It’s not often that a week goes past when I don’t hear a new story of a company being ripped apart as it struggles to deal ever more demanding and fickle consumers. Marketing and sales, it’s usually said, have gone rogue leaving finance and IT to pick up the pieces. It’s obviously important to keep selling (and to keep generating revenue), but it’s equally important to do so in a safe and compliant manner (so that you’re still in business next year).
This situation has become bad enough that the analysts are now suggesting that a shift in operating model will be required to solve the problem. That sounds about right, and it looks like the trigger for the shift will be external pressure from regulators.
The problem, then, is to form a sensible picture of how this to-be operating model will function.
Coming up with some general statements about that nature of this new model is fairly easy: it will be more collaborative, it will favor services over assets, innovation will be important, and so on.
What is more important, and much harder to do, is to develop a picture of how the shift to a new operating model will change the roles and responsibilities within a business. How will we heal the rift between the front office – sales and marketing – and the back office – finance and IT?
This is not a question of tweaking the role of the IT department, for example. The IT department’s role – as has been pointed out elsewhere in this publication – is already well defined. IT is the part of the company that is responsible for procuring and maintaining the IT assets a business requires. This isn’t changing. Many businesses need for this role is, however, diminishing.
Nor can the problem be fixed by creating new technology-based roles outside the IT department, such as the Chief Digital Officer or Chief Marketing Technology Officer. While these roles might help the lines of business use technology more effectively, and they may work closely with the CIO and the IT department, they don’t address the root cause of a disconnect forming between the front and back office.
The interesting question then, is “What’s the role of IT in business?” How can the entire business consume and manage IT in a safe and compliant way while still meeting the needs of today’s empower customers?
To answer this question we need insight into who will make the decisions on what IT will be used where and how it will be knitted together. We need some understanding of the drivers behind the current transition in how we consume IT in business.
5 drivers for change
The easiest way to identify these drivers is to consider the shifts we can already see in how we’re managing the technology we have today. We’re not interested in changes in the technologies themselves. Nor are we interested in how the business uses individual technologies. We’re interested in how technology is managed across the business: who gets to decide what and how are conflicts resolved.
First there’s the shift in where technology comes from, and who is responsible for the infrastructure it relies on.
IT has expanded beyond the IT department. The development of on-demand IT (such as Software as a Service, SaaS) and the consumerization of enterprise IT (the use of consumer technology in a business context) mean that businesses, and the lines of business, no longer require the deep IT infrastructure skills that they did in the past. Nor do they want IT to act as a gatekeeper, selecting and procuring the technology to be used by the business.
From this we can identify two obvious trends shaping enterprise IT:
- Driver 1: Enterprise IT is no longer an infrastructure problem, it’s not an asset we own
- Driver 2: Consumer trends drive enterprise IT, rather than enterprise IT driving consumer trends
Next, is the impact of these trends on how we manage technology within a business.
Many business stakeholders today feel empowered to make their own decisions on what technology to use where, a result (for many) of a childhood steeped in technology. They’re using new technology in new ways to solve new problems, creating new business opportunities in the process. They don’t want the IT department mediating access to the technology they need, and slowing everything down. Many IT departments are finding themselves on the back foot, unable (or unwilling) to support the business as technology moves out of an automation and cost focused role.
This gives us another two trends:
- Driver 3: The old core IT skills are not as valuable as they used to be
- Driver 4: How we define the value of IT has expanded (it’s a lot more than ROI now)
While the previous four trends show us the how IT governance might flex and adapt to changing needs in the business, it is the external constraints that will determine the final role of IT in business.
So what external governance requirements are going to shape how IT fits into a business?
Audit is an obvious candidate. With marketing departments going rogue, often there’s only a tenuous link between what’s happening at the coalface that the company’s chart of accounts. In some instances the only link between sales and the general ledger is a spreadsheet containing the P&L for the new initiatives that is manually uploaded once a month. One day the auditors are going to come in and they will want to see a clear trail of evidence from sales by the new division through to the general ledger.
Another example is anti money-laundering and counter terrorism financing, which is receiving more attention from government as complementary currencies – such as Bitcoin and the “points” used to purchase virtual assets and services in games and social services and which are sold for cash – grow in popularity and attract organized crime. As businesses, even privately held businesses, integrate themselves into new commercial environment they find themselves increasingly subject to AML and CTF regulation.
Consequently our final trend is:
- Driver 5: External obligations – such as financial reporting, anti money-laundering and counter terrorism financing – will trigger the transition to new operating models
The future role of IT
The future role of IT, as well as the role of the IT department, is not carved in stone. Both are likely to change as businesses find new ways to use IT to create value for them and their customers. The challenge is to understand what is driving this change and which, consequentially, will shape the role of IT, and the role of the IT department, in the future.
What trend do you think will shape the future role of IT and of the IT department in business? What are the drivers that we should be paying attention to?
Image Source: Pilot Theatre