The Federated IT Operating Model is Under Threat!

Today, most organizations employ some sort of Federated IT Operating Model.  Wikipedia defines a federation as:

…characterized by a union of partially self-governing states or regions united by a central (federal) government. In a federation, the self-governing status of the component states, as well as the division of power between them and the central government, are typically constitutionally entrenched and may not be altered by a unilateral decision of the latter.”

Typically, enterprise-wide or common applications, initiatives and infrastructure are a centralized (federal) responsibility, while local applications and activities are under the control of business units or functions.  This “federal rights/states rights” model has infinite variations.  Definitions of “common,” “enterprise-wide” or “infrastructure” are subject to interpretation, and these tend to change over time, with changing business conditions, leadership, technology and other forces.  There’s also inevitably a “shadow IT” phenomenon – sometimes quite large – where much IT activity happens outside the realm of IT governance.

Just as in countries with a federal governance model, the competing forces between state and federal rights pull and push over time, leading to an ebb and flow of centralization and decentralization.  This can be healthy – like an accordion, making sweet music as the parts are squeezed together or pulled apart.  It’s never static, but constantly responding to the forces of change – just as all living systems “breathe” in some way or another, and have their seasonal variations.

But every now and again, new forces surface and combine together to disrupt the gentle ebb and flow – the so-called Arab Spring comes to mind.

The New Forces of Change

IT governance is undergoing such a confluence of new forces.  These include:

  • Cloud computing – it is easier, faster and cheaper (on the face of it) to leverage the cloud to host applications and provide IT services (e.g., storage, transaction processing, data analytics) rather than have your federal IT group provide these services.  Much of this activity takes place in the “Shadow IT” realm.
  • Mobile computing – more of us are doing more via smart phones and tablets.  This exposes us to mobile applications and the many “app stores” including Apple’s and Google.  Getting an app is as simple as clicking a button – and many apps are free, or cheap enough to add to your mobile phone bill without feeling any pain.
  • The shift in the personal computing operating system – from Windows, et al, which can be controlled by the central (federal) IT department, to technologies such as Apple’s iOS and Google’s Android which are much harder (perhaps impossible?) to control centrally.  The genie is already out of the bottle, and it’s not going back any time soon!
  • Economic climate – the economic climate facing most businesses, whether in the US or just about anywhere else is in the doldrums.  This keeps people scrutinizing costs, prepared to make short term economic moves, even if at the expense of the longer term, and trying just about anything to get “unstuck”!  Such a climate tends not to favor centralization and federal power (just ask President Obama’s campaign advisers!) but empowers local forces and factions.

Beware the Unintended Consequences

So, what to do about it?  Here’s three options:

  1. Take a laissez-faire approach – a path of least resistance.
  2. Push back, hunker down and reinforce the federal model with more controls and stronger sanctions for “shadow” behavior.
  3. Adopt a “mutual adjustment” approach that navigates the stormy waters to constantly find the optimal balance.

From my perspective and experience, Option 1 has potential (likely?) unintended consequences.  We saw this when many central IT groups were slow to respond to the emergence of the Personal Computer.  When they did respond, it was generally via Option 2 – they tried to constrain them.  That drove a lot of rogue and shadow behavior and set many companies IT efforts back several years.

For most of us, Option 3 is the practical and pragmatic solution.  Let’s face it, there are all sorts of unknowns in terms of how these forces will play out over time.  We need some form of centralized coordination of infrastructure. However, the terms “coordination” and “infrastructure” must be defined clearly and re-defined from time to time as we gain experience with cloud computing and consumerization of IT.  There is not a right and wrong here – but a critical need for organizational clarity so that you are setting the bounds of infrastructure clearly and in a way that is appropriate to the times and to your business context.

Seven Steps to a Mutually Adjusting IT Operating Model

I believe IT leaders must approach this in the same way they would approach any needed change:

  1. Create and “market” a compelling end state vision.
  2. Surface and “sell” the cost of status quo or of going down the wrong path.
  3. Define a credible and palatable path to the future.
  4. Enroll key stakeholders in joining together on that path.
  5. Engage selected key stakeholders in the governance model.
  6. Surface and celebrate successes along the way.
  7. Take action to discourage deviations from the path.

Image courtesy of Charles Ayoub

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