Building an agile IT operating model that fuels growth

The unpredictable events experienced globally in the past four years (COVID-19, high growth in 2021-2022, high inflation/interest rates since 2023) have created a much tougher operating environment for businesses. These conditions meant companies that couldn’t adapt fast enough quickly faced the realities of dwindling revenues and ever-rising costs. The concept of using technology to help businesses be agile and flexible is not new. However, we observe that many continue struggling to organise themselves to deliver and manage technologies at pace consistently.

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Key Components of an Agile IT Operating Model

At LanciaConsult, we have helped organisations to set up and operate their IT teams to be more adept in handling their evolving business challenges. In this article, we will share our learnings and explore the crucial role of the IT operating model in unlocking agility and driving business growth.

The definition of an IT operating model is a framework that determines how IT services are delivered and managed within an organization. This framework includes three key aspects, namely:

(1) Structure (how you are organised),

(2) Policies and processes (your rules and guard rails), and

(3) Talent (your people).

These three aspects power your organisation’s ability to leverage and optimise the technologies used. Let’s take a deep dive into these three aspects.

1. Setting the Structure

First, the structure of the IT department. It is important to articulate how it is organised into smaller sub-teams, the responsibilities of each sub-team, and clear reporting lines. Organisations will need to determine which services (for example, application support) are handled in-house or outsourced to an external party. While handling some services in-house may seem commercially attractive in the short term, it could become expensive and risky in the long term due to resource retention challenges.

Our advice to our clients is to consider whether the technology is part of the business’s core unique selling proposition (USP), is proprietary to the business, or handles sensitive data that cannot be managed externally. A good example of managing the service in-house is found in the banking industry, where the core banking platforms are typically developed and maintained internally (not outsourced). On the other hand, a goods manufacturer might outsource its HR system to a 3^rd party vendor.

The IT department also cannot operate in isolation but must align itself with the organisation’s overarching vision. This enables the IT department to focus its priorities and resources on the technologies that truly matter. For example, a real estate client needed to accurately track their construction costs. To do so, the IT team first sought to understand the business goals, before meticulously documenting the user needs, and then advising on the most suitable options. Following this, IT worked closely with its technology partner to deliver a solution that met the business requirements and ensured that the goal of optimal cost management was achieved.

2. Policies and Processes

Second, the policies and processes give the structure form to operate. This covers a breadth of areas such as cybersecurity, personal data protection, access control management, application delivery and support, etc. For organisations to operate in an agile manner, the push for automation, data analytics, and cloud computing should be embedded into the IT governance and framework. Organisations will also need to document and put in place processes to handle day-to-day queries and issues.

One key area that is often overlooked is the use of automation and analytics in monitoring and enforcement. The implication is that the process may fail to meet its intended objectives and improvement opportunities are missed. An example is in the area of access control, where employees who have left the organisation or vendors whose contracts have been terminated may not have their appropriate access removed if the IT offboarding checklist is not rigorously followed. Thus, we advise our clients to use automation to alert deviance from processes and if necessary, audit it to ensure process compliance.

3. From Supportive Player to Strategic Enabler

The third component in the IT Operating Model is an organisation’s talent. We observe that the rising expectations from business teams require their IT counterparts to play the advisor role and help bridge the gap between business needs and technology capabilities. The IT role is also shifting from a support function to a strategic enabler. For example, one of our clients in the education industry had tasked their IT team to advise on the optimal combination of technologies to develop personalised customer services to improve customer engagement. Without the right knowledge and technical competency, the IT team cannot provide the right technology recommendations, which can result in cost overruns or unmet requirements. Hence, organisations must continually invest in their IT practitioners to receive training in new technological trends and methodologies in deploying them successfully. Again, the IT team should not function in a silo, but be more involved in understanding the customer journey, needs and pain points.

The topic of talent though, revolves not only around the competencies that people possess but also around embracing a culture of agility. Fast-moving technological trends require organisations to foster forward-thinking perspectives and open mindsets across levels in considering how technology can be applied. Organisations can leverage technology trade shows and webinars offered by reputable technology players to cultivate such openness in their IT talents.

Conclusion

In conclusion, agility is the new imperative for business success. By embracing an agile IT operating model and taking proactive steps to foster agility, organisations can attain new levels of speed, innovation, and resilience, driving business growth and staying ahead of the competition. However, achieving agility requires a concerted effort and a willingness to challenge the status quo. The management team must lead by example, to champion agility and openness from the top. By investing in building the right structures, processes, and culture, driven by the right talent, organisations can succeed and thrive in an ever-changing world.