Shaping the IT Function - North Highland

Shaping the IT Function for 2020

In this blog post I would like to look at the capabilities we see in organisations that are driving the pace, and what we believe the more traditional IT functions need to do to stay in the game over the next 5 years. We will explore how high performing organisations are shaping the IT function for 2020.

We are all consumers of IT, and the variety of services delivered through technology keeps increasing. They are reaching more and more people, doing this more of the time and many of the services improve on a daily basis. For a government IT function this is challenging as all those companies with bigger budgets are raising the expectation of my customers, my supply chain and also my employees. Now they all expect 24×7 service, personalisation, sub second responses, no errors, immediate fulfillment, and they expect it to be so intuitive they can use it without any training.

Does public sector IT need to compete with that? The answer is yes. Usability of your services is impacted by the expectation everyone else’s services set. Usability drives channel shift and that saves money.

Leading Digital organisations that are driving competitive advantage through technology and setting the pace for all of us. So what are the digital capabilities they exhibit that we need in order to keep up?

At North Highland we define digital capability across the following 5 areas:

  1. Digital Products – Using software to solve problems and meet user needs. Software is eating the physical world because Digital products are easier to improve – Look at Tesla – the proportion of their car that is software is ever increasing, and as that can be upgraded without going to a garage it’s a huge differentiator.
  2. Digital Efficiency – Automation on an enterprise scale makes new things possible. Automating workflow and business processes, removing wait states and hand-offs drives huge improvements in quality, scalability and efficiency. It also gives the customer immediate fulfilment. If 24×7 digital services leave a queue of work for people in the morning – that just doesn’t scale. Combining this with a lean and systems thinking approach has a huge impact.
  3. Digital Relationships – New channels, new touch points, and new ways of interacting with users. Whether it’s B2B or B2C or B2E – digital scales, without scaling the cost, and provides more choice an efficiency for the customer, so digital organisations are driving all relationships to this channel.
  4. Digital Disruption – Introducing disruptive changes in existing markets, or creating new ones. For example look at Uber, technology innovation allows them to disrupt their markets and even create brand new ones. The capability here is to use digital technology to aid innovation.
  5. Digital Change – The process, technology, governance and culture that underpins an organisations’ ability to change services and implement new ones. This capability underpins the other 4. It is the ability to deliver technology enabled change at a pace that is orders of magnitude higher than non-digital organisations.

For non-digital organisations, the challenge in each of these areas is significant. In each area, IT faces its own challenge. So, if a non-digital organisation wants to compete in these areas, what are the challenges for the existing IT function?

They are as follows:

Digital Products and Digital Disruption
We need to stay relevant and inform design. IT leaders need to get invited to the table so you can add value to scope and design before you are asked to integrate or industrialise support a product that wasn’t built with experience of doing that.

Digital efficiency
We need to get support to change business processes. IT is expected to automate but the simplification required is often resisted by the business.

Digital Relationships
There is a challenge for ownership. The customer is often owned outside IT as it is seen fast moving enough with the IT that drives revenue/market share. However the result is multiple systems holding customer data that don’t join up, which will be seen as IT’s problem.

Digital Change
IT functions need to develop technical agility and improve their responsiveness. They need to professionalise their change in order to stay relevant. Their ability to rapidly respond to business demand underpins the other 4 areas. This is a big cultural shift for the IT function.

In my experience I often hear from IT that “we don’t have the time or money to keep up with business demand” and from the business that “IT is already too expensive for us to be competitive”. So, let’s take a look at the IT effort:

Slide4

 

As you can see from the diagram above around IT effort, genuinely keeping the lights on only consumes about 20% of IT effort. There is 30% of time used on ‘change to keep the lights on’ – or the business will complain about a deterioration of service. Also a further 30% on ‘change to keep up with the basic expectations of IT Services’ – or business feels IT is falling behind.

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So the business often feel IT is doing very little change in response to their requirements, and often think they are getting more from shadow IT. However I have seen in digital organisations, that middle 60% seems to take much less time, so what are they doing differently?

In leading organisations the IT function is making change safe, fast and easy by:

  1. Abstracted hardware – Software is eating IT’s world and with it transforming Operations ability to provide services. They are virtualising servers, storage and implementing software defined networking. They are replacing WAN’s with VPNs, EUD moving to VDI and looking at a future where the browser is the desktop.
  2. Simple operational infrastructure – digital organisations typically have many more servers, but fewer server types. We have robots reset servers to design configuration daily and also a composible infrastructure. These changes have a huge impact, for example in a big New York Bank Ratio of Systems Admins to Servers it was 1-100 ten years ago it is now 1-10,000. This may involve further as use of containers like Docker reduce virtual server proliferation in development and deliver another step change in speed.
  3. Automation of basic tasks – The culture is all automatic, removing wait periods and time wasted on repetitive tasks. This creates near instant feedback loops and makes things repeatable and reversible which means there is less room for error.
  4. IT change as a repeatable & reversible science – meaning change is delivered in an agile way in small simple increments at a frequent pace.
  5. Cross-discipline product teams – Having Development, Operations and Security people working together on the evolving user needs.
  6. Limiting WIP and focus on tasks – The work focuses on completing tasks and getting things into a production environment limiting WIP and task switching – this helps individual productivity but it also means less guessing about the changes that are underway in other areas.
  7. “Try it and see” approach – An empowered team culture facilitating a “try it and see” approach rather than agreeing everything on paper or having decisions taken outside the team and away from the detail.
  8. End to end optimisation – Optimising ‘end to end’ value chains and processes not organisational silos.

So now what?

We believe creating a separate digital function or implementing 2-speed IT is a good way to find that extra gear but it isn’t a long-term strategy. Once you’ve mastered it, the benefits can be applied to all IT change.

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Organisational value is delivered much faster as well as visibility being naturally better as the business can see working solutions. Agile DevOps scares people, but done properly it’s far safer than other approaches. Below are the risks removed from its implementation:

Development risks removed:
1. Less risk from incorrectly specified requirements
2. Changing requirements are absorbed throughout the lifecycle
3. Design issues are uncovered early
4. Business engagement is far easier
5. Simple deployments as often as possible
6. Functionality released as business change demands

Operational risks removed:
1. Everything is automated and recorded
2. Nothing is built by hand during deployment
3. Everyone does the process every week, they know it well
4. Simple changes create smaller failures and take less time to undo

The biggest challenge however is the culture and silos between teams. The Agile movement is breaking down the wall between the Business and Development areas, DevOps is breaking down the wall between Dev and Ops. Now we are seeing DevOps becoming DevOpsSec as organisations add Security people to the product teams. We are seeing quite a few organisations insourcing Dev and Ops function at this point to remove organisational boundaries and contracts from the product development teams.

At North Highland we’ve run some really successful collaboration workshops to break down theses barriers and overall we’ve found the critical thing is to create a culture of trust across these areas of expertise.

If we take a look at the below diagram and reflect on the fact that we’ve had twenty years of a ‘refresh then sweat as long as possible’ culture with our IT. We need to think that if we are going to switch from ‘Build to last’ to ‘Build to change’ then transformational change is required at each vertex. If its not done in unison, the leading vertex is held back by the trailing one.

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In summary, we believe that:

By default IT should be ‘built to change’ not ‘built to last’. IT change needs to be delivered in small frequent increments and Professionalising IT in this way means we reduces business risk.

The sourcing/contracting of development and operations needs to change. We are seeing lots of different models emerging. The thing I think most people are agreeing on is that the in-house capability needs to improve and where we do contract for services we need to stop trying outsource risk, it has to be shared.

The fastest approach to find the ‘faster gear’ required is to create a digital function and master this in one ‘end-to-end’ value stream first. Business, operations and development have to be one team and we need to address the whole lifecycle from Procurement to Deployment.

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