As companies undergo, or prepare for, digital transformation, organizational structure matters. Rigid hierarchies across lines of business can limit how teams operate and innovate, impeding the ability to cast off dated corporate structures.
At Fannie Mae, rather than segmenting groups to focus on applications or infrastructure, the company made a single structure, said Bruce Lee, SVP and head of operations and technology at Fannie Mae, speaking at the MIT Sloan CIO Symposium in Cambridge, Mass., last week. "Simplifying the structure was the key thing to getting business people, corporate [and the] CFO to understand what we were doing, to demystify [and] soften the boundaries" with technology.
"Simplifying the structure was the key thing ..."
SVP, Fannie Mae
Yet, organizations struggle to integrate IT functions, creating a division between technology and the business. But part of the fault lies with the tech units.
Incorporating more operations, IT has evolved and modernized without understanding the business, said Adeel Saeed, SVP and CIO of corporate technology services and interim CSO of State Street, speaking at the symposium. "As you revolve around that paradigm, you have business-aligned IT functions cropping up because business needs technology to understand the business in order to deliver."
Rather than serving as isolated technology organizations, IT needs to understand business more efficiently to help introduce elements of evolution into a company, Saeed said. "It's the role of a technologist to understand business," using technology as the baseline to spur innovation.
For digital transformation to be successful, it is imperative to eliminate the idea of business versus IT.
"There's no such thing as business-led, unless you think IT is not part of the business," said Naufal Khan, senior partner at McKinsey & Company, speaking at the Symposium.
The end of the CDO
Inspired by the digital economy and keen to quickly evolve, in recent years organizations began acquiring chief digital officers to help spur transformation. To some, renovating the business and integrating technology throughout an organization required an outsider.
The stigma used to be, "the CDO is the CIO the CEO wished they had," said Khan. And the assumption persisted that once a CDO was brought in, everything would suddenly become digital.
But companies are starting to realize that the separation of the CIO and the CDO doesn't scale well. Whether businesses call digital leaders a CIO, CDO or CTO, organizations need to bring digital and IT operations together, according to Khan.
And working with an integrated operating model, bimodal isn't necessarily the answer.
"We, as CIOs, just have to see ourselves much more as an equal partner in the C-suite … [rather] than the junior partner trying to explain what technology is and be somehow the support," said Lee.
CIOs have the opportunity to step up and rewrite their job descriptions and help the business evolve, focusing on external, rather than internal customers.
"How many CIOs end up becoming CEOs?" Khan asked. "That's where the future could be."