Kenny van Ierlant - Information Governance demystifies the IT sector

As a result of regulations concerning openness and transparency, businesses have to provide an insight into all their processes. The ICT sector does not seem to be aware of this yet, its contribution is still too technical. It is time for the information technology to inform.

By Kenny van Ierlant

Automation and informatisation increasingly focus on the individual interest. The consumer /client as end user is becoming familiar with the possibilities of ICT and also want to see these possibilities reflected in the offered products and processes. For example, this trend demand is already being met through narrow-casting and market intelligence in the field of marketing. And this is not only the case with marketing. Other business functions must also take account of their ICT skills. At the same time the technological progress creates more and more challenging expectations with users and business clients. Businesses will also have to step forward in this respect. In this article five current trends will be described that place the ICT business function, and in particular its management & control, in a new light. 

Developments in the ICT business function

The first development is that of the transition from three phases of the ICT business function:
• automation
• informatisation
• demystification
Each organisation can be classified under one of these three development phases, each with their specific features (see figure 1). The automation phase is characterised by the facilities role of ICT in an organisation. ICT makes work easier, for example word processors, editing software or spreadsheet systems. They are tools. Failure is not pleasant, but it is not insurmountable. In this phase the focus is on processes: identifying successive tasks that are forged into one process. As a result it is possible to arrange all these tasks efficiently in a process-like manner, support the implementation and automate the process. As more tasks and even processes are integrated, both the complexity and dependence will increase for the user. This goes so far that failure is not only a nuisance, but also frustrates an adequate implementation. It is not surprising that many users feel that they are at the mercy of the ICT system during this phase, which imposes its possibilities and impossibilities. In this phase the ICT service focuses on explaining processes, tasks, data and systems for users and management.

ICT as an integrated system

The informatisation phase is characterised by ICT playing a more managerial role. Work is determined here by complex and communicating ICT systems, in which various tasks, processes and subsystems form one integrated system. In this phase the chain philosophy is highlighted. The ICT sector has been developed in cooperation with users, which is not the case in the first phase. At the same time the ICT systems have been developed and parameterised in such a way that they can be applied with different business models and business transactions. Failure is not only a nuisance, but is also blocks an adequate proceeding and introduces errors because of incorrectly processed data. Restoring this failure requires much more time than required by the mere failure. The dependence of users and business functions on ICT has greatly increased. In order to keep such systems manageable there is also a focus on cost control: on setting up management processes and optimising processing capacities. In this phase the ICT service focuses on offering advice about functionalities, cost control and the flexible applicability of these systems.

Kenny van Ierlant - ICT as an utility

The phase of demystification is characterised by the client and user instead of taking the technology as a starting-point. In this phase it is important to think in a service-oriented way. The wishes and requirements of users are central aspects. ICT systems must be entirely focused on these aspects. The systems do not support processes or chains anymore: they are the operational process. Hence they are simultaneously the realisation of the business model and the unique competitive advantage. This development is characterised by trends such as subdividing into modules, standardisation and debundling of the value chain. The technology becomes an utility and the focus is on the business. The business and client now decide which ICT functionalities are required and how they must be organised in a flexible and efficient way. The mist surrounding information technology is disappearing because the focus is where it should be: on the interface between client and company, user and organisation, supplier and buyer. In this phase the ICT service focuses on offering advice about flexibility, scalability, commitment, business model and business planning, and the value creation of the latest generation of ICT systems. The service also focuses on transparency, reproducibility and transition options of these systems. Often specific regulations must be complied with or performed transactions must be retrieved. Account also has to be given of the contribution of the ICT systems to the business of the organisation (which is not the case in the first two development phases). Incomprehensible, costly and often also unreliable systems will be a thing of the past in the demystification phase.

Strategic role CIO

The second trend in the new ICT business function is that of the changing role of the Chief Information Officer (CIO). When the CIO focuses more on the business, he will become more detached from the traditional realisation of his position. He will have to directly report to the management. His role changes to that of Chief Operations Officer. If the CIO focuses more on technology, he will become a Chief Technical Officer and focus more on research and development. The CIOs are not only responsible themselves for this changing role, but it is also inspired by a different premise from the market and the organisation itself. Instead of thinking in terms of processes organisations are thinking in terms of chains, and thinking in terms of services. The CIO must shape the turnover in this process from thinking in terms of technology to thinking in terms of business. In the first development phase the CIO is still automation manager with mainly a service role, but in the third development phase he will direct the business strategy, and most likely will also play an important contributory role.

Towards business-operational tasks

According to the third trend line, the ICT business function is becoming more a business-operational function, as has been the case with banks and major insurers for a longer time. The ICT sector in these branches has many similarities with industry. In industry end products and semimanufactures are produced in stock or according to an order, while banks and insurers ‘produce’ transactions and policies. It is noteworthy that cost control and thinking in terms of value chains are becoming generally accepted in the industry, while the information-processing industry is gradually working towards this. The government, for example, is developing an interactive system in which citizens, under their own responsibility, can update their data. This goes far beyond an intelligent portal, because it is the principle of ‘customer engagement’.

Corporate governance as a guideline

The fourth development is that Corporate Governance has an increasing impact on the ICT business function, which is also referred to as ICT Governance. New regulations and the introduction of principles make an appeal to work according the rules, to transparency and to monitorability. In the field of ICT the call for a clear structuring and financial control is also becoming louder. As is the case in other business functions, the ICT must consistently report about (financial) performances, including cost control and value creation, or contribute to the business objectives. For this purpose a demystification of the ICT sector is required, which at the same time will also result in the required transparency and accountability.

ICT innovates business

The fifth and last trend line is that of new business modelling. IT can be of decisive importance in identifying which field should be changed and improved (and the risk of a lack of understanding how the changes affect the operational process). The new business models are developed due to the new, individualising demand of clients and users, and technology makes it possible. It is in particular here that the developments are visible which are so characteristic of the third development phase. As is the case with products and services, businesses also have a life cycle, in their case that of the business model. The earning  model that was so profitable only yesterday has reached its peak today and may result in a loss tomorrow. Such a development is not unusual. However, it is new that the business model is largely based on the ICT business function. The life cycle of the business is running increasingly synchronous with the life cycle of the ICT sector. Business ICT alignment says how the ICT sector can optimally support the business (second development phase), while the current development focuses more on finding an integral connection between business and the ICT sector (third development phase).

Conclusion

In the current field of business there are only few organisations that actively deal with these five trend lines. However, often subconsciously, they perceive that these developments play a role and they feel the pain. Pain about where the organisation stands and about the required transition. As long as there is no conscious understanding in the developments and the place of the own organisation in these developments, this pain cannot be combated effectively. However, it is clear that the traditional role of ICT is a thing of the past. Alignment between the business and ICT is possible, providing the ICT sector is demystified, if it makes its delivery of the core business visible. The parallel with the industry already indicated that these developments are in particular taking place in the information-processing industry. This is why the term Information Governance is used instead of ICT Governance. It does not concern the information technology itself, but controlling and arranging the business.

K.E.J. van Ierlant MBA, ConQuaestor