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4 types of information technology cultures explained
How the CEO and other top leadership view the IT department has a major impact on how CIOs should make their business cases for new technology.
Information technology does not exist in a silo.
In any organization, CIOs need to understand how their IT decisions support the business goals and CEO's vision. That IT-business alignment is critical for helping to solve organizational challenges.
The type of information technology culture your organization has determines the role of IT and the investments for which it will be more or less difficult to make a business case. No single technology culture is best. Each industry has its own unique environment that has different views on technology's position in the business value chain. IT leaders who understand their company's culture are better able to make the best use of their IT resources.
IT culture defined, the 4 cultures explained
An information technology culture is a company's attitude toward investing in technology and business technology as a strategic business differentiator. In this regard, IT culture typically falls into four basic categories: conservative, moderate, aggressive and leading edge/bleeding edge.
1. Conservative IT cultures
In a conservative IT culture, top leaders see technology as an expense to minimize. In turn, they have IT departments maximize the use of the technology they have, getting the utmost value out of technology investments.
These types of companies move off operating systems only when vendors no longer support those systems and IT cannot create workable internal fixes to keep those systems going. Organizations with conservative IT cultures have employees use laptops and desktops for six to 10 years and only replace those when they break. Conservative companies do not see technology as something to provide a competitive advantage, but something whose cost they want to reduce.
2. Moderate IT cultures
Organizations with moderate IT cultures prioritize cost management but will occasionally invest in new technology. However, when they do, it is with an eye toward cost containment over seeking strategic advantage.
For example, companies with moderate cultures will invest in automation if it directly reduces costs. If there is an ROI in less than a year, they may make the investment.
3. Aggressive IT cultures
Aggressive IT cultures categorize technology spending as key to moving the company forward. Business and IT leaders actively look for technology to give them an advantage over competitors. They see how spending in one domain can reduce costs in another.
For example, they believe adding automation frees people from doing low-value work so they can focus on high-value work. Although open to developing technologies, leaders in these organizations won't procure such technology based on hype or exploration. Instead, leaders will investigate technology that delivers a business advantage.
4. Leading-edge or bleeding-edge IT cultures
Leading-edge or bleeding-edge IT cultures always see technology spend as an investment. Business and IT leaders in these cultures see technology as a business driver, essential to establishing and maintaining market leadership. They are less worried about process and cost, knowing they will figure out how to get more efficient over time.
This does not mean investing in technology for the sake of investment. Instead, leaders see investment in technology as a driver for creating a new market, adding a unique competitive differentiation, and facilitating transformation of people, processes and products. Technology for technology's sake rarely yields fundamental business change. Rather, the desire for business change uses technology as a channel to allow this change to occur. In this way, leading-edge companies will necessarily align with business, as a transformation change agent.
A cultural view of technology deployment
Each of these cultures has different approaches toward deploying technology.
- Leaders in conservative IT cultures focus on creating business efficiencies by creating and improving repeatable processes. This attitude eschews change since it disrupts processes.
- Leaders in moderate IT cultures are concerned about efficiencies and costs, but they can approve of technology use that saves money.
- Leaders in progressive IT cultures deploy technology for a strategic advantage, but need to have a clear ROI before they move forward.
- Leaders in leading-edge and bleeding-edge IT cultures trust their instinct that new technology is good. They envision new markets and lines of business where they can deploy new technology. If there is a new market to exploit, they don't need all the details sorted out. They see the advantage of being a first mover. They know there will be trial-and-error and failures; they are prepared to accept that.
A view of technology culture by industry
To some extent, different types of IT cultures are associated with industries combined with the size of a company.
Conservative IT culture. Industries that are very cost-sensitive with slim profit margins tend to be conservative. Retail companies tend to be this way, especially smaller companies. Retail establishments tend to hold onto equipment until they can no longer use it and may have plain old telephone service, as opposed to IP phones. Some manufacturing companies have slim margins, only spending on technology when necessary. Hospitals tend to be conservative in technology investment -- especially IT technology -- as well as smaller transportation and logistics companies.
Moderate IT culture. Law firms tend to be moderate in their view of technology. While they have better profit margins, they generally view technology as a cost to be avoided, versus to something that enables new capabilities. This is true for many service firms, where the service itself isn't technology centric.
Aggressive IT culture. Industries that tend to be aggressive in their technology investments include pharmaceutical companies. They see a great advantage in technology, but also must adhere to regulatory frameworks, which leads to strict justifications for technology investments and thoroughly thought-out use cases.
Leading-edge or bleeding-edge IT culture. Companies at the edge see technology as critical to business. Investment banking is one industry. They have high profit margins and will adopt new technologies and algorithms to get any analytical advantage over competition. Oil and gas exploration firms also invest aggressively in new technology, searching for novel methods to identify the next energy source, as well as new extraction techniques. Because of the need for innovation, IT is generally given wide latitude to support company goals, which includes the capital to support this innovation.
Business case examples in different IT cultures
Understanding the culture of your company can help you understand which technologies the CEO is most likely to approve and how to make a good business case for a particular technology. Here are a few examples.
Conservative IT culture. For conservative companies, business cases focus on cost avoidance, then cost savings. A typical conservative business case is upgrading to a new operating system (OS), because the vendor doesn't support the old OS. A conservative company upgrades these systems when it doesn't have a choice.
Moderate IT culture. Moderate culture companies may choose to outsource servers to a managed colocation service. They cannot afford the staff to design and build new server systems as they grow, and their building doesn't have redundant power. They see colocation as a less expensive alternative to building their own redundant power. In this case, investing in data center colocation is cheaper than building their own dedicated facility.
Aggressive IT culture. The aggressive company sees clear business advantage in applying technology. Managed service companies will justify adding event correlation and advanced security analysis tools, which allow them to handle more customers without adding staff.
Leading-edge or bleeding-edge IT culture. Leading edge financial service companies will spend millions on new computers and computing algorithms to find ways to identify fraud more quickly and for financial analysis to optimize investment portfolios.
