The proliferation of information technologies (IT) and the rise of digitization have brought fundamental change in the way we think about all aspects of business. Companies seeking new opportunities to grow their business, drive operational efficiencies or simply stay competitive in increasingly crowded markets are finding that the adoption of new technological innovation is imperative to their success.
This growing dependency on technology as part of business strategy brings with it a new set of opportunities and challenges for today's IT leaders. The demand for implementation of new technology services and the accompanying sense of urgency are greater than ever before, and business leaders are looking to their IT counterparts for guidance when determining the best path forward. Bound by traditional expectations of reliability, security and cost management, IT leaders are under pressure to maintain the foundational underpinnings of their historical role in business operations while grappling with an elevated responsibility in shaping business strategy.
No matter our individual positions, we're all under pressure to adapt to the changing role of technology in business. As we consider how best to adjust to these new pressures and take advantage of opportunities provided by innovation, it's prudent to start with understanding the disruptive forces producing the pressure.
Digitization and innovation
Digitization and technological innovation have introduced relative chaos in the market. As recently as 2010, the world's most highly valued companies were largely operating in traditional industries like manufacturing, energy and pharmaceuticals, whereas the list is now topped by digital innovators like Apple, Google and Microsoft. Technology has also greatly reduced previous limitations on scalability, enabling dorm-room startups to go from viral hit to initial public offering in record time. For example, Snapchat went from initial release to a $22 billion valuation in just five years. These shifting trends in valuation and intensified competition stemming from technological advancement have led to a 70 percent reduction in the average life span of a company in the S&P 500 over the last 60 years, which is predicted to drop another four years by 2020.
To stay competitive, companies are increasingly challenged to re-evaluate their focus and shift direction quickly to maintain market parity, or risk being left behind. Take Amazon, for example: They're competing at the forefront of retail, video and music streaming, cloud services, artificial intelligence and home automation; a long way from its beginnings as an online book vendor. Amazon and its competitors are forced to respond in months - not years - if they want to stay relevant. No business is immune from disruption.
Millennials and the consumerization of IT
We've been on the road toward the consumerization of IT for some time, but it's starting to have some very serious business implications, which are only exacerbated by the entrance of millennials to the consumer market and workforce. There are 92 million millennials in the U.S., most of whom have grown up with information at their fingertips. Through their sheer size and use of technologies like social media, they influence over a trillion dollars in annual spending, despite only being directly responsible for $62 billion of that spend. They see technology as an extension of themselves, value access and features over ownership and see little risk in the switching costs associated with following the latest trends in technology use.
Whether they are functioning as consumers or employees, millennials and those they influence expect technology to work without inputting any effort. They want full access to the best technology experiences from across the market, and demonstrate little patience before migrating away from existing services if they don't keep up. This same trend is now being witnessed outside of individual experiences, as business leaders are starting to adopt the same sentiment. Armed with the ability to spin up data center services or procure enterprise-level software through little more effort than keying in credit card information, anything short of immediate access appears archaic.
Under intense pressure, it's easy for both sides of the business and IT relationship to be dismissive. Business stakeholders characterize IT organizations as overly controlling and unresponsive, while IT leaders can be quick to label non-sanctioned technology implementation as risky and expensive. At a time where partnership between business and IT organizations has never been more important, it's critical that IT leaders focus on reducing the friction. In order to not be left behind as the business and its employees seek new technology to reach their goals, IT leaders must find a balance between control and agility.
Balancing control and agility through bimodal IT
To improve responsiveness to changing business demand without foregoing the importance of a well-managed catalog of services, IT leaders should consider a bimodal approach to IT service delivery. Bimodal IT is defined by Gartner, the world's leading information technology research and advisory company, as the practice of managing two separate but coherent styles of work: one focused on predictability (Mode 1); the other on exploration (Mode 2). It calls for restructuring the approach to addressing IT demand to match the nature of the work itself, rather than forcing all requests through conventional delivery models intended for incremental advancement of products and services.
Mode 1 closely resembles the mature IT management practices of today, where Mode 2 is an evolution from current agile practices and professional services models. Mode 2 calls on IT leaders to organize a portion of their workforce into highly flexible arrangements of clusters or pods of teams that switch between assignments as ideas flow, priorities rebalance and demand surges. In digital business, new value can emerge from every step in the process of serving clients, and Mode 2 lets freshly surfaced ideas be incubated, tested for viability, and rapidly implemented to maximize speed to value. In essence, Mode 2 recasts the IT organization as an innovation and enablement hub for external and internal products and services.
While Mode 1 follows the traditional IT practices that appear to be the source of business/IT friction, it's important to recognize there is still value to be generated through the evolution of core services in support of predictable, long-term changes in demand. Furthermore, it seeks to align core services in a manner that enables them to serve as both a foundation and an accelerant for the explorative work of Mode 2.
Transitioning toward a bimodal approach to IT doesn't require an "all-in" commitment in the form of complete organizational restructuring, nor is there a well-worn playbook for making the shift. It starts with gaining a stronger grasp of the challenges a business is facing and looking for areas where current IT competencies could be refactored to address new business needs. From there, it can be as simple as temporarily segmenting resources to work closer with the business, potentially under shared leadership, unencumbered by the requirements of traditional structure and process.
Embracing the new role of the IT leader
With the proliferation of cloud technologies and continued consumerization of IT, it would be easy to assume that IT organizations are on their way to irrelevancy, but the role of IT in business has never been more important. The impetus is on IT leaders to do an even better job of enabling the business to deliver with the speed and agility necessary to compete and win in a highly dynamic market environment. Digitization has erased the line between business and technology, and companies that capitalize on the opportunities that digital business offers will thrive where others fall.
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