The role of the technology leader is changing: Evolving business demands have created new challenges and opportunities for IT leaders to elevate their roles within the business. Ed Benson is one of those technology leaders who has taken ownership of his own career growth and paved the way for others by acknowledging and embracing these shifts.
Ed held various leadership positions throughout his career before striking out full-time as a management consultant. Most recently, he spent eight years at the Farm Credit Bank of Texas, first as a VP of Business Systems, then as a CIO.
Ed recognizes the rise of “Business-led IT” as something that IT leaders must embrace in order to expand their influence and impact within the organization. His experience sitting on both sides of the table gives him unique insights into why and how technology departments and business units need to work together for the benefit of both their organizations and the end-user or customer.
We sat down with head to chat with him about what Business-led IT is exactly, and why “business-led” is not a bad word for IT leaders who approach it properly. We talk about how, with open minds and free communication, IT leaders can expand their agency and create more value by meeting all stakeholders’ needs.
Can you start by explaining what you mean by Business-led IT and how it’s different from traditional IT?
Traditionally, technology solutions have their budgets, decision making, development, deployment, and long-term maintenance within the IT department.
Shadow IT is where technology systems are deployed by departments other than IT to address the shortcomings of the central information systems. Historically, this has been a relatively small percentage of IT: If you think about the whole IT spend for an organization, it will include what’s documented within the IT group and there’ll also be about 5% or so outside of that. So it’s really gone sort of under the wire—not a huge concern at those small levels.
However, in recent years, Shadow IT has become a growing concern and a problem for innovation, because the Shadow IT spend and influence has grown. As more technology solutions move out of the IT department, without their visibility, there are rising concerns: Are these products going to integrate? Are they going to operate well? Are they going to be secure?
Business-led IT is the middle ground between these two: Systems may be deployed by business units, but with transparency and close coordination with the IT department. Often, budget, direction, and subject matter experts (SMEs) are located within the business, but development and support are coming from the IT group, and, ideally, decision-making is shared between Business and IT leadership. (This is something that we transitioned to and really benefited the organization that I worked in recently.)
Today, Shadow and Business-led IT budgets have grown to now 36% of the formal IT budget, so it’s not something that can be ignored. It’s something that the CIO must be proactive towards. They have to become stewards of a model in which the IT organization is working more closely with the business than ever before.
What accounts for this sudden growth of Shadow IT?
Technology has changed and become much more accessible. Cloud tools and services make low-code/no-code solutions readily available to lines of business, without them having to involve IT—and these solutions have become very low-cost. “Citizen development” has great appeal for business users, and with the combination of easier tools and more tech-savvy employees they can now self-service and customize.
There are a lot of reasons that business leadership might choose to implement a solution independent of the IT organization. Some of the top reasons cited by Gartner include:
- The business has a better understanding of their requirements than the IT organization
- They have the necessary capabilities and resources to do it themselves
- They can be more responsive to changes in requirements
- And, generally, the IT organization moves too slowly
These are all valid reasons that, at times, I felt myself while on the business side. That’s why more business leaders are choosing a Business-led IT approach. With their needs unmet and the tools to implement readily available—via cloud solutions, SaaS, analytics tools and services, and PaaS—it’s not surprising that Business-led IT budgets have increased dramatically.
What are the major challenges that Business-led IT poses for CIOs and technology leaders?
Often, as these business-led solutions become more mission-critical or complex (as they all do), they move into the IT group, which hasn’t been involved in the lifecycle of the product so far. So catching up on the backend is a tremendous challenge. And business leaders aren’t really giving a high enough priority to non-functional requirements, which can cause friction.
For example, while business and IT leaders both agree that integration and interoperability are a top concern, the business tends to prioritize quality, usability, being able to make changes, and their own management time to support the solution.
But from the technologist’s perspective, other things might be of higher importance, like security, compliance, and the ability to scale the solution and manage the complexity over time. This causes a disconnect between the business and IT and can drive further Shadow IT efforts, as the business is trying to meet the needs of their day-to-day.
Unfortunately, with the COVID-related rise of remote situations, IT’s risk of being less informed of business needs increases—and with it missed expectations. This is a big concern on both sides because it could drive more Shadow IT, with less information and less communication on the IT side, and ultimately increase long-term costs to the business.
What do technology leaders have to do in order to foster a more mutual business-led approach?
I would say that communication is the most critical thing. CIO’s must be proactive and really become the stewards of technology solutions within the enterprise. What I mean by that is, engage with other senior leadership to gain support for an enterprise IT operating model. Agree on governance, fight for the budget you need—work with the CEO and CFO on funding to properly support Business-led IT.
Help them understand the costs of Business-led IT are far beyond the initial cost of the solution. The cost of owning a dog is not just the price of the puppy, right? There’s a lot that goes on after the initial “fun” stages, and there’s a cost to that. The financial organization really needs to be able to understand those costs and budget for them.
And then, you need to document the total IT spend, including Shadow and Business-led IT, as well as the Total Cost of Ownership. Set out guidelines for non-functional requirements upfront and for how solutions would transition to the IT group, with agreement from the business leaders, and consistently communicate those guidelines, so it’s very clear when business leaders are starting to evaluate new solutions what criteria are important from a security, compliance, transition, and interoperability perspective.
IT leaders can actually take advantage of this trend and seek to understand why the business is implementing a Shadow IT approach. There’s obviously a need and something that IT leaders can learn by engaging with the business leadership. Lack of transparency goes both ways. On the flip side, too many technology initiatives start in the IT department without early input from the business. I’ve seen this over and over. First, there’s a proof of concept and as the POC matures, then IT has to work to sell the business on the value. We can turn that traditional mode upside down and start by understanding what the business needs, then build it—and that way you have an instant market for your product.
It really comes down to communication, working closely with the business to create a culture of shared decision-making and responsibility. It’s a great place to be from an efficiency standpoint as well. From a personal perspective, it’s way less stressful too. You get rid of some of that tension that’s created between groups.
The boundaries between IT and the business have shifted significantly, especially around technology ownership. And so, it would behoove a CIO or IT leader to analyze the role IT plays within their organization, how that’s changing and how the business is using technology. Get to the root causes of change and develop solid strategies rather than just being reactionary, then work to incorporate those responses into the operating model going forward.
The CIO must react and embrace change or risk losing relevance. The CIO should not only lead the governance and operating models, but work with the business units as partners to ensure that when responsibility does move to the IT group, that the transition is both seamless for the end-user and a benefit for the organization.
Speaking of benefits, how do you measure the success of Business-Led IT?
Business-led IT can create value in both the short and long terms, but some key points of success can be more difficult to measure. For example, reduction of tension between the business unit and IT or an improved culture of openness and partnership across the enterprise.
In terms of how IT groups measure project success, there are certain business value-based metrics that we must include in addition to traditional project management KPIs, like budget, % completion, time to delivery, etc. We must look at things like:
- Usability: Survey customers—internal and external—about the product to find out what’s good, what needs improvement, what’s missing.
- Total cost of ownership: Often a project budget begins with the discovery phase and ends with deployment and maybe a brief period of training/support. The total cost of a solution should take into account integration and long-term costs.
- Benefit to the organization: Is the project making money? Saving money? Reducing risk? Define this upfront so you can look back and see if you’re meeting expected benefits and you can grade yourself on those.
Based on your own experience being on both the business and IT sides of the table, can you offer any tips on how IT leaders can gracefully make the shift towards a Business-led mentality?
At the bank I worked with, I was head of the Business Systems Unit in the Credit department through a major transition where IT was shifting away from total IT department control. There was tension, for sure, but I always made sure to bring conversations around to value and focus on the customer.
After we had some early wins, trust began to be built and things moved forward much better, particularly at the Senior level—Senior management saw the benefits and that made it a lot easier to continue down the Business-led IT path. Then in recent years, when I took on the CIO role, I had the opportunity to be on the “other side of the table,” as it were.
I saw how signing up and using SaaS solutions is so easy for the business stakeholders—department heads just made the decisions without any visibility. They could literally put down a credit card and for little or no money, start a proof of concept, a pilot, or even a production-level solution.
But rather than be defensive or critical of those decisions, I came from more of an “understand the motivators” angle. I worked with the business units to understand why they were looking at those solutions and to understand what they’re looking for. Even to the point of being very proactive about it and reaching out on a regular basis to ask the department leadership what solutions they were even considering.
What I learned from the experience of being both in the business leader role and then the CIO role is that the motivations on both sides are often misunderstood.
The IT group may be threatened by the loss of decision-making, budget, and perceived influence. There are always concerns about solutions being built outside of IT— will the solutions integrate? Can the IT group support it? On the other hand, business groups often feel their needs aren’t being met in a timely manner, if at all, because IT is focused on things that don’t have immediate value for them. As we mentioned, security is so critically important, but it doesn’t add value to the functionality of the end-product from a user perspective. They often feel like IT doesn’t understand the business, but also they don’t have the time to train the IT team to understand the business.
Having open conversations on these topics is critical. In my case, before we spent X amount of dollars or Y amount of time, all the department heads (including IT) had to bring up any solutions they were looking at to the leadership team for awareness. We met on a monthly basis as a management team and also had a weekly steering committee, so there were opportunities to bring those up often.
Buy-in, agreement, understanding, and visibility between IT and business units all start with clear and consistent communication. The CIO and the IT group need to communicate effectively with Senior Leadership—in a manner that is effective for each stakeholder. For example, a long email may describe the situation and outline a clear decision that needs to be made, but the business leader may not understand fully, and would likely prefer to have interactive Q & A. There is a lot to discuss on communication between technical and non-technical teams (maybe for another interview), but effective communication is essential in order to build a positive culture and implement any strategy.