In the media

Is your IT organisation in balance?

Stine Cortnum Andersen Kim Lindskov Knudsen

By Stine Cortnum Andersen, Kim Lindskov Knudsen

19 October 2022

Read the article in Danish here.

IT organisations are far from all being the same – this is due, for example, to industries' different business focus and maturity levels. But in 2022, IT organisations have one thing in common. They are constantly facing new challenges and opportunities, and so must deal with increased complexity.

In mergers and acquisitions, IT platforms and functions must be integrated. When developing new digital services, the IT organisation must use new e technology or modernise legacy IT systems. Requirements for increased effectivity, as well as security and compliance require reprioritisation, focus and investment in the IT organisation. Then there are ongoing demands for change – and so a need to adjust or redesign the IT operating model.

Clarifying and establishing a balanced IT organisation is an essential task for management, and it requires a keen eye to assess both the business context and current maturity. In addition, the task must be completed at a time of increased focus on resource scarcity and declining investment. This calls for a hard focus on prioritising in a complex landscape of challenges, prerequisites, needs and opportunities. It is simply not possible to meet all change needs at once, and so a systematic approach is required, with a focus on establishing a balanced IT operating model.

Strategic focus and IT operating model

When we advise companies on the development and maturation of IT organisations, we often encounter two main themes that need to be thought through before concrete needs for change can be identified.

The first theme is about what value the customer is demanding. It may be an increased need for customer-facing digital services, technology-driven innovation, agile development models, new industry standards, hybrid delivery models or concrete transition needs (e.g., green transition). This may also be reflected in legislation or compliance requirements that must be met. Business value can also be contradictory, e.g. business needs require high security and operational stability, while customer-facing services must be delivered coherently and intuitively with demands for continuous adaptation and speed (time-to-market). These place two completely different requirements on the IT organisation, and can easily be found in the same company – and must be balanced correctly.

The second theme is about the IT organisation's optimal composition and utilisation of market solutions. These are disciplines such as sourcing, enterprise architecture, cloud transformation, new technologies, increased demands on the use of data and cyber security. There are many prerequisites and capabilities that the IT organisation must navigate to execute and deliver value to the business. That requires prioritisation, as it is difficult to implement several transitions successfully at the same time.

Only once the strategic focus is clear is it time to address the more traditional questions: Do we have the right skills and roles? Are we organised correctly? Do we have the right processes? Do we have the right technologies and tools?

How do we work with the IT operating model in practice?

In specific assessments or changes to the IT organisation's IT operating model, we use a well-proven method with four steps as the focal point. The method must support the IT organisation's ability to arrive at what a balanced IT operating model looks like in its specific context, and to establish a prioritised and realisable approach.

Step 1: Clarify strategic ambition and focus

Begin by assessing and exploring the context of business strategy, digital ambitions, and IT strategy. An interesting angle in this work is to discover the business's experience of the IT organisation. Here we work with four different archetypes that can express both what the IT organisation is like today and what the organisation wants to be in the future – and what needs a future IT operating model should be able to meet. The archetypes range from “steady the ship" which is characterized by the IT organisation supporting the business with basic IT services, but not contributing to technology-driven business development, to "first mover", where technology is integrated into business development, and the company is constantly innovating and investing in digitisation to maintain its relevance.

The point of step 1 is to clarify the level of ambition of the IT organisation's value creation within the overall organisation, as well as where it has both challenges and opportunities. The result is a common level of ambition and a vision of the future IT organisation, which then forms a solid starting point for the next steps.

Step 2: Assess and identify change needs

In step 2, there is often a crossroads. Either the organisation is facing a major strategic change of direction, for example after a merger or acquisition or a business strategy change. Here we see a need for a re-design of the entire IT operating model. If, instead, the needs for change are driven by concrete conditions such as performance challenges, cloud transformation or increased security requirements, it typically means a less resource-intensive and intrusive change. Here we recommend a limited focus on adjusting the operating model.

Clarification of the needs for change is carried out by a gap analysis based on the established target. With the results from step 2, we can identify the change needed to deliver the value we demand.

Step 3: Analyse and determine change

In step 3, we carry out an analysis of the identified changes needed. For example, it could be a transition to DevOps and agile development methods, technology adoption, cyber device building, IT portfolio management, innovation models or new cloud organisation. Here, the classic IT operating model really comes into play because it structures analysis of how the IT organisation is affected by changes on the classic parameters, capabilities (competencies and capacity), processes and management, organisation and technology.

The result from step 3 is a catalogue of measures structured according to the issues addressed by the change. The effort descriptions must be clarified in purpose, scope, content, organisational ownership, and investment needs. After a thorough prioritisation and calibration, this can be included in step 4.

Step 4: Plan and implement change

In step 4, all tasks need to be set out in a comprehensive implementation plan, where schedule and interdependencies are identified. In addition, there is a need to clarify the communication strategy and change management, as changes in operating models can have a major impact on users, employees, and partners.

Through the step-by-step model, management can create a full overview of both the business context and the maturity of the IT organisation, which is crucial to being able to prioritise in a complex landscape of challenges, prerequisites, needs and opportunities. This gives management a way to drive towards establishing a balanced IT organisation.

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