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Contact John Wyzalek editor of IT Performance Improvement.

 

IT Value Streams and Cultural Silos

Troy DuMoulin
VP, Research, Innovation and Product Development,
Pink Elephant

Fundamentally the information technology (IT) function's reason for existence and right to ongoing funding is based on successfully performing the duties of a trusted service provider. As such, IT is charged with delivering outcomes customers want, value, and for which they are willing to pay. However, being a service provider does not make IT unique, distinct, or special within a business context. In a typical business, there are many support functions, such as human resources (HR), fleet management, facilities management, engineering, finance, accounting, and so on. Each of these support functions plays a key role (1) as a service provider to the line of business customers, (2) in external market value generation, and (3) in the larger business ecosystem. They all provide important services that are necessary for the overall business organization to grow and meet changing market demands.

At least this is how an academic or business school professor would describe IT's relationship with business. The challenge is that reality does not often reflect this textbook and even logical perspective. From experience, most readers will observe that the cultural reality is much more complex, disjointed, and often dysfunctional.

If you ask most business stakeholders if they believe IT understands their priorities and challenges, you will hear a uniform "no." In turn, the IT members will often see themselves as unique with separate goals (although somehow aligned) from the business customers they serve. This cultural perception of separation and distinction is not a one-sided view but is shared by the business units themselves. They often hold to the profound belief that IT is not part of the core business competency.

The fallacy of both views is that it would be difficult, if not impossible, in a twenty-first-century organization to identify a single major business process that is not highly automated if not completely dependent upon digital outputs. Information systems have in effect become as much a part of the business process as older technologies that have long been taken for granted. Information systems are not "nice-to-have" technologies but are simply part of the line or business value system. Point being: Business outcomes are wholly dependent on information technology and are very much part of the business core competency.

The false perception of separation represents a cultural gap that makes process improvement across business units and IT groups very difficult. To accurately map and improve a cross-functional value stream, it is important that all stakeholders involved in the improvement activities participate both willingly and in agreement on a shared goal. Effective value stream mapping depends upon understanding the linkage of the who, what, when, where, and how those goals are accomplished. For most business processes, the how is automated within information systems supported by digital data stores.

Attempting effective business value stream improvements without this acknowledgement and cultural acceptance is problematic at best and disastrous in a worst-case scenario.

As an interesting anecdotal example of business and IT separation, I once delivered a presentation on IT management best practices to a large- city transit authority. In attendance was a mixed audience. A number of the attendees were from the internal IT department, reporting up to the CIO. These attendees understood themselves to be part of the IT organization with such titles as network administrator, server administrator, database manager, and so on. This group of people spent their days focused on optimizing and managing networks, applications, and servers. In the same room was a group of people who reported to a business unit. These individuals were responsible for the systems related to scheduling and operating the trains and buses. However, they also managed their own separate networks, vendor-supplied applications, servers, databases, and so on, all outside the management and oversight of the IT function and the CIO. The business group had titles such as engineer, analyst, and scheduler and saw themselves as the business and the customer of the CIO organization. Both groups managed technology that automated the trains and bus transportation system. These two groups depended upon one other in regard to technology and data integration but did not share processes or priorities. One group thought of itself as IT and the other as the business.

  • The question is which of the two groups had the more accurate view of its role within the business? (The CIO's group was in the business of technology management; the other was in the business of mass transit.)
  • What risks does the lack of integrated management practices across the two groups managing interdependent technology systems pose to the business—not to mention the public using the transit systems?
  • What impact does this perception of separation have on mapping and improving value streams that depend upon the participation of both groups?

In actual fact, the reality of artificial separation based on culture and organizational design goes much deeper than business and IT separation. Within the IT function itself groups are typically culturally fractured along technology lines—one of the most pronounced being the cultural divide separating development groups from operations. These separations and sometimes antagonistic relationships also challenge the improvement of value stream and IT management processes, which span departmental silos.

Understanding and working within this cultural maze rather than ignoring its existence is a critical success factor in applying Lean improvement principles to IT management processes.

IT Organization Culture Model

The IT cultural model that identifies the various shifts in belief and behavior that affect how IT sees its role within a business context and how those changes enable or block an organization's willingness to share a common goal and participate in cross-functional value stream activities.

The cultural model shown in Figure 1 is based on a model first published as part of ITIL's Planning to Implement Service Management [1\. This model represents how IT organizations evolve in both the perception of the IT purpose and their relationship to generating business value.

The key premise of this model is that IT strategy, governance, organizational structures, and measures change as organizations evolve from one maturity level to the next. The model progresses through the following stages:

  1. Technology and project management focus
  2. System and service management focus
  3. Supplier/business customer focus
  4. Business partner focus
  5. Business value stream focus

Each of these levels has distinct characteristics in how IT views the following concepts:

  1. Value stream orientation: Which processes or activities are deemed to be within the organization's scope or area of accountability and responsibility?
  2. Customer orientation: Who does the IT function look to as its primary customer group and the focus of its value delivery?
  3. Measurement orientation: Which measures will the IT group likely capture and use for management and improvement?

Level 1—Technology Focus

A technology-focused organization can be described as an IT function whose primary goal is the optimization of technology domains with a focus on performance and cost reduction. Each IT functional group (e.g., network engineering, help desk, application development) within its domain looks for ways to improve performance and technical throughput within its specific technology area and with an intense focus on cost reduction. The various functional groups conceptually understand that they don't manage independent technologies, but the reality is that decisions are made and priorities are decided by each group based on departmental goals.

Figure 1. IT Cultural Model. (From Pink Elephant. Reprinted with permission.)
Click to view larger image of Figure 1.

Value Stream Orientation

IT processes are for the most part limited in scope to functional groups and primarily focus on technology tasks such as backup and restore, develop application, or new account setup. Management processes will often be unique to each technical group, which causes duplication of process functions and tools, e.g., multiple help desks based on geographic regions or technology types.

Customer Orientation

The concept of customer is vague and poorly defined. For the most part, a customer orientation is not a major concern at this level of the model.

Measurement Orientation

Measurement is focused on technology metrics such as storage capacity, CPU utilization, database performance, lines of code written, and domain- based cost reduction.

Level 2—System-/Service-Focused

Eventually, the risk, cost, and frustration of managing interdependent technology silos as independent groups becomes apparent, and the IT organization realizes the need for and makes the effort to develop shared management processes to support coordinated service delivery. Before an organization begins to think in terms of business outcomes, it must understand and manage systems, which are an integrated composite that consists of one or more of the processes, hardware, software, facilities, and people that provide a capability to satisfy a stated need or objective.

In other words, members of the IT organization begin to understand the need to manage technology solutions such as the SAP System or the MS Exchange System as a logical entity, which is made up of technology components from across multiple domains. System thinking is typically observed as each domain-based group captures and manages data about key technology relationships and other technology domains. For example, a server spreadsheet will have a new column added to track installed applications on each server.

A focus on the availability of business critical applications such as e-mail or enterprise resource planning applications are often a prime driver for managing system relationships. In these cases, business risk and regulatory requirements often dictate the need to understand and manage relational dependencies of the key technical and contractual objects that together deliver the full technology solution.

At this maturity level, infrastructure groups and data centers are often consolidated into the creation of a shared services/operation group. The structure of application groups can be much more varied in their organizational placement. Although it is common for there to be a single development function, it is also increasingly common to see development groups being managed and funded by business units outside the direct governance of the CIO.

As a typical second phase of this cultural maturity level, various IT functions start to aggregate and to include related IT systems into service descriptions based on the business or IT outcome they deliver. For example, a shared infrastructure group will define collections of systems based on what they collectively accomplish or what business processes they support. Examples include collaboration, communication and messaging, desktop automation, and hosting services. Major business application groups begin to define the application-centric systems in terms of their business outcome: power generation, logistics, refining, online trading, and so forth. This grouping and naming of IT services, based on business outcomes, is the beginning of the group's cultural focus on service orientation.

Value Stream Orientation

With the beginning of system and service thinking, IT groups are willing to acknowledge and invest time in value stream and process improvements across functional groups. Examples of this are the consolidation of multiple help desks and the establishment of a common service desk that supports the incident and problem management processes across various IT groups or customer areas. Another example would be the adoption of a common change control and scheduling process across applications and infrastructure domains.

Customer Orientation

With the evolution of a larger system and service mindset, the concept of a customer begins to take definition and shape and requires a change in management focus. At a Level 2 of maturity, however, the customer focus is often not yet at a business unit level. Instead, typically the customer is another IT group or end user. For example, an infrastructure group focuses on providing hosting services to an application development function or the delivery of end-user services such as telephony and desktop automation.

Measurement Orientation

Building on technical and cost data, measurement now begins to take on a system and service aspect by looking at customer experience such as application availability/performance and the return on investment of business systems or technologies. A key focus of process metrics is on the results of technical support and change management.

Level 3—Business Customer Focus

At this level of the cultural model, the IT organization is organized and managed as an enterprise function. The IT function encompasses both application and infrastructure groups regardless of whether internal or external providers supply them. In essence, the enterprise IT function is managed as a single business unit with a shared governance model and strategy. It is at this level that all aspects of the DPBR value stream are now part of the same organization and can align the priorities of each IT functional group to the end-to-end flow.

At this stage of evolution, all groups function as if they were part of a single IT factory or a single but multifaceted service provider. IT functions and individuals also culturally accept and embrace cross-functional processes such as those described in frameworks like ITIL. Examples at this level include the creation of a single service catalog and a configuration management system that catalogs all IT devices and application details.

Value Stream Orientation

The focus on enterprise IT principles results in a common management system. This system and organization enable and support the cultural acceptance by all groups of the various processes that support the mapping and improvement of the DPBR value stream. For example, application groups no longer claim to be an exception outside the general IT processes.

Customer Orientation

It is interesting to note that while the various IT functions begin to see themselves as a single distributed enterprise organization, the relationship with the business is still one of separation. The language of customer/supplier is predominate and promotes the perception that the IT function is separate and distinct from the business. Separation can be a challenge to IT as other internal service providers such as facilities, fleet management, human resources, and finance do not operate under this assumption.

Measurement Orientation

Building on the localized metrics listed in Phases 1 and 2, the focus now is on enterprise measures. Measurements emerge in a balanced scorecard format, and concepts of customer, innovation, maturity of operations, and finance become organizational key performance indicators. In essence, there is a move to develop holistic management dashboards based on agreed-upon service levels in the context of being a trusted internal supplier.

Level 4—Business Partner-Focused

The cultural division and perception of separation between IT and the business units are not healthy for either party because they require decisions to be made by each group, which is not in the best interest of the overall business goals. Best-practice frameworks such as ITIL that use the term customer in referring to the business unfortunately inadvertently promote this perspective. There is a growing movement among IT professionals focused on cultural transformation that all internal business functions should be referred to as partners, believing that the term customer should be reserved for the external customer of the organization.

Consider the earlier example in which the transit authority has people who work with technology assets outside of IT and have titles such as engineer and business analyst. Just because they design, develop, manage, and administer information systems does not make them separate from the business they are working within.

Other examples of this collapse of separation based on my experience include the following:

  • A major bank, which has moved all data management and transaction- processing functions into the same group that manages the information systems
  • A power utility that has combined the traditional functions responsible for power generation and distribution with the IT function responsible for application development and operations tasks of the DPBR value stream
  • In both of these cases the organization has realized the fallacy of the false separation of business and IT.
Value Stream Orientation

With the cultural acceptance that IT does not function outside the business value stream, management focus is now ensuring that all IT projects, services, and policies are prioritized based on how improvements support business processes and business outcomes. At this maturity level, IT value streams and processes are seen as subsets or enablers to the larger business value stream context.

Customer Orientation

The focus at this cultural level narrows in on business partnership and enablement. IT leadership roles are part of business planning and strategy sessions, and senior IT leaders are included as key stakeholders in the decision-making process for business growth and strategy direction.

Measurement Orientation

IT begins to support its business partners by providing measures that relate to business results. For example, typical IT reports at this level might include the number of checks processed or the number of new users added to an online product line.

Level 5—Business Value Stream-Focused

The final level of this model describes an organization in which IT is considered to be an integral and critical success factor in achieving business goals such as profitability or expanded market share. There is no more discussion about information technology not being part of the business core competency. It is generally understood that information systems are as much a part of generating business value as are older or non-IT technologies. For example, the business cannot deliver banking, transport, and manufacturing capabilities without the inherent technology and business process automation supported and provided by IT capabilities.

Value Stream Orientation

IT organization and individual participation are now focused on external market goals. The IT function proactively suggests ways to extend market share or revenue through the use of technology, such as smart meters or new online business services.

Customer Orientation

At this level, IT now focuses on the external customer of the business (i.e., the external market and consumer of the overall business services). Note: As organizations mature from level to level in the model, customer perception and focus expands. In other words, there is not a replaced focus but rather an expanded one that takes into account various types of customers and their relative requirements and services.

Measurement Orientation

Building on the capabilities of previous levels, reporting is now focused on business measures and market intelligence through customer and external market data correlation using business intelligence technologies.

Where Are We Now?

So where is the IT industry today in the overall cultural model? In my view, most IT organizations are moving from a technology to a systems service mindset. Today's process improvement priorities typically concentrate on support, asset utilization, and processes related to transition to production.

However, one cannot oversimplify or generalize this assessment for any individual organization. Very often you will find various IT groups within an overall organization at very different levels depending on their current relationship with external customers and business units.

For example, in a telecommunications organization one part of the current IT organization may focus on the delivery of telecommunication services (cellular networks, messaging, data) to an external market such as other telecommunications or direct to the consumer. The primary focus of this group is on revenue and external service agreements. This technology group knows what it is to be either business value stream-focused or part of the line.

Within that same organization, you may find an enterprise resource planning group supporting key systems such as SAP or Oracle Financials. They often will report to or work very closely with the business finance group and are part business and part technology analysts. They have trouble separating in their minds the business process of accounts receivable and the financial system that supports it. This group is solidly in the business partner mindset.

Meanwhile, another application development group works very closely with several business units; they meet regularly and cultivate a close business customer/supplier relationship.

Finally, the IT staff living and working every day in the data center do not think frequently about the relationships between the devices they carefully manage and the business outcomes they support. This group is technology-focused.

The key cultural challenge here is that within the very same organization you may have different IT groups who understand their role in relation to business value in very different ways. Understanding and managing this complexity is one of the critical factors for successfully improving IT value streams and management processes.

There is an old saying: "You manage what you measure." I think a more accurate saying would be: "You manage what you know." I recommend that you use this article and the corresponding model to raise awareness and open up discussion so that individuals and teams can understand and work with the cultural disconnects that may naturally arise within their organization.

People at lower levels who are firmly entrenched in their attitudes, behavior, and culture often do not realize that there are other goals and a broader way for looking at how the organization works. For example, success for a technology-focused culture may be seen as optimizing each domain by making it faster and cheaper every year. Mission accomplished. IT strategy realized.

This is not to decry technology management. On the contrary—you need good technologists before you can manage service outcomes and participate as a partner with user business units. Try to involve a technology-oriented group within a business process value stream kaizen exercise, and you may struggle to even get them to agree to attend the meeting because they do not see the relevance or connection to their roles. However, if you work with the same group on mapping the value stream of a task within its cultural understanding, such as improving quality and performance of the server provisioning process, they may become willing participants.

So understanding this maturity model and how it applies to the scope of a Lean improvement project will help you to scope activities and deliverables with the best chance for success. For example, each group in the telecommunications organization example above can successfully participate in a Lean improvement initiative provided that the value stream scope being mapped and improved is understood within their individual and collective cultural context. Thus, this model can be used as a tool for understanding how to successfully work within the cultural mindset of all value stream stakeholders.

In summary, improving value stream and process efficiencies needs to be understood in the context your organizational culture. Evolving a culture up the maturity scale is a long and deliberate journey requiring leadership and vision from senior leadership. A process or value stream project is at its heart a people project; process documentation, maps, role documentation, and so forth only serve as a means for defining and agreeing upon an accepted truth. The true task is changing attitudes, behaviors, and culture.


Note

1. "Planning to Implement Service Management," OGC, 2002, p. 26.

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Information Technology is supposed to enable business performance and innovation, improve service levels, manage change, and maintain quality and stability, all while steadily reducing operating costs. Yet when an enterprise begins a Lean transformation, too often the IT department is either left out or viewed as an obstacle. What is to be done? Winner of a Shingo Research and Professional Publication Award, this book shares practical tips, examples, and case studies to help you establish a culture of continuous improvement to deliver IT operational excellence and business value to your organization.