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Perspectives

A New-Age IT Operating Model for a New Age of Business

2017-01-19


To contend with persistent change and resource challenges, IT organizations need a new operating model that will not only help them deliver tailored services to a new generation of users, but also unlock the vast potential of emerging digital business opportunities.

CIOs are fast realizing that their carefully crafted enterprise-wide technology infrastructure and talent base built over the years are falling short in light of disruptive market, technology and customer behavior trends. The growing need to cultivate an agile organization that can quickly respond to market disruptions makes it imperative for organizations to intertwine their IT and business objectives.

Our take on the next-generation IT operating model is grounded on four foundational elements (see Figure 1):

Figure 1

Organization Structure

For years, IT has been guided by a mission to “align with the business” and “deliver business value.” The accelerated pace of technology disruption, however, extends beyond alignment, to deep integration, where IT is embedded in the business and not merely viewed as a supporting function. We believe this trend translates into three broad operating structures that will soon dominate the operational landscape (see Figure 2).

Figure 2

Process

For a seamless transition into the future of IT, organizations need to establish process frameworks that tie together and take full advantage of new-age technologies. Our client experience suggests two expansive principles that are significantly influencing future IT process models.

  • Agile lifecycle and lean delivery: The nature of new-age digital technology and increased emphasis on user experience means organizations must deliver higher quality products quickly. This necessitates Agile develop­ment, rapid release cycles, automated testing and deployment, and embracing a “test and learn” approach to change management.

  • Intelligent process automation: Based on our research, best-in-class companies are seeking intelligent process automation to reduce the amount of manual interventions across IT by 55% to 60% over the next one to two years. We estimate this move will provide more than 20% operational cost savings through productivity gains, process standardization and better insights into process optimization. (For more insights on this topic, please read our white paper “The Robot & I.”)

Workforce and Sourcing

With the merging of IT into business and the mandate for information over process, the outlook of the IT workforce has changed from service provisioning to knowledge work. New trends include:

  • Talent acquisition: Gamification, job postings on social media, automated skill matching, incubating startups, digitized recruitment.

  • Retention: Partnerships with online skills platforms, training programs with tech vendors, flexible work policies, revised compensation structures.

  • Talent management: Talent analytics, centralized talent management systems, self-service career planning tools, intuitive goals monitoring programs.

  • Nurturing of innovation: Hackathons, digital labs, crowdsourcing, social collaboration. 

Technology

We recommend IT organizations develop a three-tiered tooling reference architecture to harness new-age technologies: 

Front-office tools 

  • Primarily customer-focused tools that drive business growth and customer interactions, focused on usability, experience and business value. 

  • Require experimentation and innovation driven by SMAC technologies, open source, interactive user interfaces, artifi­cial intelligence, etc. 

  • Delivery agility and flexibility needed to meet changing customer demands and business priorities. 

Middle-office tools

  • Composed of enterprise analytics, information engineer­ing and integration across various data, customer channels and front-end services. 

  • Focus is on business intelligence, process automation, intelligent middleware and intelligent process automation that drive time-to-market reduc­tions, cost optimization, decision agility, and overall operational efficiency. 

Back-office tools

  • Focused on infrastructure, hosting, enterprise enable­ment, data and security services. 

  • Prevalent areas of investment are cloud/SaaS, big data, ERP. 

  • Investments should be directed at optimization/consolidation and externalization of vendor solutions, with the exception of data services and security offerings.

Looking Ahead

As IT increasingly becomes agile, innovation-driven and competitive, its positioning must move from a standard cost center to a business-integrated organization that drives the design of products and services, captures consumer choices and fuels top-line growth. Organizations that succeed will continuously monitor rapid and radical technology transformations impacting the business model. They will also proactively assess the implications of new trends and—most important—develop a top-down willingness to change. 

To learn more on this new-age operating models, see our white paper "Why New-Age Operating Models Are Necessary for Enhanced Operational Agility" or visit our Cognizant Business Consulting Practice.

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A New-Age IT Operating Model for a New Age of Business