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Digital Brings IT Home

The moneyed world is an increasingly digital space. We spend a lot of time interacting with different digital screens—smartphone, laptop, tablet and watch. Then we have the more traditional view-only screens—digital or physical billboards, digital television and movie theatre screens.

Older media such as newspapers and magazines find it hard to compete for our attention in an immersive digital landscape. For better or worse, we no longer find the average cab passenger to be staring out of the window or into a newspaper. Increasingly, we find her engaged with her smartphone.

Leading

The locus of our collective attention has shifted from physical space to digital space. In recognition of this shift, digital marketers have begun to allocate ever bigger chunks of their marketing budgets to digital. But in a world of pay-for-performance, marketing cannot just stop at arresting our attention. That is just the top of the funnel. A business still needs to convert eyeballs first into visitors and then into customers.

This, among other greater forces at play, calls for replicating the whole (or what is possible) business transaction in the digital space. In other words, we offer the customer the option of a digital journey to transact her business. To enable this digital customer journey, businesses build IT systems of engagement that interface with (mostly pre-existing) systems of record.

Getting these new IT systems in place is not without its challenges. For one, we have to consider different channels of engagement such as mobile, web, kiosk, etc. In this post however, I’d like to focus on another challenge—that of custody of these systems. Traditionally, businesses have opted to outsource the upkeep of systems of record.

Ten years ago, many businesses did not consider IT to be a core competency. Ten years ago, technology critic Nicholas Carr authored “Does IT Matter?” and answered in the negative. IT wasn’t considered strategic back then. But it's strategic now. Like it or not, businesses are now forced to pay greater attention to IT. The attention economy is largely digital, and IT systems mediate the relationship between attention-hungry sellers and spoilt-for-choice buyers.

Mobile phone

When IT becomes strategic, we can no longer evaluate the success of IT efforts using IT metrics (e.g. did we deliver to plan?). Strategic IT has to make a difference to business outcomes. This needs much closer collaboration between IT and business than is typically afforded by outsourcing. It also needs cross-functional teams that span IT and business. Again, this is very difficult to achieve under the terms of a tightly worded outsourcing contract. Businesses that understand this new dynamic are bringing IT back in-house. They are outsourcing IT more selectively. The trend has been picked up by media. A recent Wall Street Journal post cites the examples of GE Capital, Intel and Whole Foods. An earlier article in Information Week describes the transformation at Capital One.

The digital shift brings IT home. It creates new challenge for vendors of IT services. They face the prospect of disruption—of having to content themselves with the custody of not-so-mission-critical systems.

How do they cope with it?

My upcoming book, Agile IT Organizational Design, has some hints on this topic even though the book isn’t aimed at vendors of IT services. However, it has some very pertinent advice for digital businesses on how to organize their IT for digital success.

Digital success demands IT agility beyond what is possible by only improving engineering and delivery processes. In upcoming blog posts I will explore this topic from closer range.