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Stop me if you’ve heard this one: more and more aspects of your organization are now reliant on digital technology. Adding fresh credibility to that familiar phrase is an interesting statistic from some research* we recently completed with IDC : 54% of the average company’s revenue is now dependent in some way on IT services. blog and magazine websites
Statistics like this always prompt healthy skepticism (and lots of clarifying questions) – but, as you would expect from IDC, this report captures a balanced spread of indicators that serve to verify the increasing prominence of IT in the organization.
For example: 89% of business respondents said that IT services are very important to their processes and functions, and in particular understood the ability of technology to drive both cost efficiencies and employee productivity. Although, as the report also showed, metrics like this are just table stakes in building a strongly aligned IT function.
The figures are certainly interesting, but perhaps the most revealing thing in my view, is how people outside of IT now clearly understand the significance of technology to the success of their business; asking a question about technology and revenue correlation even a couple of years ago might have just resulted in a shrug of the shoulders. Progress indeed.
This study builds on the research we undertook last year which sought to understand and quantify what causes the much reported friction between IT and business users. For the new study with IDC, we chose to expand the scope and invited commentary from line of business managers, in addition to the employees in their teams and, of course, IT Management.
The previous study looked mainly at the impact of IT friction in terms daily of productivity: i.e. how much time business users felt they were wasting in dealing with technology related problems or overly complex tasks. This time, the broader scope of participants has revealed new kinds of friction, particularly related to IT’s ability to drive the business forward, a role some are clearly fulfilling better than others.
Around 38% of business respondents felt that friction in their relationship with IT was stifling innovation and around 32% felt their IT was a hindrance when it came to keeping pace with their rapidly evolving marketplaces. Although clearly problematic for the IT organizations that do fall into these categories, what’s striking about these statistics is the majority of businesses don’t feel this way.
The specter of failure and outage did return in this new study though, with 52.8% of respondents citing IT failures leading to a loss of efficiency and a significant contributor to revenue loss (39.6%) and losing customers to competitors (33.6%). Given the continuing headlines surrounding high profile technology problems, these figures seem entirely reasonable.
It’s clear that in these days of elevated scope and profile for IT, every aspect of operational performance matters and everyone’s watching…
Moving GDP (no, really)
One of the more striking and provocative concepts in the report is the potential for the reduction of IT Friction to have a meaningful and positive impact on the GDP of nations. The report describes the drag on innovation and efficiency that this less than optimised relationship, but at the scale of economic output – and it’s hard to fault the logic.
If we could successfully crack the impediments described in the research, which we know to be possible given the conclusions of the piece, we could, the report claims, see the generation of additional productivity equivalent to adding another Taiwan. This is a significant finding and underlines the importance of this piece of research.
Through the half-full looking glass
Another echo of the previous IT Friction analysis was IT’s habit of overestimating how well it was doing and how favorably it was perceived in the eyes of the broader business. This time 36% of IT leaders said they were working strategically to address business needs, countered buy just 20% of line of business leaders agreeing.
More interestingly, 56% of IT leaders said they provided dedicated, executive-level individuals to support each line of business; a role which only 24% of line of business owners reported knowing anything about. Whoops.
Again, even with salt added liberally to these numbers, its clear that the relationship is always characterized more positively by those providing the service, than those consuming it – but it t’was ever thus. IT does demonstrate a reassuring self-awareness in the study though: with 52% of IT leaders agreeing that their function was a source of friction – and that’s good – because that awareness is the catalyst for change.
To survive or thrive? That is the question…
This study did more than usefully quantify some long-discussed problems though: it revealed a strong correlation between the behaviors of the top-rated IT organizations and their perception among business leaders. It also documented those behaviors, helping to identify a path to improvement for IT organizations that fared less well in the analysis.
The more proactive and visionary IT organizations that actively (and publically) sought to drive innovation performed more strongly in many aspects of the study. Not a surprise of course, but a surprising number of organizations don’t act (or can’t, or won’t) act this way. IDC called these high-performing teams ‘Thrivers’.
By contrast, those less willing (or perhaps able) to adopt new technologies and approaches were classified as ‘Survivors’. The perception of Survivors in the business was measurably weaker – not terrible – more a ‘meh’. Interestingly, their more traditional approach was also reflected in the things they chose to prioritize: such as operational efficiency over things like ‘time to market’ and other measures of agility or innovation.
But there is good news: just over half (52.8%) of business leaders surveyed categorized the IT team they work with as being in the ‘Thriver’ category. These leaders were twice as likely to be ‘very satisfied’ with the services they received.
The whitepaper also highlights lots of other interesting correlations between the behaviors of Thrivers and their perceived role and alignment to the broader business. So what makes an IT organization a Thriver? What are some of the things they do differently to those departments who battle through life in survival mode?
Thrivers prioritize strategic business outcomes
When it comes to making and recommending investments in technology, Thrivers were shown to favor more strategic outcomes over traditional operational priorities. In particular, Thrivers were more like to prioritize their investments on the basis of:
- Time to market
- Customer satisfaction
Whereas Survivor organizations demonstrated a clear propensity to model their return on investment in terms of cost of operations and productivity metrics.
Thrivers don’t just talk S.M.A.C.
We’re all grindingly familiar with the four horsemen of the digital apocalypse by now: social, mobile, analytics and cloud – a group of disruptive technologies frequently identified as being at the heart of any digital transformation initiative.
Most organizations now have at least a plan and policy in place for taking advantage of their undoubted business benefits too. So what’s different about Thrivers? It seems to be a matter of execution and perceived value by the business leaders. Those businesses working with Thriver IT teams were twice as likely to be provided with IT services that took advantage of these ‘Third platform’ technologies.
Automate and Thrive
Despite thinking about their technology investments from a more strategic point of view, Thrivers do still clearly value good old-fashioned efficiency. They are much more likely to be driving the automation of key non-IT business processes than those teams in the ‘Survivor’ group.
In my experience, this can be symptomatic of closer working relationship between IT and the rest of the business. The value of process automation to each function is fully understood and championed by a well integrated IT team that works closely with each part of the organization. Automation is often viewed as a holistic differentiator for the whole organization by more far-sighted IT leaders.
More recently we’re also seeing CIOs willing to take on increasing responsibility for business process design and optimization across the board. This is a reflection of two things: The increasing reliance on technology to underpin the processes and a recognition of IT’s expertise in the effective implementation of processes in general.
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