If you’ve made it to Stage 4 of IT maturity, the “Business Transformation” stage, congratulations! You’ve come a long way, and are now part of an elite club that not many businesses are able to make it to. Your hard work and commitment have allowed you to seamlessly connect your business processes with IT, which blurs the line between business and IT decisions as they are more and more interdependent.
What can you expect in Stage 4? And for those businesses who are still on their IT maturity journey, what do Stage 4 companies look like today?
What Is Life Like in Stage 4?
In Stage 4, we see that the business is significantly engaged in IT governance, and business is engaged in all tech decisions with clear accountability outlined for the different types of decisions. The company’s tech capabilities influence these decisions, but the company is confident enough with their expertise and resources that business decisions are now the main driver behind technical strategy, changes, and level of investment. Key business decision-makers value IT’s contribution to the company to the point that business and IT strategies themselves may be difficult to distinguish, as technology is so inextricably tied to business goals and success. Stage 4 leadership believes that anything is possible, it’s just a matter of prioritizing opportunities and managing the pace of change the business and clients can absorb.
Because of their interconnectedness, KPIs for technology and business are now combined as well. The company is well beyond focusing on IT operational metrics, and so is IT. They recognize the importance, but only as it connects to the business value they provide (reduced cost, higher margin, greater utilization, etc.). Budgets are geared towards lowering operating expenses, so that more can be invested toward innovation. The result is a constant focus on efforts that reduce operating costs. Employees at all levels of the business are engaged in identifying areas that are no longer offering the same value as they once did. Decommissioning these systems provides more investment opportunity for new innovation and further enables IT and the business to transform processes and achieve strategic goals. In many cases, this advances the gap on competitive differentiation.
We also see dramatic shifts in the role of the CIO in Stage 4 companies: they don’t just manage tech, they are managing tech strategy and ensuring it connects to the business strategy. He or she is less connected to infrastructure decisions, and more focused on strategy, information, and innovation. In Stage 4, CIOs frequently juggle the four I’s: infrastructure, intelligence, integration, and innovation. The Stage 4 CIO’s role as what the Harvard Business Review refers to as a Chief Innovation Officer becomes the most prominent as they introduce and drive new external-facing technology initiatives with their strong business savvy.
Finally, Stage 4 companies are very aware of industry and external trends, and are change leaders as they adapt to or introduce these trends. These organizations are now viewed as industry forerunners in how they deliver products and services, and their competitors are now trying to react to the industry disruption they have caused.
What Are Stage 4 Companies Doing Today?
One example of a Stage 4 company is Honeywell. Unlike many of the startups that reign at Stage 4 today, Honeywell is a long-established company that had to progress through all the stages to finally achieve Stage 4 IT. They have been able to launch innovative products like their Lyric smart thermostat. With its extensive IT integration within its business plan, Honeywell is currently beating startup Nest in terms of features, cost, and execution of company vision.
Stage 4 companies are also making a big splash in the realm of small-time service delivery apps. One up-and-coming example is Dolly, a service for consumers to hire someone to help move and deliver furniture and other large items. Like Uber, customers use the Dolly app to locate, schedule, and pay a driver, and drivers use the app to set up their appointments and get paid. Because the business is entirely app-driven, Dolly’s business and technology plans are essentially one and the same. Dolly is now using their success to expand their market reach and shake up the typically expensive retail delivery market. Currently they are working on a delivery partnership with Crate & Barrel.
Of course, the fastest and most notable disruptions come from companies that start out in Stage 4. These are primarily tech startups with lots of venture capital funding, such as Netflix, Uber, and Airbnb. We all know the complete transformation (and panic!) that these innovators have caused their respective industries to undergo. Many slow-to-adapt companies (Blockbuster, traditional taxi cab services, hotel chains, etc.) have either seen their market share and revenue dwindle, or gone out of business entirely rather than change their business model to account for the necessity of IT in every industry today.
A Destination Worth the Journey
Although it takes a lot of work and commitment to get to Stage 4 of IT maturity, it can be done. Maintaining Stage 4 status is a lifetime commitment and only a handful of companies have made it, but it is well worth the time and investment to not only remain relevant today, but to dominate the market and revolutionize an industry.