Our prior consideration of the Strategy-Focused IT Organization and strategy map design intersect today as I present a framework for developing strategy for the IT organization. Please note the considerable distinction between IT strategy and IT organization strategy; the former generally refers to the intent of an enterprise with respect to technology and enterprise information architectures, standards, approaches to sourcing decisions, technology site design and redundancy, etc. These are important considerations about the deployment of technology in the enterprise. But IT organization strategy is about the management, composition, direction, and evolution of the IT organization (hence, ITO) itself.
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23 June 2009 • 7:30 am In the 20 years that I have been a management consultant, I’ve seen over a hundred IT organizations (ITOs) up close. Although I have come to see the ITO as a strategic asset to the organization, unfortunately, more often than not, the ITO has been seen as a liability by the most members of the parent enterprise. In the diversity of ITOs that I have seen, I observed that ITOs seem to evolve through a series of stages until their value to the parent enterprise is fully mature (first described in an article I wrote in 2001). The maturity model was based on my observations about the different change agenda I saw in different ITOs. In short, ITOs are either Defensive, Reactive, Responsive, or Strategy-Focused. 15 June 2009 • 11:11 am In the previous post, we considered the first two of the four domains of desired change in IT organizations that was introduced in my 2001 article in Harvard Business School’s Balanced Scorecard Report. Satisfactory performance in the domains of Cost and Quality is merely hygienic and expected of every competent IT organization. Cost and Quality are the primary domains for desired change in traditional IT organizations. But in those enterprises where IT is essential to the value proposition (e.g. firms born during the “dot-com” era), IT leaders focus more on the agility of the IT organization and infrastructure, and their ability to innovate with technology on behalf of the parent firm. Here, we examine these domains a bit more closely. 14 June 2009 • 1:42 pm In 2001, I developed a model for organizing the change agenda for IT organizations that was published in Harvard Business School’s Balanced Scorecard Report. The model arose from observations of the many IT organizations with whom I had been consulting, and described four broad domains of desired change in IT organizations: Cost, Quality, Agility, and Innovation. I had observed that in older, more traditional IT organizations, the main concern of IT leaders was to lower (or at least manage) costs, and to improve quality. By contrast, in those enterprises where IT was essential to the value proposition (e.g. firms born during the “dot-com” era), IT leaders tended to focus more on the agility of the IT organization and infrastructure, and their ability to innovate with technology on behalf of the parent firm. 5 June 2009 • 10:34 am In earlier posts, we considered the first two of three principles of aligning IT with business strategy: Principle I: Strategy execution cannot be accomplished without information technologyand Principle II: The demand for technology in the enterprise always exceeds the capacity of the enterprise to deliverToday, we build on these ideas to form Principle III. 28 May 2009 • 11:46 am As was asserted in a previous post, the first principle of aligning IT with enterprise strategy states that strategy execution cannot be accomplished without information technology. This principle has powerful implications for the way IT is managed inside most enterprises. Business unit (BU) managers(*) understand that their success depends on information technology, both in terms of day-to-day operations (keeping the business running) and long-term success (changing the business to achieve strategy, as described in Principle I). They know that if IT fails, the business fails. Thanks to the steady drumbeat of technology innovation, members of the IT vendor community are delighted to describe how an investment in new this technology will undoubtedly improve performance in a variety of ways: operational reliability and efficiency, improved customer service, access to new customers and markets, etc. Hardware improvements quickly obsolete past investments; try to imagine convincing an executive in your firm to use a five year old laptop. The promise of new technology, as small as a new PDA or as big as a new enterprise-wide software solution is always high on their lists of needs. 22 May 2009 • 7:41 pm An overview of the history of information technology in organizations shows that at one time, decisions about IT spending were simple cost-benefit calculations made to reduce labor. Things are very different today. 21 May 2009 • 1:32 pm For a few years now, I’ve been doing a riff on Blockbuster and Netflix in some of my speaking engagements. It’s been a useful case for sharing many of my insights about strategic management and the role of technology in strategy (disclaimer: neither of these firms has been a client of mine, and my impressions have been formed only from publicly-available information). The essence of the riff is this: Blockbuster built a very successful business model and then had its lunch eaten by Netflix. The key lessons we can learn from this case are:
18 May 2009 • 5:11 pm (note: This is the first in a series of posts on the topic of the Strategy-Focused IT Organization) Many date the modern use of information technology to the introduction of the general-purpose IBM 360 computer in 1964. Organizations quickly realized that computer technology was a path to direct money savings, with the ability to quickly automate routine and time-consuming tasks such as accounting and payroll and inventory control. As the large corporations that could afford mainframe computers began to embrace and employ the technology, a curious thing happened. The technology didn’t manage itself. Suddenly there were decisions to be made that required expertise and technology beyond simply operating the machines. A new profession, EDP (alternately, MIS, information systems, information technology, and finally, IT) arose during the 60s and 70s. When I first started working with computers in 1978, whole information technology departments with management and staff organized according to job function and technology discipline had arisen inside corporations. |
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