Perspective

Ford Motor Company, GE, John Deere are among the most recent traditional firms to declare themselves to be ‘digital businesses’. It’s a natural response to the times in which the interest of investors and customers are clearly aligned in this post-brand loyalty era. Traditional companies, burdened by the process and standards rigor and scale that made them successful in the previous era, are unable to respond quickly to changes that drive to today’s markets. Upstarts (er, startups) exploit the vulnerabilities of these fully matured firms and their ecosystems of suppliers and regulators. Large firms simply have too many vested interests in their standardized, internally optimized organizations and investments to freeze them in place to be able to respond to shifting conditions fast enough to head off exploitation of new market expectations.

As markets change as quickly as they emerge, keeping up is a full time job. If you cannot beat them, you must close up shop…or join them.

The C-suite has heard loudly and clearly the messages from its Stakeholders to do much more and with much less and in less time. Cursory searches on google and perusals of headlines on industry rags suggest that most firms have allocated significant resources to transform themselves as well. It’s the megatrend permeating all sectors of industry today: leaders understandably envy the successes of actual digital businesses like Amazon, Netflix, and VMWare that use technology to reduce COGS from their ledgers and accelerate time to value for their customers.

In an era when most firms are striving to become “digital” and the IT engineering teams receive more resources and attention, business as usual (BAU) is blurring the lines of ‘the business’ and ‘IT’ as CFOs and CMOs each solve their respective challenges on their own using Saas-based ERPs, niche ERPs, CRMs and MarTech (to name a few). Each domain has developed their own software support organizations internally, effectively embracing ‘shadow IT’ while giving lip service to the contrary. We speak with forked tongues.

So why in this era of blurring business and IT do I still hear people say that “shadow IT” is ‘bad’? It seems contrary to empirical observation and smacks in the face of reason. I see clear benefits

1. Business and technical accountability get consolidated within the domains that succeed or fail by how well aligned their respective operations are.
2. The scope of investment remains at the functional domain level, solving domain level challenges with domain-scaled solutions.
3. It simplifies the stakeholder landscape and risk/reward calculation that often complicates IT projects that span domains.
4. It ensures that functional domain leadership is 100% vested in the process and the outcomes.

It also drives foundational improvements that protect the business without compromising its ability to act nimbly in response to challenges and opportunities. With more and more industries subject to regulatory compliance, both self-imposed (PCI/DSS, SAE-16, ISO27001) and in response to public sector focus (FISMA, SOX, GPRM, HITRUST), domain based IT has a natural incentive to strike a sustainable balance between innovation enablement and risk mitigation.

The normalization of Shadow IT compels both rigor and simplicity of operation. It aligns accountability with authority neatly where it is easy to explain, support and sustain because the benefits are easy to observe. And it creates a problem.

Remember The Customer?

The customer journey spans functional domains, organizations and systems. Where they cross jurisdictional boundaries (technical, cultural or organizational), hand-offs must happen. It is here were we typically see manual procedures at the beginning followed by semi-automation and ultimately fully automation for repeating, repeatable tasks as the firm increases its investments to scale volume of transactions.

Decisions about how and where to allocate each functional component of the solution falls to decisions makers who often do not hold full accountability of the process, system or organizations. When these solutions are done poorly (the norm, unfortunately), data quality issues ensue, compromising process and product integrity, directly impacting the customer experience.

Clean-up is arduous and costly for the employees who are pulled away from BAU to scrutinize and document and cleans and map and load data. It is not what they came to work to do. And it distracts the organization from what it exists for. Outside company walls, customers complain, contact centers must temporarily surge, resources are diverted from making money to retaining customers, possibly damage control – at worst, law suits and unrecoverable PR – detract further from growing the company.

Regardless of the extent of it, bad data undermines the bottom line.

Connecting these disparate domain based IT systems is not as easy as we like to tell ourselves when scale is the ambition. Resilient, stable, seamlessly operating platforms that scale are intrinsically complicated solutions. They entail multiple systems interacting – authenticating, interrogating and exchanging information – to execute some functions between them. There is complexity here that is masked by its simplicity of operation when it is done correctly. The ingenuity of their implementations – something the engineers and architects understand implicitly – is lost on many stakeholders, who do not appreciate full extent of the achievement!

Domain level leadership is rightly focused on domain level accountabilities and the IT solutions they have brought into the firm to help them. Typically the space between domains is left unattended and under-valued. It is here where this critical function of uniting the domains into a seamless fabric of operation to power the enterprise resides.  This obscurity of accountability can create gaps in responsibility with no natural framework to resolve itself outside an escalation.

 This gap is precisely where the CIO may play a vital role for the enterprise.

The unclaimed spaces in-between functional domains are under appreciated for their critical role in enabling value streams that enable enterprises to make money. Without this connectivity, domains succeed but the enterprise will fail.

Chief Integration Officers should assume responsibility for providing the connectivity services between operations. Integration of processes and data exchanges and system functions through organizational white space is how organizational Capability is developed and matured.

Specifically, by professionalizing systems integration functions, CIOs can

1. Drive down costs of data integration through repetition and repeatability
2. Guarantee data quality and integrity of data that is shared between systems (not within them!)
3. Liaise operational risk management functions for all things people, process and technology platform wide
4. Enable opportunity and operational change on behalf of domain leadership and the CEO, since change is the nature of integration
5. Incubate innovation and experimentation, in controlled environments and in miniature

CIOs are needed to build bridges between the island empires. Without these bridges, exchange between them is subject to risk of inconsistency and disruptions. Taking chance out of the equation is what is called for in the world of Domain IT. This is the natural play for Data and Information Management Leadership to create value for those who create value. It is here where the future of IT and the role of the CIO are clear. And the future is now.