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 “The greatest challenge in the digital era is how to cross the performance barrier to achieve true Business IT integration. It is a matter of governance, leadership and IT value proposition.”

A few days ago, the Swedish skiing team won both Olympic gold medals in the men and women’s relay competitions in the ongoing games in Russia. The favorite Norwegian teams failed to reach the podium with great disappointment. Interesting is to follow the aftermath of the competition and the Norwegian skiers blaming their service team and their ability to provide great skies and enable great performance. What does this have to do with IT? Well, don’t we often see the same blame game and relationship between business and IT? How does this relationship affect the business performance and ability to compete in Olympics or dynamic business environment?

Numerous discussions with IT managers and CIOs in various industries tell the same story. A malfunctioning business IT relationship where business and IT fail to speak the same language and understand each other’s pre-requisites and expectations. IT and business work in silos and giving rise to a culture without trust and cooperation. We very much talk about “business IT integration” but when scratching on the surface – not much real integration can be found. IT still provides services based on optimization of own capability (lowest cost) will a limited understanding the role of IT (value proposition) to make business successful.  The fact is that “business IT integration” is the biggest corporate challenge the coming years due to the affects of digitalization and increased unpredictability. But what does this mean? How to go about that task?

Looking at the IT maturity ladder of governance (diagram 1) we see that IT organizations need to reach level 3+4 (IT Business Steering and IT Business Agility) to change the relationship with business (business IT integration). It demands a different kind of governance based on performance management, adaptability, self-governance, innovation and collaboration. But the problem is how IT organizations cross the “performance barrier” (move from maturity level 2 to level 3).

IT Governance maturity

Diagram 1: IT Governance Maturity model (The Goodwind Company)

Awareness is obviously a good starting point. A couple of years ago (before the digital urgency), focus on level 3 + 4 used to be “nice to have” and ambitious in many industries. It gave an extra service to business but with limited value. Today, it is much difference. The unpredictability on many information-driven industries are exploding, barriers of entries are demolished and customer behavior is being digitalized every minute. Today it is not ambitious to focus on level 3 + 4 it is a matter of corporate survival. All employees in the organization need to understand that the situation is getting critical and how they deliver (qualify) each day to make the company successful!

 “The greatest challenge in the digital era is how to cross the performance barrier to achieve true Business IT integration. It is a matter of governance, leadership and IT value proposition.”

As an anecdote, I remember having a discussion with a senior executive manager (business) a couple of years ago in a Nordic bank on the topic of collaboration between IT and business regarding innovation and performance. We could already see how digitalization affected the banking industry with serious effects. He stated very clearly that business development and innovation was the responsibility of business and IT had no role here. That is not good enough in today’s digital world. The effects of that arrogance is showing today with decreasing customer satisfaction, decreasing revenues and the launch on yet another cost reduction program.  The question is whether the bank will survive the new digital landscape with that culture.

The key challenge of many IT organizations is how to cross the Performance Barrier separating levels 2 and 3. That is the greatest challenge today for many companies. Moving from an internal focus with a goal of efficient internal processer to an external and collaborative focus with a goal of optimizing business value. The fact is that the two different maturity levels require different governance styles, culture and leadership. With a shift in these focus areas, companies are doomed to fall behind in the new digital competition. But how is this done? What is my first step?

Here are my recommendations of next concrete steps:

  • Build awareness! Dare to talk about the effects of digitalization and they way it is affecting your industry and business. How fast are the moments? How predictable is the industry? Everybody need to understand!
  • Understand the value proposition of IT and its role in the business IT value chain. How does IT actually create value and support competitive advantage to business?
  • Dare to challenge your own governance! Dare to let go of ‘command and control’ culture to unleash performance and collaboration. Challenge your budget process, your staff and leadership! Nothing is sacred – only the business value!
  • Review the competence and leadership capabilities of your IT organization. Does it support Operational Excellence or True Business IT Integration?
  • Invest in innovation! Learn how to involve the whole company, customers, universities, experts and other stakeholders in an open source innovation function.
  • Contact me for advice!

Some IT organizations are addressing the challenges of the digital landscape and pursuing ”True Business IT Integration”. But the problem is obviously around governance and leadership – but also around competence! Employees are recruited and trained to support Operational Excellence, “command and control” and efficiency of internal processes. To switch to another governance style demands other competence and an offensive approach to training and development. How much does your company spend on training and development? What competence and characters are you recruiting? Is it enough to create ”True Business IT Integration”? if not, do something about it today!

– Hans Gillior

Hans Legend 1