What Is the Future of the IT Department?

Just like cars and phones before them, the ubiquity, familiarity and essential nature of tech capabilities, makes the centralization of such skills impractical and even counterproductive. 

Tech's growing role as a core business function means that IT departments will evolve to become embedded in the departmental level while some staff may remain internal advisors on higher level tech-related issues. JL 

Angus Loten reports in the Wall Street Journal, image, Computer History Museum:

Cloud computing and other innovations make it easier for business leaders to deploy technology beyond the control of the IT department. The move to let business units run their own IT comes as cloud computing, data analytics, automation and other capabilities become critical functions in all sectors. Though most CIOs continue to oversee data governance, compliance and other higher-level IT functions, (for) day-to-day business apps they are seen as advisers. CIOs are leaving software and other enterprise technology decisions to finance, marketing, sales and others, turning their attention to core strategies.

Chief information officers say their role is evolving, as cloud computing and other innovations make it easier for business leaders to deploy technology beyond the control of the IT department.

“Of all the roles  that we cover, the role of CIO is in the most flux now,” said Chris Howard, chief of research at business consultant Gartner Inc. While enterprise technology’s impact on the survival of the business has accelerated, the question is who is in charge of that, Mr. Howard said. “Sometimes it is the CIO, sometimes not.”

In response, many CIOs are leaving software and other enterprise technology decisions to finance, marketing, sales and other departments, and turning their attention to core business strategies.

The move to let business units run their own IT shop—a shift tech leaders have resisted for years, citing integration and security issues—comes as cloud computing, data analytics, automation and other capabilities become critical functions at companies in all sectors, said Kim Bozzella, managing director and leader of the global technology consulting practice at management-consulting firm Protiviti Inc.

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Though most CIOs continue to oversee data governance, compliance and other higher-level IT functions, when it comes to day-to-day business apps they are more likely to be seen as advisers.

In a survey last year of 985 IT leaders and 250 line-of-business workers, by market research firm International Data Group, nearly 60% of workers outside of IT described their company’s CIO as a “strategic advisor who proactively identifies business opportunities and makes recommendations.” Eighty-six percent said groups or functions outside of IT now have their own technology budgets. IDG said.

“The push to transform has stressed that companies that silo technology to their IT departments will be quickly outrun by competitors,” said Jeff Wong, global chief innovation officer at Ernst & Young LLP.

Irving Tyler, distinguished research vice president at Gartner, said the proliferation of digital technology means CIOs can no longer be the owner-operator of every system in the enterprise anymore.” Technology leaders who cling to an older mind-set are “going to struggle,” he said.

John Hill, chief digital and information officer at Carhartt Inc., said many of the responsibilities he used to have over enterprise technology are flattening out across the company. His focus now is on ensuring that systems are integrated, secure and aligned with the company’s long-term business strategy, he said: “I do think the role has changed.”

John Hill, CIO at apparel maker Carhartt

PHOTO: CARHARTT INC.

Last week, the 133-year-old U.S. apparel maker launched an initiative to create dedicated tech teams in every department, starting with its wholesale, direct-to-consumer and customer-care units.  Mr. Hill said the teams—which he calls “squads”—consist of both technology and business experts. Though under his watch, he said, “the prioritization of what’s being done is in the squad.”

At many companies, business segments aren’t waiting for IT to bulk up on tech talent. According to Gartner, an average of 41% of today’s total global corporate workforce is made up of what it calls “business technologists”—employees hired into departments outside of IT to build tech tools and other digital capabilities. The average percentage of these employees within organizations varies by industry, from 28% in the public sector, to a high of 55% in the energy sector, Gartner said.

Many tech providers have started pitching cloud-based and low-code software tools, designed to be ready-made or easily customized, directly to business segments, bypassing traditional IT gatekeepers—a trend that accelerated during the Covid-19 pandemic, analysts said.

“The sheer amount of technology options in today’s ecosystem necessitates new decision processes,” said Penelope Prett, chief information officer at IT consulting firm Accenture PLC.

She said Accenture recently created a new governance model that includes executives from every area of business, aiming to make department leaders more closely involved in critical technology decisions.

David Vidoni, vice president of IT at software company Pegasystems Inc., said tech departments are engaging at a much deeper level with business units, compared with just a few years ago. While there is no one-size-fits-all approach, he said, business-line departments should prioritize their unique objectives, leaving IT to provide a framework to help them make technology decisions that help achieve those objectives.

“Our business is looking at me to help with the realization of their strategic goals,” said Anil Bhatt, global CIO at health insurance company Anthem Inc. He said the job of the IT department today is to set and drive the company’s overall enterprise-tech strategy.

Within that framework, which includes measures to address security, stability and resiliency, among other issues, business-unit tech leaders can then create and maintain their own IT road maps, Mr. Bhatt said.

Sam Deshpande, CIO at health-insurance provider Humana Inc., said having dedicated technology teams in each of the company’s business segments gives IT leaders a unique position to view the entire enterprise-technology ecosystem. As such, he said, every segment’s unique decision on tech investing gets integrated with the company’s broader business strategy.

“I am impressed with how the Humana business leaders have leaned in to understand contemporary technology capabilities,” Mr. Deshpande said.