“We can conclude that many IT organizations invest in competence areas, which easily can be outsourced and done more cheaply elsewhere, but not in the competence area which makes a difference for business success.”
The idea to increase performance is central in many IT organizations. Teams and employees are required to perform higher than before in an attempt to increase productivity and achieve cost efficiency. IT processes are matured, leanified, outsourced and automated to demand less input (resources) for the same output. But performance is not about productivity or cost reduction but rather about achieving a goal (business value) or executing according to a set strategy – which obviously might be cost reduction. However, performance management requires different kinds of competences and skills. We need fewer car mechanics to trim the engine but rather drivers that can interpret the landscape and steer the car in right direction with right speed. There is no use having the most powerful engine if we do not know where you are going. But do we view competence as a performance driver?
When discussing performance with many CIO and IT Directors, we come back to the same issues. “We do not have the right competence to increase performance in our organization”. Based on the discussions, I would assume that a normal IT organization has 90% of their competences and resources in the Operational Excellence area and the rest evenly distributed between different governance functions. The focus has been to build up a pool of resources to increase productivity and operational excellence leaving competence for strategic planning and innovation far behind. It is a quite natural approach with the high focus on Operational Excellence in many IT organizations (based on the maturity and role given by business) but is now threating organizations competing in industries with a higher degree of digitalization and unpredictability.
At the same time, we see that operational services is being more and more standardized and outsourced to low-cost countries. The “factory” of IT is sourced to global players or cloud services. We can conclude that many IT organizations invest in competence areas, which easily can be outsourced and done more cheaply elsewhere, but not in the competence area which makes a difference for business success. Is this a smart approach?
My view is that competence planning in many IT organizations is very shortsighted and does not support ITs value proposition – how IT creates value for business success. Frankly, many IT organizations do not have the right competence and skills to define ITs value proposition resulting in low IT maturity – and hence not set an appropriate competence and sourcing strategy. It is a very harsh conclusion but right in many IT organizations. They are stuck in a vicious competence circle dragging business success down the drain. IT competence is a key success factor for business competitiveness and hence a key drivers of performance in IT organizations today.
IT competence is a key success factor for business competitiveness!
OK, I understand the logic but what can I to do change this? Let me come with a couple of recommendations:
- Define your IT organization’s value proposition! How does your organization actually contribute to business success? What is your role in the business IT value chain?
- Analyze what percentage of your resources supports the value proposition. Involve business in this discussion to understand what competences are needed to support business value creation in the future. What is a suitable level?
- Produce a competence strategy on how to have the right balance between operations, governance and business value creation to drive business value creation.
- Bring in interim external competence to bridge the gap in the short-term while the right competence is built in long-term. Change is needed now!
- Contact The Goodwind Company to help to define a competence strategy and interim resources.
Many IT leaders see the lack of right competences as their primary obstacle to high performance and eventually business success. But not much is done about it. But with IT competence being the main driver for performance, there is no excuse to ignore the problem. So, what is your approach? What is your organization’s value proposal? What can you do today to change the competence mixture in your management team and unit?