Leading IT Transformation
Leading IT Transformation is targeted at organizations struggling with various issues and feel the need to transform how they are doing business. Possible examples include, but are not limited to, relationship issues (or lack of trust) between IT and business areas, failing technology implementations, inefficient or ineffective business processes due to lack of methodology or proper technology implementations, ineffective IT outsourcing, ineffective IT vendor relationship management, etc.
One or, more likely, a combination of these factors may have led the company or IT business area to conclude they need a methodology to “fix” what is broken. Possible segments might include:
– Creating a 90 Day Plan (within 30 days);
– Conducting a Current State Assessment (Days 1-30 of 90 days);
– Creating a Future State Design (Days 31-60 of 90 days);
– Developing a realistic Transformation Roadmap (Days 61-90 of 90 days); and
– Execution of Transformation Roadmap (Day 91+ – usually 3-5 years in total).
Other possible segments include:
– Effective Leadership (including concepts of Servant Leadership, collaborative partnerships);
– Effective Team-Building (getting the “right people in the right seats”;
– Effective organizational design, team-building to enhance teamwork and collaboration);
– Leading Organizational Change;
– Developing Meaningful Metrics;
– Communicating Progress (Successes and Challenges);
– Implementing/Improving Agile Practices (Kanban and Scrum);
– Building an effective IT Outsourcing or Co-Sourcing model;
– Software Package/Service Evaluation;
– IT Vendor Relationship Management; and
– IT Vendor Negotiations
Overall, the idea is to understand where the company or business area is by interviewing key stakeholders (executive leaders, area leaders, staff, other business areas that do or should collaborate, etc.) to understand the perceptions of the current state – these may not be accurate, but they are true from those individuals’ viewpoint. Then determining where the company/business area needs to be to be best in class – this involves researching the industry leading practices, any published standards, leading competitor practices, etc. to develop future state design. Then developing a roadmap to get to that future state in a very practical way, anticipating (and addressing) the challenges likely to be encountered.
A History of the Use of Technology in Business
A company’s IT infrastructure is its backbone. It provides the foundation to manage business processes, serve customers and work with vendors. Technology has advanced tremendously over the past seven decades. A laptop today has roughly the same power a supercomputer had 20-30 years ago. Information systems cover many more functions of the organization than before, have become more integrated, and allow visibility into vast amounts of data to inform business decisions. Technological advancements have continued at a relentless pace, impelling businesses worldwide to modernize their IT systems to gain competitive advantages.
Tracing the IT infrastructure evolution
1930-1950: This era of electronic accounting machines used large, cumbersome machines with hardwired software. The machines were used for sorting, adding and reporting data.
1959-present: Mainframe computers were the first powerful computers that provided virtual memory and multi-tasking, and supported thousands of remote terminals. This era was defined by centralized computing managed by programmers and system operators. Minicomputers made computing decentralized to individual business units.
1981-present: The IBM PC made an appearance in 1981, attracting the attention of businesses across America. The PC era had arrived, and the big winners were Intel and Microsoft, who formed an alliance to build the software and hardware platforms for personal computing and businesses. This ‘Wintel’ partnership became weak with the growth in mobile computing; in 2017, Microsoft announced partnerships with chipmakers Qualcomm and Cavium to power its PCs and Azure cloud computing service.
Starting from 1983, the client server era reshaped the way computers were used. In this form of computing, computers (“clients”) are networked to server computers that provide services and capabilities to clients. Client/server computing provided a host of benefits, including integrated services, centralized management, improved data sharing, and data interchangeability and interoperability.
From 1992 onwards, enterprise internet began connecting computers and related devices across departments, facilitating data accessibility. Also known as a corporate network, enterprise internet uses the TCP/IP communications architecture.
Evolution of management information systems and IT management roles
A management information system (MIS) is a computer system that collects and stores information, and includes tools for analyzing that information. The tools support processes, operations, business intelligence and IT. Past management information systems operated independent of other company systems. They were found only on mainframe computers and the information they processed were used only by the company management. Today, information systems, as they’re commonly called, serve different organizational levels.
In the mid-1960s to the mid 70s, information systems were centralized and reserved for governance and management issues. The information systems and their reports were controlled by the accounting department. They used mainframe computers, the assembly language Fortran, databases and ethernet networks.
As the benefits of organization-wide implementation of information systems became apparent, initiatives were formed to explore the scope of additional information system projects, culminating in the adoption of minicomputers and mid-range computers.
In the third era, from the mid-80s to the late 90s, information became decentralized and the role of the Chief Information Office (CIO) emerged for planning the purchase and management of information systems for various organizational departments.
The fourth era, beginning in the late 1990s, made systems and data more accessible to all organizational employees. Technologies utilized included social media, search engines and laptops, tablets and smartphones.
The recent years have seen the emergence of cloud computing based information systems. The value of cloud computing derives from the availability of resources in a flexible and economical manner. As a model for delivering software, platforms and infrastructure on an on-demand basis, the cloud offers businesses huge cost-saving potential.
Problems with older technology
Relying on old technology to run operations is risky for several reasons. Not only can it affect operations but also negatively impact users.
Reduced productivity: Older systems may slow down not due to age but due to the weight of new software, which require new and better hardware than what aging systems have. This bloat makes PCs and laptops slow, hindering productivity. It poses a problem when employees need to download apps or use cloud services. If the operating system freezes and installation and integrations don’t occur in the time they’re supposed to, that can affect performance at the individual and organizational levels.
Invite cyberattacks: Outdated software cannot be maintained or patched, which means nothing can be done if vulnerabilities are found. They can fall prey easily to sophisticated cyberattacks, potentially compromising corporate networks and systems. Moreover, outdated software cannot integrate with new applications and does not work smoothly on new devices. If the software is no longer supported by its manufacturer, it should be discontinued. Major upgrades to software should be considered when operations are becoming noticeably inefficient, time-consuming and costly.
High maintenance costs: On average, 31% of an organization’s technology comprises of legacy systems. Gartner defines a legacy application as “an information system that may be based on outdated technologies, but is critical to day-to-day operations.” The costs associated with maintaining legacy systems can sometimes be greater than the costs of modernizing the corporate IT infrastructure. Frequent maintenance and hardware changes can add up quickly. Organizations should also think about the opportunities they have missed on account of their legacy technology. There’s also the problem of finding software engineers who have the experience and willingness to work with older systems. The COVID-19 pandemic exposed the shortage of COBOL developers. Organizations that were continuing to use 40-year old systems written in COBOL, which is 60 years old, struggled to find qualified developers to support and maintain their platforms and systems.
Signs that your company’s technology needs an update
– Systems have become slow and clunky
– Systems have come under repeated cyberattacks
– Downtimes have increased
– Legacy systems do not support the company’s growing operations
– IT security struggles to comply with industry’s compliance standards
– A high electricity bill from older computers using more energy than the latest laptops
In-house versus outsourcing
Software powers virtually everything around us. Every company has a need for software that supports or improves operations, solves customer challenges and provides a competitive advantage. Software development can occur in-house or be outsourced. The success of software development depends on a range of factors. The team working on it must possess the right technological skills to design and develop the software as it was intended, to serve a particular function or set of users. Project delivery, timelines, quality and the business outcomes it generates, are the responsibility of the project manager.
There are different types of project management methodologies. Popular ones include Agile, Scrum and Kanban, which are used extensively today as they provide huge benefits over traditional project management methods.
Life before game-changing Agile
What did software development look like in the past? And why did we move on from those approaches to Agile and DevOps? Imagine being the IT lead of a technology company in the 80s. You would identify a problem and plan a solution. The methodology followed would be to decide the requirements and scope of the work; design a solution based on those requirements; build the solution; test the solution; fix any problems
discovered during testing; and launch the solution.
As the product requirements were pre-determined, it wasn’t possible to make changes once development had commenced. Bringing a complete product to market took years. During this time, the problem the product intended to solve underwent changes, rendering it less effective or ‘dead on arrival’. The long development times also meant that the market segments that needed the solution would have to wait for years by the time a satisfactory product hit the market. The other disadvantage was that once the solution lost relevance due to a change in the nature of the problem, teams would abandon it.
The 90s were dedicated to changing software development and delivery approaches. It led to Scrum, Pragmatic Programming and DSDM, among other development methods, and set the stage for Agile, which first appeared as a manifesto in 2001. The Agile Manifesto laid out the core values of the proposed method, emphasizing interactions and people, working software, customer collaboration, and responding to change. By 2015, Agile adoption skyrocketed and became near-ubiquitous across development teams.
Learners enrolling in the Leading IT Transformation program will understand how the adoption of Agile methodology can help them execute IT initiatives successfully. They may employ Agile project management techniques for a range of IT (and non-IT) priorities, including automating business processes, boosting customer engagement, developing software applications, and achieving small yet quick wins for digital transformation initiatives.
The advantages of implementing Agile practices will become apparent in the following ways:
– Creating better products or improving processes in less time
– Ensuring that staff make best use of their time on priority tasks
– Producing noticeable and trackable improvements in processes and products
– Having greater control over projects and improving project predictability
– Creating opportunities for team engagement and lifting team morale
The enduring power of Kanban
Kanban started life as a planning system in the 1940s on the Toyota manufacturing line. Its goal was to manage and control work and inventory at each stage of production optimally. As a visual system for managing work as it moves through a process, as well as see the work passing through it, Kanban could be applied to anything, in any industry. Nike used Kanban to standardize work and reduce overtime at its supplier factories, salvaging its reputation – which had come under attack from activists – and setting new standards for employee well-being in its industry. Jaguar leveraged the system to shorten time-to-market and improve new product design.
What makes Kanban so relevant in the digital world is its facilitation of team collaboration, project visibility and efficient work planning. Companies may use Kanban boards to manage IT projects from development to deployment. Leading IT Transformation includes Kanban implementation and fine tuning, helping learners apply Kanban where it has potential to make a meaningful difference. There are many advantages of using Kanban as a way of working, including workflow transparency, ability to deliver a solution continuously, flexibility in managing changing or incoming project requirements, reducing wasted work, increasing efficiency and productivity, and telling team members
about the work they need to focus on, ensuring clarity and eliminating confusions.
Kanban is considered an Agile methodology, although it doesn’t necessarily involve incremental and iterative development. It can be used when a solution is being developed and/or implemented over a long development cycle/duration. Although Kanban is generally spoken of in terms of project management, it is also a powerful change management method.
An understanding of Kanban’s applications and advantages will help learners of this program apply change quickly or gradually in support of IT transformation. By implementing Kanban, they will be able to provide managers and staff a visualization of the work, create a feedback and review system, identify and manage bottlenecks, spot and use opportunities for improvement, and introduce the right performance
Organizations that don’t have the necessary internal resources or fewer internal resources than necessary to develop custom software may engage the services of a software development company. Outsourcing is practiced by small and large companies alike, and has been around since the 1980s.
One of the earliest examples of outsourcing dates to 1989, when Eastman Kodak outsourced the design, building and management of a data center to IBM. Hundreds of Kodak staffers were transferred to IBM. Other companies took note and the IT outsourcing industry began to come up. The growth of computer networks in the 90s led to the creation of application service providers (ASPs). Over the years, managed service providers (MSPs) have formed to deliver applications, networks, security and infrastructure remotely via pay-as-go models that enable businesses to save costs and increase or reduce the resources they pay for as they scale their business up or down.
A company may outsource an entire function or some activities only. Surveys indicate that 59% of businesses use outsourcing to reduce their operating expenses. The top outsourcing countries are India, Ukraine, Poland and Argentina.
The decision to outsource the company’s IT infrastructure management, cybersecurity monitoring or software development, is informed by the realities facing the organization, and strategic advantages that outsourcing brings. Common reasons for outsourcing include controlling operating costs, accessing top talent and capabilities, freeing up internal resources for other activities, and sharing risks with the outsourcing partner.
The success of IT outsourcing projects depends on certain factors discussed below:
Clear goal-setting: Clarity around goals and objectives from outsourcing is essential to achieve business-provider fit. Companies define the macro-level business results and granular outcomes they expect from the outsourcing agreement. The attributes that the ideal provider for the project is expected to bring to the relationship are also determined.
Strengths and weaknesses: To ensure that the relationship gets off on the right foot, companies conduct an assessment of their strengths and weaknesses before starting negotiations with the provider. An accurate view into internal IT assets, talents, and policies and procedures, provides a realistic picture of the company’s present state to the provider, helping avoid misunderstandings and delays once work commences.
Management and oversight: Relationship management is an important success factor. SLA compliance by itself may not reduce costs or improve service. Beyond SLAs, periodic meetings with the provider helps expand overall value from the relationship, such as in the form of greater creativity or agility. Along with SLA reviews, non-SLA reviews dealing with qualitative performance indicators at a deeper level, have become commonplace.
Cultural elements: Outsourcing is as much people-centric as it is process-centric. Transitioning activities or functions to a third-party provider requires a well-defined methodology, the creation of a transition team, and knowledge of the cultural aspects of transition.
Leading IT Transformation will enhance learners’ understanding of outsourcing strategies. The outsourcing model of cooperation that work for one bank, insurer or technology company may not be the best option for another. Depending on the nature of the business process or function, learners can evaluate whether full outsourcing or partial outsourcing – in which the process/function are performed by the company and the third-party provider – is suitable. Known as co-sourcing, this model offers benefits of staying in control, minimizing outsourcing risks, and increasing transparency.
IT leadership and business-IT alignment
IT leaders not only have responsibility over the organization’s technology infrastructure but they must also deliver on the business level. When technological development was in its infancy, and performance indicators like agility and innovation didn’t exist, organizations did not find it necessary to align their technology and business. Neither did the need to have a dedicated leader to oversee the business technology infrastructure exist. IT skills, leadership and IT-business fit stemmed from the proliferation of consumer and business technologies in the developed and developing worlds.
Business and IT never intersected
In the pre-internet era, the IT department was just a bunch of data entry operators who entered data all day and fed them to minicomputers running on COBOL, with programmers sitting a few feet away to step in if anything went wrong. Business and IT lived in two different worlds and were more or less invisible to each other.
After PCs became a common sight in offices, the presence of IT was felt in the use of email, chat, internet and the early Java apps. The IT department’s status had elevated as the enabler of office productivity. Its role in business enablement was some years away. As technology began to advance by leaps and bounds, and its critical role in driving business performance came to be realized, the need for business-IT alignment became plainly obvious. As technology resources in the organization began to multiply, and collaborating on data and insights gathered steam, loosely connected business and IT teams started coming closer to make informed decisions on leveraging technology for organizational growth.
Emergence of the CIO role
In the 1950s, when computers were bulky and one machine filled up an entire room, CIOs were called electronic data processing managers. Following the entry of supercomputers, the CIO role gained more stature. The term ‘Chief Information Officer’ was first articulated by William Synnott and William Gruber in their influential book Information Resource Management: Opportunities and Strategies for the 1980s. They believed that the CIO role would evolve in line with the increasing adoption of technology in organizations, and emerge on par with the CEO and CFO. Bank of America was among the first companies to use the CIO title, and its holder was Al Zipf, who is considered the father of electronic banking.
As the business and consumer technology markets grew stronger in the 90s, the role of the CIO became multi-faceted. During this time, academicians and industry watchers urged businesses to organize their business around technology for exponential increases in performance and profits. IT suppliers came up with two types of solutions: IT outsourcing or enterprise resource planning systems, which integrated many tasks into a single system. However, the enterprise resource planning systems back then were unreliable and expensive. They worked for some companies, and failed at others. To manage the risks of failed IT investments, CIOs had to get involved in organizational design and technology architecture while also donning the role of technology advisors and informed IT buyers.
The dawn of the web era changed the CIO role further. CIOs were now expected to be change agents and strategists in charge of modernizing the company’s IT to drive business change. The increasing pace of technological developments meant that CIOs had to invest in continuous learning, adapt proactively and develop professionally.
The Present: How Businesses Use Technology Today and Why IT Transformation is a Priority
Technology is changing all industries. Traditional products and services are facing-off with new digital alternatives. In an age of disruption and rapid change, organizations face the pressure to be more agile, innovative and adaptable. Even those that have historically been resistant to change owing to the nature of the industry, company size, risks and regulatory burden, are looking at IT transformation to become nimble in order to sustain and thrive.
Factors driving the adoption of technology
Banks are risk averse when it comes to implementing new technology or even modernizing their existing technology infrastructure. For example, many banks resist implementing a new core banking system to replace their existing one, which they may have had for years, due to integration, scale and functionality concerns.
At-scale implementations are risky given how embedded core applications are. Conventional core banking systems have a range of product and process functionality, and they’re designed for heavy customization to align to the individual needs of banks. Next-generation core banking systems have fewer products and processes, APIs and versatile software development kits. The costs of integrating a new core banking system into existing systems and channels can be exorbitant, running into millions of dollars for medium-sized banks.
Banking and financial service leaders consider numerous factors in determining whether they need to invest in a core banking system. The costs to support the system is a key consideration. Is the system inefficient? Does supporting the system account for 5% of the annual IT expense? As far as technical considerations are concerned, leaders may look at stability issues (have there been more than ‘x’ number of severe outages in the past 2-3 years?) and functionality issues, including whether the core system can interface with modern communication methods such as APIs?
Other than the potential risks of changing the core banking system, the risks of sticking with the existing one are also investigated. Leaders will want to know whether the core system has been customized to such an extent that it looks vastly different from how it was even a few years ago. Whether the vendor has indicated discontinuing support for the product is also an important concern.
The advent of the internet combined with the high rate of mobile phone ownership globally have given rise to ecommerce and m-commerce. Consumers can bank, apply for loans, renew insurance policies, buy and sell stocks, and make and receive payments online. Many aspects of traditional banking, lending, coverage and transactions now occur online.
After the Great Recession (2007-2009), financial technology companies or fintechs disrupted the financial sector, using technology as a facilitator for many of the basic banking activities that used to be mainly performed in-person/offline. The proliferation of digital banking and third-party payment applications can be attributed to multiple reasons, including convenience, simplicity and time savings. It costs consumers nothing to download a payment services app to pay merchants – from hotels and restaurants to hawkers and mom-and-pop stores, and send to and receive money from friends and family.
Banks’ and insurers’ adoption of IT systems and development of software applications is propelled by the objective to deliver better customer service and move with the times. However, given the substantial investment required to implement IT projects, businesses in the banking, financial services and insurance sectors also conduct a cost versus benefits analysis. This assessment extends not only to the product or service that the bank believes it needs, but also the provider of that product or service. That is, technical specifications, costs, support and long-term value are all under consideration during IT investment planning.
The assessment will also likely include market research to estimate the potential impact of launching an app or bringing a service online. For example, while consumers possess the technology to take advantage of mobile banking, fewer may actually conduct banking activities through their mobile devices. A good understanding of consumer readiness for mobile banking in a particular geographical region helps banks and financial services companies determine appropriate actions, such as building stronger relationships with existing customers and making personnel available to discuss mobile banking with them.
A technology company is any business that develops technology or otherwise relies extensively on technology to offer its operations online. Some among the different types of technology businesses are technology hardware companies, software-as-a-service (SaaS) companies, businesses that have an online presence – such as ecommerce businesses – and companies that offer platforms or networks to connect buyers and sellers. At technology companies, IT transformation is driven by the following objectives:
– Maintaining successful operations
– Enhancing customer engagement through effective digital communications, including an omni-channel presence and self-service portals
– Implementing holistic solutions that cover critical aspects of their revenue generation cycle
– Utilizing agile tools to respond flexibly to regulatory changes and market demands
– Lowering overall IT costs, such as through a mix of cloud and on-premise solutions
– Partnering with the best IT vendors who support organizational growth and innovation
What is transformation?
Transformation leads to a different state of being for an organization. It is a journey, not an event, and its impact is felt at both organizational and individual levels. The need for transformation starts with a critical question or challenge, such as ‘how do we fundamentally rethink the way we do business?’ There is no perfect answer, but there are choices that can be explored to determine what can create impact at scale.
An organization embarking on transformation deepens its learning and grows its knowledge. Leadership behaviors and assumptions are spotlighted for improvement. Realization around the consequences of those behaviors and assumptions dawns! The transformation journey obviously endeavors to iron out inefficiencies and support strategic business goals. But, along the way, it also has a profound impact on people and gives them an opportunity to change for the better.
What is transformation in the context of an organization’s IT? Tech Target offers this definition: IT transformation is ‘a complete reassessment and overhaul of an organization’s IT systems to improve efficiency and delivery in the digital economy.
Is IT transformation the same as digital transformation? While both have commonalities, IT transformation is centered on the organization’s IT systems, including hardware, software, networks and how data is accessed, stored and secured, while digital transformation is more software-focused and customer-centered. According to Gartner, digital transformation can be anything from IT modernization to inventing new digital business models. IT transformation can include a digitalization of certain business processes, or it may focus solely on improving the current IT infrastructure or adopting Agile practices and reorganizing IT for faster software delivery.
IT transformation offers strategic and financial benefits. Implementing technology solutions that improve staff productivity and engagement can directly impact business outcomes. Automating a cumbersome manual process can free up employees’ time for strategic activities. Replacing and modernizing legacy systems reduces maintenance costs. Introducing customer solutions that are faster or more convenient attract new customers and keeps existing ones satisfied and loyal to the company.
In the aftermath of the COVID-19 pandemic, business agility and flexibility have come into sharp focus. Companies with the right IT infrastructure in place to support remote work and collaboration have assumed an advantageous position over peers less prepared to deal with a remote workforce. Future IT transformation initiatives can be expected to prioritize areas of security (endpoint, data loss prevention, programs, mail filtering etc.), implement robust telework solutions, and set up remote access infrastructure to be able to monitor company systems from remote locations.
The modern organization uses several types of information systems and leverages new and emerging technologies
Information systems have become ubiquitous, and today serve most if not all departments or business units within the organization. Here’s a snapshot of some of the categories of information systems for various business functions:
Sales and marketing: Customer relationship management (CRM), customer intelligence, lead generation and tracking, customer support (call center and via website), sales management
Operations: Enterprise resource planning (ERP), operations support, process control
Financial: Expense management, budgeting and planning, forecasting and reporting, investment and portfolio management
Productivity: Project management, web conferencing, email and calendar, voicemail
Information management: Content management, management information systems, document management, record management, planning and reporting
Business intelligence: Big data, data lakes, data modelling, decision support, competitive intelligence, visualization, text analytics, market research
Knowledge management: Knowledge bases, enterprise search, intranets and portals, enterprise collaboration, skills inventory
Cloud has redefined how information is stored and shared, and is expanding to new frontiers. The new or emerging technologies that matter to businesses include artificial intelligence, blockchain, Internet of Things, virtual reality, Intelligent Process Automation (IPA), big data analytics, 5G, cybersecurity, and Everything as a Service (XaaS).
Planning a modern IT infrastructure
A robust IT infrastructure is necessary to meet operational and business goals. In the digital age, every industry must modernize their IT infrastructure. This modernization requires aligning business objectives with technical infrastructure, or what is known as technology architecture planning. Being a resource-intensive exercise, technology architecture planning is done only by the largest organizations. That said, every business can benefit from developing IT architecture strategies.
Studies show that US firms acknowledge the need for improved planning across the entire IT infrastructure, and they see real benefits from better planning, such as better collaboration between business and IT teams, and a greater ability to evaluate current technologies against long-term objectives, which also helps in prioritizing investments judiciously. This exercise is also an opportunity to strengthen ties between IT and business teams, enabling them to make better informed decisions about options and trade-offs when selecting IT applications, devices and models.
A lot of value is at stake
Banks, insurers, technology companies and financial services companies risk being overtaken by competitors and new entrants if they don’t refresh their technology as new and updated systems arrive to replace legacy systems. Firstly, consumers expect businesses to have a strong technology underpinning so as to carry out tasks online securely and smoothly. A poor experience using the company’s services, whether it’s a core offering such as online security monitoring, to the company’s portal, such as a transaction that takes too long to process or a website that keeps refreshing, can be frustrating for existing customers and create negative impressions in the minds of potential customers.
There is also the regulatory risk of not using the new and updated versions of IT systems. Non-compliance with any reform that requires businesses to upgrade some parts of their technology infrastructure, can result in fines and reputational damage. As technology continues to advance, cybercriminals are looking for loopholes in older systems to exploit. Hardware and software updates are no doubt necessary, but replacing aging systems and investing in SaaS/cloud products that drive better results at a lower cost, should also be examined.
Success starts at the top
Top, middle and lower level management play the most important role in organizational IT transformation. They create the plan, call the shots and monitor progress. They take ownership of the initiative, and are responsible for its success or failure.
Their inputs and decisions are especially important at the start of the transformation journey. This is when organizational leaders will need to answer three critical questions:
– Why are we pursuing transformation? The specific reasons for modernizing the organization’s IT architecture, developing custom banking software or digitizing processes must be set out at the beginning. Will it allow the financial services company to be more responsive to customers’ needs? Is the bank envisioning an increase in staff productivity? Can the implementation facilitate rapid innovation at the insurance company?
– What is the scope of the transformation? Are we replacing legacy systems and moving to the cloud? Are we, at this point, only interested in digitizing the back office? Is overhauling our core platform an immediate priority?
– How do we implement the transformation? Depending on the scale of the implementation, this discussion will involve an understanding the current state, and its impact on the initiative. Issues of governance, resourcing and approach will factor into deciding the implementation plan.
Clear transformation goals gain the commitment of unit heads leading the initiative.
Clear metrics and targets around processes and outcomes establish what managers and staff need to achieve.
An understanding of the mix of skills required for the success of the transformation ensures that people with the highest potential play key roles in enabling the transformation.
Expectations from today’s CIO
Present-day CIOs are largely focused on the digital transformation of their businesses. There are four types of digital transformation: process, business model, domain and organizational/cultural transformation. CIOs play a crucial role in growing their business organically – by using organizational resources and capabilities – or inorganically, through mergers and acquisitions, venture investing in digital start-ups or ecosystem partnerships, cooperating and competing with other businesses and entities (including government agencies) to support new products.
Surveys show that CIOs play a key role in governing and managing their organization’s digital transformation initiatives. At firms that are regarded as digital leaders, CIOs spend a majority of their time in pursuing business model innovation, and devote the rest to managing the existing IT infrastructure. In digital ‘follower’ companies, where digital transformation is limited to a few business units, CIOs spend the same amount of time managing their existing or legacy IT systems and on business model innovation.
Another IT leadership role has been carved out over the years – that of the Chief Technology Officer (CTO). The CTO and CIO roles tend to be used interchangeably, but they are in fact distinct and those who fill them have separate responsibilities. In companies that have a CTO, that individual handles all technological and scientific issues related to the organization. He/She primarily engages with external customers and is in charge of utilizing technology to improve and advance the company’s products. The CIO is more concerned with utilizing technology to improve internal processes and managing existing IT to support the organization’s strategic goals.
Today, IT has a stake in business success. This is because IT is now outcomes-based and linked to business results. For example, in the past, IT’s contribution to banks was limited to computerizing banking operations, but now IT’s role in enabling internet and mobile banking makes it a stakeholder in banks’ success. IT enhances operations, shapes products and transforms business models.
The interdependence between IT and business teams can bring about key benefits, such as better products, improved service delivery, more effective approaches to managing risk and compliance, cost reduction, and improved decision making. In organizations where business-IT alignment has been in place for a few years, the traditional roles of IT and business leaders are changing.
IT buying, which has traditionally been the CIO’s role, is now shifting to line of business executives. However, as line of business leaders have begun purchasing their own technology, the need for strategic advice from the IT team has also increased. This cooperation cannot be envisioned in an organization that has loosely coupled IT and business departments.
Surveys on CIO roles and responsibilities reveal that line of business executives and the executive boards at digital leaders play a bigger role in digital transformation ideation and strategy. Alliances and partnerships for digital transformation are not just led by the CIO’s office, but line of business leaders, manufacturing unit, strategy office and legal department also come together to leverage the digital ecosystem. That said, overall leadership for driving IT transformation comes from the CIO’s office.
Business units are becoming more tech-savvy and CIOs now require competencies to become business leaders. CIOs most likely to succeed not only have vast technical expertise but also good business judgment.
Organizations that are yet to strengthen their business-IT alignment should waste no time on pursuing this initiative. If business managers are not sufficiently IT literate, there is an outside chance that they may blow the budget on costly cutting-edge technologies without a clear understanding of the risks versus rewards. An IT team that has a blurry idea of business strategy can make blunders that cost the business not just in terms of expenses but also opportunities.
A shift in business strategy requires a similar adjustment in IT planning. Without synergistic relationships between business and IT, the required updates and changes will either be slow, faulty or both.
Digital technologies can enable new ways of working and innovations not possible before. Organizations that are smart about exploiting the full potential of information technology must ensure that their business and IT teams work cohesively to accomplish shared goals. It matters even more for organizations looking to move some aspects of their software development and implementation in-house, build cost enters or expand into related segments.
As discussed, the CIO’s roles and responsibilities are evolving. A good fit between business and IT can help IT leaders view their role within the company clearly and also adapt to new duties seamlessly. The organization of the future can look vastly different to its current state. A threshold of business-IT cooperation is imperative to cope with the overlapping of roles, and ideally, excel in them.
The fate of previous large-scale IT initiatives
Most IT transformations fail. Common reasons for IT projects not going as planned include a disagreement among managers about the transformation goals, long implementations, and a lack of focus on users.
To build consensus among managers, the organization must define and articulate the opportunity as well as the problem that the transformation solves. A long implementation may be doomed from the beginning. Management changes can happen within a two year timeframe; when the project is not delivering value, then it will likely be scrapped when management changes. Users need to see the decision-making path to understanding why the particular solution has been recommended. Without it, they will lose confidence and likely reject the results.
Have these or other problems plagued previous unsuccessful IT initiatives? If so, has the organization worked to mitigate the risks of IT project failure? Documenting the project helps regardless of how it ultimately pans out. A successful project reinforces the decision-making strengths and resource capabilities that contributed to the positive outcomes. A scrapped project or unsuccessful implementation reveals the gaps in planning, collaboration, purchase and vendor selection, project management, and what management underestimated or overestimated about the scope, timeline, work involved and other aspects of the initiative.
IT transformation doesn’t happen without external vendor involvement
Vendors brings in expertise and fill gaps in in-house resources. That makes it critical to selecting the right vendor. Before making this decision, you need to answer what capabilities you need, and whether you should insource, outsource or co-source. A competitive vendor selection process should follow, for this will encourage vendor to present cost-effective and innovative approaches, increasing the likelihood of a positive outcome.
Good relationships and open communication play a major role in top-performing outsourcing engagements. A high level of vendor involvements can translate to a deep commitment to the work. At the same time, reviewing vendor performance is important to determine whether you’re getting the desired value from the partnership. If you’ve chosen smartly, your project is most likely to stay on track. Once the project is under way, you can use the terms of the contract to keep things on track.
As the program progresses, learners should be able to put in place a process on how to engage with vendors. This process will include the best practices of vendor management, and make up the following steps:
1. Identifying and establishing the reasons why the business will use the vendors
2. Creating a vendor management team to act as intermediaries between the business units and vendors
3. Setting up a database for all vendor-related information
4. Establishing the selection criteria for vendors
5. Assessing and selecting vendors
6. Signing contracts and onboarding vendors
A number of best practices will guide the vendor engagement process. They include communicating expectations clearly, collaborating with vendors in pursuit of long-term relationships, measuring vendor performance using meaningful KPIs, and mitigating vendor risks.
By following best practices-led vendor selection and management, learners should be able to realize these benefits:
– Access a larger selection of vendors, which can help reduce costs and increase value
– Effective vendor performance management
– Better vendor relationships as a result of documenting vendor information
– Better contract management, supporting NDAs, SLAs and vendor compliance
Taking stock of the status quo
The goal of a current status assessment is to identify organizational pain-points and requirements that will inform the IT transformation plan. As one of the first steps in the project planning process, this assessment is necessary for an understanding of the supportive and mitigating factors. As mentioned previously, perceptions about the status quo bring multiple viewpoints to the fore. The perceptions of various internal stakeholders can illuminate the common areas of agreements and disagreements, which are vital to both planning and managing the project. What is broken and what doesn’t need fixing must be determined early on to make informed choices throughout the project.
A review of the current state is also helpful in determining which standards and best practices must be adopted, and the existing practices that need to be improved. Another advantage of gaining a clear understanding of the status quo is to confirm the organization’s motivations behind pursuing the transformation. Studies reveal that organizations modernize their IT and fast-track digitization because they don’t want to miss out on the opportunities rather than out of a fear of being disrupted. These motivations also play a part in how problems are identified and desired outcomes are defined. Additionally, a review of the existing organizational environment alerts project stakeholders to anticipate roadblocks and any resistance that might potentially derail implementation.
IT transformation metrics
What are we trying to achieve and what do the results tell us? These all-important questions must be crystal clear. The IT transformation’s purpose will enshrine what the organization is trying to achieve. The results need to be tracked, reported and acted on. Meaningful metrics have the following characteristics:
– They have a clearly defined relationship to a business outcome
– They can be understood by IT and non-IT audiences
– They can work as lagging or leading indicators, or include both types
– They can inform and drive action
– They are easy to measure
For example, a bank developing software using agile and lean processes may use lead time (time taken to go from idea to software), cycle time (time taken to make a change to the software and deliver it to production), and team velocity (the amount of work a team can handle during a single sprint) as metrics.
Good IT metrics allow a fact-based method of measuring business and/or operational outcomes from IT transformation. Relevant metrics guide decision-making for both business and IT teams, infusing objectivity and transparency into measuring the impact of technology on the organization. As learners complete the Leading IT Transformation workshop on establishing meaningful metrics, they should be able to:
– define, measure and review IT metrics;
– establish metrics for assessing IT investments, performance and delivery;
– communicate data in business terms to stakeholders;
– build teams aligned to business priorities; and
– evolve metrics as the organization matures.
Leadership mindset matters
IT transformation can be relatively smooth or massively painful depending on whether the organization is accepting of change or resistant to it. It is not possible to change organizational culture in a few weeks or months. But, every change initiative offers the opportunity to nudge people out of their comfort zone and bring them around to the risks of not embracing change.
When implementing new tools, staff may say they don’t need it and things are fine the way they are. Leaders should be ready with answers on how the tool helps employees and the benefits it brings, such as making something easier, more accurate or less cumbersome. If new steps are added to the vendor selection process, managers should be aware of how it helps make better decisions.
Anyone who is a part of the IT transformation team is not just a ‘doer’ but a ‘business partner’ and must hence understand what everyone on the team is trying to do. This applies to senior management, who should not only be open to learning but also promote collaboration, learning and concern for one another. They should make everyone feel protected to try new things. They also need to identify where organizational disconnect lies, so as to actively address those issues.
A supportive organizational culture is obviously advantageous for the transformation plan. That said, IT transformation should always start with the initiative(s) planned rather than the culture. Conversations around the need for change, how it will be implemented, the benefits it will bring, and what it will mean for different departments or teams, should occur side-by-side. If the purpose of the IT transformation is clear, then leaders should not face too much trouble in handling resistance or a lack of commitment.
– Position the organization as one that responds to (or must start responding) agilely to change.
– Leaders should lead with a clear purpose, think ahead, and paint a picture of the organization’s future state.
– In the digital era, the risk of not changing is greater than the risk of embracing change. Employees should be provided the space to innovate and forward their ideas without fear. They need to feel empowered to take reasonable risks and encouraged to learn from their mistakes.
– The dictum ‘if ain’t broken, don’t fix it’ applies to change initiatives. It is futile to invest in an undertaking that wasn’t necessary in the first place. It is also important to make tough decisions and be honest about what is holding the business back. Competent leaders are able to distinguish between what is needed, what can wait and what isn’t consequential to the organization.
– Fostering and enabling collaboration is especially important for banks and incumbent insurers and financial services companies whose operational models prohibit effective collaboration. Some, if not all, IT and customer service initiatives can be better served by breaking down siloes, and improving data visibility and collaboration among teams. One area where this connectedness can make a difference is in onboarding business clients, which is often expensive, time-consuming and painful for both the client and banks and fintech companies.
Improving organizational design
Existing business structures, processes and systems can act as barriers to efficient implementation. They can make people cynical and disinterested; whatever motivation existing in the beginning can evaporate when the organizational design is incompatible with the project. An assessment of the current systems, workflows and structures can identify inefficiencies so that appropriate redesign can be undertaken to fit current needs.
There are different design processes, and the optimal one for the organization can be determined. The conference model, for instance, involves a large number of people from a cross-section of the organization in real-time analysis, design and implementation sessions. As many people participate in the design change and decisions can be implemented quickly, the process takes no more than a few weeks.
Alternatively, a smaller number of employees can take ownership of analyzing, redesigning and developing the implementation plan, which they then present to senior management for approval and adjustment. The team has the onus of communicating with the rest of the organization as needed, and gaining their commitment. This can extend the process by a weeks or months, depending on the size, resources and motivation of the organization.
Organizational redesign implementations can be disruptive for IT staff. Without buy-in and commitment from IT leaders, staff and other organizational members whose work may be affected by the implementation, you may have more problems to solve along the way. Consequences can include decreased productivity, high turnover and resistance to change.
The importance of a structured plan cannot be emphasized enough. You must know why you’re doing what you’re doing, and communicate it cogently, highlighting the benefits and outcome – at the team, individual and organizational level – of redesigning workflows or bringing in new tools or systems. IT leaders should also manage the emotional and operational challenges in the early days of implementing the redesign. Managers should proactively address change management issues, focusing on not only operational changes (as is often the case), but also on people.
In their first year, learners should be able to review their current organizational structure to identify any issues that may affect IT transformation initiatives. Common issues include roles, responsibilities, rules and how information flows at different levels of the organization. Traditional organizational structures are not effective for modern knowledge work. Banks, insurers and technology companies can benefit from reviewing how their existing structures facilitate collaboration, create open channels of communication, and the kind of employee experiences they create. Based on this understanding, they can consider moving to a flat or even a holacratic organizational structure that supports IT transformation.
A process to evaluate technology requirements before installation
– Are existing hardware, software and solutions compatible with business requirements and goals?
– Is there a timeline of investment and deployment, where technologies needed for priority items in the strategic business plan are implemented first?
– Do you have a network architecture that shows how your company’s networks and devices are structured? It aids smooth installation and helps keep installation costs low.
– Do you have the right metrics in place to measure the success of IT investments?
IT budgets are shrinking and decision-makers are under pressure to demonstrate value from technology investments. For this, the focus should be wide, on tools and processes as well as people and governance, on short- and long-term costs, risks and impact.
Peter Drucker said, ‘if you want something new, you have to stop doing something old’. If the transformation involves replacing older systems, users should be educated on how those tools can be used. IT governance should be aligned with corporate governance. Decision-makers need to take time-to-value into account so as to invest in software tools and solutions that best fit business requirements and start delivering value soon after implementation.
The Future: Setting the Foundation to Accelerate IT Transformation
Upgrading your IT infrastructure, embracing digitalization and growing your IT muscle is a deliberate, well-considered exercise. You may need only a few new or emerging technologies to meet your business goals and put your organization on the path you’ve laid out. The future state you’ve envisioned can be actualized by these wins from new technology deployment, which apply to most industries and sectors:
– Infrastructure agility
– Higher efficiency at lower costs
– Better customer experience
– Innovation (or more of it)
– Access to data, the new oil
– Leadership and technical support for continued success
Common pain-points during the IT transformation journey
As this program progresses, you will appreciate how most organizations confront a common set of challenges on the path to IT transformation. Working around the challenges can speed up transformation and push the organization to the future state faster.
The major pain-points encountered include: expectations by the board for a rapid response to avoid commercial failure, legacy systems that make new technology integrations problematic, resistance to change, and building a team with the right skills for agile experimentation.
A roadmap and timeline for IT transformation will take stock of these challenges so that the objectives and outcomes aren’t affected. The takeaways from the project can inform future IT initiatives and still be relevant with a change in CIO and CEO.
Effective methods for problem-solving
IT purchase and implementation are not just the job of the IT department. An understanding between business units and the IT team can go a long way in bringing about a profound way in which the organization selects, uses, manages or develops its technology. Technical acumen is crucial, but problem-solving capabilities will ultimately pave the path for profound IT transformation.
No matter what the problem, you can capture all information about it, and clarify the problem to decide if it needs to be solved now or set aside for later, as well as estimate the amount of time needed to fix the problem. Then, you can organize solutions or projects, schedule timelines, estimate workload, priority items, and keep involved stakeholders engaged and committed to the work.
Problems with vendors, technology implementation or rigid work processes can be tackled effectively if you have a good idea of the root causes(s). Say the non-technical managers in your company tend to discount IT problems, which is one of the reasons why you’re facing recurring issues. Here, weak alignment between business and IT can be probed and addressed. Perhaps business managers don’t fully understand the impact of a particular technology-related issue. Quite likely, there are bound by budget constraints. In this case, it becomes imperative to sit down together and flesh out the problem in terms that non-technical decision-makers understand.
Weak knowledge of new technologies among non-technical staff can be detrimental to true IT transformation. Every department can benefit from technologies that enhance productivity and eliminate repetitive tasks. Business managers should have at least a basic understanding of how new and emerging technologies work, and their implications for the organization. This will allow business heads to see what IT leaders are seeing when they evaluate IT packages and review vendor relationships.
At the same time, IT leaders must also be able to judge what the key business needs are and prioritize IT investments accordingly. In addition, they need to possess sufficient emotional intelligence to manage diverse teams. Research shows that non-homogenous teams in which individuals come from different backgrounds make better decisions. The role of the CIO, and indeed the C-Suite, is slowly but surely changing. More and more, they are ‘leading from behind’, as discussed below.
CIOs must master new roles
The days of command-and-control leadership seem to be over. The writing has been on the wall for a while now. Top-down, autocratic leaders may get the job done but they don’t inspire employee loyalty and are a bane to creativity and innovation. In today’s highly collaborative work environment, leaders are enablers, empowering teams and aligning employees’ sense of purpose with the organizational mission. In this context, it is important to talk about servant leadership, a leadership philosophy that puts people ahead of power. Servant leadership, which is a part of this course, was articulated by Robert Greenleaf in his 1971 essay The Servant as Leader. The leadership model came to the attention of businesses after Southwest Airlines founder Herb Keller’s practice of serving employees and putting them first, reduced employee turnover and resulted in profits year after year for over 35 years, an astonishing feat for the airlines industry.
New technology adoption is never smooth. Employees may have to give up old ways of working, learn and get used to new tools, and be open to the next round of changes driven by technological advancements affecting their industry. An inspirational leader who engages employees, takes cognizance of their concerns, gives them opportunities to utilize their inherent strengths, and charts career paths aligned to individual interests and ambitions, is best poised to lead IT transformation smoothly and successfully. Regardless of whether the company has a hierarchical or a flat structure, a leader who is not afraid to relinquish power, give employees ownership, and support them unselfishly and committedly, is an asset.
The Leading IT Transformation program discusses servant leadership in the workplace. Learners will be introduced to servant leadership practices, and the areas in which they need to develop skills. It may include the following:
– Improving listening skills to understand the intent behind words
– Have an open mind to others’ ideas and viewpoints
– Show empathy and a willingness to understand or learn from others’ lived experiences
– Become more self-aware about their own strengths and weaknesses, and consider how their actions and behaviors can affect others
– Know what works and what doesn’t in gaining consensus and building influence
– Develop people and demonstrate commitment towards their growth
– Convey a vision of servant leadership to executives and staff
– Make the existing organizational structure compatible with the vision
– Provide the training necessary to adopt servant leadership entirely or some facets of this style
– Support managers and staff to become more helpful and resourceful by aligning information and systems
Future IT Roles
Leading IT Transformation includes aspects of change management, leadership roles and team building that can help learners make their organizations resilient to shifts, changes and disruptions related to these matters in their industry. Organizations have many opportunities to learn from each other, and new practices that generate big business outcomes for the first-movers are emulated entirely or partially by ‘follower’ companies. They can go on to become best practices and raise the bar of excellence as well as expand the frontiers of what can be further achieved.
Collaborative relationships will continue being important in the future, and newer technologies may facilitate faster, better communications between individuals, among teams and workgroups, and across management lines, both at the place of work and away from it (remote working).
The focus on customer experience and workforce experience will become stronger as competition grows and roles change. Soft skills will matter even more as IT leaders accelerate digital transformation and ambitious growth plans are pursued. The talent war will intensify with the growing need for data engineers, DevOps engineers, cloud engineers, AI/machine learning engineers, business intelligence analysts, computer vision engineers and cybersecurity analysts.
Historically, learning and development has been the responsibility of the human resources department. In the future, it may become common for a HR function to exist within the IT department. The individual in this role will understand how technological trends impact the organization, and hire for the roles necessary to bridge the present and future states, and to implement the required training.
A continuing process, not an end goal
Digital transformation is a continuous process; you cannot declare that is done! There will always be a new technology that can help the organization meet its requirements more cost-effectively or efficiently, or enable its growth goals.
In virtually every industry, the consequences of not upgrading technology systems and practices have been played out. The David vs Goliath match between nimbler digital start-ups and incumbents has begun. If you’re not having discussions on IT transformation, you’re losing out.
Understanding how technology progresses
Organizations today have come to realize that they must stay on the pulse of technological advancements that affect their industry. A broad understanding of how technology progresses will allow you to catch trends early and stay watchful on how a particular technology is slowly but surely disrupting the existing market. Authors of the best-selling book Abundance: The Future is Better Than You Think, propose a ‘6D’ framework for understanding the growth cycle of digital technologies:
Digitalization: When something goes from physical to digital, it can grow exponentially
Deception: Initial period of growth is deceptive as exponential growth occurs in small changes
Disruption: An existing market is transformed or a new market is created
Demonetization: Technology becomes increasingly cheaper, to the point of being free (ex: free communication, free productivity apps, free VPN)
Dematerialization: The original product is removed entirely; previously bulky or expensive technologies are lumped together into one device or package
Democratization: The new technology becomes accessible to every business
Leading IT Transformation helps to implement near-term actions and to gain perspectives that allow organizations to live in the future
This course is designed to enable learners to deliver immediate value to their business after attending each session, by applying the processes and guidance provided, and addressing the challenges as they go. The modules can help learners solve problems that exist today and create a strong enough foundation to tackle any bends in the road that may occur in the future.