The next-generation fusion organization: why the IT department must go

Thinking in terms of (micro)services and 'capabililties'

At CIONET’s Summer Celebration August the 29th, CIOs from across the country discussed the future challenges of their profession. Numerous topics were brought to the table, from mixed reality, AI and robotics, data management and SAAS, to the governance of analytics. Many of these hot topics pointed to a common underlying theme: a shift from ‘department thinking’ to thinking in terms of transversal (micro)services and ‘capabilities’.

Decentralizing capabilities

A term coined by the Irish Innovation Value Institute (IVI) in their IT Capability Maturity Framework (IT-CMF), ‘capabilities’ in a business context refers to ‘the ability of a company to do things’. In the IT-CMF, IVI has defined 36 ‘critical IT capabilities’ that create real, measurable business value. These capabilities can’t be confined to one department, but need to be implemented throughout the company.

After all, IT capabilities are needed on every floor, and – more importantly – at every stage of the buyer’s journey. Ultimately, it’s the people closest to the customer that need the most access to IT capabilities. This makes agile end-to-end service delivery possible, and allows the company to quickly respond to changing customer expectations. To put it more bluntly: IT is much too important to be left to the IT department only.

Fusing business and IT

The idea of ‘business and IT working together’ isn’t new, of course. Peter Hinssen spoke at length about it in his 2009 book Business/IT fusion: how to move beyond alignment and transform IT in your organization. By ‘fusing’ business and IT, companies can maximize the value they gain from technological innovation. An example of IT proving its worth in the business is when data analytics and artificial intelligence are deployed to find new product applications, detect anomalies, or predict buying behavior.

Next-generation fusion

Companies are increasingly aware that they are engaged in siloed thinking. They already realize the need for new ways of organizing and collaborating to optimize the customer experience and create new products or services. However, truly forward-looking companies, like Janssen Pharmaceutica, want to take this to the next level and find out how they can embed experiments and innovations into the fabric of their business. Thus, it’s time to update Peter’s original idea of fusing business and IT and talk about next-generation fusion.

Next-generation fusion implies a shift from thinking in departments to thinking in capabilities and from hierarchical thinking to participative management (e.g. teal or holocracy). Expert teams need to open themselves up to other teams, and even to clients and contractors, to explore new possibilities. In this way, the company becomes a network of people with certain capabilities that can rapidly change its constellation. Like the Avengers, they can come together when their collective capabilities are needed to achieve a certain outcome – whether that’s saving the world or launching a new product.

Change management

A prerequisite for successful next-generation fusion is change management. Instead of just serving people from the front office departments, IT will now be actively involved with product development and sales. This will have a huge impact on the daily workings of the company, and will probably be met with resistance from the sales department. That’s why, to promote maximum value generation, a lot of effort needs to be funneled into growing awareness and end-user training.

Today, IT provides thousands of microservices. Some of these will have to be implemented very quickly and might be obsolete tomorrow. Others will be crucial to the success of the company. Either way, the time of only making long-term plans is over. Determining what the next steps are in creating an agile end-to-end service is a crucial part of the CIO’s job.

Author: Kenneth Vanhoutte. Interviewee: Ludo Van den Kerckhove. You can connect with Ludo on LinkedIn.