Digital IT Operating Model

Faced with competition from digital disruptors, smart traditional players acknowledge that they need to disrupt themselves before someone else comes along and disrupts them. Consequently, many began developing disruptive business models which rely on digital technologies. However, many organizations struggle in aligning their IT operating model with these new business models.

We are convinced that a well-designed digital IT operating model can act as an engine that turns strategy and new business models into effective actions and tangible results. A future-proof IT can respond to changing market requirements by focusing on product development, driven by scalable and agile capability groups. Let’s discuss what’s next.

Emerging business trends are challenging traditional IT operating models

CIOs have noticed that their IT operating models, which have been proving successful so far, are falling short in the digital age. Four major business trends are responsible for these challenges:

Diversity of digital business opportunities

Countless digital business opportunities unfold from emerging technologies such as robotics, IoT and advanced analytics. The rapid pace of new digital technologies needs to be reflected in IT organizations and is transforming the enterprise technology landscape.

Personalization of products and services

In today’s digital environment, consumers expect seamless and personalized omni-channel experiences with state-of-the-art technologies. New consumerism not only re-defines market conditions, but also compels businesses to reconsider their operating models. As a result, the role of IT is changing: IT needs to increase customer orientation while focusing on business products and outcomes.

Increasing velocity of business change

Emerging technologies, disruptive new players and rapidly changing customer demands require a drastically enhanced IT agility. Business models have become more IT-intensive and IT must deliver high-quality end products quickly. Therefore, IT needs to improve its responsiveness and delivery by reducing time-to-market and release cycles.

Inevitable technology penetration

As the role of IT within the business value chain grows into a potent innovation engine, the demand for a business-savvy tech workforce has intensified. At the same time, a disruptive and dynamic technology skill shift can be observed. This growing demand requires IT to have both a broader tech know-how and relevant business acumen.

Digital IT operating models can help to overcome with these challenges

To tackle persistent change and resource limitations, IT organizations require a new digital IT operating model, that supports digitally driven growth strategies. Capgemini Invent’s approach to digital IT operating models addresses these challenges by structuring IT organizations in matrix organizations along two main dimensions: products and capabilities. Above all, three key aspects contribute to add value to your company.

Beyond agile

In times of persistent change, the ability to make swift adjustments to accommodate new requirements and changing business needs is crucial. Cross-functional virtual teams from various capability groups, enable the IT organization to successfully react to the emergence of new competitors, rapid advancements in technology and sudden shifts in overall market conditions. While the idea of agile models and processes is already established, digital IT organizations go beyond agile: they flexibly adjust to volatile business demands through customized products driven by scalable capabilities.

Product-centric

Products become the central steering element of the IT organization. By transforming into a product-centric organization, the focus of IT shifts from process compliance towards creation of business value. This shift supports an end-to-end delivery of IT solutions in a matrix organization.

Capability-driven

Capability units are the foundation of a digital IT organization. They drive value creation and are essential for global collaboration and external partnering. Capability groups proactively engage in assessing emerging technologies to build subject matter expertise and provide skills and assets for the products – enabling IT organizations to scale fast and efficiently leverage the skills of its workforce across the entire IT organization.

Let’s discuss what’s next

A product-centric and capability-driven IT operating model is essential for enabling future business models and satisfy volatile business demands. Let’s addresses these challenges and add value to your business with a digital IT operating model.

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Many thanks to Manuel Ranz, Isabel Cortadellas Mancini and Valentin Zacherl for their collaboration on this post.

Felix Middendorf

Expert in Digital Strategy & Transformation

I am an expert on Digital IT Strategy & Transformation and advise CDOs and CIOs in strategic challenges and target-oriented transformation of their organization. Focus areas include agile IT, IT operating model & organization as well as alignment between business and IT.