{"id":58723,"date":"2023-04-27T12:59:38","date_gmt":"2023-04-27T10:59:38","guid":{"rendered":"https:\/\/intellias.com\/?post_type=blog&p=58723"},"modified":"2024-07-29T12:38:40","modified_gmt":"2024-07-29T10:38:40","slug":"enterprise-it-transformation-how-to-close-the-gap-between-it-and-business-functions","status":"publish","type":"blog","link":"https:\/\/intellias.com\/enterprise-it-transformation-how-to-close-the-gap-between-it-and-business-functions\/","title":{"rendered":"Enterprise IT Transformation: How to Close the Gap Between IT and Business Functions"},"content":{"rendered":"

Once upon a time, there was a multi-billion-dollar conglomerate (whose name you probably know).<\/p>\n

To stay competitive, the company duly increased its IT department headcount, purchased new IT systems, and invested in proprietary software development.<\/p>\n

The company\u2019s IT function kept growing larger and more complex.<\/p>\n

However, IT was bringing increasingly less value to the business, as the IT department could just barely keep up with so many IT systems, policies, and compliance requirements.<\/p>\n

The IT headcount kept getting bigger and bigger, as the IT department needed to support unnecessary assets.<\/p>\n

At the same time, revenue and operational efficiency hardly budged.<\/p>\n

Why? Because the company\u2019s IT function didn\u2019t proactively solve end users\u2019 issues. Instead, IT was working for itself and generated new problems as technologies aged and operational processes grew redundant.<\/p>\n

The above story isn\u2019t unique.<\/p>\n

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60% of tech leaders described their current IT landscape as complex, and three-quarters of this group said it was so complex as to be unmanageable.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tRoland Berger <\/span> <\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Why enterprise IT transformation is more about investments in processes rather than just new software<\/h2>\n

Enterprises once had the advantage of acquiring best-in-breed software. Yet today, many struggle to keep up with the pace of change. What was once a cutting-edge enterprise technology (such as COBOL) is now a heavy anchor hampering the ability to innovate.<\/p>\n

Likewise, people originally employed to service legacy enterprise IT programs now lack the skills and motivation to challenge the status quo.<\/p>\n

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Technology is important, but the people dimension (organization, operating model, processes, and culture) is usually the determining factor. Organizational inertia from deeply rooted behaviors is a big impediment.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t <\/span> BCG<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

As a result, enterprises face an alarming disconnect between IT (as an enabler) and core functions (as a driver) for transformation.<\/p>\n

For decades, IT departments operated in isolation from the core business. As Joe Peppard of the MIT Sloan School of Management CSIR has pointed out<\/a>: \u201cDespite their mission, which often talks about driving corporate-wide innovation and digital transformation, chief information officers, as heads of [IT] departments, are frequently reduced to running a metaphorical island.\u201d<\/em><\/p>\n

Heritage IT departments are siloed from other business units and mostly deal with back-office tasks: maintaining legacy systems, supporting business apps, running security checks, providing updates, and so on.<\/p>\n

Culturally and operationally, IT people stay at the margins of operational efforts, whereas the modern market landscape expects IT to bring new technologies to the mainstream.<\/p>\n

\"Enterprise<\/p>\n

Every company needs to become an IT company<\/h3>\n
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Tech adoption\u2019 times \u2018tech capability,\u2019 multiplied \u2018to the power of trust.\u2019 This is what I feel every company needs to do to become a software company.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tSatya Nadella, <\/span> CEO of Microsoft<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Traditionally, companies define their business in terms of the products or services they sell: We\u2019re an e-commerce organization, We\u2019re an apparel company, We\u2019re a fashion brand, We\u2019re a biotechnology firm.<\/em><\/p>\n

Yet digital technologies have grown engrained in every business and now dictate a company\u2019s market position.<\/p>\n

\u201cComputing is a core part of every industry. A car is now a computer. Software skills are a valuable resource. I don\u2019t think in ten years we will have [industry] demarcations. We won\u2019t have the tech industry and other industries,\u201d<\/em> said Dieter Zetsche, chairman of the board of management at Daimler AG and head of Mercedes-Benz Cars, during a Mobile World Congress (MWC) panel<\/a> with Satya Nadella.<\/p>\n

The increased role of tech became evident during the pandemic, which dramatically changed the ways (and the speed) of doing business. Among companies surveyed by IBM<\/a>, 59% accelerated digital transformation during the pandemic and 66% said they completed digital projects that previously encountered resistance.<\/p>\n

Organizations that managed to quickly switch to remote work and remote product\/service delivery saw massive growth. Over 100 global companies<\/a> added $1+ billion in market cap during 2020 alone (despite the economic slowdown).<\/p>\n

The pandemic also accelerated the adoption of new digital channels by consumers, creating what has proven to be sustained demand for doing business online.<\/p>\n

\"Enterprise<\/p>\n

When technology is everywhere, businesses that don\u2019t embrace it risk becoming obsolete.<\/p>\n

Due to competitive pressure from digital-first players, 80% of heritage financial institutions can be commoditized or exist only formally by 2030 if they continue the same course.<\/a><\/p>\n

In heritage organizations, the gap between IT and core business runs deep and often manifests itself in the form of:<\/p>\n