Lite at the End of the Tunnel
- 08 June, 2004 11:49
IS Lite is about value not cost savings.
Want your OS organization to be agile and lean? You're not alone. What is surprising is that it's such a long time coming.
The idea of "IS Lite", a lean, focused and high-value-adding IS organization, was first proposed in a Gartner EXP in a research report four years ago. It promised greater IS agility and cost efficiency.
But what's happened in those four years, and what can we learn from the early movers? Why isn't IS Lite everywhere?
We recently conducted a survey of our members to find out. We wanted to see how IS organizations were meeting the challenges of implementing an IS Lite-organization. The results were intriguing.
But first some history. In 1999, IS Lite was seen as the culmination of forces that were reshaping the traditional federal IS structure. In a federal structure, IS units sit in the middle of a value chain - from external service providers (ESPs) on the supply side, to business unit (BU) customers on the demand side. IT activities take place in three IT macro-processes:
- Driving innovation, which includes strategic planning, architecture design and business requirements definition;
- Delivering change, which includes system development and support of user changes; and
- Supporting infrastructure, which includes desktop support and data centre and network operations.
These three macro-processes are spread across central and local units.
Four trends were recasting this traditional IS organizational model: process-based working, outsourcing, specialization in centres of excellence and application development embedded in the business. As a result of these trends, IS Lite predicted that innovation would be retained internally and mostly centralized for coherence and exploitation across the enterprise. Delivering change would be mostly moved out to the business units to get the benefits of being close to customers, and the supporting infrastructure would be selectively outsourced under central control for cost and efficiency.
That was then. What we found from our research is that - unsurprisingly - IS Lite is more difficult to implement than it looks, but worth doing if you can. We've found that the foremost benefit of IS Lite is actually higher customer satisfaction, followed closely by improved IS service levels, better alignment with the business, access to expertise and increased IS flexibility - not cost savings as you might have expected.
What is the extent of restructuring around IS Lite?
Today, with the continuing pressure on IS to deliver even more for even less, interest in IS Lite remains as strong as ever, but change is always a challenge. IS Lite is being implemented, although unevenly. The survey revealed that all EXP members interested in IS Lite have adopted at least one of the four trends predicted. Of the four, process-based working is the most widely adopted, followed closely by outsourcing and then centres of excellence.
Process-based working means organizing people, operations and technology around end-to-end workflows - in the business or IS - rather than around functions, platforms or skill-sets. For example, order fulfilment might have separate functions for order entry, inventory control, shipping, billing, customer service and claims processing. In process-based working, a single team with the requisite expertise manages the entire end-to-end process - from taking the initial order to resolving warranty and billing issues. The result is that the entire process appears seamless to the customer.
Moving application development to business units is a different story, though. It hasn't happened in many enterprises so far and probably won't.
What's the explanation for these findings? The recent worldwide economic downturn has caused tremendous pressures to reduce IT costs. Centralization is the fastest way to get control of IT costs, and eliminate redundancies and overlaps. Even though this downturn is now receding into memory for most of us, it has left a legacy of caution and cost control behind that centralization plays to.
This centralization has spurred process-based working and outsourcing, while blunting the migration of application development to business units in the way that IS Lite envisioned. It's true that business unit executives are more involved with application selection and implementation now than four years ago, but there has been no wholesale migration of the actual development work because it opens the door to too many problems of maintenance and integration. There's also a recognition that issues like privacy and data security - each a key focus for CIOs this year according to another recent survey - suggest that these mission-critical areas are too important and too hard to be devolved.
What are the challenges in adopting IS Lite?
Two main impediments to making IS Lite a reality come, not surprisingly, from within IS.
Competencies in IS Lite differ from those of traditional IS. For example, behavioural competencies such as collaboration, team building and conflict resolution are much more important in process-based work than traditional technical competencies. Many current IS staff lack the competencies to make the new roles a reality.
IS resistance, the second challenge, is due mainly to staff concerns over outsourcing and changing work practices caused, for instance, by a switch to process-based working.
In addition to these two challenges, Gartner EXP analysts have found that the seemingly uneven uptake of IS Lite is probably due to the time it takes to shift from functions to processes or implement an enterprisewide sourcing strategy. Both can take years.
In IS Lite, there is relatively less emphasis on technical (know-how) competencies than in traditional IS and more emphasis on business (know what) and behavioural (know why) competencies While technical competencies can be acquired by straightforward training, business and behavioural competencies are relatively difficult to acquire. The five retained roles in IS Lite include IT leadership; architecture development; business enhancement, which involves business process analysis, project management and business relationship management; technology advancement; and vendor management. Filling these positions in an IS Lite organization is a significant challenge.
How do you move towards the Lite?
So what is to be done in addition to pushing adopting process-based working, developing centres of excellence and expanding the scope of your outsourcing arrangements? The most important steps involve analyzing your business drivers to determine IS Lite priorities; strengthening your IT leadership team's skills; centralizing the architecture development role to coordinate internal and external architectural direction; using the business enhancement role to encourage process-based working throughout the enterprise; using the technology advancement role to develop knowledge-sharing centres of excellence; centralizing and expanding the scope of the vendor management role; consolidating the roles in a Lite organization; and finally demonstrating the business value of IT by running IS like a business.
A lack of behavioural competencies and resistance to change in IS are impeding the migration of some enterprises to IS Lite, a leaner, more focused variant of the traditional IS organization.
Four IS Lite trends - process-based working, outsourcing, centres of excellence and application development embedded in the business - have been partially adopted in the past five years. The two main challenges have been lack of competencies to carry out the five key IS Lite roles and IS's resistance to change.
To move toward the IS Lite, use business drivers to prioritize which trends to adopt. Strengthen IS roles by developing or acquiring the necessary competencies, and focus IS on delivering value. One person can't do it all, so you need to build the IS leadership team.
In particular, the leadership team must have, develop or acquire capabilities for: process-based working, managing change to overcome resistance, business and behavioural expertise, and demonstrating the business value of IT. This means taking a close look at which roles will remain in your organization and which are likely to become obsolete so you can well-position your IS organization for the future.
Andrew Rowsell-Jones is vice president and research director for Gartner's CIO Executive Programs