The role of IT in digital transformation

There is still a fundamental difference in understanding between IT and the business when looking at how digital contributes to organisational capabilities.

Digital has been a key agenda item for some years now. You could (wrongly) assume that most corporations already had it in the bag. Indeed most leadership teams assumed it was a done deal, some had strategies in place as far back as 2012. A Forrester report from early 2014 stated that 74% of senior business leaders felt they had a digital strategy in place.

Recent figures paint a different picture. Forrester, Fujitsu, Global Centre for Digital Business Transformation and IDC all released reports between Q4 2015 – Q2 2016 that point to only a quarter of business leaders believing they have a coherent digital strategy in place. A stark contrast from 2 years ago.

So what happened? Part of the problem is that most digital initiatives to-date have been ‘bolt-on’ or tactical. They have innovated only around the fringes of the organisation. One of the big problems is that they do not deliver the fundamental shift that organisations need to transform. The changes demanded by digital will change not only the technologies of enterprise IT, but the behaviour, culture, organisational capabilities and skills of the organisation. These are issues that impact the whole business, not just IT. One of the most common challenges faced by our clients is about IT departments not speaking the same language as the business. This continues to drive a wedge between the two and does little to help produce a common understanding of digital problems or potential solutions.

It sometimes seems easier to rebuild from the ground up, than to attempt the arduous task of transitioning large scale organisations into modern 21st Century businesses. This is part of the reason why so many startups are dominating today’s digital landscape. They are born digital and mobile first and do not need to go through the painful transition from old to new – although, as we have argued before, that can pose its own issues once startups start to grow.

Some organisations have navigated the transformation process better than others. Below are some of the common themes we have seen emerge within their IT departments;

• Move towards becoming an internal service provider
  Experience-led design and SaaS delivery models are becoming the norm in both consumer and enterprise technologies. IT organisations need to re-think and re-design their service offering to better serve their users, moving away from centrally mandating technologies or applications. Instead they should focus on developing a platform and framework thats allows greater choice of internal or external services. Yuvi Kochar, CTO at Graham Holdings (formerly part of the Washington Post group) denounced his right to mandate technology usage across the business. Instead his team offers the business a set of managed services. Business units choose the services they wish and are free to source alternatives from external vendors. Kochar’s team provide an open platform for combining internal and external services. They monitor usage, adjusting resources according to demand. Whilst the IT team are always innovating their service offerings, they are not alone. The organisation acts as a sensor for Kochar’s strategy. When new technologies begin to emerge, his team can look to combining them into an internal service offering.

• Develop products and services with cross functional teams
  Many digitally mature organisations are moving away from the notion of funding projects and programmes. Instead they are moving towards cross-functional teams developing a set of products/services. Teams align around an individual service, continually monitoring usage and improving the tool. They can scale as and when the user base ramps up and can disband when the product or service is no longer used. The products and services developed may prove to be business models in their own right. Amazon developed its AWS offering as a way to serve internal teams. One day they realised that what they had built was a valid service in its own right and opened it up for public use.

• Beyond the notion of Bi-Modal and Tri-Modal IT.
  New agile practices are beginning to do do away with the big-bang approach of delivering whole applications. Instead, smaller, more nimble teams aim to release products early and often. They present something usable and gain feedback earlier to help steer the design. Bi/Tri-modal strategies encouraged faster moving projects around the edges, but they did not put provide a holistic approach to shortening delivery cycles throughout the estate. Most second-speed projects will hit a hard-stop dependency on a first-speed application that takes a long time to resolve. Organisations must move beyond bi-modal IT, into systems that encourage shorter cycle times across all applications.

• Computing as a commodity
  For many reasons the adoption of cloud technologies was slow off the mark amongst large scale IT organisations. New tools and technologies are beginning to emerge that help build confidence. As a result, cloud is finally taking off within the enterprise space. There are two primary strategies being pursued; public and hybrid. Standards for cloud computing have rapidly matured in recent years and should be the default option going forward for most.

• Micro-service over monolith
  Those who are brave enough to have tried will know first hand the pitfalls of trying to introduce agile working practices on large-scale monolith applications. The trouble with monoliths is they keep getting bigger and reach a point where you need a whole department just to maintain them. Running small, standalone change projects becomes impossible. It is by no means an easy task, but the monoliths need to be broken up to make way for smaller, loosely coupled services. Technologies such as Docker are accelerating the rate of maturity of microservice. Migration patterns are beginning to emerge to help ease the pain of dismantling. Netflix was one of the early adopters of microservices in 2009. They are now one of the most successful case studies of microservices running in the cloud.

• Platforms and ecosystems
  IT departments need to define a flexible technology platform that underpins and enables service orchestration and combination. A platform needs to provide integration across internal and external services to encourage development of a natural ecosystem of services. Dave Gray (author of The Connected Company) describes how digitally mature organisations manage their technology platforms like a city rather than a dictator with an iron-fist. Gray explains that the secret to success when building out IT platforms is defining a set of high level standards and a governance model. This aims to standardise the interaction of services, without dictating what they are or how they should function. Gray claims this approach can lead to a more reliable and more long term solution.

Digital transformation requires a fundamental rewiring. It is not something that any single department can own – whether that is IT, marketing, knowledge or others. So how can you do it? We are helping large organisations tackle this problem. We use a holistic approach, which focusses on the development of target organisational capabilities. The capabilities form a common language that the whole organisation can rally around. We often use an agile user story format to ensure that capabilities are results-orientated and solution-agnostic. Multi-disciplinary teams working in an iterative fashion can experiment with solutions and measure the results. We want these teams to fail fast, learn quick and share insights. We believe that this move away from classic waterfall-based project requirements and budgeting is fundamental, if IT is to get closer to the frontline business problems and help the business define its digital future.