Perhaps everyone in the IT industry has heard the phrase software is eating the world. Whoever uses this phrase emphasizes that IT and software applications become more and more important in our everyday life. IT is not a separate entity that operates on its own but it is closely aligned with the business departments to make great software applications a reality. IT should steer new initiatives while at the same time, the business should know how IT can work for them to increase revenue. Although IT is at the heart of a lot of companies, this might not yet be the case. There is no clear path for companies to measure if they are a true “Business Technology Company”. The guidelines in this article help to get you into this direction.
Three major topics
Before we deeper dive into it, let’s identify three major topics that are important in today’s IT-savvy organizations.
1. IT is not a cost center (anymore)
In the past, IT departments were seen as “overhead” to the core business, as they were delivering internally-focused services, or ‘enterprise IT’ service. Their goal was to help employees do their work, and they were (rightly) treated as cost centers. IT departments only spent money on things very little people saw the true value of. The perception of what IT can do for the business was very low. Furthermore, IT managers had to convince the financial managers for budgets to start “yet another project” (from the view of these financial managers). A lot of IT projects failed to deliver in time and within budgets. In addition to that, projects rarely delivered what was promised. This did not help to boost the image of the IT department.
These kinds of struggles are fading away – slowly but for sure a lot of improvements have been achieved. IT is now an integral part of the overall (business) strategy. Without IT, almost everything comes to a standstill. Take away the email functionality in a mid-size organization: what will people do? Will they be as productive as before? Most probably not. Business processes are heavily disrupted and this has a major impact on the way companies operate.
2. Adaption to change
Scrum and Agile provide faster feedback loops while at the same time being more adaptable to change. Every 2-3 weeks, the business departments have the opportunity to watch a demo of the next increment of an IT product.
They have a chance to ask for new features or to fine-tune their initial requirements. Companies are more flexible to external threads (e.g. legislation) or opportunities (new customer-markets). DevOps bridges the gap between Dev and Ops to accelerate this even more.
3. Cloud computing
Cloud computing supports the above-mentioned topics. In the end, it helps the company to become more business-driven:
- Cloud computing (more than traditional infrastructure) helps you to implement business metrics. It’s not purely about technical metrics like CPU and memory usage, but about revenue versus costs. The cloud operating model helps to measure things like: if we scale up by 150%, it will cost us X amount of money for extra resources and in return, it brings us Y% of revenue. That is a business metric.
- Business terminology becomes more important. Organizations need to stop talking about technical terms but talk in terms of business outcomes. There should be much more focus on business entities and business services than the technical aspects like cloud-native components which are seen in (technology) isolation. IT minded personnel need to change their way of thinking. Discussions should not (only) about technical differences between identical services, but what they can do for the business. With this in mind, organizations bridge the gap between business and IT.
- Common infrastructure components like Virtual Machines or networks become a commodity very quickly. All major cloud providers offer these in some sort of way. They have been there for quite long already. You cannot differentiate your business with these services anymore. Companies should spend their money on technology which differentiates them from the rest and which creates new business opportunities.
IT versus BT
IT is already embedded in almost all processes and activities in your organization. However, that does not mean IT is used at the best potential. Imagine a beautiful application that is delivered in time and according to the original requirements – everyone happy. But what if it is not being used by the top 10% of your most valuable customers? What if you missed designing the application for them, but instead you attract a lot of customers which put high pressure on your support desk? The application was not designed for the right people and it did not have a business view in mind. The organization misses a business technology (BT) mindset across all of your departments.
You can use the following indicators to verify if your organization is a Business Technology Company. It helps you to find the true benefits from what IT can bring to your business and how you can use IT to best support your business initiatives. As this list is never complete, it provides only a starting point.
Digital-first. A true Business Technology company focuses on the digital dimension of (new) products and services first. They see the true possibilities of what you can do with digital products (applications) and it’s related (meta) data. For example, a logistics company whose primary goal is to ship products from A to B should understand how IT can help them to plan the routes more efficiently. Another one: collect statistics of the vehicles to decrease fuel consumption.
The focus of the IT department. They need to build the right things instead of building things right. Even ff the features building is 100% according to the specifications, it can be the wrong features. Then it doesn’t matter to the business at all. You should have never build them.
Responsibility for IT selection and provisioning. In the past, the IT department decided this. Now it is the business department with the IT department as a broker. For example, the business tells them which cloud services (from a functional perspective) are needed. The IT department acts as a broker between the business department and the cloud provider to help the business realize those goals.
Projects versus self-service. IT Projects have fixed start and end dates. Once a project reaches it’s end-date, you have to verify the outcome. Within budget boundaries or over budget? In BT, business departments use self-service or iterative provisioning to initiate and steer their projects. Using this approach, there is much more flexibility to respond to external change. This poses less dependency on the IT department.
Sales & revenue
Innovation. Without innovation, your company becomes less attractive for people to work. Your products are less “in demand” and you are likely losing customers thus generating less revenue. Business Technology Companies expect value from technology and innovation to increase market share and revenue. Just “new technology” as a result of innovation is a thing of the past. It’s about the opportunities which come with the usage of new technology.
The same is true to use innovation solely to increase productivity. Remember: the IT department is not just a cost center which should reduce their spending. Think of launching a pilot project for only a couple of days. Pay only for the days you use this service and tear it down after the peak. Business departments should see those benefits and prioritize these kinds of initiatives.
Collaboration. In BT, the marketing, business, and technology departments are closely integrated, whereas those work in isolation in a classic IT company. Without close collaboration, you can never gain the best results since business initiatives are not aligned with IT. Having a separate Dev and Ops department is also a thing of the past.
Technology related functions & roles. In a true BT company, these are found not only in the IT departments but also within the business analysts, workflow, and process management. Technology becomes a factor of nearly every role of everyone in the organization.
Knowledge. In the old world, senior management (CTO excluded) knew little about IT. They are like end-users who only know the basics. As of now, they have the deep technical knowledge, follow trends, and identify business opportunities.
Role of the CIO. The main focus of the CIO change from a focus on the creation and operation of technological solutions towards managing a portfolio of internal and external services. Reducing costs is not his primary goal, but to increase the cash flow.
Measure components. Customer interactions, transactions, and revenue are much more important than CPU/memory usage, system loads, and uptime. Those technical aspects are mostly taken care of by the solutions you obtain from your cloud provider. For the business it is much more relevant to take decisions based on what customers do with your systems and how to can transform those to new business opportunities or improve your existing systems to improve the customer experience. In the end, it’s the money that counts.
How to start
Most IT departments are not yet ready for the transition to become a true Business Technology Company. It’s useful to get some tips to start with the initiatives. It’s not just about implementing DevOps, increase agility, and support self-provisioning. A couple of other things are needed as well:
- IT geeks need to start talking about technology that is more understandable to the business. This might be very hard since a lot of IT nerds are deeply technical and oversee the entire spectrum of options, possibilities, and hurdles and they tend to explain it all. For business-minded people, this is a bit too much. Their agendas are packed with meetings (useful or not), they need simplified answers so they can use that to push new initiatives. On the other hand, business executives need to understand the basics of IT and need to become technologically knowledgeable business people. For sure the MBA curriculum has to change a lot 🙂
- The speed of change within the domain of the IT departments should be supported by the speed of change on the business side. In practice, the people and processes should not slow down IT, but optimize their processes to keep up. Business departments can only keep up if they better understand the IT departments. Welcome knowledge sharing sessions between them!
- As indicated in one of my previous articles, have your business strategy clear before you carry out your IT strategy. In addition to that, the cloud strategy will focus less on the technical aspects, but more on the innovation and business processes that surround them.
In this article, I presented several guidelines that your organization to become a Business Technology Company. Key take-away is to align the business and IT departments to increase the flexibility of your organization and to use IT as the main driver to increase revenue. Think from the business perspective to fully use the potential of technological solutions. Good luck.