IT must rethink how to deliver on its promise to enable the business. IT-centric efforts are falling short and IT experts seem to be stumped what to do about it. This is why a few years ago in search of a solution I turned my attention from mainstream ‘IT thought leadership’ and toward ‘business management best practices’. I literally avoided IT conferences and unplugged from IT industry framework communities because I figure asking IT experts how to shape IT to better support the business is sort of a ‘blind leading the blind’ situation. Instead, I turned my attention toward business schools, business forums, customer-advocacy communities, and business strategists to carefully listen. I’ve finished my first leg of adopting some interesting business practices in a career-long journey aimed to course-correct IT and bring it to its full potential. I’d like to share with you one of the ideas aimed at structuring IT organizations based on business strategy.
Strategically Federating IT
The notion that IT be distributed isn’t new, in fact, it’s probably the current-state situation in most large enterprises today. The notion of Federated IT isn’t new either. When it was introduced in the early 2000’s it was narrowly scoped to define IT with collaborative functions to work with other IT organizations. This is a great start by describing the basic IT functions to collaborate between Federated IT organizations but it left out an important guideline where to place IT organizations and how businesses were to integrate with them based on the company’s business strategy. The resulting situation is what we see today; in one extreme we have central IT organizations that want to control and manage all IT assets and on the other extreme we have numerous IT organizations spinning up all over the place.
Sidebar: “Strategic Functions Within A Federated IT Organization”, Forrester, Cecer, 2004
Many IT organizations are confused to what their purpose is and find it difficult to provide a simple plan for where it is today and where it should go tomorrow in language that both the business understands and the IT organizations can deliver to. I’m currently thinking of an approach to avoid that situation which leverages the Federated IT concept and adds a deliberate set of new characteristics tethering the Federated IT concept to business strategy. Strategically Federated IT organizations abide by a federated model to share a common mission, professional management goals, strategy management and program portfolio management processes, technology management, information management/stewardship, and architecture models. Over time we’ll refine these but to start the ball rolling, the rest of this blog post begins to describe some of the big rocks for consideration; IT’s Purpose, Deliver to Business Strategy, Strategy Management and Program Portfolio Planning, Cascading Balanced Scorecards, and Shared IT.
Here are two fundamentals of Federated IT organizations to help describe their mission:
Sidebar: “Run IT in the business”
I hear that IT needs to run as a business a lot so I thought I’d take a moment to comment on it here. We need to encourage IT to move away from the concept of ‘Run IT as a business’. Instead, we need to encourage ‘Run IT in the business’. IT is not a business. In fact, thinking that IT is a business actually hurts IT’s ability to better integrate with the business. Bob Lewis wrote an article published in InfoWorld titled “Run IT as a business – why that’s a train wreck waiting to happen” that does a fantastic job explaining the disruptive concept. I agree with Mr. Lews and think it’s caused a lot of distraction to IT organizations focusing on their primary mission. The appropriate approach is to remember IT’s Purpose of ‘professionally managing IT resources’ noted above and build competencies for professionally managing IT resources such as; reducing exposure to corporate risk, optimize financial investment portfolios, secure corporate and customer information, manage IT people careers, and deliver systems on-time/on-budget/on-expectation. Every organization must strive for professional excellence. IT Organizations are no different. That doesn’t mean IT should run ‘as a business’, just run it professionally.
The article also supports IT-and-biz-integration ideas which I consider Federated IT to be one. Here’s a quote from the article worth calling out “The alternatives begin with a radically different model of the relationship between IT and the rest of the business -- that IT must be integrated into the heart of the enterprise, and everyone in IT must collaborate as a peer with those in the business who need what they do.”
To help make Federated IT operate more efficiently, we need a few constructs:
Although the resulting IT organizations would be completely focused on contributing to business strategy, we need teams distributed to each LoB equipped with a common set of program investment decision-rights and processes as a means of federating IT responsibilities to program investments across the enterprise to avoid huge problems such as information management nightmares and out-of-control technology redundancies across the enterprise. I extend Kaplan and Norton’s concept of Office of Strategy Management to do this, however, I’ve observed others shape their Program Management Offices to do the same thing. Whatever concept works for you, go for it, just make sure you include these fundamental strategy and program planning processes together because one without the other is a waste of time:
There is certainly opportunity for a Shared IT organization to centrally manage IT assets that are reused across the enterprise. To do this, Shared IT must carefully plan and govern the shareable IT assets that are not already managed by Federated IT organizations. Managing Shared IT to support several Lines of Business is no simple feat. Successful implementations require more than building processes and underlying software and hardware to be reused. The far greater challenge is for Shared IT to include stewardship processes to manage the shared IT assets so that changes don’t disrupt all the LoBs using them, and the shared asset can deliver quickly to the needs of the businesses. The result might look something like this diagram below:
The principles and concepts above define foundational elements for supporting Federated IT in the enterprise. They support Federated IT organizations to manage their segment of IT assets which support business processes streamlined to optimize Value Streams for all Lines of Business. The enterprise-wide result is IT and the business partnering together to execute business strategy through shared program investments targeting shared business objectives.
Not only is IT sick, but much of the business is too
Some Lines of Business have challenges too and need help communicating and executing their business strategy, discovering new innovations that bring competitive advantage, and enabling scalability. The concepts of Strategy Management and Program Portfolio Management that are born from business thought leadership are a natural concept to uplift maturity and help the business manage themselves. For Lines of Business unfamiliar with strategy management and program portfolio planning best practice processes, IT folks can bring these concepts to the business to help them solve business challenges in addition to bringing forth a critical mechanism to integrate IT into the business.
I used many terms in this article that may be unfamiliar to many IT folk so here are terms and definitions:
Great read! Very insightful and can apply to so many other areas of business. Thank you!