Thin IT: The emerging technology operating model

A blog post by Atilla Terzioglu, principal, Suseela Kadiyala, specialist leader, and Ninaad Balachandran, consultant, Deloitte Consulting LLP

The IT function has traditionally had a monopoly on enterprise technology. Lines of business have relied heavily on centralized IT departments, helmed by a CIO, to provide sought-after capabilities, and IT has been best suited to vet, select, deploy, and scale applications and infrastructure efficiently and effectively.

However, that model is rapidly evolving. Today’s markets demand specialized, customer-facing capabilities that directly affect shareholder value and may be best served by technologists embedded in business units. Moreover, the advent of game-changing technologies—chief among them the cloud and automation—makes it possible for non-IT professionals to effectively scout, implement, and maintain technology without intervention from IT staff.

This shift from traditional IT service delivery to a technology operating model that directly affects business outcomes is transforming IT’s role. Establishing a borderless technology function with business and technologists creating new products will likely significantly contract the size of the IT department. In many organizations, this new model may raise some uncomfortable questions about a Thin IT function, reshaping enterprise technology and, with it, the CIO role.

Several trends are driving this movement toward a borderless technology operating model:

Digitally enabled customer experience. Technology is increasingly part of customer-facing offerings in many businesses. Particularly in Agile development environments, which thrive on rapid releases of features tied to business outcomes, it may be wise to partner IT specialists with individual business units so they can work more closely with stakeholders. This approach may improve their ability to develop desired capabilities, bespoke products, and solutions that improve customer experience, brand perception, and sales, among other benefits. These aligned technologists would likely report directly to business units rather than to traditional IT leader.

The cloud. Now that organizations can tap into massive amounts of computing power and storage via the cloud, the mere notion of organizations maintaining their own data centers might seem downright antiquated in the future. Many applications that IT teams previously dedicated months or even years to implementing can be released in real time. Given that application and infrastructure services usually make up the vast majority of IT organization headcount, moving to the cloud will drastically change or eliminate work previously performed by IT.

Automation from end to end. Automation, driven by DevOps and cloud adoption, is taking over many tasks IT teams previously managed. Additionally, with the rise of robotic process automation, AI, machine learning, and natural language processing, some customer-facing IT tasks are being automated as well. Moreover, organizations are increasingly turning to ecosystem partners, rather than in-house IT staff, to stay abreast of new tools and enable technology throughout the enterprise. Such trends are likely to accelerate, contributing to further reduction of traditional IT roles.

This is not to say the IT organization will vanish overnight. While application development, infrastructure management, and other IT roles may shift or contract, the central IT function will still exist, albeit in a thinner form, with a changed role and capacity. Thin IT represents a foundational layer of the technology operating model that will orchestrate and integrate services across lines of business. Enterprises will likely rely on Thin IT to ensure platform standardization and consistency across business units for such corporate collaboration tools as email, or for applications used throughout the enterprise such as ERP, where efficiency and economies of scale outweigh the need for differentiation and business-unit alignment. Thin IT would also continue to ensure the quality of governance programs, compliance with cybersecurity standards, and vigilance in risk management practices. In addition, it would enable the curation of data by lines of business as enterprise-wide analytics programs rely on access to non-siloed data.

This new technology operating model will not take hold tomorrow, nor will it affect every organization in the same way. However, easier access to technology, increased adoption, and the resulting Thin IT construct raises questions: How will IT leaders reshape their functions to expand the business impact and value of technology to the enterprise? What type of leader does a Thin IT organization require? How will lines of business source leaders that possess a combination of business and technology acumen? These may be unpleasant questions to confront but they should be on every business leader’s mind.

This article first appeared on the Wall Street Journal.