Highly respected McKinsey & Company has just published a ground breaking research report entitled, “Partnering to shape the future—IT’s new imperative.” The opening statement powerfully expresses the raison d’être for Business Relationship Management:
“When IT acts as a partner to the business, rather than as a technology consultant or supplier of IT services, the benefits are striking. …IT organizations that play a partner role—that is, actively collaborating with the rest of the business to shape an overall business strategy that effectively leverages technology—tend to perform better on a number of dimensions, including the delivery of core services and the creation of a healthy organizational culture.”
They go on to state:
“But while most respondents, from both the business side and the IT function, believe the IT organization should be a partner to the business, few say IT plays that role today.” (Emphasis added.)
“The results suggest that the best opportunities for improving IT’s performance overall lie in strengthening the model the IT organization is structured, run, and managed around, and in defining more clearly IT’s role and priorities.”
The Business Relationship Management Talent Gap
Of particular interest to those in Business Relationship Management, McKinsey states:
“Nearly all executives say acquiring talent is a challenge and a possible longer-term barrier to improving IT, which could require preemptive moves on the part of many companies. …their most pressing needs for IT talent are in analytics and in joint business and IT expertise.” (Emphasis added.)
Business Relationship Managers, are your ears burning? Have you thought about getting trained and certified in Business Relationship Management, but were not sure how to justify the investment in time and cost? Let’s look at the McKinsey data to get a handle on the value of BRM.
Partner, Consultant or Supplier?
McKinsey examined 14 dimensions of IT performance and found that the type of relationship between business and IT has an impact on IT effectiveness in every dimension. They characterized 3 levels of Business-IT relationship:
These 3 levels approximate to levels 1, 3 and 5 on the BRMI Business Relationship Maturity scale (Ad Hoc, Service Provider, Strategic Partner). They found that 35% of executives at companies where IT is seen as a partner say the IT function works very or completely effectively with the business to develop new capabilities, while only 14% say the same at companies where IT is a consultant or supplier.
Benefits of a Partnership Relationship
McKinsey notes that in some dimensions of IT performance, the benefits of partnership are exceptional. For example, when IT is a partner:
“…respondents are more than three times likelier than all others to say that IT is very or completely effective at implementing bottom-up innovation and at creating a healthy IT culture. Similarly, in many other dimensions—from bringing new ideas to the business to delivering projects on time and digitizing business processes—the partner respondents are at least twice as likely as others to report that IT is effective.”
What Does this Mean To Your Company?
Effective deployment of Business Relationship Management Capability can improve your ability to create a healthy and effective IT culture, implement bottom-up innovation ideas, and measure IT’s performance on multiple dimension increase by factors of 3.27, 3.43 and 2.64 respectively. The impact in terms of realized business value is going to vary by company, industry, leadership effectiveness, and other factors, but a 300% advantage in reaching meaningful outcomes is one to be seized!
McKinsey point out another couple of key factors:
The Impact of Cloud Computing
With uncertainties in the global economic climate, IT organizations are under constant pressure to improve performance. Cloud computing, in its various forms including Software as a Service and Infrastructure as a Service are rapidly gaining traction as a supplement or alternative to the traditional IT function.
“About one-third of business executives see third-party providers as a significant or complete substitute for the IT function’s services.”
Companies are expanding their digital programs, as they come to grips with business in the age of digital everything.
Here, McKinsey notes:
“Digital initiatives have already begun to thrive at organizations where IT operates as a partner with the business. Compared with their peers… these companies are roughly twice as likely to report… that the business impact from the initiatives has been significant, and that the IT function shares accountability for digital initiatives rather than simply playing a supporting role.”
Changing Mind-sets, Driving Value
Getting to a true business-IT partnership requires a top-to-bottom shift in mind-set. In McKinsey’s words:
“To reap the full benefits of partnership, stakeholders across the board must adopt a partner mind-set toward the services (and value) that IT provides rather than thinking of their IT colleagues as consultants or suppliers.”
What are you doing to foster that mind-set change? What more could you be doing?
Seats are available for my upcoming CBRM training and certification course in Atlanta on July 25-28. For details or to register, please click here.