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2019-05-14

The second wave of digitalisation – the organisational identity crisis

2019-05-14
The digital transformation implies a shift in responsibilities that risks creating an organisational identity crisis.

We have seen how the digital transformation has made organisations more aware that data is an important asset. Hence moving the focus from systems and application to the core value of data.

It also implies a data driven organisation where data is owned and managed by the core business. Data is exposed and consumed via a digital backbone through a common set of APIs. Core business will innovate by using own and external data to build new services and to expose them for further innovation by others.

Shift in responsibilities

This shift in responsibilities from Central IT to Line-Of-Business (LOB) must be reflected in the organisational structure, processes and digital backbone. Many organisations struggle with this and find themselves in an organisational identity crisis where old truths are not valid any more.

We see, in reports like “IT-Radar 2019”, that LOB investments in IT outside the IT budget is increasing for the third year in a row and now amounts to 20% of the total IT investments. We also see in “Radar report 2018”, that central IT departments are measured mostly on stability and keeping budget.

No wonder if there is a gap in understanding between central IT and business when the organisation strives for digital innovation and is measured on stability.

What is central IT and what is business then?

All business is IT business in digital transformation which will imply that Business need to take full responsibility for the business critical data and can no longer rely on that central IT take responsibility for the business data.

The new role of central IT will instead be to take responsibility for delivering a digital backbone up to a standardized connecting point. Hence the responsibility will be:

  • stability of digital backbone
  • enablement of LOB
  • delivering a standardized platform for consuming and producing APIs as the way of exchanging business core data 

 

One can compare this evolution with an electrical company that delivers power to households. They deliver a standardized power to a standardized socket. The households then connects whatever that complies to the standard, i.e all innovation on the standard delivery is done at the household side. Compared to an organisation the electrial company is the central IT and the household is the LOB.

We need to apply the same change to Central IT that electrical companies have done otherwise we might end up with an extremely large and uncontrollable IT organisation that is responsible for business data they do not fully understand.

All business is IT

Of course there is still IT outside central IT, all business is IT. This means that all IT needed for  the innovation and maintenance of core business data shall be within LOB responsibility since this is here we have the financing.

The digital transformation is about technology, culture and organisation. 

When we apply all three changes as described we not only make a digital transformation we achieve an even more important change, the business transformation, that allows us to deliver core business value in a substantially more efficient way.                                                                                            

It is time to cut the boundaries – all for one and one for all!

Written by Henrik Gavelli