Aligning IT capability with confidence

While Australian businesses are quick to talk up the benefits of embracing digital transformation, they’re slow to put in the hard work required to align their digital strategy from the boardroom right down to the server room.

Up to 85 per cent of IT projects ran over-time, over-budget or failed to deliver on their objectives last year, according to MinterEllison research.

The tendency for Australian businesses to overestimate their IT capabilities, while failing to address technology issues adequately at the board level, is a key factor behind this damning statistic, explains Ashley Howden, CEO of technologyfocused strategic advisory firm KJR.

“Historically speaking, I think the majority of the largest IT disasters at an enterprise level tend to occur when there is a disproportionate ego-totalent ratio – where the organisation believes it’s better at developing and ingesting new technologies than it actually is,” says Mr Howden.

KJR is looking to address this disconnection between confidence and capabilities with a Digital Maturity Model, which assesses 120 data points across an organisation to rate its readiness for digital transformation.

The model was developed in partnership with Queensland University of Technology’s Chair in Digital Economy, as well as Isobar Australia. KJR has teamed up with Australia’s CIO Executive Council to offer the model to all of its members, plus KJR is working with Telstra Wholesale, and its clients are being encouraged to use the tool to assess their own capabilities.

Despite a growing awareness of the need for true digital transformation, Mr Howden says many Australian businesses pay only lip service to concepts such as agile project management and software development.

Many of KJR’s clients claimed they had “gone agile”, perhaps changing job titles and mixing up team seating, but they baulk at the prospect of true change throughout the business.

“They might even honour some of the ceremonies of agile,” Mr Howden adds. “But meanwhile, the rest of the business isn’t agile and still wants timed delivery dates for certain feature sets.”

“The team won’t talk to customers to find out what feature sets are actually important; instead, these decisions will fall to an internal business analyst who creates the functional spec for the developer or configuration team to work on.”

IT remains very siloed as a function in Australian businesses as they continue to view digital transformation as a technology issue rather than a broader business issue.

“That’s evidenced, in particular, by what I feel is an anachronism within most enterprises in Australia, where the chief information or technology officer tends to report through to the chief financial officer,” says Mr Howden.

“That speaks to IT’s historic status as just a cost centre, there to support business efficiencies, rather than being seen as a concrete part of the customer interface and a potential differentiator in the market.”

While the country’s IT skills shortage presents challenges, the lack of technical expertise in boards – typically staffed by accountants – is also a key factor. Stemming from this comes a disconnection with IT, which means that some KPIs are almost antithetical to good governance and good digital transformation processes.

“I don’t think we’re seeing a lot of improvement in how the majority of organisations handle digital transformations,” Mr Howden adds. “I recently overheard a conversation between someone in charge of all of the e-commerce revenue for a listed company in Australia and their CIO.

"The CIO was categorically saying, ‘It’s easier for you to explain a drop in revenue to the board than it is for me to explain a missed deadline’ – and that to me is a fundamental example of the types of conversations that take place all the time in Australian organisations.”

The hallmark of an organisation that is truly ready for digital transformation is a governance structure that allows for an up and down flow of information.

If the board lacks technological expertise, the business could benefit from a Digital and IT Committee to provide a conduit to the board and ensure it is across the company’s technology capabilities and implementations.

KJR’s Digital Maturity Model provides an opportunity for people at every level of an organisation to provide insight into these issues, people who otherwise might be concerned about speaking out to identify roadblocks on the digital transformation map.

It is important for businesses to look beyond people within the IT function to complete the model’s self-assessment tool, according to Mr Howden.

“The Digital Maturity Model emphasises the importance of aligning digital capabilities with vision and purpose,” he says. “Many businesses are living very hand-to-mouth in terms of their digital transformation initiatives, and too often let existing technical capabilities limit their overall vision.

“Hence the need for a tool that gives them the ability to look in the mirror and view themselves holistically, bringing about a level of transparency around the differing views of digital impact versus digital capabilities.”

Many businesses are living very handto-mouth in terms of their digital transformation initiatives, and too often let existing technical capabilities limit their overall vision. Ashley Howden