Achieving IT innovation: A guide to advancing IT maturity for transformation

IT has always been central to organizational success — but with rapidly changing business needs corporate IT itself must transform to become a true strategic partner to the wider organization. How effectively are IT teams at embracing this shift — and where are the gaps that are holding back responsiveness and maturity? This Arthur D. Little (ADL) report shows that most IT organizations are not yet fully mature, particularly when it comes to key areas, including cultural change. How can they transform themselves and deliver the increases in productivity, agility, collaboration, and innovation that companies need to thrive?

Understanding the IT Steering Wheel

Responsive IT is about much more than deploying advanced technology. By taking a holistic overview of nine key dimensions of a modern IT environment using the IT Steering Wheel approach, IT organizations can transform their maturity, by focusing on key areas and embracing best practices.

The dimensions of the IT Steering Wheel approach span three areas, as summarized below and explored in more detail in the report:

1. Enterprise architecture (EA) — a strategic discipline that underpins the development of applications; deployment of technologies; design of processes, systems, and data structures; and the availability of the right services to the business
2. Operating model — how IT functions are adapted to align with the strategic business partner role, focusing on organizational design, process alignment, and strengthening capabilities as partner ecosystem orchestrators
3. Human dimension — creating an open, digital-first, customer-centric culture, focusing on empowerment, collaboration, action orientation, customer centricity, constant change, and continuous innovation

Understanding progress in IT transformation

However, many organizations are struggling to make these changes. Our benchmark study assessed the progress of IT organizations in six industries against the dimensions defined in the IT Steering Wheel framework. Five key highlights are:

1. Organizations have achieved a median level of progress, starting their journey but without moving beyond the median (proficient) level. This relative lack of sophistication demonstrates a need for IT organizational transformation to achieve a true strategic partnership with business.
2. Traditional IT dimensions are the most mature with the most evolved areas being business layers and organization and governance. Processes and culture are the least developed and reflect a need to move away from a technology-centric to a business-centric environment.
3. There is wide diversity within each sector, demonstrating that there are no inherent sectoral-specific barriers preventing an organization from achieving best-in-class maturity — and that role models already exist.
4. The human dimension is least mature, with progress in the technical and organizational elements of IT (EA and operating model) being more advanced, pointing to a need to increase the engagement of employees to deliver transformation.
5. Different industries lead in different areas, with significant variation between sectors. For example, financial services is generally ahead in EA and operating model, while automotive leads the way when it comes to human dimensions.

Best practices & models for transformation

Given that most organizations remain at an early stage in their IT maturity evolution, how can they successfully transform IT into a strategic partner for business? Drawing on experience working on transformation projects, ADL has identified three critical areas that underpin successful transformation initiatives:

1. Enterprise architecture. EA should flow logically from corporate strategy and requires a focus on four key aspects: (1) transparency of the current and target EA, (2) mature capabilities to drive effectiveness, (3) a team of enterprise architects that combines business understanding with architectural expertise, and (4) business-IT alignment.
2. Operating model. A well-designed IT operating model ensures the organization is agile, value-driven, and business-aligned. It must be underpinned by a flexible, modern, and solution-oriented structure based on business capabilities and services, with a streamlined interface between IT and business units — and focus on identifying and collaborating with strategic ecosystem partners to understand and adopt state-of-the-art approaches and solutions.
3. Human dimension. Despite being a critical success factor, the human dimension of transformation is often overlooked. Without employee engagement, even the most well-designed plans and strategies will have limited value and will fail during implementation. Organizations must address three key areas: (1) fostering an open, digital-first, customer-centric culture; (2) investing in skills and talent; and (3) demonstrating strong leadership to personify and drive change.

Models for IT transformation success

Adopting holistic, all-encompassing solutions and programs to drive IT transformation is valuable but takes significant time, structure, and planning to deliver results. However, multiple models allow IT organizations to accelerate their journey, justify their direction, and deliver initial success to unlock future investment. Examples include:

The Run-Grow-Transform model

This provides a simple way to assess the distribution of current IT spending, outlining the percentages committed to the three areas of:

1. Run — IT resources dedicated to day-to-day operations
2. Grow — IT resources that support business growth
3. Transform — IT investments aimed at enabling the company to innovate

Based on client experience, we recommend around two-thirds (66%) of the overall IT budget be spent on “run,” 20%-22% on “grow,” and the remaining 12%-14% on activities to “transform” the business through IT.

Competence assessments

Across all the different dimensions and areas of the IT Steering Wheel, the contribution, participation, and value of your employees are crucial to success. Running a competence assessment exercise identifies current capabilities and any gaps. Rather than measuring performance, this instead assesses what is needed and compares it to current capabilities. This can validate current capabilities or identify the actions required to put in place the required skills, as shown in the example assessment below.

Change management approaches

Extensive experience running all types of transformation projects has identified a range of specific formats for communication, alignment, and participation that deliver significant impact. By choosing from this catalog of different approaches, organizations can successfully involve different stakeholders within IT transformation, depending on their specific roles in the process.

Each model provides a starting point for IT organizations to guide their transformation, helping deliver best practice frameworks to power success. Determining which model to deploy should be based on an organization’s specific needs, existing IT and business landscape, and overall objectives.

Building strategic partnerships through transformation

Becoming a true strategic partner to the business requires understanding and transforming IT across three dimensions — EA, operating model, and the human dimension — using the IT Steering Wheel approach. Organizations should begin by benchmarking their current maturity in these areas and then implement best practices and models to accelerate progress. This approach will help create more business-focused IT organizations that deliver enhanced IT quality, cost reductions, and, most importantly, innovation — positioning IT as a key enabler of future business change in a fast-moving, volatile, and technology-driven world.