First came Data Processing (DP), as massive, arcane behemoths of computers crunched numbers for select enterprises and government agencies. DP evolved into Information Systems (IS) and in turn, Management Information Systems (MIS). Next up: Information Technology (IT) and its cousin, Information and Communications Technology (ICT).
As the corporate department responsible for enterprise technology evolved, so too did the title of the executive in charge, eventually settling on the Chief Information Officer (CIO) – in spite of the fact that CIOs are rarely if ever in charge of an organization’s information per se.
Throughout these changes, the role of the organization we now label IT has evolved, and with it, the focus of the CIO. Today, with digital transformation upending the status quo across the entire enterprise, IT is transforming once again.
Given its history, then, what will the IT organization become as digital transformation works its magic? And correspondingly, what is the new role for the CIO – assuming we’ll even need a CIO in the digitally transformed future?
To make sense of the role the digitally transformed IT organization must play, it’s essential to review the roles that IT has served over its history – not only to understand the past as prologue, but also because each of these roles remains part of the story.
In other words, each role layers on top of the previous ones, adding complexity to an already complex organization. These layers of complexity, of course, are high on our priority list of things we’d love to transform.
The first role for IT – the most universal of all the roles – is IT as cost center.
Of everything an enterprise does, the traditional reasoning goes, some things bring in the bucks and some don’t. IT is firmly in the second camp, consisting entirely of overhead.
As a result, the CIO’s primary role is cost containment. Do more with less is the mantra – and when times are tight, it becomes do less with less. Little if any of the IT budget is earmarked for innovation.
Layered on top of the cost center role is role #2: IT as service provider. True, IT costs are still overhead, but the CIO’s focus shifts from managing costs to serving the business.
Interactions between IT and the rest of the business become service interactions – often leveraging a ticket-based service management system where people ask IT for services and then wait in line to get them.
For the CIO, the service provider role has clear advantages over the cost containment role, as the value IT provides to the business is now quantifiable. As long as the IT organization can innovate in order to provide better service, the reasoning goes, then the CIO is likely to be able to justify the additional expense.
However, CIOs still struggle with the service provider role, because it is entirely tactical. To warrant the ‘C’ in the CIOs title – C as in C-level – the CIO must have a strategic role in the business.
That’s where the third role for IT comes in: IT as partner with the business. The C-suite finally recognizes that IT is strategically important to the enterprise, and as a result, invites the CIO to join in as a full-fledged member.
Sounds good, right? CIOs who have truly reached the lofty heights of the strategic C-suite may finally feel they have reached the pinnacle of their careers as CIO.
But – and this is a big but to be sure – partnering with the business is no longer good enough. In fact, it’s a dot-com era holdover, from when organizations first came to realize that the Internet and the Web in particular were strategic assets.
True, the Internet opened the C-suite door for many CIOs, and today, the enterprises that survived the dot-com boom and bust are the ones that got the Internet right. Kudos to them.
But digital transformation represents the next generation of change. Partnering with the business won’t cut it anymore.
Compared to digital transformation, the Internet revolution was decidedly one-dimensional: either you got the Web or you didn’t.
In contrast, the IT-related transformations enterprises are facing today are numerous, complex, and intertwined. Four component transformations in particular are worth calling out.
We have the move to the cloud, transforming how enterprises deploy, pay for, and manage their IT assets.
We have the rise of mobile technologies, changing how customers (and everyone else) interacts with businesses, and as a result, transforming what customers expect from the companies they interact with.
Add to this mix: Software-Defined Everything (SDX). Combining the last decade’s principles of Model-Driven Architecture with the technical advances in Software-Defined Networking, we’re increasingly able to represent our technology infrastructure as software models. Deploy or redeploy any aspect of our technology, from our network to our applications, with a push of a button.
Perhaps most important for understanding the new role for IT, however, is the advent of DevOps. By leveraging the power of Software-Defined Infrastructure, developers, ops personnel, and testers have hammered out entirely new ways of building and deploying software.
And now, the DevOps virus is spreading, infecting the entire enterprise with new ways of organizing itself along horizontal, self-organizational lines.
If we extend these trends into the future, it becomes clear that the entire idea of an IT department as a separate organizational silo within a hierarchically-organized enterprise is becoming obsolete – because hierarchical organizational models themselves do not support the business agility enterprises need to remain competitive in the face of the multifaceted disruption that characterizes today’s software-driven business environment.
As a result, digital transformation represents a rethink of enterprise organization from hierarchical and top-down to horizontal and self-organized. DevOps represents early steps to this vision, and SDX is what will make the change practical and cost-effective.
The fourth role for IT, therefore, is for IT to become the business. Every part of the organization, regardless of the nature of the business, becomes software-empowered. Business operations (the role of the COO) and technical operations (the ops part of today’s CIO role) become one and the same.
We must still manage technology costs, serve users, and partner with lines of business – but none of these roles alone or taken together tell the story of how fundamentally and comprehensively digital transformation impacts the IT organization and its leadership.
Even though our vision of IT becoming the business is unquestionably bold, don’t fall for the straw-man trap of concluding that the digitally transformed enterprise doesn’t need an IT effort at all. That fallacious conclusion aligns more with the early, cost center role for IT, reducing costs to zero by extinguishing the department altogether. Clearly, reaching that conclusion is entirely disingenuous.
The reality is subtler and more profound. This transformation, in fact, shakes the C-suite to its core, as the point of the C-suite today is to be the top of the hierarchical pyramid that represents how every large organization structures itself. Do away with the hierarchy, and corporate leadership must transform accordingly – and with it, the role of the CIO.
What will such a digitally transformed enterprise look like? We don’t really know, as we only have glimpses as organizations progress along their digital transformation roadmaps.
Remember, however, digital transformation has no end state. For change to become a core competency, today’s enterprises will always be in flux – and the ones that embrace that disruption will be the only survivors.
Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Energy.gov.