Best practices and key insightsÂ
Digital transformation is about balancing the old and the new. This is also true for IT management. Efficient IT organizations are still crucial for keeping the current business ticking via complex back-office systems and operational backbone infrastructures, whether this is handled in-house or outsourced. Companies still rely on these systems for the proper functioning of their traditional value-chain, from procurement of goods and services to manufacturing, distribution, sales and customer service operations.
But digital transformation has added new demands to the IT agenda, including rapid application development, innovative customer interactions, platform building, and the digitization of products and services. Effectively managing this dual agenda is paramount for digital transformation success, but it requires a mindset change for IT leaders because they must now align the demands of operational IT and innovative digital solutions. This dual agenda requires leaders to recognize and then manage a set of seven tensions.
Managing these tensions requires a commitment from leadership. A main component in aligning IT and digital programs is to first agree on a structure that allows for a clear division of responsibility and accountability. It also involves clearly mapping out the current system landscape and the target architecture that will underpin digital developments.
For example, the CDO-CIO team collaboration at CooperVision Inc, a manufacturer of contact lenses, used the approach of “decoupling front-end systems from back-end systems” to draw a clear division of responsibilities. CIO John Casella says that “decoupling” the customer’s digital experience on its website (as much as practical) from core enterprise systems gave the digital team more control and responsiveness while minimizing extra work for IT. This led to clearer responsibilities and less conflict.
Successfully aligning IT and digital ventures also depends on the governance model that has been adopted. In some cases, both IT and digital are within the same entity and reporting line, which allows a dual-mode IT model to be instituted. However, tight integration might come at the cost of incremental rather than radical innovation and slower time to market. In other cases, a CDO or other executive(s) is charged with overseeing the digital unit. In that case, the digital unit acts as a bridge between IT and the business for the delivery of digital solutions.
Starbucks adopted this model very successfully with the appointment of CDO Adam Brotman as a sparring partner to CIO Curt Garner, both reporting to the CEO. Garner describes the alignment: “We have tiger teams or SWAT teams that are assigned to specific projects and goals. We’ve been able to knock a lot of time and cycles off the work by having the thought leaders for digital and technology and their teams all together and working towards the same objective. Everything from inception and brainstorming through to the service delivery is jointly owned, team-focused and very collaborative.”
Sometimes digital units are set up as independent entities from traditional IT. The advantage is that this provides focus and accountability for digital transformation, but it needs to be managed very tightly as there is a risk of isolation from the core business, which could generate sources of conflict with traditional IT.
Lastly, alignment can be strongly enhanced by establishing fluidity of resources between IT and digital — by creating a joint team with a dual focus on digital delivery and back-office integration, or by dedicating key staff on each side to align objectives. CooperVision’s CIO John Casella describes how he assigned a senior enterprise architect to the CDO team: “This manager understood the CDO priorities and marshalled IT resources for projects so they didn’t have to work through the IT machinery.”