It is end of the year and time for predictions. Mine are rather intuitive, with a few obvious implications for CIOs:
First, the industry will continue to push innovation to businesses faster than businesses can absorb. In addition to customer obsessions — BOYD and tablets, social business processes, cloud computing, machine-to-machine applications, and many others — CIOs will continue to struggle with the usual suspects: huge expectations of technology from business stakeholders, cost reductions, people’s longer-than-expected learning curves, skills shortages, immature management practices, and a few more:
Increasingly complex technology stacks. Rather than replacing legacy capabilities, most of the new products and services increase the complexity of existing technology stacks. For example, mobile devices and social apps come on top of enterprise systems of record in which organizations have invested for decades and are not ready to dispose of so quickly.
Increasingly dynamic business models. The more technology products and services become embedded in business processes and services, the more non-IT organizations, products, and business models start resembling IT ones. Cars are becoming complex tech devices, and industries that preserved their stable structures for decades are transitioning to a continuous state of dynamic change. Take, for example, the utility sector.
We plan to add more research and organize it around the six building blocks illustrated in the following figure:
The assumption underlying the entire collection is that BT governance is IT governance done well — a process that builds consensus among business stakeholders on how to effectively evaluate, prioritize, direct, and track technology investments for optimal business results.
Based on the research done so far, we believe that BT governance requires strong CIOs who are able to master the art and science of building three reinforcing capabilities:
As you may know, my colleague Craig Symons and I have started an initiative to refurbish our research agenda on business technology (BT) governance. Our intention is to develop a collection of documents on “good” IT governance practices for CIOs. The research is based on facts and findings gathered through interviews with leading practitioners, case studies, survey questions, reviews of popular and state-of-the-art methodologies, and our long standing industry experience. This blog post provides you with an overview of our assumptions, the current initiative’s status, what kind of questions we have answered so far, and what we plan next. Your feedback, questions, and recommendations are warmly welcome!
We are building the research on a few basic assumptions: BT governance and “good” IT governance are the same. We define them as a conscious effort by senior executives to establish strategies, structures, processes, and measurements for the management of technology to boost business results. We assumed also that the current wave of tech innovation affects not only how information workers and IT departments manage devices and services but also how business executives evaluate, drive, and monitor IT-related decisions.
At this stage, we have verified our assumptions through interviews with governance and industry experts and reviewed several consulting engagements and case studies. We have also launched a global survey, which we invite you to take.
When I opened IBM’s CEO Study 2012 for the first time, I was quite disappointed. Headlines such as “CEOs are building analytical muscle” and “technology takes top spot” echoed like traditional vendor-speak in my ears.
But I was wrong. If you are a CIO thinking about your current and future role, take a few minutes of your time to read this document! Here are three takeaways for my CIO customers:
1) Prepare to think differently about complexity. The CEO Study 2012 brings an obvious, yet counterintuitive, solution to the complexity gap, described in the previous CEO Study 2010 as: “Eight out of ten CEOs anticipate significant complexity ahead, less than half feel prepared to handle it.” IBM recommends that CEOs address this gap by empowering employees and encouraging collaboration, instead of a regulated, top-down approach based on controls. In the digital world, developing such a culture of openness goes far beyond traditional HR practices. While the CEO and HR will continue to be in charge of fostering a culture of transparency inside the organization, they will need you to manage the platforms and processes that inspire engagement on a massive scale, including for example facilitating communities and ideation.
This is the conclusion of a recent research project on the future of IT governance. I am writing this summary of facts and findings hoping to get your feedback.
Here is what we did in the project: We started from the recently released COBIT 5 framework to set a baseline for what good IT governance is. We then assessed 15 case studies and selected nine that displayed characteristics of good IT governance. We also interviewed 25 technology management experts, asking them "whether and how IT governance will need to change when organizations adopt smart technologies such as a mobile, social, analytics business process management (BPM), and cloud."
What is the conclusion? The more your organization invests in smart technologies for business innovation, differentiation, and productivity improvements, the more you will need good IT governance for managing these investments. And because developing good IT governance is a learning experience filled with trial and error, the earlier you start applying good IT governance as a continuous improvement process, the faster you will benefit from it and your investments.
But what does this mean in practical terms? We identified five directions for change. They nicely fit with the COBIT principles:
1) Make technology development an integral part of business strategy.
2) Focus on cross-functional business alignment.
3) Engage employees at all levels of the organization.
4) Maintain an integrated IT governance framework and single ownership.
5) Develop separate responsibilities for IT governance and IT management.
Here’s the elevator pitch: The job of the CIO is going to change from something like “show me the business process, and I will help you automate it” to “here is what we need to do to streamline our business capabilities and increase the firm’s level of engagement with customers and partners.” In other words, the CIO’s focus is moving from aligning IT and the business to aligning business capabilities and better serving customers.
To set the stage for my presentation, I will bring two key trends into one picture: The first trend comes from Josh’s Bernoff’s research. He has shown how successful companies changed their source of differentiation over time from manufacturing-centric positioning to being “customer-obsessed” in the age of the customer. The second trend comes from Andrew Bartels’ research. Andy argues that the history of IT has seen three waves of innovation — mainframe computing, personal computing, and network computing — while the fourth wave, smart computing, is now under way.
I am currently setting up a research project on the impact consumerization is having on companies. Just as a quick reminder, we define consumerization as:
An approach by which employees use technologies such as smartphones, tablets, and cloud Internet services that they master at home or discover on their own to get work done.
The more I dive into the subject, the more difficulty I have making sense of it. Based on interviews and discussions with experts and practitioners, I’ve divided opinions on this topic into two camps. Let me profile them clearly to make the differences evident:
Marketing people tend to see consumerization as a Groundswellphenomenon: Give your employees access to social platforms from Facebook to Twitter, arm them with tablets and access to apps, and let a new era of creativity and innovation explode.
IT experts need a clear implementation plan — waterfall-like if possible: First you capture requirements; then you plan the implementation and secure budgets; then you develop, integrate, and test the apps, etc.
In the course of a recent business technology strategy project, I prepared a presentation on the current forces of change in the IT industry and their impact on enterprise IT. I designed the presentation around the following three questions: “Is the IT industry becoming smart?”, “Does the consumerization of IT drive innovation?”, and “Is your organization prepared for the change?”. Based on Forrester’s research, I’ve provided a few directional statements that answer each question along with some links to the Forrester research reports that back them up. Enjoy the reading!
Is the IT industry becoming smart?
Smart computing is the stealth engine of IT’s market growth
You may have heard the term “business architect” in your travels; if you haven’t, you soon will. This summer, I have watched, and sometimes been involved in, several emotional debates among enterprise and information architects, business analysts, quality managers, Lean Six Sigma experts, management consultants, and IT consultants about the future and origins of their jobs, the skills they need, and, most importantly, their career paths to becoming a business architect.
There’s little doubt that these discussions are critically important to these individuals. Just as interesting from a research perspective is this question: What business problem do business architects need to resolve?
I have recently worked on two research projects addressing this question. For the first one, performed jointly with principal analyst John R. Rymer, our motivation came from a consulting case: Our client had experienced significant extra costs and process instabilities in operations and asked us for advice when a business transformation initiative supported by innovative technologies got out of control.
For the the second research project, principal analyst Derek Miers and I surveyed more than 300 business process professionals on their goals, priorities, and the maturity of their business process change programs. Using the collected data, we correlated the maturity assessment with the availability of business architecture functions.
One of our clients recently asked us: “If I pay €100 million for IT, how can I generate more value?”
I am going to answer this question in detail during the upcoming Forrester Teleconference “Managing Portfolios Of Business-Process-Oriented IT Services”, on March 23, at 11 am ET. This blog post is an invitation for you to register. Here are the key takeaways and a few supporting arguments:
Many IT organizations are not well-positioned to generate more business value. Forrester survey data suggest that IT organizations have not managed to improve their levels of business/IT alignment during the past three years. A majority of IT executives view the deployment of business-process-oriented models as the future of IT. But unfortunately, there are only few organizations that have implemented business-process-oriented models in IT. Most concerning: Many of the existing business process management (BPM) initiatives run outside IT. And, ironically, they look just like IT because they focus on deploying BPM tools such as application suites rather than optimizing business processes.
IT and BPM need a common demand framework to get business technology’s (BT’s) complexity under control and generate more business value. Many IT organizations have implemented business/enterprise architecture (EA) programs to get BT’s complexity under control and generate more value from IT and BPM investments. We assert, however, that these EA programs are necessary but not sufficient. BPM and IT need a common framework, which Forrester calls demand management (DM), that takes care of five additional processes: governance, investment, performance, and risk and portfolio management.