Today we will look at Stage 2 of IT maturity, or the “operational management” stage. As we’ve explained previously, Stage 2 is required for operational success, and while some new IT initiatives are implemented, system management and maintenance demand the bulk of the resources.
Read on to determine if this is where your business is, and how to continue your momentum from Stage 1 as you integrate more technology with your business processes and strategies.
Why Do Companies Stay in Stage 2?
Companies can linger in Stage 2 for various reasons. They may have an exit strategy in place, are looking to retire and save costs, or are otherwise in a position where short term objectives are outweighing long term strategies. Additionally, some business that perceive they are a monopoly, build IT to maintain product or service delivery, but do not further invest to move to stage 3 and 4 (this is very dangerous as a number of disruptions come from adjacent industries).
We also see companies remaining in Stage 2 due to the challenges they’ve experience in getting there. It can be very difficult for companies to successfully transition from Stage 1 because they constantly struggle to balance cost, complexity, and the effort required. A full commitment is essential, and without it, the transition to Stage 2 will cost more and take much longer to implement. Overall, we find that a lot of businesses fluctuate between Stage 1 and Stage 2, and struggle make it to Stage 3 because of a lack of IT expertise and a wavering commitment to investing in technology.
How Do You Know if You Are in Stage 2?
When you are in Stage 2, you have begun integrating IT initiatives beyond infrastructure and email requirements, but these basics still require a lot of your attention. The metrics that you use to track IT initiatives are not typically connected to strategic business goals, as you are still working to manage and maintain the IT infrastructure. Your IT initiatives are not yet tied to a quantifiable return as it relates to productivity, net profit, scalability, or customer experience, but you may begin seeing some improvements in these areas. Some improvements in Stage 2 include:
- Quality and consistency with product delivery
- Staff experiences (less frustration, less turnover, higher productivity)
- Visibility into the potential benefit of Stage 3, with potential exposure to Stage 4
Overall, the IT systems that you have in place are reliable and consistently available, and you have confidence in your IT infrastructure.
What Are the Downsides of Stage 2?
Unfortunately, the initial benefits of Stage 2 can provide a false sense of security, and it is easy to become complacent in this stage. When your employees and customers are happy, you may be fooled into thinking that you have arrived at where you need to be, but it’s a trap!
Without more comprehensive integration across your entire business, the costs of Stage 2 will eventually catch up with you and outweigh the benefits. Ultimately remaining in Stage 2 does not provide much more protection than Stage 1. The risk for being passed by, or becoming non-competitive, is still extremely high. The only thing that may be adjusted is the timeline in which it will happen. If you think this is overly dramatic, wait a few years and weigh in again. Stage 2 is a checkpoint, a staging area, not a finish line!
How Do You Know When It’s Time to Move?
In the beginning of Stage 2, you most likely will not be confident in IT, regarding your systems themselves as well as your expertise. When you are ready to move on from Stage 2, you will find that your experiences and resources will make you much more confident.
A more ominous sign that you are ready to move on, will appear when you see that continued investments are not providing any new quantifiable returns, and your initial returns gained from Stage 1 and 2 are no longer advancing your business. Your funds are instead going to management and maintenance to keep the systems running. This inevitably leads you to actively looking to integrate new technology that will yield tangible benefit. You’ll start asking things like: What more can we do? How can we do things better? Is there a more efficient way to do this? Can we integrate this into our product? When these questions arise, it is another indication that you are ready to transition to Stage 3.
How Do I Begin to Transition to Stage 3?
The main objective of Stage 3 is to engage in the IT activities that provide tangible returns to the organization in terms of net profit, ability to scale, and customer experience. To begin your transition, you will need to make the connection between IT and your business, and determine how they can unite to execute your long-term strategy.
You will also need to shift how you measure the performance of IT. You should measure overall cost of IT per employee, as this will be a primary mechanism to navigate Stage 3. It’s a general rule that as a company successfully expands with IT, the cost of IT per employee goes down as they use their resources more efficiently and are able to accomplish more with less.
Finally, start to make note of the processes within your organization that may be creating a barrier to growth. Identify process flows, figure out how to prioritize, determine how to execute changes, and implement procedures for managing change. These all will play a vital role in your success at Stage 3 and will need to be established early on.