IT, Business Must Team Up To Survive Digital Transformation
Have you ever heard of a position called the chief electrical officer? Probably not; it became redundant 100 years ago when electricity became an essential part of businesses, replacing steam power. A recent white paper published by The Open Group, an organization that works to help companies achieve business objectives through technology standards, suggests a coming emergence of information technology (IT) becoming as essential as electricity and of the possible disappearance of some roles and the appearance of new ones.
Titled “Why Business and IT Must Co-Create Strategy for a Digital Enterprise,” the white paper discusses the importance of creating an IT strategy in terms of achieving business goals and adding value, changing the role of IT from that of “order taker” to one of “strategic partner” (Fig. 1). To move to this desired state, IT will need to create a more-agile, collaborative, end-to-end value-stream view of work. The paper provides plenty of resources—technology standards, models, and references—that can help an organization achieve this.
In many organizations, IT currently is subjected to the last-loudest-voice syndrome and forced to prioritize low-value activities. IT departments also struggle to report to business leadership on how its work streams support strategy or value. This leads to lost credibility with business leaders and frustration inside the IT department. IT executives must aim to make IT a strategic partner for business in the successful digital transformation of the organization by asking questions such as
- What business or customer problem are we trying to solve?
- Is the investment worthwhile?
- How can we test new ideas?
- How do we measure results?
How To Get There
For IT and business to align with each other toward business agility and value-based outcome, the strategy should be co-created by IT and business together, not serially. The paper represents this shared responsibility through what it calls the strategic portfolio management triad (Fig. 2).
The “co-creation of strategy” point organizes business and IT to work together to execute the strategy and deliver business value. The “value focus” point provides a strong business value foundation based on common outcomes, and the “agility” point ensures a steady and predictable stream of business value.
Establishing trust between business and IT is key to co-creating a strategy. Creating an environment where IT is viewed as a business partner is a key measure of success for the digital journey.
Business Relationship Manager. Depending on where the organization is in its digital journey, many roles can aid in this process. A business relationship manager can partner with cross-functional teams to shape company strategy. Business relationship managers, strategists, architects, and portfolio managers likely will fulfill many of the functions until cross-functional accountability becomes a way of work and the silos break down.
The white paper recommends the Business Relationship Maturity Model published in the Business Relationship Management (BRM) Institute’s BRM Body of Knowledge as a resource that can guide companies in the process and help IT earn a seat at the table with business. The Open Group’s IT4IT Reference Architecture can be an important enabler in the IT maturity process.
Business Architect. Moving up the business relationship model maturity curve has direct financial benefits, and organizations that co-create strategy perform significantly better than others in many measures. A business architect is a key participant in the co-creation of strategy.
As a discipline, business architecture is the best practice for translating strategy to execution. The Open Group Architecture Framework (TOGAF) covers many of the components for business architecture such as business models, business capabilities, value streams, business scenarios, information mapping, and organization mapping.
The IT value chain and reference architecture from the IT4IT standard (Fig. 3) provides a roadmap for the activities and functions that must be optimized to achieve value delivery. All co-creation strategy roles can use the IT4IT Reference Architecture because it identifies the activities across the entire product or service lifecycle.
To create a new strategy that delivers business value, gaining the sponsorship of C-level executives is important. How an organization chooses to define, and measure, business value has changed fundamentally with the arrival of digital. For many organizations, defining business value must now include supporting the organization’s transformation to a digital enterprise.
In the book Designed for Digital: How To Architect Your Business for Sustained Success, the authors suggest that organizations should drive two critical initiatives to achieve success: digitization and digitalization. The Open Group defines these terms as follows:
- Digitization is the conversion of analog information into digital information.
- Digitalization is the application of digital technology to create additional business value within the primary value chain.
In a digital-first culture, some of the desired behaviors of the workforce are servant leadership, strategic value chain thinking, customer focus, fault tolerance, and agility. Some legacy organizations may measure business value in more traditional ways, such as increased revenue and decreased cost. Regardless of what measures are chosen for value, executives share accountability as their IT teams make recommendations to deliver quantifiable and tangible business values. In doing so, IT teams are perceived as business partners.
The publication TOGAF Series Guide: Value Streams describes a process for understanding business value. Using the methods and examples provided there, business architects can build and deliver an architecture based on business value and business strategy.
After the co-creation of strategy, agility in the execution of strategy and incremental business value realization is important for an organization. Connecting the long-term and short-term delivery cycles and answering the question “Who should we be? (Or, where should we be headed?)” can be challenging for organizations. “How do we get there?” is an even more difficult to answer.
To improve strategy realization, some organizations have started using a results-oriented approach called business value increments (BVIs). BVIs are iteratively evolving and have parts that allow for the realization of value, the capturing of feedback, and the application of validation and improvements to strategies and systems. By consuming and analyzing BVIs and endorsing the efforts that are important for competitiveness and strategic-goal achievement, BVIs can be mapped into business strategy.
The IT4IT Reference Architecture includes activities to identify business value and the benefits of a new service or product. The standard can provide the foundation for agility by driving integration, automation, and self-service solutions for enhanced experience for customers. Organizations can enhance their agility by using the standard as a common value-stream framework for developing digital products. This reference architecture provides a value-chain-based operating model for managing the business of IT. It can help IT teams achieve the same level of predictability and efficiency that the supply chain has allowed the business. The standard is designed to be industry- and vendor-agnostic.
Moving away from siloed organization to the co-creation of an IT/business strategy is an important progression in the journey of digital transformation. The references and standards cited can provide an organization with a good structure for comanaging the business strategy and investment portfolio. This will lead to identifying sustainable customer value propositions and a steady and predictable flow of business value.
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19 May 2020
15 May 2020