The weakest link in digital transformation

The weakest link in digital transformation

The weakest link in digital transformation

Enterprise IT refers to the function of investing, developing and operating technology solutions within enterprises. It is a multitrillion-dollar industry going through a fundamental transformation. This is why:

Changes at this scale naturally call for a new IT operating model for enterprises to exploit opportunities, and for internal IT organizations to strengthen their business relevancy. To date, the pace of management innovations benefiting enterprise IT has grossly lagged behind innovations in the technology space. And arguably, the prevalent enterprise IT operating model is the weakest link in ongoing digital transformation, because many enterprises rely on outdated management practices and behaviors.

Think about data center or network consolidation, application rationalization, offshoring, outsourcing, workforce restructuring, shared services, discretionary spending restrictions and the like. Industry examples suggest that these levers have been mostly exploited, further savings are increasingly elusive, and overuse is counterproductive. Above all, they all focus on the input cost efficiency of IT, e.g., cost per labor-hour or cost per server. The input cost efficiency was a critical success factor in the industrial age, when scale and scope economies mattered the most. It is far less significant in the digital age due to the shifting focus on business outcomes through agility and speed. Understandably, the traditional levers are proven, broadly accepted, and within the comfort zones of existing management teams, but they are a major leadership and organizational distraction on the way to digital transformation. Consequently, the traditional cost-efficiency programs continue to capture significant executive mindshare at the expense of advancing innovative management practices.

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The traditional program and project management theory was designed for plan-driven waterfall projects. It consistently underperforms on agile initiatives due to its backward-looking management metrics and controls. When dealing with agile, what executives need to know is how much work is left, not how much work is done. The fixed sizes of teams and the flexible scope of agile development make it impossible to detect risks and issues on time. Consequently, agile program budgets and schedules don’t blow up but bleed insidiously. Programs with over 100 full-time employees are most vulnerable.


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