Align IT and Enterprise Operating Models.pdf

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Unlock Execution Success: Align IT
and Enterprise Operating Models
Joanne Kopcho
VP Analyst
Monika Sinha
VP Analyst

4 © 2023 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates.
“Companies that sustain value
leadership within their industries will
be run by executives who …
understand the importance of focusing
the business on its value discipline
and who
push relentlessly to
advance the organization’s
operating model.”
Behind Every Great Strategy
Is An Operating Model
“Customer Intimacy and Other Value Disciplines” - “Michael Treacy and Fred Wiersema :- HBR, January-February 1993

Digital Execution is a Challenge for the Enterprise
n varies, Gartner CIO Research Circle members, excluding ‘not sure’
Q.. How would the top leader of your business or government characterize these aspects of the digital technology investments?
Source: Gartner 2022 Overcoming the barriers to digital execution
Percentages May Not Add to Sum Due to Rounding
43%
59%
52%
0% 50% 100%
Speed to launch (n=93)
Speed to complete (n=94)
Speed to realize value (n=94)
Evaluating Speed of Key Phases in Digital Technology Investment Lifecycle
Percentage of Respondents Reporting these Aspects of Digital Execution are Below Stakeholder Expectations

The Three Foundations of a Business Architecture
A Business Model reflects why and what
value the entity will create and deliver to
its customers.
An Enterprise Operating Model reflects
how the entity delivers the targeted value.
A Strategy Framework reflects the entity’s
strategy, strategic and operational plans for
where and when it will capture value for itself.
Resources
Governance

Four Components of the Enterprise Operating
Model
An Enterprise Operating Model reflects how the entity creates and delivers value.
Resources
Value
Streams
Governance
Business
Capabilities
Business Capabilities
The necessary actions to create
and deliver the organization’s
value proposition (or mission).
Governance
Guiding principles, decision
rights and responsibilities, and
forums and processes to ensure
the entity performs optimally and
conforms with appropriate
regulations.
Resources
All the human, physical, digital
and financial resources
necessary to execute your value
streams
Value Streams
The collective set of value-
adding activities that support
each business capability

The IT Operating Model is Part of the EOM!
Source: A Key to Unlock Execution Success: Align IT and Enterprise Operating Models

Shape the ITOM to Align to the Strategy

Use Strategy to Connect EOM and ITOM

ITOM Supports and Enables Execution
Source: “Defining and Applying I&T Conceptual Delivery Models” (G00721864)

Delivering at Various Speeds and Service Layers
Strategic Services
New Competitive
Advantage
Core Services
Current Competitive
Advantage/ unique Process
Run Services
Support Current operations
Project
Delivery
-
+
Governance
+
-
Change
Product
Delivery

ITOM Shapes the Organizational Structure
Centralized COEs Federated IT Service
Teams & Shared Service
Business Led IT
Workday Oracle QA
PMO DBA Architect
Network E-Comm Legacy
Production
Recruit
ment
FP&A
Procure
ment
Order
Management
Network
DevOps
Cloud
QA
PMO
HCM
Integration
A
A
A
A
A
B
B
B
B
B
C
C
C
C
Legacy
Data Fabric
Application
Composition
Platform
Integration
UX
Security
Development
Extension
Customer
Experience
Supply Chain
Optimization
Workforce
Mgmt
Shared
Service

In other words, evolving the Operating Model will Scaling
Digital Execution
Shared Infrastructure
Shared Applications (e.g., ERP)
Digital Product
Line B
Shared Platforms (Digital Foundations)
Traditional
IT services
Digital Product
LineA
IT Staff
Business Unit Staff Customers
Fusion/Cross-
Functional Staff
“Digital IT” Staff
(Digital Business
Platform Focus)

Extending or Adding a Value Proposition
Impacts Capabilities
Extend today’s value
with portfolio insights
Add value with a
personal advisor

Business Capabilities Link and Operationalize the
Strategy

Refactor Selective Capabilities Into Composable
Building Blocks
Differentiating
Capabilities
Core
Capabilities
Commodity
Capabilities

Blue Cross NC’s Capability-Based Planning
Process Steps

Deliver Leadership
Value to Improve
Performance of IT

Enterprise Aligned
IT Strategic Vision
Communicate IT Strategies connected to
tackling business challenges in order to
deliver business goals
Bimodal
Execution
Foster experimental processes that will
generate new norms that enable the
organization to meet strategic outcome
Transformation
Leadership
Recognize predictable defensive patterns
of response that operate at the individual
and systemic levels within IT
Customer Service
Mindset
Build an IT culture that values diverse
views and relies less on centralized
decision rights and the genius of the few
Now
2023
Now
2023
Now
2023
Now
2023
Profile 1: From a Traditional CIO to Service
Optimized CIO
Identify and Close Leadership Gaps
Peter
"Building his
strategy and
influencing role
on a great record
of saving money
and improving
delivery"
Focus of development

Influence
Enterprise
Strategic Vision
Observe what is going on. Stay inquisitive
even when taking action. Develop more
than one interpretation of interventions
Scale Business/
Technology
Delivery
Distinguish technical problems from
adaptive challenges that require continuous
innovation and new patterns of behavior
Enterprise
Transformational
Leadership
Communicate plans in a way that enable
everyone to understand what I have in
mind, why the plan is important and how
they can help carry it out.
Enterprise Value
Mindset
Inspire others to relentlessly seize
opportunities while increasing appetite to
deal with ambiguity
Now
2023
Now
2023
Now
2023
Now
2023
Katie
"Technology Isn't
Driving Business
Transformation.
Behaviors Are."
Profile 2: From Service Optimized to Value Based
CIO

Enterprise
Strategic Vision
Set visionary strategic enterprise direction
with CEO, understanding my role within the
organization is fluid
Enterprise
Execution
Keep the business outcomes at the
center of people's attention. Wrestle with
normative questions of value, purpose, and
process
Transformational
Leadership
Engage people in distinguishing what is
essential to preserve in the organization's
heritage from what is expendable
New Business
Models or Mission
Mindset
Inspire enterprise culture of disruptive
exploration that also faces the fear of loss
those ideas generate
Now
2023
Now
2023
Now
2023
Now
2023
Lynne
"Respected
executive vision
and passion for
using digital to
create value"
Profile 3: Value Based to Digital Business Leader

1 2 3
Determine how
shifting ITOM
execution will
impact the
Enterprise
Support and lead
the definition of
Business
Architecture and
Capabilities
Build a
collaborative role
within the
enterprise strategy
Recommendations
1 2 3

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