The contours of the new IT department are emerging


Co Van Leeuwen

October 23, 2015

IT departments put a great deal of effort each day into supporting their organizations optimally with strength and efficiency by providing them with the latest IT resources. The number of challenges facing them is mounting up, however.

Managing the IT function is becoming increasingly more difficult as a result. Breaking out of set patterns and solving complex paradigms are necessary to be able to take a good step forward. This presumes leadership and the ability to make clear choices. For example for the operating model (or working model), in order to improve efficiency, sourcing on the basis of real partnership, a clear strategy with an identifiable point on the horizon and the structuring of a powerful leadership organization within the IT department. Below we briefly outline the seven changes we see coming. These are based on talks that Capgemini has held with CIOs from around the world. The sum total of these changes will define the new form of the IT department.

Change one: IT determines the added value, so the business determines the IT choices

After one hundred years of industrialization, IT technology is the key factor for improving a company’s added value. The new generation of managers, the ‘digiratis’, have a firm grounding in this area, understand the possibilities and see the opportunities. They will be engaging with the content more explicitly and as such become the new decision makers, who will set out the strategic course for IT. CFOs, CMOs and CDOs will be the largest IT budget holders. Already at this point, half or more are on the business side, often because the current IT department does not adequately satisfy the wishes and requirements, and in future because those in charge of operations will want to manage more directly.

Change two: focus on information, interaction and transaction

The business is increasingly procuring IT functions directly to support the processes. The expectation is that this will be organized per end-to-end process column. For example for ‘Order2-Cash’, ‘Procurement2Pay’, or ‘Marketing2Sales’ and in first instance primarily for those processes where growth is a central concern, as is the case for innovation, marketing, sales and service management. These processes mainly involve information, interaction and transaction. And while attention is now principally devoted to improving the process itself, in future the emphasis will be on improving the information provision within the process. Typical ‘food for thought’ for knowledge workers.

Change three: strengthening demand & supply

There is a great deal of attention therefore to how the information management function is implemented. IT departments, driven by leadership, are currently fully engaged in the necessary strengthening of the demand and supply function. A meaningful activity, since if this is not properly implemented, IT change programs cannot be successfully realized. From the perspective of the business, business information managers (BIMs) are already being hired. We still see all sorts of job titles cropping up for this, with very diverse profiles. These BIMs will be more and more frequently representing the business in negotiations with service providers in order to coordinate or even directly procure services from selected service providers and within formulated frameworks.

Change four: agile business operations

The world has been becoming more dynamic for years. Where these dynamics meet complexity, opportunities arise, but also a great degree of uncertainty. Three direct managerial countermeasures are possible for this. The first is to improve the transfer of information between parties.The second is to carve departments and activities up into smaller pieces. The third is to make decision making less formal and more localized. All three are incorporate in the agile way of working or in the DevOps delivery. We also see that the old, slow way of moving is being combined with a new, quicker movement, with the latter gaining more and more ground. The motto here is ‘build quickly and try, and then fail or improve’. The trick is to understand information technology and see how it can be applied smartly. Using an IT strategy as an orientation point on the horizon, management efforts are aimed at quick development and constant change. We also see this way of working gaining more and more ground for how regular business operations are carried out.

Change five: far-reaching outsourcing

Sourcing is being seen in a new light. Some advisors preach further fragmentation, but larger IT organizations are in fact opting for selective partnering so that by means of single sourcing they can, in one fell swoop, resolve all paradigms and enable a digital transformation. That does not mean that the same sourcing solution is relevant for every process or every functional block. Commodities will be procured on the basis of good quality at the lowest costs via BPO, Software-as-a-Service or standard Managed Services, for instance. And the metrics of this operation will be benchmarked by external parties to test whether they are competitive. Where the most important added value is created, service providers are expected above all to have insight into best practices and to focus on the constant improvement of these processes and systems. And where the emphasis is on real innovation, partners who are able to introduce an entirely different approach to innovation are selected.

Change six: increasing responsibility for service providers

The sourcing approach outlined above also steers toward greater responsibility on the part of the service providers. The business – and likewise IT – no longer wants to have a solution made, but to buy a solution. The possibilities of the cloud support this, as new delivery models arise. But more is also being asked of providers for the somewhat more traditional environment. Guaranteed cost reductions for commodity services, the contribution of learned best practices and innovative power to update the business model, the products or services. For the mainstream, services are offered ‘productized’ as a result. At the same time, output-based contracts are being entered into with supplementary requirements for the constant improvement of services, preferably on the basis of ultimate flexibility, to the extent entry and exit costs allow.

Change seven: the IT department takes on a management function

All this outsourcing results in far-reaching erosion of the IT department’s operational activities. As such the IT department ends up in a slimmed down but key management role in which it oversees the added value for the business and also monitors the required cohesion and quality. The focus shifts from ‘building and managing the applications in the right way ‘to ‘buying the right applications, having these built and managing them.’ It is crucial in this process that it safeguards the critical competences such as strategy, sourcing, security, architecture, data management, service integration, governance and program management. All areas which receive quite a bit of attention these days and which offer much room for improvement.

This article was written by Co Van Leeuwen from CapGemini: Capping IT Off and was legally licensed through the NewsCred publisher network.

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