The Future of IT & the CIO – Redux of the Dodo?

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The future of the information technology group  has been determined…and it doesn’t look good.

See that bird over there? That’s the Dodo.  He’s extinct.

Will IT follow the Dodo into extinction?

I don’t think so…but without some real changes in how iT groups do business, many IT groups may find themselves on the endangered list.

The Future of IT & The CIO

Earlier this week on CIO Essentials, I wrote about CIO Insight’s reporting on the Corporate Executive Board‘s (CEB) research report titled “The Future of Corporate IT“.

I asked readers there if they had any more detail on the report…and a good friend let me read his copy and I also found a version of the report online – read a PDF version of “The Future of IT“.

The report is an interesting one….and one that every CIO and IT professional should read through.

The main points of the report can be summarized as a “current state” and then a “future state”. These points are provided below with a brief discussion of each.

Current State: Business Process First

Future State: Information Over Process

IT has been working with the motto of ‘business first’ for a few years now (and maybe longer) but the CEB report states that this will change over the next five years.  Rather than focus on the business process, IT groups will change their focus to be more on the customer experience, data analytics and making the job of workers easier by providing better access to knowledge.

Current State: IT as Service Provider

Future State: IT Embedded in Business Services

According to the CEB report, IT will move away from providing services directly to business units and move toward supporting platforms, systems and applications that are embedded within the business unit(s).  IT’s role as central service provider will change and IT positions will move into business units.

Current State: Right-sourced IT

Future State: Externalized Service Delivery

A fancy way to say more internal IT jobs will be outsourced or completely eliminated due to the move to SaaS, cloud, and other offerings from vendors.  This is a scary one for anyone who’s in an IT operations role.

Current State: Pressure for Central

Future State: Greater Business Partner Responsibility

IT will no longer hold the keys to the technology kingdom.  Responsibility for purchasing, and managing technology solutions will migrate to the business units.  This is already occurring in many organizations (think about Shadow IT) and will only continue to grow.  What is IT’s role in the future if business units will be managing their own technology?  Better figure that one out Mr/Ms CIO.

Current State: Fully Functional IT

Future State: Diminished Standalone IT Role

The role of IT will move away from an all-in-one functional unit to a dispersed group of smaller IT shops within business units.

The CEB report continues to say that the IT group will transition into a shared services group (much like HR and finance has done in the past) and most will shrink by a whopping 75%.  Ouch!

The role of the CIO in the Future

So…if we do see these things come true, what happens to the role of the CIO?  Well…according to the CEB report, the CIO will:

“expand to lead the group of Business Shared Services or shrink to manage IT procurement and integration”

Wowsers.

The “future of IT” (and the CIO) looks bleak.  Gone are the widespread powers and responsibilities.  Looks like the CIO could transition into a role of procurement and project manager.

So…is the IT group and the CIO going the way of the dodo?

Nope…but I do think there will be some major changes coming in the next few years.  IT groups will shrink due to external platforms (e.g., the cloud) and will transition from a pure technical group to a more business oriented IT group.

The future of IT is actually bright….but I do see a need for change.  Without change, you may just find the CEB report to be true.

There are just too many stories (most shockingly true) of the inability of IT groups to actually get anything done.  I know quite a few groups who regularly take 10 times as long and 10 times the budget to get anything accomplished.

Organizations have become immune to the delays, cost overruns and failures found within IT projects…but I think we are seeing that changing now.  Companies have realized how important technology is to their competitive advantage today and are no longer putting up with the CIO & IT group of yesterday.

Change is coming. I”m not sure it will be the revolution that the CEB report predicts but I do think the IT group 5 years from today will be different.

I’d love to hear your thoughts on the Corporate Executive Board Report and the future of IT and the role of the CIO.

Glenn Whitfield asks “IT Project or Business Project?”

I hope everyone out there is reading Glenn Whitfield’s great blog IT Business Alignment (IT2B).  I’ll wait for you while you jump over and check out Glenn’s website.

Back?  good.

Glenn wrote a piece titled “IT Project or Business Project?” that really blew me away with it’s simple approach to leading projects by first asking who really owns the project.  Plus…it fits perfectly into my ‘common sense’ view of the world 🙂

In the article, Glenn asks the question of whether a project is an IT project or a Business project.  Wow…that makes sense right? 🙂

Glenn writes:

…we define every project that deals with technology as an IT project, and then try to manage and lead it accordingly. And we fail…

You know something?  He’s right.

Glenn uses a few examples that I’ll let you jump over and read them all but one that highlights the issue perfectly is:

If the organization is installing a new finance system, then although the whole company can benefit from this, the greatest impact on the business processes is probably in the finance department. Therefore, someone from the Finance team should lead the project day to day (with project management support from IT)

I’ve made that argument for years too but IT and PMO’s tend to think that all projects need to be led by IT Project Managers.

Great stuff over at IT2B…jump over now or subscribe to his RSS feed.

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Innovation and Outsourcing – Do they go together?

According to a research report released by The Hackett Group, and reported by Financial Week, they don’t.

The Financial Week article, titled “Customers say innovation not part of outsourcers’ services“, describes The Hackett Group’s research.  A few excerpts:

In a new study, the Hackett Group, a consulting and advisory firm, found that businesses that have already begun to move their general and administrative functions offshore will likely pick up the pace over the next three years.

Indeed, by 2010, these companies will have outsourced or transferred off-shore an average of 16% of these back-office operations—an increase of more than 50% from the current level.

Not really much of a surprise…many companies have been outsourcing these functions for a while and the trend is to continue to do so.

The article continues:

Not surprisingly, cost savings drives most companies to shift back-office work overseas. Whether businesses outsource the work to specialist firms located in cheaper locations or set up their own captive offices abroad, the Hackett Group found that most companies save 25% to 50% on back-office work that’s shipped outside the United States.

The catch? Less than half the companies who had begun moving general and administrative work to offshore offices said they were satisfied with the new unit’s ability to innovate. In fact, only about one in six of the companies in the Hackett Group’s study were satisfied with so-called business process outsourcers’ innovation ability.

Emphasis mine.

After reading the article, I jumped over to The Hackett Group’s research report for more information.

The research report dives into more detail.  Specifically, a discussion around innovation, which says:

Only 17% of all responding companies using BPOs said they were satisfied truly satisfied with their BPO’s ability to innovate. While a much larger percentage – 46% — of all companies using captives made the same claim, this is clearly an area that both types of organizations can target for investment.

Emphasis mine.

Looks to me like an opportunity for BPO’s to improve their offerings…but also a hurdle for organizations who are considering outsourcing.

So…back to the original question at hand.  Do innovation and outsourcing go together?  I don’t think they do currently, but I think they can…at least in the realm of BPO or IT outsourcing. However, to make innovation and outsourcing go together, you’ve got to know what you want from the outsourcing company…and you will have to specifically ask for it.  And…you wil get exactly what you pay for and nothing else.

For me, the question that rises to the top of my brain is: Do you really expect an outsourcing companies to innovate for you?  I’m not talking about consulting companies who’s sole business is innovation, consulting, etc.  I’m talking about outsourcing companies who focus on processes.  Finance, HR, IT, etc.  Does anyone really expect these folks to come up with new and innovative ways to handle your business to save money, be more efficient or create more value for you (the outsourcer)?

I don’t. I’ve done some work for large IT outsourcing companies.  They can be quite innovative….but, for the most part, they use their innovative ideas to get more money from their clients.

I’d love to hear your ideas on innovation and outsourcing.

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Hiding behind your Role

A recent article by J Schwan at The Technology Edge titled “Stop Hiding Behind your Role and Get it Done” has an interesting spin on the world of technology and getting things done.  J Schwan writes:

…in order for a project to succeed we need to stop hiding behind our roles and get back to the fundamental understanding that we are technologists. This means that regardless of the role that we are playing, it is our responsibility to understand the business problem, understand the system as a whole and understand the plan that’s in place to solve that business problem.

This is an excellent thought and does happen more often than not.

I’ve found that many people tend to hide behind their roles and have done it myself in the past.  I don’t believe people do this on purpose…I think we all get comfortable in our roles and get so busy trying to get our jobs done that we sometimes forget about the ‘big picture’.  I think we get so busy, we stop focusing on the business issues and only focus on the small area that falls within our ‘small world’ of influence.

In the world of ‘productivity’, ‘efficiency’ and ‘methodologies’, everyone is so busy with following process, that we’ve lost focus on the end result: solve the problem and/or get it done.

I’ll be the first to say it:  Let’s stop hiding behind our processes, methodologies and roles, look at the issues and the solutions.  Then…here’s a thought…let’s look at what’s best for the business and do that.

J Schwan’s original post kicked off some interesting comments…take a jump over and read the entire post and the reader’s comments.

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