Are you a technology company? Perception vs. reality and where does IT fit in your organization?
When this question is posed to companies, unless they are in the business of coding, developing applications, software or building hardware, the answer comes back as no. However, a case can be made that most companies in the 21st Century are “technology” companies or at the very least a company providing products and services on a technology platform.
When thinking about a company’s organization structure, there are the verticals aligned to product, service or core offering, however, there are many horizontal groups/departments that provide support for these verticals. These are generally referred to as support or Shared Services groups and include HR, Legal/Compliance, Audit, Operations, Finance and Information Technology to name a few. In the current era it is rare if non-existent, that any group does not rely heavily on Information Technology (including Information Security).
Three common issues when structuring the IT department and business technologies:
- Mis-Alignment of business strategy with IT
- Information Technology, much like other areas, relies on business and operational requirements in order to develop and execute on its Strategy and Operational goals. The key dependency for Information Technology is on the Business Strategy. The Business Strategy is generally defined through teamwork where heads of Businesses, Sales, Operations, The Board, etc. meet to determine and finalize the company’s go forward strategy. Most often than not, Information Technology does not have a seat at the table and is viewed as a support function. This causes a disconnect between what the Business wants to accomplish and what Information Technology can deliver based on the constraints that any system or group has as part of their toolset.
- However, Information Technology is a critical and integral part of the entire organization’s ability and capability to deliver successfully on the goals of the Business Strategy. Without a robust and thought-out Information Technology Strategy based on the Business Strategy, a hodgepodge of point solutions make their way into the DNA of the organization.
- Issues with making IT decisions
- In many businesses, technologies, systems, applications are bought directly by the Business teams thus bypassing the Information Technology team (AKA, Shadow IT). The net result becomes an organization where the best cannot be extracted out of the systems, application and infrastructure. At best, this leads to inefficiencies (lost time, effort) and frustration all around. At worse, business comes to a halt due to technology issues or security breaches. Point solutions also lead to having data sources that are dispersed around the organization without a robust Data Governance and Management practices in place. As Information Technology budgets get squeezed, situations arise where the technology is not kept up to date and in this day and age technologies are updated quite frequently.
- Lack of investment in IT and the long-term impact
- The lack of continued investment into, or shrinking budgets of the Information Technology area, can and will result in a situation where the organization accumulates a technology “debt” or shortfall. The longer this situation exists the bigger the Information Technology debt becomes (i.e., the gap between optimized and operational Information Technology systems/applications vs. band aid point solutions). As with most debt, but this debt in particular carries a heavy compounded interest rate as Business and Operational practices continue to move up the maturity and complexity curve. The Information Technology debt can grow to a point where much like financial debt, it crumbles and the company becomes so inefficient or uncompetitive that it either goes out of business, becomes less and less profitable or is forced to take drastic actions to bring itself back into an efficient or workable equilibrium.
- To avoid such situations, the management team should view technology as an investment rather than a cost and work with Information Technology as a partner to define, map and execute on technology solutions that continue to deliver exceptional results. The continuous management of Information Technology investment can be achieved through long range thinking, strategizing and operational execution. When done well, not only does the company become much better able to organically grow in its industry segment, it can become more efficient, thus profitable via leveraging integration of technologies (e.g., FP&A books and records that can be reconciled and closed in a matter of a few days as opposed to weeks) or purchasing/procurement that can get products and services to teams in a timely fashion, or through real-time and periodic reporting that is accurate and actionable by management.
Embrace IT as a business strategy enabler
Maintaining an up to date and efficient Information Technology shared services has become a necessity and a minimum baseline for business and operational excellence. When treated as a support function business groups view Information Technology as order takers and thus IT becomes a hindrance to growth or efficiency at best and the Company’s demise at worst. However, when viewed as and embraced as a partner, Information Technology can be an enabler and accelerator of growth, especially in the modern era where products and services are becoming commoditized and where consumers and clients are looking for excellence in delivery, support and price.