Redesign Your IT Operating Model to Accelerate
Digital Business
Ian Cox
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Can your operating If the answer is no,
model support your then you need to
digital ambition? design a new one.
1 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Key Issues
1. What is an I&T operating model?
2. What does the I&T operating model look like for digital business?
3. How should CIOs design and build their new operating model?
2 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Key Issues
1. What is an I&T operating model?
2. What does the I&T operating model look like for digital business?
3. How should CIOs design and build their new operating model?
3 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
An I&T operating model describes how the
information and technology capabilities the
enterprise requires to successfully execute
its strategy will be delivered
"How We Do Things Around Here"
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Nine Operating Model Components That Are Configured to
Create the Required Capabilities
Enterprise
Governance
Performance
Decision Organizational
Rights Structure
Sourcing and Ways of
Financials
Alliances Working
Talent Tools
Places
Enterprise
Culture
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Business Strategy and Model Shape the I&T
Operating Model
Gartner's I&T Operating Model Framework
Business Model and Strategy
I&T Operating Model
Strategy Execution
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Key Issues
1. What is an I&T operating model?
2. What does the I&T operating model look like for digital business?
3. How should CIOs design and build their new operating model?
7 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
"The world has changed. Just ask
yourself: If you were a brand-new
digital company, would you have the
operating model of an IT department,
or the model of a software
engineering firm?"
Karl Gouverneur,
VP, Head of Innovation, Workplace
and Corporate Solutions at
Northwestern Mutual
The I&T operating model for digital business is
likely to be very different to your current operating model
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In 2017 to 2018 which of these will be
the stronger focus at your company?
Building up
in-house information
57% technology and
digital capabilities
Outsourcing information
technology and digital
work to external 29%
providers
13% — neither is relevant
n = 388, Global CEOs and Sr. Business Executives Note: Percentages may not add up to 100% because of rounding.
To support digital business, the I&T operating model will need to
deliver new capabilities
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"The I&T operating model continually
evolves in line with business needs,
but with the quickening pace of digital
and technology advancements over
the last seven years, every facet of
the model has been stressed."
Kevin Humphries,
SVP — Enterprise Infrastructure
Services at FedEx
The I&T operating model will need to be optimized for agility,
speed and innovation
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Achieving These Goals Typically Starts With New Ways
of Working
Enterprise
Governance
Performance
Decision Organizational
Agile/Iterative
Rights Structure
Product Management
Sourcing and Ways of
Financials
Alliances Working DevOps
Lean
Talent Tools
Design Thinking
Places
Enterprise
Culture
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And the Decision to Adopt New Ways of Working Impacts
the Design of the Other Components
Financials
Ways of
Working
Talent
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"A nimble organization that can adapt
to how the world of technology is
changing starts with recruiting. But
how we develop our talent is
equally crucial."
Rob Alexander,
CIO at Capital One
A decision to adopt new ways of working has implications on the
type of I&T talent you will need
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And the Decision to Adopt New Ways of Working Impacts
the Design of the Other Components
Allocate funding/costs to products/business units
Financials
Funding for shared technology held centrally
Ways of
Working
Recruit new people with required skill sets/experience
Talent
Develop broader skills and knowledge of existing staff
14 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
And the Decision to Adopt New Ways of Working Impacts
the Design of the Other Components
Decision
Rights
Financials
Ways of Organizational
Working Structure
Talent
Places
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"It's not about centralized versus
decentralized. To me this is a
polarized, older way of thinking.
To meet or exceed customer and
marketplace demands, we need
to use a much more complicated
matrix for operating and staying Kevin Humphries,
SVP — Enterprise Infrastructure
as fast as possible." Services at FedEx
Digital business requires a more sophisticated or "integrated"
operating model
16 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
And the Decision to Adopt New Ways of Working Impacts
the Design of the Other Components
Business ownership: Product roadmaps,
Decision prioritization and budget allocation
Rights
Centralize: Platform, strategy, architecture
and security
Financials
Adopt a flatter structure, with smaller self-managed
Ways of Organizational
empowered teams comprising IT and BU staff
Working Structure Centralize IT resources but align to
products/business units
Talent
Colocate IT and business unit staff
Places Rebalance onshore, nearshore and
offshore locations
17 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
And the Decision to Adopt New Ways of Working Impacts
the Design of the Other Components
Decision
Rights
Financials Performance
Ways of Organizational
Working Structure
Talent Sourcing and
Alliances
Places
Tools
18 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
"The core of our transformation was
moving to a partnership model with
joint accountability for delivering
digital solutions."
George Hunt,
GM Digital Services and
CIO, Sydney Water
A more integrated operating model leads to joint accountability
for delivering IT and business outcomes
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And the Decision to Adopt New Ways of Working Has
Impacts Across the Other Components
Decision
Rights
Business units and IT jointly accountable for
business outcomes
Financials Performance
Increase focus on team rather than
individual performance
Ways of Organizational
Working Structure
Adopt bimodal sourcing
Talent Sourcing and
Alliances Redesign sourcing processes to enable rapid
selection and onboarding of new partners
Places
Automate testing and release to support
Tools
continuous delivery
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Your New Operating Model Will Require Changes in the
Enterprise Operating Model
Enterprise
Governance
Performance
The integrated I&T
Decision Organizational operating model is
Rights Structure
I&T becoming an underpinned by an
enterprise asset Sourcing and Ways of
enterprise culture
Financials of collaboration,
requires changes in Alliances Working
accountabilities, learning and
prioritization and Talent
engagement
Tools
how investment
decisions are made
Places
Enterprise
Culture
21 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Key Issues
1. What is an I&T operating model?
2. What does the I&T operating model look like for digital business?
3. How should CIOs design and build their new operating model?
22 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
A Structured Approach Produces Better Results
Trigger Design Pilot Scale Optimize
Change in
IT/OT
New convergence
technology
M&A
business strategy
Scan for triggers that require a change in the operating model
Respond using a structured and iterative approach
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Three Steps to Developing Your Operating Model Design
Trigger Design Pilot Scale Optimize
1 2 3
Define
Configure Identify
design
components changes
principles
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Define Design Principles Based on the Trigger
Business Needs Outsource commodity;
insource differentiating
Translate
Design Principles
Prioritize time to market, where
to standardize/allow differences
Operating Model Design
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"Our lesson learned would be not
only to plan the change, but also to
look holistically across the landscape
of changes being contemplated."
Managing Director at BankCo
However you create your design, all components need to be
reviewed to ensure that the operating model remains balanced
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Use Gartner's Operating Model Patterns to Accelerate Your
Design and Configure the Components
Business Focus
INVENTION
VALUE
Back-Office Front-Office
Bias SERVICE Bias
PROCESS
ASSET
Technical Focus
27 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Assess the Gap Between Your Current and Target Models
Goal
Component Asset Process Service Value Invention
Financials
Decision Rights
Performance
Talent
Sourcing/Alliances
Org. Structure
Ways of Working
Places
Tools
Current Status
28 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
"Since large sections of the IT
organization had been outsourced
for years, it lacked some basic
capabilities. Over three and a half
years, we have been evolving the
I&T operating model through a
John Quinn,
series of phases." CIO at Medicines and Healthcare
Products Regulatory Agency
If the gap is significant, then an intermediate stage may be
necessary to build the missing parts
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Use Pilots to Test and Develop Your Design, Then
Scale Quickly
Trigger Design Pilot Scale Optimize
Use pilots to test operating model changes before they are
deployed more widely
Scale quickly once the design of the new operating model
has been tested and refined
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"Choosing the right pilot is crucial
to success. And you need to be
prepared to refine your design
and make 'in-flight' changes
during the pilot."
Tom Bauer,
CIO at Hagerty Insurance Agency
Piloting operating model changes requires business
stakeholders who are willing to be part of a test bed
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"We had a team that went into
various areas and started helping
other teams implement with the
right language, ways of working
and toolset. Then they'd move on
to the next area. It was a formal
sort of adoption plan." Stuart Warner,
Head of Technology, U.K. and
Europe, Fidelity International
Scaling will be a major program. Establish a transformation office,
and use phases and workstreams to implement changes.
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It's an Ongoing Process — Optimize to Stay Relevant
Trigger Design Pilot Scale Optimize
The operating model design should not be viewed as something that
is fixed or static once deployed
It will need to evolve to meet the changing needs of digital business,
to exploit technology changes and to respond to other events
33 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
"When you move to a new operating
model such as this, you are never
done. The process is continuous.
You are always optimizing,
adjusting, evolving."
Rob Alexander,
CIO at Capital One
Scan for potential triggers on an ongoing basis and adjust the
operating model as required
34 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Recommendations
Evaluate your current operating model and answer this question: Does
it support you digital ambition? If not, redesign it.
Define a set of design principles that reflects business needs.
Design your I&T operating model holistically — use Gartner's
operating model patterns to guide your design.
Use pilots to test operating model changes before they are deployed
more widely, then scale quickly.
Scan for potential triggers on an ongoing basis and adjust the
operating model, as required.
35 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
Recommended Gartner Research
Redesign the IT Operating Model to Accelerate Digital Business
Ian Cox, Donna Scott and Simon Mingay (G00344440)
What Is an I&T Operating Model, and How Do You Accelerate Its
Design Process?
Ian Cox and Simon Mingay (G00342071)
Monetize Your Business by Adopting the Value-Optimizing I&T Operating
Model Pattern
Donna Scott, Remi Gulzar and Bill Swanton (G00340604)
Drive Disruptive Innovation by Reinventing the I&T Operating Model Pattern
Donna Scott and Monika Sinha (G00343310)
Governance and Culture Are the Fabric of Your I&T Operating Model
Remi Gulzar, Jamie Popkin and Others (G00335265)
For more information, stop by the Experts Desk in the CIO Lounge.
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