For many years, the suggestion box served as a source of fresh ideas from outside traditional hierarchies of organizational authority. In today’s IT world, decentralized innovation is a much more chaotic proposition, with business demand for rapid, responsive IT driving both overt requests and shadow activity, and with fresh ideas and the means to their execution emerging from any quarter in the enterprise. But how is it possible to manage across this scattershot of innovation, while continuing to deliver the unified technology foundation needed to support the business as a whole?
One answer to this conundrum, which has experienced a recent revival of media and analyst attention, is the ‘divide and conquer’ approach to IT management where CIO responsibility for app-centric systems of innovation and foundational systems of record is divided between a ‘Chief Innovation/Digital Officer’ and a ‘Chief Operating Officer’ within IT. An idea that was introduced more than a decade ago – analyst firm Gartner actually argued for division of the CIO function into four discrete roles back in 2000 – notions of strategic (business oriented) vs. tactical (IT maintenance) responsibility have re-emerged with technology advance, the data explosion and the increasing imperative that all organizations engage in digital transformation in order to thrive. For example, technology consultant Capgemini has attributed need for this division of labour to the introduction of cloud: while CIOs have turned to utility models, buying computing resources to free up time for more strategic activities, cloud management has proved a more unwieldy beast that consumes more energy and resource than anticipated. The creation of resilient infrastructure, security defense, integration of heterogeneous apps and environments have ironically left CIOs “too busy managing the Cloud to actually manage the business.”
While the separation of roles may hold appeal in org chart rendering, the bifurcation of CIO responsibilities and associated IT functions may not always correspond to the complex interdependence of business and technology – and the interplay of strategic and tactical activities within IT. As Shawn Rosemarin, Chief-of Staff, Americas Systems Engineering for VMware, observed, “A few years ago, you could have told everybody in IT that they would fail if they didn’t understand business. I would tell every business executive today, you will fail if you don’t understand the strategic importance of IT. Every single aspect of the digital economy – which is basically the only economy we will have in the future – will be fundamentally anchored in the ability to seize opportunity by taking a theoretical concept within technology and practically applying it to an element of the business.” And industries that formerly relied on government regulation in competitive scenarios – banking, hospitality and taxi services – will need, he argued, to substitute digital innovation for traditional legislative protection in order to survive.
According to Rosemarin, in this digital future where innovation is everyone’s responsibility, the issue is no longer who is responsible, but how tightly IT and the business are connected. Companies that are now thriving in the era of the digital business have moved the CIO from a traditional focus on “cost savings” to “fostering innovation.” To support this shift, many have adapted their organizational structures to have the CIO report directly to the CEO. Within this new reporting structure, the CIO can focus on providing input on digital opportunity, while acting as the primary source for technology expertise. CIO rewards and remunerations also factor in his/her ability to facilitate innovation in addition to maintaining the availability of key systems. In this scenario, the key question that emerges in Rosemarin’s view is “how do we most effectively build a culture of innovation within the organization?” At a structural level, this happens when the business takes every opportunity, without putting systems of record at risk, to drive a closer connection to the customer through systems of engagement – typically through a mobile or web application. At the IT level, this occurs when the technology is in place to accelerate and support all paths to innovation. In a nod to Barry O’Reilly’s Lean Enterprise, Rosemarin contrasted the traditional enterprise, in which a very small fraction of all good ideas are selected for project funding due to financial and resource constraints, and then funded for far too long due to investments already made – whether the project outcomes were successful or not – with high performing, lean organizations that embrace innovation by funding many more projects over shorter periods of time to produce “Minimally Viable Products” (MVP), which are quickly tested in the market to prove out their business cases. Armed with market tests, the innovative enterprise can make a more informed decision about which projects are the best to pursue and more likely to thrive. In this approach, Rosemarin explained, “the investment is tied to specific, much smaller milestones aimed at testing the market to keep the organization closer to the path of the original business case. If at any point, the foundational premise for the project falters, it’s possible to pull out and devote that investment to other projects.”
As a foundation to drive this innovation, IT must continue to deliver infrastructure securely but manically automate the provisioning of services all the way up the stack. According to Rosemarin, the typical IT organization of today fails to deliver on each of these requirements – a disfunctionality due in large part to the separation of IT into operational staff who deal primarily with systems of record and are driven by SLAs and control, and development groups that are focused on delivering speed and agility to foster innovation. However, of necessity, these teams and technologies cross boundaries in project roll out, and new approaches such as DevOps represent one way the CIO can draw operations and development together, creating mutual responsibilities focused on the delivery of innovation platforms. So while IT provides the rapid infrastructure scale needed so that development teams can say “yes” to business manager requests, developers “own their code,” taking responsibility for developing services with security, mobility and availability in mind at the time of creation to meet operational needs. “This traditional “Waterfall” approach of dev, to QA, to production has to go away,” Rosemarin argued, “and we have to move to an “Agile” DevOps culture that says ‘we are constantly iterating.’”
CIO need to simultaneously address the split mandate to support innovation with on-demand IT resources while keeping the lights on is a tall order. To help drive this change, VMware has developed an IT Transformation model that Rosemarin describes as designed to “better align IT projects with the needs of the business by connecting the business outcomes with the IT outcomes” through delivery of consistent metrics across the organization’s technology framework. Essentially, the path for IT is to transition from a cost center within the organization which reports to the CFO, to a service provider that can support accelerated development, and ultimately to what Rosemarin calls “an innovation partner” that delivers service automation and application delivery to any device or platform.
Proven across many customer environments, VMware’s new managerial framework is driven by three CIO/business objectives that connect with IT outcomes in the figure shown here. The first imperative is to accelerate innovation through the use of virtualization (compute, network and storage), and the adoption of automation tools rather than people; success is measured by more rapid IT service delivery, and CAPEX and OPEX savings which provide funds that the business can allocate to innovation.
The second outcome that business is asking for is expanded mobility support for customers and staff, to enhance productivity and engagement. VMware believes that businesses will gauge success in this area in terms of more secure and faster delivery of mobility for customers and the workforce. And the third business objective is improved security and control which IT can deliver through micro-segmentation along with high availability and resiliency, yielding a more favorable security to effort ratio and improved uptime. Collectively, this managerial model moves beyond system uptime and cost control, the primary concerns of traditional IT, to offer the CIO six different metrics to evaluate the value of specific projects, as well as IT’s ability to fulfill the dual innovation and maintenance mandates.
If these outcomes in the new IT Transformation model appear onerous, Rosemarin points out that many of the management tasks and technologies in the figure are in fact work that was traditionally accomplished by IT. So the end result is not more work, but rather a new transformation framework that offers a systematic way to think about how current business objectives can be addressed, and how success can be measured along the way. The model also provides specific guidance on the achievement of each outcome – a three step process, for example, to optimize virtualization, to streamline data center operations, to automate app delivery, enable business mobility, and improve security controls and availability. For VMware, the model serves as context for discussing customer maturity and future goals, and for the customer, it acts as a tool for prioritizing projects and self-assessment. Using metrics outlined in the model, the enterprise can evaluate the ultimate requirement for IT – the business case that justifies investment by demonstrating the value and revenue generating potential of the today’s advanced IT, and its ability to transform the digital enterprise of tomorrow. “It’s not ROI or TCO,” Rosemarin concluded, “the CIO can see through that instantly. The real choice for CIOs is to shift the conversation from ‘what’ is the technology to ‘how’ can I use it effectively to drive innovation across my organization!”