A plan isn´t a contract any longer or what are the consequences of IT decisions moving to LOB executives
Some time ago IDC made some interesting predictions around IT decisions.
“By 2016, 80% of new IT investments will directly involve LOB executives, with LOBs as the Lead of
decision makers in half or more of those investments.”
EMEA and Asia/Pacific indicated that the largest percentage of decisions were jointly made by business and IT, whereas in North America, more than 50% said that executives or corporate managers take the majority of decisions.
Many people adopted this topic and I have seen it appearing in many company presentations as a proof point towards more LOB (Line of Business) specific communications and as introduction to a wave of mega trends approaching enterprise businesses. But I haven´t found many interpretations about what it really means for companies and of course suppliers when IT decisions will be relieved by LOBs.
It is not set in stone how decisions have to be made, given the diversity within every organization. And I strongly believe that the best way to come to an IT decision is a joined approach anyway. Nevertheless we see tendencies in the way how groups are approaching a project which I would like to share with you from our experience.
Run a company vs Innovate a company
Analyzing the blueprint (business model) of organizations you identify significant differences in the setup. LOB executives´ responsibility has always been to INNOVATE the company and grow the business while IT Executives have to RUN the company (at best efficiency).
Simply put this makes IT spending “Costs” and requires extremely short ROI´s. LOB spending is different. It is investments in the companies´ future. It focuses on creating opportunities and growing business and follows different patterns.
As a consequence many CIOs started transforming their organizations and interpret their role away from a “Chief Information Officer” towards a “Chief Innovation Officer” while others still focus on optimizing the “Run the Company” role.
How to approach a project
A Line of Business is interested in quickly seeing results. The organization typically starts with a “We can” approach and a rough plan. Further problem identification is a step beyond “Implementation Action”, not before. With the arrival of CLOUD, IT decisions surely got a strong push because it runs on OPEX (Operational Expenditure) and undermines corporate processes like IT investment budgeting processes.
OPEX simply doesn´t require investments.
This in combination with the innovative approach makes cloud the perfect choice for Lines of Business. It is also highly scaling and allows a perfect “Land and Expand” strategy. Start small, explore, innovate and grow perfectly matches with an LOB way of taking over control and speed of innovation.
Cloud is something where “Line of Business” can start modeling their processes without further need of IT and present a POC (Proof of Concept) with own data to underline a decision. Driven by Best Practices, Velocity, Agility, Start with a “We can” mentality and a fast “idea to action”.
NPS (net promoter score) plays a more important role in LOB decisions as well. The path they follow: How many of my peers would recommend a solution to me and to how many of my peers would I recommend this solution. It needs a rocket solid proof of value and a strong support of my roles´ KPIs to promote a solution. And it requires the solution provider taking care of my issues immediately. Service is everything.
Unfortunately nothing that LOB Executives have been enjoyed during the past decades of company consolidations when it came to IT.
So far so good, this way of approaching projects usually kicks back when it comes to data and process integration outside the department – on enterprise level.
IT has a different understanding of Corporate Citizenship and is trained to ask different questions. Decisions are well thought through and embedded into Corporate Context. Robustness and sustainability of solutions are significant requirements. Of course! Their primary role is to run the company at best efficiency.
Regarding IT decisions:
- Effectiveness (doing the right things) – LoB
- Efficiency (doing the things right) – IT
As a disadvantage this leads to a slowdown of decisions and delayed solution availability as well as an extended time to value. But the big picture is created upfront starting with a conceptual phase, anticipating issues and planning logistics before going into execution. Once they start a project they want to and have control. And as a consequence a Plan becomes kind of a Contract.
If it comes to Cloud we often hear that IT is against SaaS, because this would take control away and better serve the LOB project approach than the IT approach. On the other side does cloud deliver simplification and takes away commodity tasks and complexity from IT. It allows to focus on value add tasks and helps serve the business better. IT will still play an important role to ensure a sustainable IT platform/infrastructure where specific LOB solutions can be added and integrated into the company’s context/processes.
The CIO of a large European organization recently used the probably well-known car example. Hundred years it was simply not possible driving a car yourself. You needed a chauffeur to drive, manage and maintain it. Today 700 Million people drive a (far more complex and faster) car. A maintenance interval of 25.000km is state of the art compared to 20 km one hundred years ago.
With IT we can see similarities (obviously in less than a hundred years). Who sticks to the chauffeur (the existing and complex landscape) for too long instead of making use of available commodities will lose company value.
After two decades of IT decisions following the path of “Run the Company in the best possible way” we now face a decade of “Run the User in the best possible way”. The Consumerization of IT.
Paradigms and expectations are shifting and it requires the best of both worlds to not lose company momentum. Focus on Value and Innovation instead of sticking to technical details is more Key to Win than ever.
The new Reality: Help Blueprint new Opportunities and support business growth (instead of saving costs), Simplification of Consumption, Ease of Use IT, Frequent Innovations and Scalability beats old decision patterns at the new LOB POS (Point of Sales).
Let me know your thoughts…
Bert Schulze @BeSchulze