An organization that is not evolving and frequently re-inventing itself is destined for death and extinction.
There is an imperative for every business to maintain the status quo from a market and execution perspective, and at the same time write the story for their future.
If a company is not evolving, like a living organism, it risks being swamped and eventually killed by the ecosystem in which it finds itself. This ecosystem contains predators, new entrants, changing environmental factors and many more threats and risks, that are challenging the very survival of the business, every day.
To survive, a business needs to actively evolve to not only counter threat, but also grab available opportunity for survival and grow. A business needs to work hard to care and nurture its current state, while at the same time prepare to extinguish and replace this state with a new and improved organization able to survive, compete, and grow in an ever changing market dynamic.
So far in this Blog, I have spent a lot of time to advocate some innovative thinking for managing your organization’s I.T. delivery. One of the recommendations I’ve made in the Blog entry of 22 May 2006 was to clearly separate the Operate functions from the Change functions in your I.T. organization.
I have made the case that in your IT department or vendor organization you may have inherently two different types of business on hand: An Operating Business, and a Change Business.
The Operating Business is focussed on maintaining and supporting the status quo. It is concerned with servicing and use of the technology and solutions that were implemented, and that is used within the business every day. The key objective of the Operating Business is to ensure the consistency and availability of accepted current states of solutions.
The Change Business is focussed on creating and delivering the future state of your technology and solutions. It is concerned with evolution, improvement and facilitating step-change for a business.
Each of the above types of businesses use different types of people, different resources, different process frameworks and have different business and success drivers.
It is also important to note that each have a different relationship to the business functions they support, depending on the industry and the significance of I.T. in the success, survival and growth of a business.
The objective of this Blog is to elaborate on these relationship differences the two I.T. Businesses have with the Company in which they exist. We will look at how the I.T. function plays a role in ensuring the company sustains itself in its current state, and also what role it is to play in the design and realization of the business’ future state.
Simplistically viewed, there are four main business process groups in every business.
Three of these groups make up the core business processes, or main value chain. Being core processes, means that it is imperative for every business to have these, to be in business. The process groups are: Product/Service Design processes, Demand Creation processes, and Demand Fulfillment processes.
The fourth Group is known as the Supporting processes. They are typically processes that enable or support the three core process groups. It includes, but is not limited to financial management and execution processes, human resource processes, and IT management and execution processes.
In Product/Service Design, the business identifies and crafts the offerings of the company for its customers. Typically the engineering processes fall in this group. In Demand Creation, these offerings are taken to the market, and therefore includes marketing and sales processes. In Demand Fulfillment, the business executes the manufacturing and delivery of the product or service to the customer. The logistics and distribution process fall in this group.
When the three core business processes groups are analyzed, it becomes evident that their success are in many cases dependent on key supporting processes. There is little chance for an Organization to differentiate itself or be successful unless the core processes are enabled or differentiated by some key and innovative supporting processes.
One of these key supporting processes, that are growing in significance every day is the I.T. management and delivery processes.
The Old and The New
The Product/Service Design processes are concerned with the future state of a business. It covers, which products or services will be sold, how it will look, be manufactured, taken to market and fulfilled.
The Create Demand and Fulfill Demand process groups are concerned with the current state of the business by executing the designed elements.
The Supporting processes like the I.T. processes, play a dual role in both the current state, and also the future state of the business. It is therefore important to recognize the difference in approach that needs to be deployed by these supporting process groups to support each of the core business processes groups.
One can make the case for a Change I.T. organization that supports the future state of the business. The more the future state of a business relies on technology and the role technical innovation plays to differentiate, the stronger the role will be that this I.T. Change organization plays in executing the Company’s strategy.
Both the Product/Service Design and I.T. Change organizations already trade in the same process frameworks. It is through Project and Program management processes, within well crafted portfolios, that businesses architect and execute their strategies and future objectives.
Institutions like Stanford’s Centre for Professional Development have already made the case that Project Management ability, regardless of domain speciality is the single most important and prevailing way of how progressive organizations in future will be able to effectively and timely execute their strategies. Corporate and public service sector spend on projects in 2001 already, are estimated to have represented around twenty five percent of Gross Domestic Product (Malcolm Wheatley).
It should therefore come as no surprise when in future, the I.T. Change processes and the Product/Service design process becomes so intertwined that it becomes hard to distinguish them as separate organizational functions or departments. The company will have one Product/Service design set of processes, executing its strategy through a portfolio of programs and projects, which includes their I.T. Change organization.
Indeed, it will be the Companies that recognize the value of harnessing their I.T. Change organizations by directing them into the main stream of strategy execution, that will have most success in competing in their respective markets.
For some die-hard C.I.O.’s (Chief Information Officers) this may just be the bell that is ringing the end of the I.T. department as we know it. One can make the case for the new C.I.O to step forward - the Organization’s Chief Implementation Officer, and for the I.T. department to finally be split into two.
What remains of the I.T. function is then the commoditised processes that Operates the current state. Systems Administration, Problem and Incident Management will be the currency that is traded in the future outsourcing contracts. This will happen while new system implementations and solution evolutions are included, managed and architected into corporate project and programs of work, managed mostly from internal to the Organization.
The future I.T. department will look a lot different from today.
On one side it will be elevated from the current business support status into being a significant part of the future business implementation and strategy execution function. I.T’s role in enabling corporate strategy execution through project and programs will become even more critical as it is assimilated into the organization’s Product/Service Design processes.
The other part of the I.T. department that is concerned with supporting the current state of the organization’s execution processes will become even more of a commodity, ripe to be outsourced to the lowest cost bidder.
This state of play holds significant implications for players in this industry, and for the careers of those involved in I.T. today. As vendor and I.T. Professional you will have to decide on which side of the fence you want to be. Chances are that you will not be able to do both, unless you stick around in business that are destined to die and become extinct.
For the vendor, to play in the Implementation and Strategy Execution side of your client’s business, you will be forced to expand your repertoire beyond technical expertise into business innovation, industry thought leadership, and strategy execution, to demand a seat at their project and portfolio table. Your differentiation will rely on your ability to foster customer intimacy and the ability to lead the way for your customer through industry disruptive innovations.
If you want to play in the Operate and Support side of the client’s business you will be forced to develop a cost and product advantage, or risk losing out to more cost effective, leveraged and reliable executors - most likely to be found in India.
For the I.T. Professional that wants to be in the projects that designs and implements the future business solutions, you will be required to speak both Java and business. Your business knowledge will earn you a seat at the project table.
If you find yourself in the support organization, it will be because of your technical support and execution specialization. The organization will rely on you to keep it serviced, oiled, polished and ultimately available.
Please don’t hesitate to be in touch with any thoughts and comments. Your feedback is welcomed.
Hendrik van Wyk