IT is business and business is IT, so why this never ending debate?

When I started my career as a programmer 25 years ago, there was one debate that was more in focus than others, in the internal IT department. The debate was related to how to align business and IT. I understand the rationale of the debate in the 1980’s, when IT was rather immature. Just a few decades earlier where IT involved punch cards as the main input medium, men in white coats were operating the data centers (telling everyone not to touch anything) and the output at best was printed on long white and blue striped papers.

Over the years the IT industry has gone through many phases, but this one question seems to be as relevant as it was 25 years ago. I still hear statements that make me doubt that we have come that much further in relation to this question. The IT departments still don’t seem to see themselves as full worthy members of the organization. They insist to continue to separate themselves from the rest of the company by putting up a  barrier between the “business” and the IT department. The controllers, the purchasers and the HR people never talk about their department and the “business” as completely separated units like the IT does. The last few years we have seen numerous ground-breaking innovations where IT not only supports and improves operational excellence, but also defines new business models and provides the boost that the company needs. Unfortunately the tension between the IT department, often viewed as a cost center, and the other functions (often referred to as the “business”) has lead to a stagnation in usage of these innovations. The internal IT department is very often seen as too slow and continuously guarding their interests and definitely not drives the business development. One example is the Cloud where the ease and the speed of implementing new business systems will reduce the need of the internal IT department.

One of the biggest hurdles to reduce time to market and improving cost effectiveness is the increasing complexity and the reduced flexibility in the IT-landscape. The new disruptive technologies within the digital transformation often categorized as SMAC – Social, Mobility, Analytics and Cloud – are other levers to drive business transformation1). These are example of areas where the CIO needs to step forward and play a strategic role in driving real business value. Then, the wall between IT and business must be dismantled.

To dismantle the wall between IT and business, here are a few suggestions

  • Let the CIO take place in the management team and see him as the entrepreneur that contributes to develop the future business model and lead the work with improvement of the operational excellence.
  • The importance of IT as the tool to implement operational excellence will increase, as well as new business models,  enterprises must recognize the value and scarcity of employees who combine business acumen and IT competence and make sure these are recognized and awarded.
  • Make sure that the management team understands the value of IT and utilizes the power of what it can potentially bring.  IT is business, and business is IT. If you run a company without the insights of how to use IT as the tool to shape your operational excellence, improve your decision making, grow your business and comply to legislative requirements, make sure that you have a CIO as your right hand with the right skills.
  • Transform the internal IT department from a cost to a profit or value center that is measured not only on cost reductions for IT expenses, but rather on the business value that IT brings to the company. Transform the common way of treating IT as the total amount of dollars spent on application management, application development and infrastructure management to measure the financial value that IT can deliver directly to the bottom line. IT can not only create more effective business processes, but can also be used to create new business models that can create completely new sources of revenue by attracting new clients or markets.
  • Start the transformation journey of the current IT landscape by going from being reactive to proactive, from complexity to simplification and from historic data to predictive analysis.  Thereby also reducing the portion of keeping the “lights on” from 72%2) by developing a firm roadmap and make sure the plan is anchored in the company strategy. A lack of involvement from IT in the company’s strategic planning will lead to that opportunities that IT can bring will be overlooked.

There has never been a greater opportunity for the CIO and the IT department to advance their position and truly making a great impact on their organizations. If not done, then the CIO and the internal IT department will be stuck with maintaining outdated systems and be viewed as the department that always turns new proposals down.

#SAP, #simplification, #CIO, #ITandBusiness

  1. 2014 Application Landscape Report from Capgemini earlier this year.
  2. Forrester IT Survey 20134