Transformation and the future of the IT Organization – Part 1

Transformation is a buzzword within the industry, since it gets companies to spend large amounts of money. It is welcomed by some and feared by others, but this term is overused to a large extent. What does transformation mean to Information Technology (IT) organizations today?

Where we are

Today’s IT organization grew from automation of the industry, from within humble EDP departments that ran reports for management. This developed into MIS and the PC revolution kicked in. Automation and reliance upon computers for all tasks increased. While this increased worker productivity, investments in IT are now leading to diminishing returns.

Evolution of computing technology

Moore’s Law has had its relentless impact upon the technology industry, driving up performance of computers while driving down costs. Enterprise applications such as Email, ERP, and complex client-server applications were implemented by IT to demonstrate value. In the face of resistance from the business to maintain IT spending during recent downturns, there has been a push to establish metrics to demonstrate the efficacy of the IT organization. We are at a tipping point where personnel costs exceed capital costs, drawing greater scrutiny to the productivity of IT staff. However, each of these “transformations” within the IT organization has not affected how users worked, or their perception of IT.

Some possibilities:

  1.  This was only a change, not transformation.
  2. If it was a real transformation, it did not help the business much. IT was focused on providing a technology solution that improved efficiency, but also needs to be effective.
  3. IT tracks its own KPIs; it does not track the business KPIs, or how it moves the needle on them.
  4. IT is slowly losing credibility with the business.

What has changed now?

  1. IT is increasingly perceived as a barrier than an enabler due to its slow pace.
  2. The business is getting more technology savvy, thanks to the evolution of consumer focused technologies and products.
  3. SaaS offerings are point solutions that the business can easily implement without IT, and at a much lower cost. The phenomenon of “Rogue IT” is fairly recent, but its impact is already visible.
  4. The business realizes that agility is crucial for success in today’s environment. There are compelling economic reasons for businesses to be agile, as seen here.

These are some of the forces facing IT today. There is a pressing need for “real” transformation of the IT organization. How does the IT function transform, what will the future organization look like, and what will it need to do in order to provide value? We will hear industry leaders weigh in on this topic in my next post.

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