Are you a digital leader or a high-maintenance digital dunce?
Yep, an article about aligning business and IT
When it comes to implementing IT effectively, not all companies are equal. Some place a heavy emphasis on business outcomes, and tie deployment strongly to business outcomes. Some merely keep the engines running without really thinking about what they’re doing, or why. Some use IT to innovate and disrupt their businesses, and some don’t.
HP already seems to have an idea of what cutting edge looks like in the enterprise. It surveyed 1206 people, spanning senior IT and line of business managers, and used the resulting data to put them into three categories: digital leaders, those in the mainstream, and laggards.
Digital leaders, as you might expect, are those who put IT infrastructure at the heart of their business to effect better outcomes. So what is a laggard?
Typically, a poor performer views IT as a necessary evil, there to make the underlying mechanics of the company grind along, but not to innovate or to be particularly responsive.
Some of the more interesting stats from the survey came from the responses with the biggest deltas. For example, whereas 73 per cent of leaders felt that they could disrupt their own business model using IT, less than half this proportion of laggards - 33 per cent - felt the same.
This suggests that infrastructure laggards prefer to think inside the box, and are interested in maintaining the status quo rather than effecting any significant change.
What makes them this way? Part of the problem here is that laggards spend more of their budget maintaining their existing IT than they do deploying new stuff.
Fifty-three per cent of laggards spend more than half of their budget on maintenance, compared to just 36 per cent of leaders. When it comes to implementing new technologies, more companies in this category tend to fret about scant resources, and difficulties managing it.
Leaders on the other hand, focus on the challenges of running it safely while minimising risk. A dallier says “we don’t have the time, money, or management skill to do this”. A leader says “How can we do this and make it work with the systems we already have?”
So all a laggard has to do is deploy something new to vault into mainstream or leadership mode, right? Not so. There are three mindsets, all as bad as each other. No thought and no action, thought but no action, and the third: action without thought. It isn’t enough to just bite the bullet and deploy something shiny. You have to tie it to effective business outcomes, and the numbers suggest that laggards tend not to.
Leaders and poor performers both implemented new technologies in around the same quantities, but the results different markedly. Some 42 per cent of leaders saw a material impact to the business from this new tech, compared to just 24 per cent of laggards, meaning that more than half of them squandered the business’s money on something pretty, and useless. So what happened?
One of the things that came out of the survey is that infrastructure leaders implement IT in ‘extreme’ ways, which makes us think of someone abseiling off the side of a mountain with a cat 5 cable. The idea is to use technology in a way that is rare in their industry and is an example of true innovation. What might that look like?
With mobility, for example, a maintenance services company could finally permit all of its managers to use BlackBerries and access a group calendar, but this wouldn’t exactly set the world alight. If, on the other hand, it put mobile telematics in its fleet, and used this to allocate jobs to engineers in the field on the fly based on where they were and how long they had to complete their current job, it could give internal efficiencies a significant bump.
But laggards aren’t anywhere near such innovations. Instead, they focus more on maintaining existing infrastructure than they do on designing new stuff. Their mindset is about preservation, rather than possibility.
This shows up in the numbers around key technology deployments. Less than a third of laggards are ‘strong to extreme’ users of mobile tech, which means that where they have mobile, the CEO is using it to play Candy Crush.
Conversely, 83 per cent of leaders are batting mobile out of the park. The same goes for big data and analytics. One in three of those crawling along in the slow lane use it at ‘strong to extreme’ levels, compared to 80 per cent of leaders.
A third of laggards (33 per cent) used social media in strong/extreme ways (mining for sentiment, say, or using it as part of an attribution-led digital marketing campaign, vs. letting the marketing manager post puff on Facebook).
These tech categories have knock-on effects in areas such as responsiveness and customer experience, which in turn have potential implications for customer retention and upsell. 57 per cent of leaders showed improved customer experience through the use of technology, compared with just 38 per cent of laggards.
Half of all leaders tied increased customer loyalty to their IT innovations, compared to a measly 16 per cent of poor infrastructure performers. The ROI doesn’t always show up straight away, but done properly, it may shake up somewhere further down the line. Just ask Sykes Cottages, which got solid, quantifiable returns in online conversion rates by marrying social media and big data.
Sykes is an example of a company that might fall into the leader category, going from a standing start to a 25 per cent reduction in cost-per-acquisition by showing some solid technology aptitude. Conversely, laggards don’t necessarily tie technology investments to business outcomes.
Less than one in five laggard companies saw their organisation as a profit centre, instead simply viewing it as a cost. Only 27 per cent saw it as a means to reduce business costs, and even fewer (24 per cent) looked to it to generate new revenue opportunities.
Talk to the hand
How businesses see their IT departments is a big factor, then, as is the reverse. One thing that defines an IT laggard is a lack of communication and co-operation between the IT department and the line of business.
In a dysfunctional relationship, nothing gets done, and in fact, tensions and mistrust can arise. To make sure that the IT department delivers solid value to the business, you need buy-in from both sides of the fence. Here’s another big delta from the HP survey: 96 per cent of LoB managers infrastructure leaders believed that IT can enhance customer experience, but only 59 per cent of managers in laggard organisations did.
If there’s no believe in IT’s potential on the business side, there’ll be no encouragement to make a difference. What you expect is exactly what you get: almost all leaders (96 per cent) think that IT gives the line of business exceptional new technologies to use, vs just over half (54 per cent) of all laggards.
A sector analysis
Who are these laggards? The industry with the largest single percentage of poor infrastructure performers was the public sector (22 per cent). That’s perhaps unsurprising. Government austerity measures have choked off budgets and investment there, and the public sector tends to be a place with a lot of bureaucracy and barriers to innovation when it comes to technology development, in any case.
It’s true that both of these categories had slightly more leaders than laggards. Twenty-four per cent of public sector respondents and 19 per cent of transportation firms led in their IT infrastructure deployment. Compare this to professional services, though, which has its act together far more. Only 12 per cent of these firms were laggards, compared to 30 per cent who fell into the leadership category.
It’s easy to frown on poor performers in the survey, and to suggest that it’s all the IT department’s fault. In truth, everyone has a part to play. Is the department being given enough budget to do anything useful? Do LoB managers listen to it if it does suggest new technologies? Are relationships between the two parties constructed in a way that encourages interaction? I once knew an IT manager who send his staff on mini-secondments to different LoB functions so they could learn more about how they worked.
Ultimately, any change to help promote better relations between the two sides – and therefore to put IT more at the heart of the organisation – must come from the top. This is a cultural shift that we’re talking about, and it’s vital that board level players be involved from both the business and the IT function.
Making sure that the IT director/CIO actually has a voice there is a start, and ensuring that they have a leadership mindset is crucial. If the person in this role is a constant grumbler and focuses on what can’t be done, then nothing is going to happen.
In an environment where business managers can easily go out and procure SaaS services and expense it, IT’s relationship to the business is more crucial than ever. In two years’ time, will your company be a leader, a mainstream player, or a slow mover when it comes to IT infrastructure? ®