Lean IT?

I recently kicked off a series of posts on the future of IT as well as some follow on posts looking at the pros and cons of treating IT as a separate department versus rolling its functions up into their business unit counterparts.

In this post (which is unreasonably long…so you may want to grab a snack) I want to change gears a bit, however, and lay out why I think IT in 2010 offers a particularly rich opportunity for organizations and their leaders to effect profound transformation within the modern corporation.

In my day-to-day work with clients (as well as during the time I spent in IT before becoming a consultant), it’s clear that something isn’t right in the way most organizations do IT. Strained relations between the business and IT, poorly managed demand pipelines, failure to consistently deliver business value through applications and services, difficulties delivering projects on time or within budget (or both), lack of documented, repeatable processes, leadership that struggles to share a seat at the table with their business counterparts to help shape corporate vision, mission, and strategic direction—the list goes on.

And while not every IT department suffers from all these issues (although a great many in fact do), I think it’s safe to say that world-class, top-notch IT shops are less common than they should be, given that IT has been around in one form or another for more than four decades now.

So what’s the problem? Why can’t we technologists get our collective act together and run consistently high-performing IT shops that deliver value to the business?

Step one is to realize that this isn’t an IT problem or a technology problem, but an organizational problem. Picture a married couple that fights all the time, tooth and nail, practically coming to blows; and when the marriage counselor asks them what the problem in their relationship is, the husband says, “She burns my toast every morning—makes me want to scream!” and the wife says, “He’s always leaving his clothes on the floor—I could jump out the window when he does that!”

It would be a poor counselor who suggested getting a better toaster and a mahogany valet for the bedroom, because the problems they’ve identified are of course not the real problem.

We’re in a similar situation with IT: alignment with the business, IT as a service, agile vs. waterfall, outsourcing, insourcing, SOA, cloud computing, whatever. These attack the symptoms rather than the root causes of the problems modern corporations face around IT.

So what’s the real problem with IT then? To begin to answer this, I think it helps to look at another corporate function that not too long ago was in a similar position to IT today and has emerged transformed: manufacturing.

For corporations in the United States in the 1970s, manufacturing was in bad shape. Particularly in those industries where the US faced tough competition from overseas (like the auto industry) deep, structural problems with how manufacturing operated within the organization were becoming apparent.

And although lots of people pointed to a wide array of issues (quality, speed to market, product development, supply chain, labor costs, and so on), none of these quite hit the mark to arrive at the root causes of the problem with the US manufacturing function.

At the end of the day, making smaller cars or hatchbacks wasn’t the solution, increasing fuel efficiency or reducing prices didn’t do it, making the supply chain more nimble or finding ways to reduce labor costs weren’t the answer either. What was required was something more fundamental, something that, once it was accomplished, allows these other shifts to have real impact and drive true organizational value: US automakers needed to approach manufacturing as a strategic capability for the enterprise rather than a nuts and bolts, blue-collar follow on to the “real” work of the organization, such as product design, marketing, or sales.

What Japanese automakers had already realized was that the manufacturing of the car didn’t have to be a low value, commodity activity, but rather could be approached as a differentiator to gain competitive advantage. I’ll leave the detailed explanation of the variety of approaches to process excellence developed during this time to experts, but for me it boils down to this: the manufacture of the most seemingly insignificant part—say, the rubber seal around a car window—has extreme strategic value to the enterprise. Doing it more efficiently improves time to market; doing it more consistently raises margins; paying attention to how the part fails during use provides opportunities to continuously improve product design; and so on.

And this approach was not only applicable to auto makers, but to any organization that manufactured products, from the simplest widgets to the highest-tech gadgets.

Over the course of the 1980s and 1990s, US corporations learned valuable lessons from their Japanese counterparts (helped in no small measure by the shift of auto manufacturing operations from Japan to the US), to the point where a strategic approach to manufacturing is a commodity today.

There are other examples of this maturation process, e.g., supply chain, customer service, HR, but I think we can start drawing some instructive parallels to IT in 2010 based on this one.

First, to materially transform IT at the organization, the focus should be on making it a strategic, enterprise capability rather than on incremental improvements such as introducing agile methods or adopting a service oriented approach. What this means in practice is first and foremost conceptualizing IT as a way to solve business problems rather than a way to deliver technology capabilities.

We have to keep the lights on, of course, but the work of keeping the lights on needs to be seen in a more strategic light rather than relegated to a “blue collar” function of dropping boxes or banging out code.

Second, any changes to the way IT works need to be introduced in order to improve how IT solves business problems, not to improve the delivery of IT capabilities. The real value of introducing an agile SDLC is not to shorten development timelines, reduce defects, or build higher quality applications—although of course, all of these are good things. But in and of themselves they are nearly worthless if the business doesn’t get value out of the applications we build so well.

This is the common problem of IT meeting SLAs and managing metrics that the business frankly doesn’t care one lick about.

And finally, no matter how IT is structured at an organization (one centralized shop, federated business unit shops, or something in between), leadership can never forget that their primary responsibility is never simply technology, but rather the many business functions that we happen to group under the umbrella term IT.

So the leader of a technology organization actually has responsibility for operations, product development, business process engineering, marketing, customer communications, project management, and quality control. To take a seat at the table with her peers, a technology leader needs to view herself as owning these functions, must understand them as well as her LOB counterparts, and be able to articulate her vision for how the resources under her authority contribute meaningfully to the larger pursuit of each at the organization.

The Final Word

This has been a long post, but really has just begun to scratch the surface of “The IT Problem” at the modern corporation. And I read ZDNet every day, so I know that people have strong opinions about the current state of IT. I would love for folks to chime in and get a healthy discussion going around these issues. Whether you work in IT or not, how successfully organizations transform IT affects us all and ultimately affects how well we can compete over the next few decades. Let’s hear from you lurkers out there: do you agree or disagree? Have I missed the mark? If so, what are the other issues I’ve left out completely? Jump in and get involved, share your ideas, and get the conversation started—I can’t wait!

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One Response

  1. I totally agree with the views you have expressed in this post Joe. I think oftentimes IT is seen as a necessary expense instead of a strategic partner. Companies that properly align their IT functions with the rest of the business organization reap rich rewards (Jet Blue is a perfect example). It all begins with excellent senior leadership on both sides of the table.

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