A HARVARD BUS I N E S S R E V I E W A N A LY TI C SERVICES REPO RT

Copyright 2015 Harvard Business School Publishing.

RETHINKING THE
IT/BUSINESS PARTNERSHIP
TO DRIVE DIGITAL
INNOVATION

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RETHINKING THE
IT/BUSINESS PARTNERSHIP
TO DRIVE DIGITAL INNOVATION
Quickly delivering innovative applications to employees
and customers alike is a top priority in the digital economy.
But such agility requires big changes in how IT relates to the
rest of the business.
Digital disrupters such as mobile devices, social media, and the cloud have fundamentally
transformed information consumption and delivery, rewriting the corporate competitive
landscape in the process. However, acquiring such digital agility often requires significant
change to how the IT function operates with the rest of the business.
So how are companies doing? According to an online Pulse survey of more than 270 business
and IT professionals by Harvard Business Review Analytic Services across a variety of
industries worldwide, theres room for improvement. In particular, organizations must build
closer ties between IT and the rest of the businessand reinvent technology infrastructures
in order to support modern digital initiatives. In one key finding, nearly half of respondents
said a lack of partnership between operational units and the IT department was a top roadblock
to getting new applications to market.

RESPONSIVENESS DRIVES REVENUE

Success in the digital economy is increasingly driven by a companys ability to leverage
information for real-time decision making, or to improve customer experience via customerfacing products and services.
In fact, companies in the vanguard of this movement are already reaping significant benefits,
according to cross-industry research conducted by Dr. Didier Bonnet, Capgemini Consultings
global head of digital transformation. Bonnet, along with MITs George Westerman and Andrew
McAfee, have found that such companiesdubbed digital mastersgain a decisive edge by
melding digital technologies such as social, mobile, cloud, and analytics into their business

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FIGURE 1

LAUNCH SCHEDULES LAG BUSINESS EXPECTATIONS

How frequently does your IT department launch or update core enterprise applications
that directly impact your key business objectives, such as generating innovative products
and services?
What would be the ideal frequency to launch or update core enterprise applications
with innovative new features?
Current frequency

Ideal frequency

9%
16%
Every month or more frequently

12%
21%
Every 3 months

14%
32%
Every 6 months

48%
24%
Every year or less

17%
7%
Dont know

H A RVA R D BU S I N E S S R E VI E W A N A LYT I C S E RV IC ES

strategy. These companies are 26 percent more profitable than peers in their industries, said
Bonnet. Thats not a small numberthese people are performing better.
In the digital economy, companies cannot afford to wait months for IT. Many business
applications target highly focused business unit needs, such as the marketing department
quickly building out a mobile app for the companys digital initiatives. Those users increasingly
expect a short turnaround time.
The survey, conducted in September 2014, showed significant line of business (LOB) interest
in ITs ability to deliver fast responses to all users. Respondents expressed pent-up demand for
solutions that enable real-time decision making and improve the customer experience. Indeed,
a majority deemed those factors very to extremely important. Yet the survey also shows that
many IT organizations are not currently structured to support increasingly shorter application
cycles. For example, respondents cited a significant gap between their IT departments current
application launch or upgrade cycle, and business-side expectations. Nearly half said new
launches or upgrades happen only once a year or less. Figure 1
Besides IT not meeting their demands for new applications, less than half of respondents
considered IT to be responsive to ever-growing user expectations. Indeed, only 11 percent
tabbed their IT group as very responsive to providing new enterprise solutions, while more
than a third said their IT group was either not very or not at all responsive. Figure 2
As companies increasingly embrace the promise of the digital economy, its becoming clearer
that agility is a critical success factor driving IT and business changes. Companies need to get
applications out extremely quicklyand it fundamentally changes not just the way you do IT,
but the relationship between IT and the business, said Bonnet.

FIGURE 2

IT RESPONSIVENESS FALLS SHORT

How responsive is your organizations IT department when it comes to
providing new and innovative enterprise software applications/solutions?

11%

VERY RESPONSIVE

37%

SOMEWHAT RESPONSIVE

14%

NEUTRAL

38%

NOT VERY OR NOT AT ALL RESPONSIVE

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FIGURE 3

INNOVATION ROADBLOCKS
What are the top two challenges for your organization in getting new
and innovative enterprise applications to market?

48%
Lack of integration/partnership between operational units and the IT department

38%
Limited IT resources

33%
Project budget

31%
Operational units operating in silos

16%
Compliance and security issues

13%
Lack of the appropriate technology tools

9%
Unknown issues

FIGURE 4

RISE IN DECISION MAKING

How do you think your organizations decision-making process will change over
the next three years when it comes to the involvement of your line of business
(LOB) managers in the development of innovative IT applications and services?

58%
More line of business (LOB) involvement in decisions about IT projects

33%
About the same

9%
Less LOB involvement in decisions about IT projects

H A RVA R D BU S I N E S S R E VI E W A N A LYT I C S E RV IC ES

RESOURCES NOT THE ONLY ISSUES

Lack of budget and limited resources are the two factors typically limiting an organization from
getting new and innovative enterprise applications to market. However, the most surprising
finding from the survey is that nearly half of survey respondents report that lack of internal
partnership is a top roadblock to digital innovation. Figure 3
Clearly, CIOs must build stronger IT-business partnerships that reflect the increasingly vital
role played by LOB workers in creating core enterprise applications, a process that demands
increased business-side involvement. Furthermore, it is anticipated that there will be greater
and more direct business involvement in IT decision making in the next three years. Figure 4
Well over half of respondents (55 percent) said it was very to extremely important to have
operational units influencing innovation in enterprise applications, with 44 percent saying both
IT and the business units should share the responsibility equally. Figure 5 Not surprisingly, survey
respondents also identified senior leadership as a vital prerequisite to digital success, with 64
percent saying that leaderships involvement was very or extremely important in achieving
software innovation.
Embracing a more collaborative model will require organizational overhauls in many IT shops,
said Kerry Osborne, managing director at Accenture. One of the biggest barriers to success is the
internal organizational silos that slow IT responsiveness, he said. LOB functions turn to external
people for help because they often get a better response than from internal IT.
As those barriers begin to disappear, companies must also be able to field IT workers with the skill
sets necessary to create new products and services that further digital innovation. The legacy
IT organization is not currently equipped to support fast-changing business demands, said Erik
Dorr, senior research director with The Hackett Group. There are skills that IT groups need to
acquire or develop, particularly around areas such as data architecture and mobile development.
Limited IT resources can present another barrier to successful partnership. In the survey,
82 percent of respondents said that if IT had more resources to focus on developing innovative
applications, the result would be better operational efficiency and reduced costs. Moreover, while
cloud services are commonly perceived as a popular alternative to internal IT, many respondents
view such shadow IT moves as a function of limited resources rather than functional preference.
In fact, well over half of respondents said that increased IT resources would help build stronger IT/
LOB collaboration in-house. Figure 6
Contrary to the popular perception that everything is moving to outsourcing and the cloud,
the survey shows that a majority of business managers prefer to work with their internal IT
departments.

BUILDING A UNIFIED STRATEGY

As organizations seek to align business and IT, they must eliminate unnecessary complexities
distracting IT and slowing progress. Doing so requires new approaches to architecture along with
organizational changes.
Such projects work best when companies view their infrastructure through the lens of business
strategy, said Bonnet, referring again to his study of the digital economy. Successful companies
had a clear view of what they were trying to achieve, and one of the first things they asked was,
What is the best way to do that given the current state of our IT infrastructure? And what are the
top priorities to make that infrastructure support digital projects? he said.

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FIGURE 5

WHO SHOULD BE INFLUENCING INNOVATION?

How important are each of the following departments or groups within your
organization in terms of influencing innovation in enterprise software applications?

64%
Senior management (C-level)

55%
Operational units/line of business

49%
IT department

44%
IT and operational units sharing responsibility equally
RESPONDENTS CHOOSING 8-10 ON A 10-POINT SCALE FROM NOT AT ALL IMPORTANT TO EXTREMELY IMPORTANT.

FIGURE 6

BUSINESS UNITS STILL ENGAGED WITH IT

If your IT department had more resources, would you prefer to work with them
to develop and update core and mission-critical applications in-house rather
than to outsource the development to cloud or IT service providers?

57%
YES

24%

NOT SURE

19%
NO

H A RVA R D BU S I N E S S R E VI E W A N A LYT I C S E RV IC ES

For example, getting data to flow across multiple systems and platforms is a critical first step to
digital success. IT is still custodian of the enterprise data architecture, and its a significant role,
said Dorr. You arent going to get very far with a mess of disconnected legacy systems.
As IT drives these important platform conversations, one emerging strategy centers on IT
simplification. Hardware, software, and processes need to be simplified, said Bonnet.
Recognizing the enormous cost of complexity in terms of time and resources, its no wonder that
the integrated systems market has grown substantially. Integrated systems, which include server,
storage, networking, and management software, eliminate much of the cost and complexities
that come with traditional systems. According to IDCs Worldwide Integrated Infrastructure and
Platforms Tracker, revenue for integrated systems in the first half of 2014 grew 35.9 percent to
$4.3 billion.
But spending more on IT is not enough. Business input is required in order to fully wed a
technical platform to a digital strategy. Infrastructure and platform are areas where IT leaders
know best, but they need to work with the business side to translate the platform into business
terms, said Bonnet.
Its clear that digital technologies are rewriting the business landscape, and companies that
are able to successfully integrate them into their business will gain a competitive advantage.
However, doing so requires a substantial reinvention of IT processes, new platforms, and a
strong partnership between business and IT management. Only then can enterprises fulfill the
promise of digital innovation. u

METHODOLOGY AND PARTICIPANT PROFILE

Harvard Business Review Analytic Services conducted an online Pulse survey about business perception
of IT responsiveness in September 2014, using lists from Harvard Business Review. In all, 274 self-selected
respondents at midsize to large companies worldwide participated across a wide range of industries.
Altogether, 14 percent of respondents identified themselves as C-suite/executive management, 42 percent
as directors/senior managers, 24 percent as managers, and 20 percent as other. In addition, 46 percent
represented enterprises with 5,000 or more employees, 20 percent with 1,5004,999 employees, and 34
percent with 2501,499 employees.

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SPONSOR STATEMENT

IT Department and the Business Users:

Can This Relationship Be Saved?
The evolution of the digital economy has highlighted a
long-standing gap between business user requirements
and IT responsiveness. According to a recent survey
conducted by Harvard Business Review Analytic Services,
business users need application cycles that keep pace
with rapid market changesbut IT, faced with limited
time and resources, often struggles to keep up. The more
than 270 business users surveyed showed significant
interest in ITs ability to deliver fast responses, as well as
solutions and processes that enable real-time decision
making and improve the customer experience. Despite
this overwhelming demand for faster IT turnaround,
respondents cited a significant gap between their
expectations for speedy application cycles and their IT
departments ability to deliver.
ITs inability to keep up with the speed of business
change has put a severe strain on the relationship
between IT and business. Furthermore, the rise of
cloud-based applications has led many to speculate
that business users have given up on IT. However, as
the Harvard Business Review Analytic Services research
shows, there is interest from business in improving its
working relationship with its IT departments. Nearly sixty
percent of the business users surveyed would prefer to
work with internal IT staffers. First, IT and business users
have to work more closely together. The business must
get involved with ITs decision-making process, both at
the staff and senior management level, to add valuable
perspective to purchasing decisions. In turn, IT can
help the business side understand the ramifications of
IT complexity. This type of collaboration helps IT focus
on activities that add business value and find ways to
accelerate new application development.

One of the big killers of business innovation is IT

complexity. Both business users and IT contribute to that
problem. Today, most of ITs time and budget is spent
on keeping the current infrastructure up and running.
Business users who deploy their own applications
through shadow IT only exacerbate the problem by
creating even more fragmented information silos.
Oracle engineered systems are designed to reduce
complexity and cut costs by improving IT performance
and speeding IT applications. With more than 10,000
units shipped, Oracle engineered systems have
been proven to reduce operating and labor costs by
eliminating the need for custom integration and speeding
application deployment. Because engineered systems
are optimized for performance at every layer of the
technology stack, they deliver an unmatched level of
performance and value for the business.
Oracle engineered systems are available for any
enterprise workload, and just as important, these
systems come with comprehensive single-vendor
support services. In the digital age, business survival
depends on driving innovation through a partnership
between IT and business users.
A key step to driving innovation is eliminating
unnecessary IT complexity by deploying optimized
systems that quickly deliver the highest application
performance at the lowest cost. Our customers want
their data centers to be as simple and automated as
possible. Oracles strategy is to deliver engineered
systems that get the job done faster and at a lower cost
than anything else available today.

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