Digital Transformation Needs Planning and Attention - Some Best Practices
By Anne Marie Murray
A recent article in the Wall Street Journal reported that more than half of U.S. firms are empowering their business units with technology purchases, rather than funneling these important investments through the Information Technology (IT) department. The article confirmed a trend that we have been seeing for some time - and it is accelerating. It is part of the overall digital transformation that is changing business practices in fundamental ways throughout the global economy.
As more and more innovative and productivity-enhancing technology goes to market, executives who drive the business units are allocating portions of their budget to key technology purchases. The survey cited by the WSJ indicated that 52 percent used business-unit budgets to pay for technology purchases last year. Business unit leaders have a job to get done and circumventing IT is simply seen as a quicker way to make that happen. New productivity-enhancing technologies make it very easy to do that. Some gladly accept the transformation, others begrudge the changes. The same is true for traditional IT executives - some fear the erosion of their technology decision making authority while others see digital transformation as an opportunity to expand their value within their organizations.
Resistance is tempting, but futile. Effective collaboration between the business unit and IT department executives is the key to pushing digital transformation to its ultimate goal - improving productivity and value for the enterprise. Here are some recommendations for best practices for all concerned:
1. Embrace "shadow IT." For IT executives -- use this opportunity to learn more about each business unit, then use your technology expertise to streamline the costs, security aspects and technology that's being used. Shadow IT presents an opportunity for IT execs to see what their business colleagues need to get the job done. They can see when lines of business (LOBs) are having issues with file store limitations (as LOBs look more and more to cloud storage). They can see when other applications are needed, including business automation tools. IT can use this intelligence to better arm the LOBs with what they need. And when the time is right, IT can suggest more secure and cost-effective options to technology implemented by the LOBs. They may find the LOB picked the best technology and they can use that to help enable other business units facing similar challenges. Organizations should consider appointing an IT liaison who is focused exclusively on technology procured by business line owners and charged with recommending how to either find better solutions solving the same problem or ensuring the new technology can integrate well with the existing technology.
2. Sharing is caring. At a minimum, all technology purchase decisions should be centrally shared so that all LOBs are informed. Enterprises do not want duplicate services. For example: - LOB #1 needs to solve a problem so they contract with a new cloud service provider; LOB #2 has a similar problem and finds either the same provider and application or a different provider with the same type of application. The two LOBs trying to solve the same challenge without knowledge of the other's activities could well miss an opportunity to achieve a volume discount. All LOBs need to be aware of what their peers are doing, as does IT. With a central place to house all in-flight projects, LOBs and IT will not only solve problems but can benefit from the other LOBs' research. Even after a new technology is implemented, all LOBs and IT should know the technology purchased, the reason it was purchased (problem it was solving), the cost, terms and conditions, this way IT stays informed and the next LOB can use that knowledge when looking to solve its problem.
3. Communicate, communicate, communicate. Even in the best of companies, LOBs and IT can often seem to speak in different tongues. LOBs have their own jargon and acronyms, which often pale in comparison to the geeky terminology of the IT folks. LOBs see an easy fix to a problem but may not be informed enough to make the best decisions. An enterprise-wide effort to educate LOBs and IT on common lingo and best practices is in the best interest of making digital transformation work for all.
4. Beware the downside of Shadow IT. While Shadow IT is altruistic, it can have a downside. If the right stakeholders are not involved, including C-Suite executives and directors, the results of Shadow IT will fall flat. LOBs and IT should manage up -- educate the C-Suite on how Shadow IT can affect the outcomes of critical projects or challenges so there are no surprises at the end of the process.
5. Partner with the CIO. CIO's generally want to prove themselves a valuable resource in technology buying decisions and overall business strategy decisions. They are a key influencer in technology strategy (and therefor buying decisions), rather than just the IT department. The silos are breaking down. When LOBs and the C-suite align with the CIO they will do so to their own benefit.
6. Plan ahead, then plan further ahead. Businesses are in the middle of the latest cycle of digital transformation, but there will be many more. Plan for today, but keep your eye on developments coming down the line. Example: Artificial Intelligence and Machine Learning (AI/ML) applications have advanced at a rapid pace over the past couple of years - but they are expected to utterly transform many businesses by the end of this decade.
The key to digital transformation success is to have a plan that is well thought out with all the right stakeholders, well documented, aligned with long-term strategic initiatives and communicated across the business. When all technology buying decisions are made within the framework of the digital transformation strategy, the enterprise and its stakeholders will benefit.