What Makes a Difference in Digital Transformation (part 2 of 2)?

What Makes a Difference in Digital Transformation part 2

In the first part of this article, we discussed how the IT department’s responsiveness affects the company’s digital transformation, according to the recent research by Harvard Business Review Analytic Services. We will now find out how companies with highly responsive IT departments embrace modern technology towards digital transformation.

Highly responsive IT departments are more successful

The research revealed that a responsive IT department greatly contributes to the company’s business performance. Forty-two percent of respondents with IT departments who are quick to respond firmly believes that their IT team is extremely successful in taking advantage of modern technology to achieve better business results. This percentage is remarkably higher than companies with moderately responsive IT. Only 10 percent of them said their IT department is highly successful in leveraging new technology while only 4 percent of companies with slow responsive IT team agreed.

Interestingly, the study showed that companies with highly responsive IT teams take a distinctive approach to technology. This approach includes:

  • Streamlining IT infrastructures to improve business outcomes and achieve business agility
  • Leveraging workloads that would be more sensible to and for the cloud
  • Allowing internal IT staff to focus on more strategic, innovative tasks as well as new development instead of keeping them busy with maintenance and support
  • Working with capable and reliable IT partners to handle non-strategic workloads
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Nowadays, many companies supplement their own IT team with external IT providers. In the survey, 62 percent of business leaders said they prefer to have a mixture of internal and external IT providers. They favor this approach because they believe they will achieve a faster delivery time and innovation by using both their internal IT team and partners. In addition, they said this option would enable them to achieve their goals because they will have the necessary technical skills and expertise.

This trend shows the changing role of IT department in an organization – from a mere developer and manager of systems to being a leader of “broker” of technology services. Forty-one percent of companies surveyed said this growing shift is taking place in their own enterprise. On the other hand, those organizations that favor working exclusively with their own IT staff (22 percent) consider security as their priority.

Interestingly, this shifting role is also reflected in the functions and responsibilities of the CIO. According to the survey, IT leaders of responsive IT departments are more innovative than their counterparts in the slow-responsive IT departments. They also have a better understanding of emerging technologies and are not engrossed with legacy systems.

In the survey, respondents identified innovative thinking (57 percent) and knowledge of emerging technology (50 percent) as the two most useful skills of IT leaders today. The ability to optimize business processes (47 percent) and technical knowledge of integrating systems (38 percent) are the other popular attributes. Respondents named technical knowledge of legacy systems as the least desirable attribute (18 percent only).

Cloud’s role in digital transformation

In today’s digital business, cloud computing has become a popular aspect of enterprise IT. It enables companies to move swiftly in the face of new opportunities while paying only for the capacity they use.

More than 90 percent of respondents are using cloud services. According to the research, organizations with highly responsive IT departments use more cloud than companies with unresponsive IT teams. Thirty-two percent of those companies with responsive IT have more than half of their information technology in the cloud, while only 12 percent of companies with unresponsive IT departments do.

Besides business agility, cloud also allows the IT staff, particularly the CIO, to focus on more crucial and strategic activities. About three-fourths of the respondents said their organization’s ability to acquire Software as a Service (SaaS) has either freed up the CIO’s to perform a more strategic role (40 percent) or not changed the CIO’s role at all (34 percent). Interestingly, SaaS has enabled 60 percent of CIOs with highly responsive IT team to be more strategic.

IT departments must engage, empower and collaborate

Involving and empowering end users in the technology process is a common scenario in companies with highly responsive IT teams. In the survey, 82 percent of companies with responsive IT departments provide security for technology acquired by end users. Forty-five percent offers support to users in firms with a BYOD policy, while 44 percent allows frontline staff to propose and develop applications.

Meanwhile, 40 percent of all respondents said that digital business innovation ideas originate equally from IT department and other parts of the business. But the question of who should be leading the digital transformation initiatives generated interesting results. Forty-two percent of the respondents said the CIO should lead, and 64 percent of IT personnel agreed. The CIO also got the highest vote (30 percent) from the general managers, but the GMs also voted for the CEO (21 percent), Line of Business leader (17 percent), and COO (15 percent). The survey also noted that there is only a little interest to have the CMO or CFO to lead the digital transformation.

But whether the ideas come from IT or other business areas, 90 percent of respondents believe that what’s crucial is the close collaboration and communication between the IT organization and the different stakeholders in the business. This aspect is important so that they can take advantage of new technologies for a better business outcome. Unfortunately, many companies don’t do well when it comes to cross-functional collaboration. Companies with unresponsive IT agreed that their organization has a poor track record of collaborating across functions (63 percent), while companies with highly responsive IT agreed on the same (24 percent).

On a positive note, one business executive at a large company in Asia shared that because of the close collaboration between their IT department and other parts of the business, they can do things quickly. An example of close collaboration is when a business user moves to IT and becomes certified in one technology-specific function, then returns to his/her business function. Or vice versa, a technology manager closely guides the business manager in using different modern technologies. As a result, the team becomes very efficient in performing their tasks because both sides have a better understanding of the technology capabilities and business requirements.

Conclusion

In this digital transformation era, companies must accelerate their digital initiatives to stay competitive. What will make a difference in the way they innovate and face digital transformation is to improve the level of collaboration and communication between IT departments and other parts of the business. Enterprises must also adopt effective mechanisms to be able to effectively prioritize their IT investments. In addition, companies must simplify their technology operations and effectively utilize capable IT providers so that their internal team can focus on more strategic tasks.

Photo courtesy of AltimeterGroup.

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