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Today's IT department doesn't look much like it did in its first incarnation. Back then, IT was called the computer department and oversaw technology that was largely peripheral to business processes, according to Joe Peppard, a researcher at the MIT Sloan School of Management's Center for Information Systems Research.
As technology becomes increasingly integral to a company's day-to-day activities and business strategy, the evolution of IT continues. But where is IT headed? A research project Peppard launched in January aims to map out what the IT function might look like in five to 10 years. While the research won't be prescriptive in nature, Peppard is hoping to uncover archetypes that companies can refer to, depending on their digital strategy.
Next month, Peppard will host a panel on the future of the IT department at the MIT Sloan CIO Symposium. Ahead of the conference, he sat down with SearchCIO to talk about the evolution of IT, the downfall of outsourcing and why a chief digital officer could be the death knell for a digital strategy. This conversation has been edited for clarity and brevity.
So, let's talk about the evolution of IT. How is IT adapting to the times?
Joe Peppard: That's exactly the kind of question the research is looking at. It's looking at how the IT organization needs to evolve. And that's the point I was trying to make earlier -- the function has evolved. It's completely different today than it was 10 years ago, and the expectation is that in 10 years' time, it's going to be fundamentally different.
What that means in terms of evolution is that it's going to have an impact in terms of governance. Because, from what I see, IT governance today -- we could call it 2.0 -- is not really working. One of the reasons is it makes a lot of assumptions that you bring people together in a committee or other forum, and somehow they can represent each other's knowledge and share each other's knowledge. And we know that doesn't happen, for example. So, I think for me, what organizations need to do is shift the focus away from managing IT to focusing on delivering value for the business.
You might see that as a simplistic thing to say, but in a lot of companies, they see the role of the IT organization as having to manage IT. I think that if you say, 'Well, actually, what we're looking to do as a business is to deliver business value through IT,' you may not need an IT department to do that. That's one of the ideas that I'm playing around with in the context of this research.
But there's still technology to manage. So, who does that?
Peppard: Let's just take that scenario. For example, let's assume that, in the future, infrastructure, apps, everything will have moved into the cloud. So what would the retained IT organization look like? What are the skills, competencies, capabilities that will need to be in an organization in that type of a scenario? So, to your point, will you need IT professionals managing the infrastructure? Maybe not. But you still need a strategy for digital, for IT. You're still going to run a portfolio of projects and programs. So, a lot of what I kind of refer to as the thinking aspects [of IT] are still going to remain.
This is an area where a lot of organizations are currently struggling with and have historically struggled with. We know, for example, the history of outsourcing is not stellar. Companies have struggled with outsourcing arrangements, and, very often, we see from research that one of the reasons IT is often outsourced in a company is because the leadership team is somehow dissatisfied with the value that they perceive is being generated from IT. IBM and HP come knocking at their door, and the perception is these companies can do a better job at delivering IT than a local IT unit.
But the key reason why the organization might be struggling in the first place is because there is a lack of strategic direction for technology or there's an inadequate management of the investment portfolio in digital or they're really, really bad at running projects and programs in relation to technology. And those very elements are still going to remain when you outsource -- you still need to do that.
Along with the evolution of IT, how does the CIO role evolve? Does the CIO become the chief data officer, for example?
Peppard: I think the chief data officer is an artificial role. … What we see happening is that a lot of companies today are merging the CIO role with operations. We see it in banks and insurance companies, for example; we see it in retail. So, we're already seeing the recognition that IT cannot be a separate organizational entity by merging IT and operations. If you're a bank, that could count for 60% to 70% of employees, for example.
How is the chief data officer an artificial role?
Peppard: It's the same as the chief digital officer. If there's one piece of advice that I could give companies looking to embrace digital opportunities or opportunities from digital technologies, my one piece of advice would be don't hire a chief digital officer. The reason is because what that means, usually, is that now there's somebody in the organization that we can point a finger at in relation to digital. We know digital is a team sport, which comes back to my point about this pervasive notion of the IT unit. It does need collaboration, and you've got to walk right across the organization, and that's really where the big challenges lie.
So, coming back down to the notion of data, yeah, I think companies will maybe have somebody to somehow help them sort out the mess, if I can use that label, that currently exists in their organization vis-à-vis data and information. But I still firmly believe that business-savvy, motivated CIOs can do the role that a lot of companies are expecting the CDO to do. And, again, from what I'm seeing, companies often bring in a chief digital officer where maybe the CIO is seen more as a technologist, rather than as a business-oriented type that is going to partner with business colleagues, drive innovative opportunities around digital, work at reimagining the customer journey and building great customer experiences -- all of which is quite a different skill set.