The direction of travel for CIOs and the broader IT function is clear. In a digitised world, IT is becoming a powerful business partner – a strategic enabler driving forward key business projects – rather than a mere service provider responsible for ensuring that the lights don’t go out.
However, while that shift is broad-based – almost half (43%) of the CIOs polled in research by EY said they are already highly engaged in their company’s strategic decision-making processes – this is a journey with plenty of bumps on the road.
Business as Usual and the Legacy Burden
Not least because while modern IT infrastructures that make use of hosted applications, for example, may require a lower support and maintenance overhead, the process of implementing that infrastructure – and, more broadly, new ways of working – exposes organisations to additional risks during the transition. In time, this infrastructure will free up CIOs to play an even more strategic role, but in the short term, implementation may actually add to the operational burden on IT. In any case, CIOs will also still have to ensure business continuity by managing legacy systems and this can be challenging.
How, then, to manage transformation while limiting the risk of downtime and minimising the overheads and costs associated with support and maintenance? CIOs who champion and deliver innovation will find it easier to claim their place at the top table, but IT performance and business continuity will remain a business imperative.
The first step towards managing this tension is to assess the risks posed by current systems and infrastructure, which will include:
- Cost. Legacy systems consume resources – in the banking sector, for example, research suggests maintain ageing systems accounts for three-quarters of businesses’ IT spending, leaving precious little for innovation. The annual cost of supporting a system may even outweigh the cost of replacing it – and that’s before the factoring in the expense of lost productivity caused by systems that are no longer fit for purpose.
- Continuity. Would your business be able to operate if your legacy system went down, and what would such a failure cost you? Many CIOs find it increasingly difficult to maintain such systems – ageing hardware may be increasingly costly to maintain, software may no longer be supported and people with the skills required to maintain and fix the system may be in short supply.
- Growth. Legacy systems and infrastructure may not have the capacity to scale with your business as it grows – let alone facilitate its move into new areas, or adapt to multi-channel environments. Such systems are likely to become increasingly unsatisfactory to users and customers alike.
Balancing Day to Day Operations with Innovation
Based on these assessments, CIOs can begin to take practical change management steps that maintain ‘business as usual’ while moving the organisation towards innovation that delivers competitive advantage.
There may be several different ways to achieve this goal. For example, a recent Gartner report found that 40% of CIOs are pursuing a ‘bimodal’ approach to change. Such organisations have effectively split their IT functions in two: one part of the function focuses on managing existing systems and delivering stability, while the other is concerned with transformation and prioritises agility.
This bimodal approach enables the business to focus the transformational effort on its highest value areas – incubating and testing new ideas before scaling out the approach to the rest of the business – and bringing in the rest of the IT function.
However, bimodal IT isn’t without its challenges. There is a danger, for example, of creating two power centres in the IT function that fail to collaborate or, worse, become rivals. In which case, CIOs will find it difficult to plan out a long-term vision for the business that turns pioneering work into standard practice; they may also miss short-term goals because of failures of communication or outright conflict.
Another option might therefore be something more akin to a trimodal approach, with IT staff who are responsible for bringing together those dedicated to stability and agility – by working out, for example, how to turn agile new innovations into stable, everyday practice. Other businesses operate with a more cell-based approach, embedding IT innovators in teams throughout the business.
Wrestling with this debate should now be a pressing priority for CIOs as they strive to become strategic partners to the rest of the business. CIOs can’t afford not to embrace change, given the competitive advantage that cloud-based architectures can deliver as organisations become more agile. But that advantage will be undone if the shift cannot be made without increasing the risk of downtime and jeopardising day to day business operations.
- CIOs must deliver change without compromising the availability, performance and business continuity of existing infrastructure and systems
- Understanding the costs, productivity impacts and growth limitations of existing IT is key to achieving the right balance of resources directed towards “business as usual” and innovation
- CIOs must free up resources and create an environment that enables agile innovation to flourish in support of key business imperatives and changing customer behaviours