World-class IT organizations are dramatically more effective than their peers at enabling the digital transformation that is central to many business strategies, according to new research from The Hackett Group. This ability plays a key role in how the IT organizations enable greater efficiency, agility and improved competitive advantage across the enterprise. World-class IT organizations also spend significantly less on IT operations than typical companies, the firm found.
“Leaders at world-class IT organizations understand that while running core information systems and providing infrastructure efficiently remain critical capabilities, digital transformation is increasingly becoming a ‘must have’ to stay relevant in the business,” says Scott Holland, Practice Leader, IT Executive Advisory Program, at The Hackett Group. “If they aren’t prepared to support this effort, companies won’t wait. Rather than allow the internal IT organization to be a bottleneck to digital transformation execution, the business will look for outside partnerships, acquire technologies directly and develop technology management capabilities themselves.”
The firm’s research, “Four Imperatives for Creating IT Agility in a Digital Age,” details four requirements for companies seeking to achieve world-class IT performance. The first is to reallocate resources from a transactional focus to one that adds value. The group explains that IT budgets are only growing modestly, so IT organizations need to self-fund the development of new competencies to support digital business transformation. To shift resources from “run” to “build” activities, IT organizations must relentlessly focus on efficiency improvements in the delivery of commodity services. Furthermore, they should consider consolidating infrastructure and service desk components to shared services or global business services, the report explains.
IT organizations must also embrace digital transformation. IT organizations are at a “crossroads,” with one foot in the new digital world of cloud, big data analytics, social media, mobile and the Internet of Things, and the other foot is in the past, constrained by legacy technologies and skill sets, says Mark Peacock, The Hackett Group’s IT Transformation Practice Leader and Principal.
“Many IT leaders are overwhelmed by this challenge, and they are likely to find themselves marginalized,” Peacock says. “But, IT leaders working for their organization to achieve world-class performance are energized by the opportunity to elevate the role of technology to a higher level, as senior management embraces digital as a cornerstone of the business strategy.”
IT organizations striving for world-class performance also need to lead the organization on the information and analytics transformation journey, the group explains. To do this, IT must take ownership of the enterprise information architecture, which has changed dramatically, The Hackett Group’s research found. Additionally, IT must support on-going business-led, data-related initiatives by providing services such as master data management, data integration and database administration.
The group’s final imperative for IT organizations is to adopt customer-centric service design and delivery principles. IT should focus on making it as easy as possible for internal associates, business partners and external customers to interact with information systems. Self-service is a prime example of the potential for customer-centric design. According to the firm’s research, world-class IT organizations see levels of self-service enablement up to six times greater than typical companies in key areas such as supplier inquiry, distributor collaboration and customer bill presentment.
What are your thoughts on world-class IT performance? Do you agree with these findings?