For years we have heard the mantra that “IT should align itself with business.” I interpret that mantra to mean it is incumbent on a company’s IT organization to understand and enable the company’s key business initiatives. In 2017, that mantra is both extremely difficult and potentially outdated.
Why is the mantra extremely difficult?
If businesses stood still or moved slowly, it would be relatively easy for an IT organization to develop and implement plans to support the business. However, that is not the case for the majority of businesses. For example, Richard Foster, a Yale University management professor, analyzed the lifespan of the companies that comprise the S&P 500 stock market index. Per Foster, the average lifespan of a company in the index “has decreased by nearly 50 years in the last century, from 67 years in the 1920s to just 20 years today.” He also estimated that by 2027, “more than three-quarters of the S&P 500 will be companies whose names we do not now know.” The bottom line is that the more rapidly businesses change, the more challenging it is for IT organizations to enable new business initiatives.
Why is the mantra potentially outdated?
A recent article, Digital Business Strategy: Toward a Next Generation of Insights, discussed how the movement to implement digital business initiatives impacts IT organizations. According to that article, “Over the last three decades, the prevailing view of information technology strategy has been that it is a functional-level strategy that must be aligned with the firm’s chosen business strategy. Even within this so called alignment view, business strategy directed IT strategy. During the last decade, the business infrastructure has become digital with increased interconnections among products, processes, and services. Across many firms spanning different industries and sectors, digital technologies (viewed as combinations of information, computing, communication, and connectivity technologies) are fundamentally transforming business strategies, business processes, firm capabilities, products and services, and key interfirm relationships in extended business networks. Accordingly, we argue that the time is right to rethink the role of IT strategy, from that of a functional-level strategy — aligned but essentially always subordinate to business strategy — to one that reflects a fusion between IT strategy and business strategy. This fusion is herein termed digital business strategy.”
What does it mean for an IT organization to be agile?
Given the broad agreement that IT organizations need to be more agile, that raises a question: What does it mean for IT organizations to be agile? That question is best answered by examples of what agility does and does not look like. One example of what IT agility looks like is DevOps. In the traditional model, software upgrades occur infrequently, involve significant changes to the software and include little if any cooperation between any of the groups that develop and test the software or operate the IT infrastructure. One characteristic of the DevOps model is that small frequent changes are made to the software, and hence new functionality is continually being delivered to the business. Another characteristic is that the DevOps model emphasizes collaboration between all the appropriate groups and automates the process of software delivery and infrastructure changes.
For many organizations, the use of Virtual Machines (VMs) doesn’t provide all of the potential agility. The good news is server virtualization has made it possible to move VMs between servers in a matter of seconds. This capability provides IT organizations with the ability to respond in real-time to changes in the environment. However, in many cases, it can take weeks to make the necessary network changes that are required to support the movement of the VM.
What changes need to occur?
Whether an IT organization sees its primary role as aligning itself with business unit managers or working with them to create and implement a digital business strategy, IT organizations are under pressure to become more agile and innovative. Because of this, IT organizations are at a crossroads. They can either respond to this pressure and work to become more agile and innovative, or business unit managers will decide to expand their use of public cloud providers, and hence reduce the role and value of internal IT organizations. In my next blog, I will discuss how the adoption of private clouds is critical to IT organizations becoming more agile and innovative.