Change as a constant may be a cliché, but that doesn’t mean it’s not true. IT leaders in all sectors report accelerated rates of change as their organizations find new opportunities to use technology and information. Compared to just a few years ago, these opportunities are extremely broad-based, running the gamut from driving productivity in the back office to gaining a competitive advantage with new technology-enabled products and services. In fact, when CEB assessed opportunities to use technology across the enterprise, we found that the rapid development of big data, social collaboration, mobile, and other new capabilities mean that at least 70 percent of business processes can now be improved using technology in every part of the business. In some areas that rises to more than 90 percent.
As the number of opportunities increase, so does the number of stakeholders – 74 percent of business leaders are now willing to lead technology projects and many back this up by allocating money directly from their own budgets. At the same time, few CFOs have lost their fixation with managing IT spending against tight revenue benchmarks, so IT leaders must bridge an ever-widening gap between demand and available resources.
As a result, IT departments find themselves flexing to engage with stakeholders in a multitude of ways, confront a bewildering number of new technologies, and make decisions in environments where their plans and roadmaps are out-of-date almost as soon as they are published.
Many of today’s IT organizations are built for efficiency, standardization, and risk reduction - not the best starting point when dealing with rapidly changing, unpredictable business demand. In many cases, the default response is to look for a new organizational structure, such as a two-speed model or a dedicated innovation team, but these don’t fully solve the problem. Instead of helping IT keep pace with change, organizational solutions point IT in the direction of a fixed and predetermined end-state. But in an era of constant change, the chances of picking the right end-state is almost zero, and today’s correct end state is likely to be tomorrow’s competitive disadvantage.
Instead, the most progressive IT leaders are adopting a set of management principles that allows them to maximize returns from technology investment in any environment, not just the environment for which the IT organization was designed. Collectively, these five principles make IT “adaptive.”
1. Excellence is Targeted: IT must focus disproportionate effort in areas where it has comparative advantage and “dare to be adequate” elsewhere. This deliberate skewing of effort requires IT leaders to know and ruthlessly invest in IT’s sources of comparative advantage while making tradeoff decisions to cut funding for other opportunities.
2. Role is Context-based: IT leaders must vary IT’s responsibilities and relationships based on the operating context such as where the ideas and money come from. Corporate IT will neither be the source of all ideas nor the source of all funding. Therefore, IT’s role in helping the enterprise maximize value from technology investments will need to adapt to the context of the opportunity.
3. Judgment Shapes Process: IT must apply judgment to governance and delivery processes to ensure the level of rigor is appropriate to the business outcome. IT leaders and their teams don’t aspire to be “process-crats,” but the rest of the organization sometimes views them that way. More judgment and less process are the watchwords of Adaptive IT.
4. Speed-to-Market Comes First: IT leaders must increase the priority given to urgency when making trade-offs against cost and risk. To keep pace with rapidly changing demand, IT leaders must maintain funding flexibility and be prepared to rapidly reallocate resources to unplanned initiatives.
5. Technical and Business Talent Isn’t Either/Or: IT leaders must continue to sharpen IT’s engagement competencies but not at the cost of technology expertise. Corporate IT will need a workforce strategy that gives all IT staff the support and incentives to build engagement competencies and stay ahead of emerging technologies.
These principles are easier to articulate than to live by. To become adaptive, IT leaders must rethink their strategies, governance, delivery, and workforce. But done correctly, the principles will allow IT to deftly navigate change and make a growing contribution to competitive advantage.
Andrew Horne is a Managing Director at CEB. He works with CEB’s membership network of hundreds of Chief Information Officers globally focused on helping CIOs navigate fast changing business needs as technology becomes ever more important to competitive advantage, and providing support to CIOs who are transforming IT’s strategy, governance, and talent in order to build adaptive, service-based organizations.
