IT transformation is a complete reassessment and overhaul of an organization's information technology (IT) systems in order to improve the efficiency and delivery in a digital economy. IT transformation forms the foundation of an organization's larger digital transformation strategy and is led by business leaders, such as the CIO. It can involve changes to -- and modernization of -- network architecture, hardware, software, IT service management, and how data is stored and accessed. Informally, IT transformation may be referred to as "rip and replace."
Purpose of IT transformation
Organizations must take steps to keep pace with an increasingly digital and competitive market by not only optimizing existing systems, but also creating and acquiring new applications and services that generate deeper insights into their business, industry and customers. Many times, IT transformation aims to change the IT department from being a reactive, inflexible organization to being a proactive, flexible part of the business that can respond quickly to changing digital business requirements and make more informed decisions.
According to Deloitte, the ultimate goal of these efforts is to "reimagine IT development, delivery, and operating models, and to enhance IT's ability to collaborate effectively within the enterprise and beyond its traditional boundaries."
Successful IT transformation builds a solid foundational infrastructure on which to deliver automated services, cloud computing and new operating models. It also automates and accelerates the deployment of IT services and reduces risk during deployments. IT transformation clears the path to delivering IT as a service that is more cost-effective, agile and helps foster innovation.
By optimizing traditional IT cost models, organizations free up IT budget from operational expenses and can designate more funds for digital transformation. IT transformation also ensures better business-IT alignment.
Any IT transformation needs an effective strategy. It starts with developing a clear, coherent vision of the future state of IT and the business case for transforming IT. That vision must be developed with the input and sponsorship of senior management. Business and IT leaders also must define the foundational needs, scope and scale of the IT transformation project, including having a clear project timeline.
Matt Griffiths, vice president and CIO at Stanley Black & Decker Industrial, breaks down how CIOs should help drive a company's digital IT transformation journey.
It's also important for organizations to define their approach to partnering and vendor management and have a person or team responsible for analyzing vendor and partner performance and suitability. Implementation methods are equally important, including proof-of-concept exercises, pilots and methods for quickly testing new technologies and their influence on business process.
Regardless of industry and IT maturity of the organization, an IT transformation strategy must include three important steps, according to Dell EMC:
- Modernize existing, critical IT infrastructure to improve efficiency in terms of both operational expense and management overhead.
- Automate IT processes to reduce risk and accelerate the provisioning and deployment of applications. This includes automating the delivery and consumption of IT services.
- Transform IT processes and operations in order to increase agility and align IT goals, staff and roles as much as possible.
IT transformation challenges
Many organizations were not born in the digital age, which means they're not afforded as much freedom to swiftly and completely rip and replace all existing IT systems. These organizations must grapple with legacy applications, systems and business models that constrain their ability to transform while strategizing ways to incorporate modern technologies and approaches. This includes shifting budget and resources away from traditional IT and toward new digital transformation initiatives.
As with any large-scale organizational change, IT transformation influences workflow, business rules and, perhaps most importantly, the corporate culture. Research firm Gartner recently identified culture as one of the top barriers CIOs must overcome to successfully transform an organization into a digital business. A unified vision of the organization's future state is essential, as is organizationwide communication and training around new IT processes and technologies.