Mark McDonald

In the late 1990’s, CIOs asked about the shape of the IT organization in the face of increased use of outsourcing, business process change and what was called-user development.  The response to those forces was called a ‘lite model of IS’ which became known as IS-Lite.  (Gartner LinkSubscription Required)  (CIO Magazine Link)

Today, CIOs are asking the same question in the face of different forces.  Technology is going public, technology is becoming lighter weight, cloud computing, business process outsourcing, software as a service and the need for lean IT are changing the shape of IT again.  The response we have observed among leading IT organizations has evolved the IS lite model into a Lean IT model.  The figure below illustrates this evolution.

Leading CIOs see the move to a leaner IT structure as a natural response to changing IT economics and new consumer-based technologies. A lean IT organization is created through a process of addition by concentrating on the resources in areas where IT expertise can add value.  This is in contrast to IS lite that was created by subtracting out the resources and responsibilities taken over by outsourcing and the other forces.  The result is an organization that is ‘diamond’ or ‘arrow’ shaped from the perspective that it has more mid-level resources as the bottom of the traditional pyramid is resourced from either technology services or other service providers.  Building the lean model, shown below

The model above recognizes the potential of lighter weight technologies such as the cloud and SaaS to handle a portion of IT responsibility.  Likewise the increasing capability of business process outsourcing either via a contract or value network relationship changes other aspects of IT.  The question then becomes what should the major groups be within IT.  The model identifies these groups as:

• A focused and professional service and vendor management capability needed to handle complex multi-sourced partner relationships.

• An information and analytics center of excellence that houses the deep skills and tools required increasing the strategic and operational value of information.

• A business process center of excellence reflecting IT’s central role in process improvement, including the implementation of six sigma and lean thinking in the enterprise.

• An agile development group responsible for bringing new applications on line in response to specific business requirements and needs that cannot be readily met by outsourced parties.

• A CIO and technology leadership group responsible for the strategy, execution, architecture, risk management and policy management.

The above model can be called ‘lean’ from the perspective that it concentrates the IT organization on the essential roles required to provide value to the enterprise and its value network.  Those groups handle these activities, as they are best able to provide the service without duplication or waste.

The implications for IT are interesting.  Here are some initial thoughts.

• While the IT organization will be smaller, it will be higher skilled and therefore better compensated.

• Increased professionalism with deeper skills and capability provided in analytics and business process change.

• The IT organization would be more responsive, delivering short/sharp/focused projects in rapid cycle times.

• Sourcing and vendor relationship would be recommended as a professional competency and have a more formal and operational role rather than being an extension of finance.

• IT would become more executive focus in terms of creating results through others than viewing itself completely responsible for everything.

What are your thoughts?  Is your IT organization getting ‘lite-er’, leaner or more focused?

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Category: CIO IT Governance Lean Thinking Strategic planning Technology     Tags: 2011 Planning, CIO strategy, IT organization

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