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 / Spring 2013 / Issue 70(originally published by Booz & Company)


Well-Tailored IT

• Technology leader. Drawing on advanced technological prowess, this IT department provides leading-edge support for innovative products and services, enabling the company to gain a first-mover advantage. This type of agenda might help your company cross the “capabilities gap” most effectively to become a truly differentiated enterprise.

• Service broker. To provide scale and consistency (typically to global companies with multiple outsourced providers), this IT department integrates services from external vendors into an end-to-end customer-facing solution. This agenda can enable your IT function to work closely with other internal functions, and with outside groups, to develop a distinctive set of capabilities.

• Capability builder. This IT department is closely involved in the design of new practices and processes that enable a larger corporate strategy. The agenda goes beyond a purely functional shared-services role; you become, in effect, a strategic partner to the CEO and top leadership team, helping determine what differentiating capabilities to invest in.

All five of these roles are viable (unlike some other roles, such as that of a pure service provider, which are likely to be outsourced). Ultimately, the role you adopt will depend on the enterprise strategy of your company. For instance, the IT departments at two airlines might take on completely different agendas. A long-haul airline that sets itself up as a premium experience provider might want to invest in having a technology leader IT function. That would enable it to have highly customized technological platforms: a customer relationship management (CRM) system that seeks to link customers to the airline for life; a way to rapidly prototype new cabin designs and logistic innovations; and a rich online presence with dynamic content. These systems would combine to distinguish the airline in service and sophistication, with prices just low enough to show premium customers (who are tracked through CRM and continually given tailored offers) that they are getting bargains in this context.

Another airline, providing no-frills service at low prices, would need a value player IT function. This function would outsource most operational and back-office activities; impose strict controls over demand management; set up basic, low-function personal computers for its ticketing and check-in staff; and drive lower costs through a self-service website.

Your IT function does not have to take on one of these roles exclusively. The roles can be combined to craft an agenda for your IT function that closely matches the capabilities system your parent company has established. A global discount hotel chain, for example, might develop an IT function that combines the value player and service broker archetypes. If your company’s overall strategy changes to meet shifting external conditions, your IT organization’s basic agenda will probably change along with it.

By focusing on an IT agenda, CIOs and CTOs can exercise choice. They can more easily be fit for purpose: providing the capabilities the company needs most, while still maintaining the other attributes that enable the entire enterprise to create value. No IT function can provide everything that a business might demand, but functional leaders can determine the attributes that matter most. They can then use an archetypal role to provide the services that are needed, in an effective way that everyone understands.

Reprint No. 00159

Author Profiles:

  • Peter Burns is a partner with Booz & Company based in Sydney. As the leader of the firm’s service operations business in the Australia, New Zealand, and Southeast Asia region, he focuses on financial-services and government clients.
  • David Hovenden is a partner with Booz & Company based in Kuala Lumpur. He focuses on financial services and is a recognized leader in IT strategy, core banking system transformation, and IT operating model design.
  • Mark Johnson is a principal with Booz & Company based in Melbourne. He specializes in helping organizations develop IT strategies and architectures, and in IT-related transformations and operational improvements.
  • Also contributing to this article was Booz & Company associate Socrates Vossos.
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