In the modern era, it’s undeniable that information technology (IT) is the backbone of any company or public organisation. IT is engaged in nearly every activity they undertake. Consequently, the relationship between business and the information technology (IT) department has become more closely intertwined than ever before.
This, and the continuous rise in business demands, is propelling the IT function to shift from its traditional role as a service provider to becoming a business partner or even an enabler of business.
In this new paradigm, it’s crucial for business and IT to work together and align their strategies to rapidly adapt to market changes, evolving citizen and stakeholder needs, and to efficiently use emerging opportunities and technologies.
In this blog, we explore the evolving role of the IT function, the factors driving these changes, and how this transformation is affecting its interaction with the business. We analyse the impact on various dimensions, including organisational structures, governance, sourcing strategies, processes, technology adoption and risk as well as compliance implications.
From service provider to business partner
Most organisations are typically structured into business functions and support functions. Business functions focus on direct interaction with customers, clients, or citizens by delivering products and services. Support functions, such as finance, human resources, and marketing, provide essential assistance to enable business functions to operate effectively.
Historically, the IT department wasn’t part of the business function. Instead, it was like the gatekeeper for an organisation’s technology—helping to fix computers, maintain systems and manage technology in the background. Basically, IT was a service provider, like other support functions, focusing on running its operations smoothly and efficiently.
Moreover, managing and running on-premises applications on company-owned infrastructure used to be very complex and difficult, which made it hard to bypass the IT department. This supported a model where IT had centralised control.
Today, IT is no longer just keeping things running and a “behind-the-scenes” function. It’s a key player in driving business growth and innovation, helping businesses reach their goals by enabling new ways to operate, connect with customers, clients or citizens, and compete in the market. Thus, IT has become an integral part of every business, making it impossible for any company or organisation to operate successfully without it. The operating model between business and IT has also evolved, leading to the growing popularity of agile operating models—we will discuss this in more detail later.
These days, IT and business are like partners in a dance, perfectly in sync. They are co-creators. The business sets priorities, and IT, as a strategic business partner, helps bring those visions to life. We observe a growing trend of organisations adopting enterprise-wide agile operating models, fostering close collaboration between business and IT departments.
Essentially, in such agile organisations, product owners representing the business work closely with IT and ensure that they deliver technology solutions that generate new services and products to fulfil customer needs, enhancing the organisation’s value. IT also brings quick solutions to meet rapidly changing business needs, helping organisations work faster, smarter, and more efficiently. For example:
- IT can help business operation teams to use data for better decision-making and automate tasks through technologies like Robotic Process Automation (RPA), saving time and enhancing efficiency.
- IT can bring new technologies such as artificial intelligence (AI) and generative AI, enabling businesses to offer innovative products and services, like ChatBots for citizen interactions with tax authorities.
Achieving this level of collaboration between business and IT requires open communication, a deep understanding of business objectives, and empowering business users to succeed.
Adapting technology: Buy before developing
Remember when everything was made from scratch at home? Nowadays, it’s often easier to buy what you need. The same shift has happened in IT. In the past, IT departments developed custom solutions tailored specifically to an organisation’s needs. While reusing existing software can save time and money, it may not always meet users’ unique requirements or expectations.
Today, with the rise of off-the-shelf applications and Software as a Service (SaaS), IT has evolved into an ‘integrator,’ seamlessly combining pre-built solutions from external vendors, like CRM systems offered as SaaS. This shift enables greater efficiency but requires careful alignment with business goals to ensure the technology meets specific needs.
It’s like assembling building blocks to create new services and products for both internal operations and external customers. This new approach gives IT a more product-focused role, positioning it as a key player in connecting various technologies to meet business needs. However, this transition isn’t instant. It requires a shift in mindset, along with an evolution in skills and organisational structures.
Strategic outsourcing
Another key element we see is the approach to outsourcing. It’s like doing your laundry—while you might handle regular washing at home, you send your dry cleaning to a professional. Similarly, but the other way round, IT departments are now strategically outsourcing low-priority, low-value tasks to external providers, allowing them to focus their in-house efforts on high-value projects like digital transformation. This approach enables IT to allocate resources more efficiently and concentrate on core and strategic competencies that propel the business forward.
This leads us to the topic of value creation. What do we mean? It’s precisely about focusing on what matters most—core and strategic competencies and technologies that meet the business needs, while externalising commodity services like helpdesk functions. Increasingly, companies are shifting focus from maintaining operations to transforming the organisation, directing efforts towards change and innovation.
Here, it’s worth mentioning the risk and regulatory aspects. As a best practice, organisations should evaluate the risks and effects on business continuity and overall resilience when outsourcing.
Delivering business value
As we observe, the role of IT is evolving to better serve the business, and its value boils down to four key aspects:
- Gaining a competitive edge: Just like investing in a high-quality tool that pays off over time, IT helps businesses differentiate their services and products while making strategic, long-term investments that boost competitiveness.
- Driving customer, user or citizen adoption: IT departments are increasingly focused on user-centric and product-centric initiatives, which are crucial for creating value. These efforts help drive customer engagement and adoption.
- Doing the right things (business agility): IT needs to focus on activities that align with business goals and strategy, embracing a continuous improvement mindset and agile approach. Business agility is about identifying what truly makes sense for the business, ensuring IT is always bringing meaningful value to the table.
- Doing things right (operational excellence): Streamlining processes to improve efficiency, optimise resources, and reduce costs is key to operational excellence. This involves refining workflows to deliver faster and more effectively, ensuring IT runs smoothly and efficiently.
By concentrating on these areas, IT teams can maximise the value they deliver to the business. But to do so, they must have the right operating model.
The evolution of the IT’s operating models
We can trace the evolution of IT’s role by looking at the development of the IT operating model, which includes processes, technology, organisation, and governance. When IT functioned mainly as a service provider, IT management processes were rigid and highly segmented.
Today, the latest IT frameworks—for instance, Scaled Agility Framework (SAFe), IT value chain, Information Technology Infrastructure Library (ITIL)* V4—underline flexibility and agility, adapting processes to meet the dynamic requirements of modern organisations.
In terms of technology, there has been a shift from monolithic application architectures, which were rigid and difficult to modify, to more modular and flexible systems. This modular approach allows for easier updates and integration with external services.
Organisational structures and skill requirements have evolved as well. Previously, IT teams required highly specialised expertise, with distinct roles for planning, building, and running traditional environments. This rigid structure often led to inefficiencies and a lack of agility. Now, a versatile, multi-disciplinary skill set is necessary, particularly as organisations increasingly rely on external specialists and sourcing strategies to integrate services. As a result, we see more transversal roles, where IT and business functions blend together. This evolution enables faster decision-making and more innovative solutions.
Governance has also transformed significantly. It has moved from an inflexible, top-down “control” approach to one that empowers individuals at all levels. Decision-making is increasingly pushed down to lower levels of the organisation, where those with hands-on experience and expertise are best equipped to drive testing, implementation, and innovation. This shift allows for quicker and more effective responses to changing business needs.
Amidst all these transformative shifts within the IT department and its operating model, the role of the Chief Information Officer (CIO) is evolving as well.
The modern chief information officer
To align with the IT department’s transformation, today’s Chief Information Officer (CIO) must transcend the role of a technology specialist. They need to understand the broader business landscape, from client demands to regulatory requirements, and build strong relationships with key stakeholders to effectively lead digital transformation. By understanding their needs and challenges, the CIO can become a true business partner rather than just a service provider.
Moreover, CIOs need to have a long-term vision—typically between three and five years—and the ability to stay flexible. Essentially, a CIO is like a marathon runner who needs to be prepared to sprint when necessary. This adaptability ensures IT strategy remains in sync with the ever-evolving business environment.
Conclusion: Stepping back to move forward
The evolution of IT from a support function to a strategic partner is marked by several key changes: Processes have become adaptive and agile, technology has shifted from monolithic systems to integrated applications and services, governance has moved towards a data-driven approach, and organisational structures have become more dynamic and self-organising. Strategic outsourcing has enabled IT to focus on core competencies while partnering with service providers.
However, these advances bring new challenges, particularly in the areas of risk and compliance. As organisations adopt new technologies and outsourcing strategies, they need to conduct thorough impact and risk assessments to safeguard against potential issues. By embracing these changes, IT can drive innovation, enhance business resilience, and create significant value for the organisation.
Moreover, the evolution of IT is about taking a step back, gaining a broader perspective, and planning for the future. Building an efficient, resilient and forward-thinking IT organisation requires close collaboration with the business, an adaptive operating model, and a focus on core competencies. It also requires aligning IT strategy with business objectives, fostering agility, and empowering teams at all levels.
At the same time, IT professionals need to cultivate a culture of continuous learning, staying ahead of technological advancements and using them to meet business goals. By adopting these principles, IT departments can move from being mere support functions to becoming integral drivers of innovation and growth. This proactive mindset, in turn, equips organisations to overcome unforeseen challenges and seize new opportunities.
The journey may be long and complex, but with the right mindset and strategy, the potential rewards are immense. So, gear up—the IT marathon has only just begun.
*The Information Technology Infrastructure Library (ITIL) is an internationally recognised set of best practices for managing IT and implementing IT service management. It focuses on the design, strategy, operations, measurement, improvement, and delivery of IT services.
What we think
My advice for CIOs is to step back and view their IT department from an outside perspective, reflecting on how they want to shape it in the coming years. Building strong business relationships and maintaining an adaptive operating model are crucial for designing an efficient, future-ready IT organisation that evolves into a strategic enabler, driving long-term success.
As a marathoner, I believe being a CIO requires a similar approach when planning your IT strategy. You need to plan for the long term, but stay adaptable, as you can never fully predict the conditions or your mental and physical readiness. Have a strategy in place but be prepared to adjust as needed along the way.
