I was introduced to the phenomenon of Business-IT Convergence in the late 1980’s by one of the world’s leading IT thinkers and teachers—Professor James Cash, then Professor and Senior Associate Dean at Harvard Business School. I had just delivered a presentation about Business-IT Alignment to an audience of CIOs. The presentation was well received, and I was initially thrilled when Professor Cash approached me to shake my hand. He said he found my presentation “interesting.” The expression, “Damned with faint praise” came to mind, especially when he went on to ask, “Don’t you think convergence might be a more realistic approach to closing the Business-IT chasm than alignment has proven to be?”
I had the opportunity to work with and learn from Jim Cash in the early 1990’s as we collaborated on IT management research, IT leadership and Business Relationship Management development. My research and consulting firm had merged with Ernst & Young in 1990, and I became a Partner in a new thought leadership facility on Boston’s Beacon Hill. This facility was initially named the Center for Information Technology and Strategy, but was soon re-branded as The Center for Business Innovation. The name change was an acknowledgment of Business-IT Convergence—IT strategy was no longer separate from Business strategy—it was becoming a key element of Business strategy. With IT strategy being subsumed into business strategy, the IT Operating Model was becoming an integrated component of the Business Operating Model.
The Changing Nature of IT
Business-IT Convergence is a consequence of the evolution of IT, which is simultaneously becoming:
- More ubiquitous. Towards the end of the 20th Century, IT helped transform information intensive industries (e.g., financial services), but in the 21st Century, IT’s transformational power is just about everywhere, from sports, to industry, to government, and to communities and social networks.
- More accessible. With the consumerization of IT, powerful mobile computing and readily available cloud-based services, now just about everyone has access to potent capabilities.
- More capable. Touch screens, voice commands, location-based services, cheap data storage and the ability to analyze all types of information across multiple sources give people worldwide access to computing resources that were previously only available to the largest, most sophisticated companies and government agencies.
The Changing Nature of the IT Organization
With these changes, the days when there were two types of IT people—the IT professional, and the IT end user—are quickly passing. Today, there are end users who have access to tools that let them accomplish more with IT in an hour than could be accomplished by yesterday’s IT professional in a week. There are people we would consider to be IT professionals in every respect, except that they don’t work for an IT organization—rather they are deeply embedded in the business. The distinction between staff and line has changed dramatically. As predicted by Alvin Toffler in The Third Wave, the artificial breach between “producer” and “consumer” is being healed, giving rise to the IT “prosumer” and to Business-IT Convergence. So-called “Shadow IT” is no longer an aberration to be eliminated—it is becoming the norm, with the traditional corporate IT organization becoming the shadow.
So, What Does Convergence Look Like?
Business-IT Convergence shows up in many ways. The ‘consumerization of IT,’ where the line between corporate and personal technology is blurring, is an aspect of convergence. Employees now expect to be able to use the same technologies at home and at the office. They expect the search for information to be as simple and rapid across their organization’s data bases as it is when searching the Internet.
But a more fundamental implication of Business-IT Convergence is the changing nature of corporate IT. This is not as simple as a reversion to your grandfather’s “decentralized IT organization.” Rather, Business-IT Convergence happens when roles that were traditionally embedded in the IT organization are now formally embedded in the business. This has major implications for IT infrastructure, the stuff that must be efficiently, reliably, safely and cost-effectively shared across the enterprise. Also, for what moves to the cloud, what types of cloud service, and whether to transition off existing enterprise application platforms.
Note, I am referring to IT roles, not jobs. For example, Business Architect, Process Specialists and Information Analyst are roles that are often embedded in the business, but that are not necessarily job titles.
Simply stated, roles that were formerly the domain of the IT professional and that existed as part of an enterprise IT organization are migrating into the business line organization. Simultaneously, roles that were deeply embedded in the business (even if they were cloaked in shadows) are being assumed by IT infrastructure groups.
Towards a Converged Business-IT Operating Model
In the mid-1990’s I learned from another leading academic, Professor Dave Ulrich, University of Michigan, how to think about IT roles from the perspective of value creation. His focus was Human Resource roles, but his analytic approach could apply equally to IT or any other shared service.
The Ulrich framework considers how value is created against two dimensions—the enterprise need for commonality and control across Business Units (BU’s), and the degree of differentiation inherent in the BU’s served. For example:
- Where the need for commonality and control and the degree of differentiation in BU’s served are both low, the best way enterprise IT can add value is to broker needed services. PC provisioning and support are examples of services that could be brokered.
- Where the need for commonality and control is high and the degree of differentiation in BU’s is low, services should be organized as a corporate function. An Enterprise PMO (Portfolio or Program Management Office) would be an example of such a corporate function.
- Where the need for commonality and control are low and the degree of differentiation in BU’s is high, services should be embedded in the Business Unit. Business Analytics is a common example of this type of capability.
- Where the need for commonality and control are high, and the degree of differentiation in BU’s served is medium, services should be organized into a Service Center, focused on operational excellence and efficiency. An example of this construct is Global IT Operations.
- Where the need for commonality and control and the degree of differentiation in BU’s are both high, services should be provided by an Integrated Solutions Center, featuring the cross-section of disciplines needed to deploy and sustain sophisticated enterprise-wide solutions, such as Enterprise Resource Planning and Customer Relationship Management.
- Where the need for commonality and control is medium, and the degree of differentiation in BU’s served is high, the needed services should be organized as a Centers of Expertise. Enterprise Architecture is an example of this type of networked capability.
The Ulrich framework gives us a value-based lens that frees us from the historical pendulum swing between centralization and decentralization. Business-IT Convergence can now be approached as a nuanced model that locates IT capabilities based upon the tension inherent in the enterprise need for commonality and control and requirements of Business Unit differentiation.