The vibrancy of Startups. The relentless customer focus. The relentless adapting and testing of products for an ever better solution. Shouldn’t all IT departments be like this? What an exciting place to work in such an IT organization would be!

What are the waypoints on the way to transform traditional IT Departments into Start-ups?

Some answers have already been given in my recent post A 4 Step IT Manifesto – without the boring Bits. But here is a new perspective, adapted from a 2016 book “The New IT” by Jill Dyché, a seasoned author on IT Organization. It is a business practitioners book, not an academic one and therefore lacks empirical verification. But Dyché has come up with some interesting models, which provoke thought.

Start from your Archetype

Dyché clusters IT Organizations into 6 distinctive Archetypes. Most IT Organizations have elements of some or all archetypes at once, but one archetype will likely be dominant.

arch2.png

Most IT departments are associated predominantly with the Tactical, Order Taking or Aligning archetypes:

  • Tactical: No frills, just keep the system going
  • Order Taking: Write a request or initiate a project, IT will implement based on the specifications
  • Aligning: Representatives of IT discuss the direction of each Business unit with Business and IT Leaders on a regular basis and try to shape applications accordingly

The more progressive Archetypes are:

  • Data Provisioning: IT does everything possible to provide excellent data sources to business units, makes access as easy as possible and supplies analytical tools thereby enabling business units to discover insights on their own. Most notably, there are not only “Application Owners”, there are “Data owners” for the different Data objects (Customer Master, Replenishment Data etc., Sales Data), too
  • Brokering: IT is not so much “delivering services”, it is rather orchestrating services across the enterprise from a multitude of internal and external service units. A lot of Service Level Agreements are typical. IT’s aim is to focus internal services only on strategic areas only. For all other services, it tries to remain agile to ramp up or ramp down services as required by the shifting situation
  • IT Everywhere: IT nearly dissolves as a unit. It is just retaining Project Portfolio and Architecture Management. Every other function, even most IT Staff, is allocated to the Business. In a world of proliferating Cloud Applications, that cause Shadow IT Units to appear in Business, this might be a formal approach to governing the complexity of the modern IT and Business relationship

All archetypes are valuable. There is no better archetype. If an organization just requires the IT Organization to keep everything stable and change nothing, the “Tactical” Archetype might be the Best for an Organization. Every attempt to go to a different archetype would be “unnecessary excellence”, aka waste.

The interesting job for the IT Manager is to find out – together with his Business counterparts –  which model to adopt. In the example found in the lower half of the graphic above a fictional IT unit spends 70% of its time and resources on “keeping the lights on” and 30% on “processing orders”. After discussing with the business, the IT Leader determines to scale down the number of time and resources spent on these “Tactical” and “Order Taking” archetypes and aims to transform her IT operations towards the more advanced models over the next 3 years.

Once the target composition of archetypes has been determined, the next question is how to get there?

Adjust your IT Governance model

The IT Governance model is like an operating system that IT is working on.  It is the sum of all processes that IT uses to provide its services. In any IT Organisation it invariably encompasses the following seven areas:

itgov2.png

Changing IT Archetypes means to change some or all of the seven Elements of the IT Governance Model. A switch towards the “Data Provisioning” Model would require:

  1. An updated,  re-prioritized Roadmap that does not only encompass Systems but Data objects too
  2. New policies to allow Business users access to Analytical Power Tools or even access to the Data Bases directly
  3. Updating funding plans for IT, as Data Exploration can hardly be funded by submitting business cases based on Return of Investment figures. It would be a better idea to create a new “innovation” budget for use of IT and business
  4. Portfolio Management processes, that allow Business Units to understand where IT is heading and to understand the staging process IT uses to progress from data exploration to research, to test, to re-test and finally to implementation
  5. A Talent Management that seeks to recruit or cultivate data savvy personnel. This includes not only the cultivation or hiring of Data Scientists but helping Managers to get data savvy, too
  6. A new understanding of how to manage Innovation, of the inner workings of innovation within human groups. Once that insight is there, the environment (down to office spaces and the possibilities to encounter external knowledge sources) needs to be shaped
  7. Systems: New Systems Data Management or Analytical Tools are to be supported

Once the new IT Governance has been sketched out, the Organization should be adapted in order to support it.

IT Organisation: Think “Service Lines”

IT organizations are traditionally built around applications and mirror -more or less – the organization of business units. Typically, there are units within IT that care of Systems for Finance, Systems for Purchasing, for System of Production, for Logistics etc.  Plus some universal units for Infrastructure Management, Helpdesk, Architecture or Reporting.

This makes great sense, as businesses know exactly whom to hold accountable for a certain set of systems and the IT units need to know exactly who the client is. But there are problems with this model:

  • Local Applications, such as MS Office suite Apps, fail to have a strong voice in the organizations, even tough they are immensely important to users. By failing to promote the professional use of these tools, productivity potentials remain untapped. The day to day importance of working on the big enterprise applications simply crowds out any attention on supposedly small local applications
  • User Access Devices fall in the same category: They are often overseen, if not given a voice inside the organization at a higher hierarchical level via the organization chart
  • Data ownership is automatically decentralized if data owners just reside on some low hierarchical level or data ownership is just assigned as a side task to someone. Today data is often so important, as to be represented in a separate unit reporting directly to the CIO
  • Analytics is often either just an add-on contained in other IT units. Sometimes analytics is just a big Data Warehouse application. But if a company is to become more data savvy, a unit may be useful that promotes analytical practices, tools, processes across the whole enterprise

A service line oriented organizational chart may look like this:

neworg.png

But there is an even bigger problem. A typical IT organization that more or less mirrors the Business Organization or that retains too much IT services under its authority may  suffocate any initiative workers in  Business organizations have to utilize IT to maximum effect:

Having IT taking care of everything even remotely connected to information technology has the inert risk of business units always being under parental advice.

In such an environment, the business may never grow up into (digital) Adulthood.

So what can be done to let Business grow into digital Adulthood? Give them responsibility for parts of IT.dsavvy

User Access Devices, Analytics, and Local Applications are all Services of IT which can be delegated to Business Units. IT willingly withdraws out of these areas and gives business units the freedom to experiment and implement what business thinks best. Except for architectural oversight, IT will no longer be providing services as buying and maintaining Phone, Pads, Workstations, local software, reporting tools etc.

By formally handing off responsibility to business, IT moves towards the “IT Everywhere” Archetype. This might be the most effective and sustainable way to raise the digital maturity of a company as a whole.

To new frontiers: Innovation

Raising the overall digital maturity of an organization will result in the whole company feeling more like a start-up, where people are empowered to experiment and utilize IT in surprising manners. This experimentation will only happen if management behavior and values change (see for example Tired of hierarchy? Try this).

Jill Dyché offers specific advice for the CIO on how to foster innovation:

  • Encourage Questions: Who do we want to be? Who could we be?
  • Maintain an up to date knowledge of technology
  • Shift focus away from ERP towards e.g. machine learning or the SMAC Stack (Social, Mobile, Analytics, Cloud)
  • Move towards openness inside and outside the company
  • Regards Research as an end to itself, not just a mean
  • Learn the Lean Method, e.g. willingness for experiments to fail and start again
  • Rely on more organic methods to manage things and less on Up-front Business Planning
  • Do less underdiagnosing and overprescribing – do more research instead

Innovation Labs

A lot of Companies do not approach innovation in a holistic manner. Instead, they cordon off innovation in “Labs”. These are shiny new, start-up like organizations which are set-up in parallel to the old IT. While this approach is seemingly supported by a management technique that calls to apply different management techniques in for example “productivity” and “innovation” zones (see You are playing the wrong game! Learn to zone), there are pitfalls.

Innovation relies on two basic elements: Exploration and synthesis (see Social Physics: The Revival of Science in Management).  Everything must be done to maximize the opportunities for exploration and synthesis. A typical pitfall is to set up an Innovation Lab, as a “New IT”, with permanent full-time dedicated staff. This is hurting both, exploration and synthesis massively.

Instead, people should be only temporarily assigned to innovation labs. There should be:

  • a constant exchange of staff with the rest of the organization (business and IT) , based on the tasks at hand
  • people from outside the organization constantly intermingling with the internal staff
  • A democratization of initiatives, top down assignments won’t work. Instead, people need to have the autonomy to initiate lab projects on their own. Of course, this requires a new funding method, too, as the way money is to spend is effectively controlled by subordinates

Summary: Organizing IT like as Start-up

All of the above can be summarized into three steps:

orgsup.png

  • First get Business engaged. Show them how to use IT effectively
  • Second, create a culture of openness, dynamism, and autonomy.
  • Third, create an Innovation Zone that allows people to use their full potential

With this compelling blueprint in hand, whole companies can really get going along their road to Digitalization. Existing IT Organizations can be revitalized and Business gets new powerful tools.

Oh yes, it will be a rough ride – learning to lead and be managed in a different way is very hard. But this blueprint has a very positive “bias for action”, which is surely better than waiting for Digital Businesses to disrupt your business.

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By the way: I have changed the name of the blog from “Signal-and-the-noise.com” to “ManagementDigital.net” for the sake of greater clarity what this blog is all about.

Plus: There is a German language Podcast available on iTunes, Stitcher, and Soundcloud.

Comments are appreciated!

Posted by frankthun

One Comment

  1. I like that one: “Instead, people should be only temporarily assigned to innovation labs.”! Just a Little hint but great Outcome – every project often needs a special team with other skills & personalities.

    Like

    Reply

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