The IT department must shift to helm digital business transformation efforts, according to a panel at the 2018 MIT Sloan CIO Symposium.
The most enduring IT concept of the last 50 years is the IT department, according to Joe Peppard, principal research scientist at the MIT Sloan Center for Information Systems Research. However, organizations will fail if they continue operating with IT units that are designed and led on principles and practices from a previous era. Instead, the IT department must evolve to reflect new digital goals, Peppard said in a panel discussion at the 2018 MIT Sloan CIO Symposium.
IT departments have moved through three distinct models, Peppard said. In the early days, it was a functional unit, with the objective of keeping computer systems functioning. In this time period, all required knowledge to do this was located in the IT unit, and there was a clear delineation of responsibilities, with the CIO acting as the functional manager.
Then came the partnership phase, where the objective became understanding business requirements and issues. In this phase, IT had to build relationships with business units to facilitate knowledge access. This CIO acted as a manager of the boundary between business and IT, and a developer of the business knowledge of IT staff.
SEE: IT leader's guide to achieving digital transformation (Tech Pro Research)
Today, we are in a pervasive phase, Peppard said, in which the IT unit's job is to optimize business opportunities from digital. Digital is a shared responsibility across IT and business, and the CIO is an orchestrator.
"The challenge is not the IT organization, but organizing for IT," Peppard said.
A major shift has occurred in the past few years in IT, Naufal Khan, a senior partner at McKinsey, said during the panel discussion. The CIO had been separate from the chief digital officer (CDO), and companies started to realize that these distinct units do not scale well. In large organizations in particular, the CIO, CTO, and CDO are coming closer together for a more integrated digital and IT operating model, Khan said.
When undergoing a digital transformation project, you need someone on the tech side to own and drive it, whether that's the CIO or CDO or someone else, Khan said. If you do hire a CDO, you should situate them as close to the CIO as possible, he added.
However, "the CDO should not be responsible for digital transformation—that's why a lot of it fails," Khan said. "It's not an internal technology thing. You really need accountability on the business part as well."
Aligning IT with business
Aligning IT with the business has been a top CIO issue in recent years, Peppard said, as a customer focus takes over.
But in organizations that have been around for many years, IT has not gotten the time to understand the business, Adeel Saeed, senior vice president and CIO of corporate technology services at State Street said in the discussion. "You have business-aligned IT functions popping up because business needs tech to understand the business," Saeed said. "Moving the the future will be a combination of the two. You are no longer going to be a traditional IT ops shop—you need that, but that comes with understanding the business and partnering with them."
SEE: IT leader's guide to making DevOps work (Tech Pro Research)
IT is evolving along with the rest of the business, said Bruce Lee, senior vice president and head of operations and technology at Fannie Mae. "Most organizations with scale and history have quite an inward-looking business function rather than an outward-looking one," Lee said. Pushing IT further into the business has been one of the largest challenges for Fannie Mae, he added.
However, companies should not forget about employee needs, Saeed said.
"We talk about external customers, but for us to make our internal customers successful, we need them to be able to perform their jobs," Saeed said. "Collectively, we miss that digitization is not just outward-facing, but inward-facing as well. Companies are starting to wake up to that."
The role of the CIO
With these changes, CIOs now have an opportunity to rewrite their job description in terms of the role they want to play in the business, Khan said. He recommends meeting with the business side and offering them different options, to help them see that IT is more than just support.
The IT model will continue to shift as new opportunities and constraints arise, Lee said. "CIOs need to see ourselves as equal partners in the C-suite, rather than junior partners being support or explaining what tech is," he added.
Increased demand for tech-savvy senior leaders on company boards has also elevated the CIO role, Khan said.
IT can't live in a silo, but the business has siloes as well, Khan said. The customer journey is what cuts across all departments now, and organizations need an integrator. This is where the CIO can step up and play that role, Khan said. "If digital and IT is the future, you're perfectly suited for that," he added. "It puts you in the middle of the business."
In five years' time, "I see the CIO playing an integrator role across the organization, with a deep understanding of the business and customer journeys, and stringing them together," Khan said.
- How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (free PDF) (TechRepublic)
- Why CIOs have bigger IT budgets for 2018, and what they're buying (ZDNet)
- Digital transformation: A CXO's guide (TechRepublic)
- What's really holding back today's CIO from digital transformation? (ZDNet)
- How to create a vision for digital transformation at your company (TechRepublic)
- 6 questions the C-suite must answer to achieve digital transformation (TechRepublic)