by Andrew White | July 31, 2017 | Comments Off on IT’s Future Value Proposition
I noted with some interest the McKinsey article titled, “IT’s Future Value Proposition” and I realized (and had guessed this from the title and first couple of paragraphs) that the article explains what I had come up with in simple graphic form a few months ago. The odd thing is that even if we agree on this premise the future value proposition of IT, we have not assured success. First let’s look at the proposition.
At its most basic, IT represents a means to support the organization and to help the organization realize its goals – whatever they may be. Since organizations and hugely varied in a multitude of ways, from size, format, structure, purpose and so on, it is quite difficult to dumb down what IT does into simple buckets. But here’s an attempt for you:
This picture provides a meant to identify the role of every aspect of IT. For example:
- Innovation and Effectiveness. This talks to the idea that as a means of delivering value, an organization needs have some method, some practice, some technique that provides that value – and typically it will likely be through some innovative or effective means. This does not presuppose profit; but that is what the private sectors tends to seek in maximizing its share-holder value. More broadly all firms – public or private – have stakeholders of some kind – and they assume or seek something valuable to deliver.
- Efficiency. This talks to the need to determine the methods of value delivery and this looks at all the assets and requirements to support the hygiene or non-core processes and work that an organization undertakes to delivery on its mission. In fat the duality of the innovation and the efficiency topics has been the subject of management theory for many years. The terms change every few years – but the essence remains the same.
- Performance. This is a shared or common capability that actually supports the other aspects, including the next one – insight. Performance is the need to able to scale and delivery at a level of service at a cost that makes sense. In some ways this element could be seen as the infrastructure of an organization. Scale is one need; security is another. As such there are many verbs or nouns that fit inside performance – but they all need to perform at a desired level of need.
- Insight is called out as a separate element since it can and does increasingly stand alone from the other element and often provides additional services or capabilities to them. In the language of the day, this might include data itself (such as data brokers), packaged analytics (which are treated as data), or data and analytics capabilities that can be recombined as needed (more like a platform).
Gartner’s very own research has looked at each of these layers and in some cases, how the layers might be leveraged together for different parts of business and IT. The use of pace layering was adopted first by our business application teams to help clients determine what kind of apps are needed, and where to increase or decrease investment. We then applied the same idea to data and analytics itself. What I propose above is more of a generic but broader view that might help us look at the bigger picture.
Now the McKinsey article: it nicely talks through the same message but uses a little more detail, with a finer grained lens, to come to the same basic recommendation. Of course there are a few more mentions of operating model and the like, but it’s the same general idea. I don’t suppose this is new at all – maybe the article and my little graphic is just yet another twist on a long standing and important theme. But I do like my graphic. Increasingly I am applying it at all kinds of situations across the research I touch.
Now the final bad news. If you read our frequent surveys, and I am thinking of the CEO and CIO surveys we run, there tends to be a pretty wide gap between priorities. For example, for CEO’s the top priority the world over for the last few years has centered on growth. Yet when you look at what the CIO survey unearths, the top priority tends to be cost optimization. This is not as disconnected as you might think: Too many CIO’s are focused on shared services and common infrastructure, and are far removed from IT investments that are made directly by business units without “IT” involvement. So it makes sense to focus on costs since “IT” (the shared service/department) is perceived as a cost center, not a value-add generator. Yet the investment a marketer makes in “IT” is treated and often accounted for differently. So the chart above, and McKinsey’s paper, are valiant attempts to help CIO’s get away from cost alone and focus on how IT can drive value.
To compound this complexity, the CIO’s top investment priority tends to be Business Intelligence and Analytics. Of course, most “BI” is rear-view looking; and most “analytics” stop short of “the best dashboard”, visualization or worse, an analytic. Our new look of a “data and analytics platform” supposes a much broader view spanning people, process, data and technology – including among other things – a more explicitly view of decision modeling. But I digress. The problem is that there is a huge gap between realizing growth simply, automatically or easily by investing in BI and analytics – one reason being that BI and analytics is not one thing; and it tends to forget the data anyway or assumes data for analytics, not data and analytics.
So all in all I am quite interested on developing my little graphic through my ongoing research. And I look forward to seeing you in Orlando Symposium where we can discuss how organizations can put data and analytics at the center of their digital business platform.
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