Transforming IT for digital success

CIOs and their IT teams have enjoyed a bump in power and prestige in recent years, as the C-suite has embraced continuous transformation, digital everything, and a host of emerging technologies — all enabled by IT.

As a result, most IT functions have seen budget increases, support for more staff, and higher involvement in shaping enterprise strategy, according to multiple reports.

Yet many IT departments are struggling to reshape themselves to better meet the mandates of today.

Consider the findings of a report from professional services firm Accenture. According to its 2023 research paper Total Enterprise Reinvention, “only 8% of companies are moving to adopt a strategy of Total Enterprise Reinvention.”

Meanwhile, 86% are what Accenture deemed “transformers,” meaning they’re “transforming parts of their business rather than the whole. They treat transformation as a finite program rather than a continuous process.”

Many aspire to do better, though, with 43% of the transformers seeking to improve their performance.

One way they’re doing that is by reimagining the IT function, say management consultants, executive advisors, and CIOs themselves. This reinvention goes beyond the adoption of cloud, agile development principles, and cutting-edge technologies. Instead, it’s about transforming how IT itself works, scales, and evolves so that it can keep pace with the continuous transformation that the technology organization is expected to deliver to the broader enterprise.

“Laggards must follow the pace of leaders with defined roles and responsibilities that align with business needs and transformation goals,” says Ram Palaniappan, chief technology officer at IT services company TEKsystems.

Strategies to transform IT for digital success include the following.

1. Become truly customer-centric

Attention to customers pays off. Organizations that enhance customer experience can boost sales by upwards of 7% and profitability between 1% and 2%, according to management consulting firm McKinsey.

Those figures make a compelling case for developing a customer-centric mindset within IT.

Still, Manish Jain, principal research director in the CIO practice at Info-Tech Research Group, says too many IT departments remain overly focused on delivering product requirements rather than customer outcomes.

“They’ve become product-centric or use-case centric,” he says. “IT needs to go beyond that. IT needs to think of the value proposition for the customer.”

Jain says that starts by understanding the definition of “customer,” which Jain defines as “anybody who benefits from your services and products.”

Despite the simplicity of that definition, Jain sees many IT departments falter in their ability to identify their customers. “Too often they still just think business [needs], and they may not extend beyond that,” he says, adding that becoming customer-centric also requires more than delivering point solutions aimed at improving individual customer touchpoints.

A 2023 report titled The Digital Disconnect: Linking Vision to Real-World Execution from digital services firm West Monroe speaks to this point, finding that while 86% of organizations say they’re “effective at creating digital products and experiences that customers love,” only 17% score 4 out of 9 or higher on the firm’s Product Scorecard.

To do better, Jain says CIOs need to create processes and policies that give IT a view of the end-to-end customer journey as well as insights into where improvements can be made along that journey. Best practices that can create a more customer-centric mindset among the technology team include using the agile development methodology, setting customer-focused key performance indicators, and working across business functions to break down operational siloes.

2. Do cloud right

Embracing cloud is another area where ambition doesn’t match actual execution, Jain says.

Over the years CIOs often went with a lift-and-shift strategy, moving their legacy applications from on-premises servers to the cloud without reengineering them for optimal performance in the new environment, Jain explains.

Those CIOs typically saw that approach as a starting point for their cloud journeys. But with organizations now a decade or more into their use of cloud computing, many IT teams have yet to reengineer those applications.

“They did not plan for scalability. They did not refactor for flexibility. And as a result, costs have spiraled,” says Jain, who advises CIOs to incorporate FinOps into their cloud strategy, as FinOps brings together financial practices, business strategy, and IT cloud practices to ensure that the technology team is looking at the incremental costs for every new piece of software deployed in the cloud, aligning it with business objectives and ensuring cloud investments deliver returns.

In short, Jain says, “FinOps will help you focus on the right cloud architecture and design.”

3. Create innovation teams

IT departments have moved beyond their old shared services model and are now working closely with business lines. As such, budget allocations for IT operations are becoming a smaller percentage of overall IT spending, while funds for business-driven IT innovation have gone up.

In this new world, IT must have a two-pronged strategy, one focused on cost optimization and the other on digital innovation, Palaniappan says.

“Organizations should optimize IT ops by bringing in automation to continuously look for cost reduction opportunities. IT organizations can’t rely on funding coming from ticket volume, as it has now pivoted to service-level agreements and ticket reduction targets,” he says.

As for the second prong, “it is critical to build and deploy solutions that align with a specific revenue stream,” Palaniappan says, stressing the need for CIOs to seize on AI technologies, automation, and data.

Rajiv Pillai, CIO for the Americas at Wipro, which provides information technology, consulting and business process services, has taken such steps. He created an incubation team that works with the organization’s vendors and partners as well as outside research analysts to advance ideas on using emerging technologies to meet enterprise needs.

Pillai says this team stays aligned to business objectives by taking a two-in-the-box approach, always pairing a business sponsor with a tech leader when exploring how to use technologies.

But Pillai notes that his innovation mandate doesn’t exist only for this team; he wants his whole staff, including those working on standard IT operations, to learn new tech and push boundaries.

He also created a position called business-aligned service delivery manager, of which there are about 40, with the role focused on “hearing what our customers’ problems are and then figuring out how to get technology to help them. This is a deliberate attempt for us to be in the customers’ space.”

4. Change IT’s perspective of itself

To truly drive continuous transformation, University of Montana CIO Zach Rossmiller believes that IT teams can’t see innovation as just another task; rather, he says all IT teams must learn to see themselves as innovators who use technology to enable enterprise success.

He’s pursuing that perspective shift with his own staff.

“The idea of IT as a strategic thought partner to drive digital innovation and success is something I’ve pushed my staff to buy into. That we can drive change because we know the backend processes, we know the systems,” he says. “That’s something that’s sometimes hard to do in IT.”

Rossmiller, who once had a team member ask what improving student retention has to do with IT work, has stepped up to meet the challenge. He has implemented various approaches to reshape how his team sees itself. For example, he has focused on better explaining how technology’s performance affects student experiences and, thus, key business performance indicators such as student retention. And IT leaders now do annual goal-setting, quarterly check-ins, and monthly updates to gauge whether and how much IT’s work has impacted university goals.

“Every year the university releases its annual playbook with its priorities, and we look at those priorities, list out the projects we’re working on, and ask whether they align. And if they don’t, we rethink them; if they do, we highlight that this is what drives student success, research excellence, etc.,” Rossmiller says. “And once you start getting them to see how their daily jobs drive the university’s mission, that’s when you start seeing success.”

He recently had one IT staffer surface issues with identity management, pointing out that the university’s older ID management system was a problem for everyone — from the users to the IT workers frustrated with supporting the ancient architecture.

Rossmiller says he appreciated his worker’s ability to highlight a problem and advocate for doing better, both of which he sees more often in his IT today versus several years ago.

“That shows that they get the reasons why we’re here, that we’re not just a utility. We are agents for driving change,” he says.

5. Develop a startup mentality

IT needs to abandon large all-hands-on-deck kind of endeavors for nimble, smaller teams like those that exist in startups, says Saurajit Kanungo, co-author of the book Demystifying IT and president of CG Infinity, a boutique IT consulting firm.

Kanungo says CIOs must reduce the too-many formal interactions that happen and drive faster decision-making. “Start with a Navy SEAL approach rather than taking a whole army approach,” he says, “because developing a startup mentality even though you’re a huge corporation and taking a Navy SEAL approach has huge value.”

To demonstrate that value, he points to the success a large century-old company had when transforming into a digital entity; instead of creating a new unit or hiring up a lot of new talent, the CEO had a small group of staffers first create a digital platform and then scale up as the platform generated increasing opportunities and revenue. The success of that platform eventually transformed the business into a digitally-led company.

Kanungo says a whole army approach doesn’t enable the agility required in the modern digital age where markets rapidly change. “You can’t have 60 people in a two-hour meeting and think you’re going to make decisions and move on. Even 20 people in a meeting takes too long. It will take too long to even get everyone on the same page,” he says.

Kanungo favors that startup/Navy SEALS mentality not only because the teams are smaller than whole armies but also because they have a camaraderie that delivers results. Bigger teams that pull in workers from all different departments, hoping to break down siloes, are well intentioned, he explains, but “you then have an amalgamation of people brought into a project who don’t normally work with each other. And they have not developed this camaraderie, so you spend a lot of time just trying to gain momentum, where even aligning people to the common goal and what needs to be done is a massive exercise.

“Which is why I go back to the Navy SEAL approach. They are a mission-focused team and they’re able to stay mission focused because of their size and camaraderie.”

6. Advance the use of agile

IT has adopted new ways of working in past years as part of its own ongoing transformation — one of which is the use of agile methodologies for delivering tech functions and capabilities.

That move to agile has indeed helped IT respond faster to business needs and market demands, but many IT departments see the need to do better with their use of agile, says Andy Sealock, a senior partner at West Monroe, a digital-services consulting firm.

“Moving from waterfall [development methodologies] to agile has been going on for a while, but most enterprises aren’t done with that journey yet,” Sealock says.

In fact, he sees many organizations using the Scaled Agile Framework (SAFe) or some similar framework to introduce agile only in some areas, with the plan to scale their use of agile over time.

That can work for a time, as can using the conventional waterfall approach for some IT projects, but Sealock says IT needs to mature its use of agile and DevSecOps to remain competitive.

“The traditional way of doing things takes too long for the digital products people want to use, and by the time a project rolls out, it’s too late, the market has moved on,” he says.

Sealock advises CIOs to provide the training and tools required for their IT teams to work more fully in an agile fashion and to educate their business-side colleagues on their role in this way of working with IT, too.

7. Embrace a product-based approach

Others also cite the need for IT to move from a project-based delivery approach to a product-based one, where IT teams are organized around specific technology products instead of infrastructure or architecture components as they had been throughout much of IT’s history.

Most are on this journey, says Mike Shaklik, partner and global head of CIO advisory at Infosys Consulting. Still, only a fraction of the organizations have a mature product environment with responsibility for success shared between IT and business teams, he says.

“I think there’s still much more work to be done,” he adds.

Of course, some workers within IT will always remain focused on managing technology infrastructure and systems, Shaklik says. But CIOs need to move more of their teams away from TechOps and organize them instead around digital products and services, where the measures of success are how well those technology capabilities meet business needs rather than traditional IT success metrics.

“The difference with product teams is their business orientation,” he explains. “A product approach creates a tighter integration of IT and business resources to deliver on problem statements. It moves IT away from thinking of on time and on budget as signs of success and moves IT instead to understanding what they need to create to deliver value.”