Table of Contents
IT leaders are looking for guidance on where they are and where they should be to best fit and work with their business. As benchmarking and comparison, they use (role) models. However, every IT leader faces some unique challenges, different circumstances and complexities of IT-business collaboration. (Role) models, by their nature, do not fully capture all unique aspects, leading to challenges in feasibility and thus effectiveness.
Our approach to address these gaps was conducting a focus group with five experienced leaders in IT management on November, 29th 2024. These leaders came from different industries, including a leasing company, the software industry, the construction industry, and the consumer goods sector. The workshop format was designed to bridge their hands-on experience with insights from academia and research. The session was recorded, and the recording was analyzed to reproduce and share the discussion results and practical insights of the participating digital leaders. By bridging hands-on experience with academic knowledge, we aim to create a more comprehensive view on the topic.
The goal was to identify similarities and differences about the CIOs challenges and their solution approaches. The group derived hypotheses proposing practical approaches. This report shows the results to the interested CIOs, CEOs, CTOs etc. With this extended view IT and all leaders can better derive suitable actions for themselves. It starts with the common challenges of CIOs in chapter one. This is followed with an introduction to the proposed solution of the Gartner IT Operating Model in chapter two. Chapters three and four give a new perspective with the practical experience and found solution of the CIOs and with the comparison with academic theories and empirical evidence. All insights are summed up in chapter five.
1 | The Initial Situation: Common Challenges
Coming from different industry sectors the CIOs in our focus group brought different, but in their essence similar challenges that are reflected across other CIOs (Dhasarathy et al. 2020). In the following, we will elaborate on these challenges, 1. missing corporate strategy, 2. deviations in stated and required business requirements, 3. cultural aspects, 4. different understandings of the role of IT, 5. missing clear responsibilities and shared KPIs with business, 6. different maturity levels within the IT, 7. skill shortages, in detail.
The reasons why collaboration between business and IT can be so challenging are manifold. First, a missing or unclear corporate strategy, strategic goals, and corresponding roadmaps are seen as a challenge for a fruitful collaboration between business and IT. The lack of clarity gives freedom to both parties but does not give orientation to work together hand in hand. For example, when a company acquires new companies, which bring in immature IT organizations that are not digital at all or lack state of the art applications, the challenge to collaborate with business gets even harder for the acquiring company and its IT organization. Similarly, this is also the case when acquiring companies with a more mature IT organization. The same is true for cooperative work with newly hired employees with limited experience and knowledge about dedicated responsibility roles and state-of-the-art collaboration patterns, that would be required to keep the collaboration models between business and IT running. The problem is even speeded up by deviations between stated and required business requirements. According to the customer wanting quicker horses instead of cars, this can for example be asking for a new demand management instead of first managing their resources (see our Whitepaper Effective Resource and Financial Management via Rolling Planning) or result in putting IT work into an improvement of a current outdated application instead of business’ acceptance that a replacement with a better performing new application is needed to fulfill their requirements.
Furthermore, the participants experienced cultural aspects that hinder collaboration between and inside business and IT. Lack of trust, and the resulting fear of mistakes, together with missing change management set boundaries to the performance abilities of the employees (Pustovit et al. 2024). As a consequence, arising problems are not communicated properly and change, digitalization and necessary actions are prevented by the top management. One reason for misaligned communication can be the misunderstanding that arises from different understandings of the role of IT as well as missing acceptance of IT in the organization. According to the participants, particularly in the sales department they detect a misunderstanding of IT’s role and how this role has changed with the IT’s role development turning from being a supplier to a business partner. Thereby the ambiguous understandings of the role of the IT can not only be a problem outside of IT but inside, too – complicating the situation for IT. For instance, the responsibility of a service owner is not just about fulfilling requests but also questioning whether what is requested makes sense and advising on what needs to be done. However, individual employees also like their “old” role as reliable suppliers of specified requirements. What both miss out is the fact, that IT is currently already an enabler for business, that needs a new self-image and positioning in the company, new aligned processes and responsibilities.
Coming back to the lack of a clear corporate strategy and strategic goals, this can lead to unclear capability structures and product responsibilities on IT and business side. Building a capability structure is also a difficult procedure when building upon existing structures, such as bundling the capability of sending spare parts. There are many applications and people involved, so it can easily take a year to bring the people and the applications together. With too many involved business partners and an unclear corporate strategy no straightforward and timely decision-making is possible. The CIOs also mentioned the lack of shared responsibility and shared KPIs that counteract the before mentioned challenges. Going one step further, the IT not only struggles with shared KPIs but with the measurability of brought value to business in general. The measurability of value in business thus oftentimes relies on customer satisfaction as a crutch. The improvement that IT brings to sales by digitizing lead generation, for example through an AI-based software solution, is easily measured by the increase in the number of leads won. Measuring value that is brought from IT to the product via a new feature or further development is not so easily to be determined. From a managerial point of view, IT billing practices, influenced also by different laws in various countries, can hinder cohesion on top.
Within this context of collaboration and shared KPIs between business and IT, our CIOs highlighted the circumstance that this is also a practical challenge within IT, as there are different working styles for different “IT areas”. From their point of view, the infrastructure and service areas are more far away of the product of the company, whereas software development initiatives are normally closer. Understanding that these different “areas” of IT are interconnected and not siloed, challenges again the collaboration – but within IT. Different working styles require different thinking styles and models, and when these models differ too much from each other it gets hard to overcome collaboration boundaries.
Finally, the digital leaders identified constraints in the practices and corporate processes and policies that hinder the IT to be a real business partner and value generator. As good staff is rare and there is an existing skill shortage, organizations experience fluctuation of employees with cross-departmental knowledge, moderation and leadership skills who work across departments as they are often promoted to higher management positions. This results in frequent changes and loss of knowledge, that destabilizes collaboration and hamper the performance.
As a solution to many of the aforementioned problems, many CIOs orientate themselves at (role) models. One model is the Gartner IT operating model. We will first introduce the concept and then guide you through our CIO round’s discussion results.
2 | The Proposed Solution: Gartner IT Operating Model
Gartner states “An IT operating model represents how an organization orchestrates its IT capabilities to achieve its business’s strategic objectives.” Gartner writes that “An IT operating model has nine key, highly interdependent components (performance, decision rights, financials, organizational structure, sourcing and ecosystems, talent, workplaces, tools and platforms, delivery model”. For IT operating models Gartner “has identified five IT operating model patterns — asset-optimizing, process optimizing, service- optimizing, value-optimizing and invention optimizing. These patterns represent combinations of the nine components that reflect a progression in terms of roles, focus and IT scores, as illustrated in Figure 1”.
This progression is made via evolving from technical focus to business focus and with changing from back-office bias to front-office bias in parallel. Back-office bias means focusing on support capabilities such as IT for Management Accounting or Human Resources. Front-office bias stands for inclining on value-oriented capabilities such as on the Customer Service or Sales. For example, according to Gartner “the asset-optimizing pattern, which represents essentially a bygone era of the IT organization, focused on minimizing the cost of IT resources”. On the next-level process-optimized IT operating model Gartner states “Ten years ago, the dominant IT operating model was the process-optimizing IT operating model — which is reactive in nature and well-aligned to a classic “plan-build-run” structure focused on executing projects as they are requested (and funded) by business units”. An even higher level of IT maturity is a service-optimized IT operating model. Gartner states “As a minimum, most enterprises today expect the IT organization to adopt a model “where IT is run like a business, delivering against agreed goals or service-level agreements (SLAs). And if needed, the IT organization will proactively take steps to maintain or improve the performance of the services provided”. The value-optimized IT operating model is the next level. Gartner describes “The product teams, including fusion teams with a combination of IT staff and business technologists, are largely aligned with the value-optimizing IT operating model. Typically, this means that the teams are responsible for products (or product lines) aligned with business capabilities — and, as such, held accountable for the business performance of their products”. The last one is the invention-optimized operating model. Gartner explains it as follows: “These teams will typically be limited in terms of scope — however, they may be tasked with developing new (and potentially disruptive) offerings or business models”.
The CIOs stated that for models in general, they wish a practical approach. Accordingly, they shared their own perspective.
3 | The Found Solution: Shaping the IT Role in Alignment with the Circumstances
1) Discussing the ITOM: Hypotheses on the IT Maturity Development
H1: Maturing from asset to value stage of IT operating model does not equal the reality.
The illustration of the stage-like construction of the model tricks the brain in the way that it is the overall goal of all IT organizations to mature from asset- over service- to value-optimized IT operating model. In contrary, an asset-optimizing focused IT can be equally valuable for a company as the value-optimizing IT organization when this is in accordance to the company strategy. For instance, in the construction industry, one of the least digitalized industry branches, a process-orientation focus can bring the needed value and cost-savings to the company. Thus, cost reductions can be very value-oriented, and business focused, as for example the strategy of a market follower is exactly to be cost efficient.
H2: The IT focus is determined by the business model.
The second hypothesis thus implicates that the IT focus is the result of the strategy the company wants to follow. As IT the right follow-up question after clarification of the overall strategic goal of the company is then “where do I accordingly see myself as IT?”. If the company follows a path to become an innovation leader in its respective market, which will nowadays come with a higher degree of digitalization, the IT might accordingly derive to participate in the innovation of the digital products.
Yet, it is important to see the difference between the orientation focus and IT wanting to impose one pattern overall. One pattern overall is too much abstraction. Specific adaptions are needed.
H3: Different areas in the IT can work according to different patterns if these pay into the overall business model.
This leads us to the third hypothesis, that different IT areas adopt domain-specific patterns. Newly, Gartner states accordingly “Instead, adopting a combination of patterns may be more aligned with the overall strategy of the enterprise”. The IT areas adapt to their own surroundings, depending on what is needed. For example, the IT Service Desk of a cost-oriented logistic-intensive business can focus on saving costs whereas another IT area makes sure to run the best logistics software to optimize costs in logistics. This results in a focus on the same overall business model and strategy but achieving this via different patterns in different IT areas. Accepting this improves understanding and collaboration within IT and between IT and business.
With that insight, the CIO’s derived that more patterns need to be considered.
H4: The other two quadrants must be defined with patterns as it is possible and can be useful to be there.
The CIOs concluded that there are empty quadrants that need content (see Figure 2). It is perfectly possible and seen in practice that IT areas can have a business focus paired with a back office focus (IT as efficiency driver, see the cost saving focus example above). Similarly, IT areas can focus on technical requirements with the front office (IT as tech advisor, see the sales AI example above).
These hypotheses culminate in our last hypothesis.
H5: It is a continuous change depending on what is needed.
Taking changes in the surroundings via the lifecycle of IT assets, technologies, projects etc. into account, we further conclude that the patterns are rather used cyclical. Let us give an example. After rolling out new technology, such as a SAP platform rollout, the focus shifts back to process management, as the business has left the project again. Another contributing factor is the aforementioned fluctuation. New leadership such as a new CFO coming from an IT organization with a focus on asset or process management contributes to the IT accordingly focusing on these aspects. These reflections on changing and different needs brought our round of CIOs to the conclusion that this result can be broadened to organization models in general. There is no optimal organization model but the necessity to adapt to corresponding requirements and circumstances within the organization.
2) Reflecting on Impact Factors and Possible Solutions for the Challenges and Hypotheses: IT Management, Collaboration and Current Practices
IT Management and Positioning of IT
Coming back to the hypothesis, that at first hand the business model and not the IT organization determines the operating model pattern, the IT management needs to reflect what they want to solve and where they want to go. For this it needs to be clarified what vision to be followed for the IT organization. After the strategy and the vision is clear, IT should elaborate which collaboration mode fits them best. Formerly a vision might be enough, but when fusioning IT and corporate strategy, CIO and whatever is applicable, CMO, COO, CEO are required to be ready for a joint target agreement, which might focus on the Order2Cash flow. As everything in life this is not one-way, so communication is required to find a common perspective on how to collaborate. Although one should focus on joint targets on business key performance indicators, there may still be difficulties. Thus, in one of our CIOs’ experience one way to start with joint targets is AI in supporting digitalization as everyone wants to do something with this trend topic. Otherwise, IT and business are trapped in diverging self and external perceptions.
After the will comes the ability; everyone gets the IT they deserve.
What needs to be considered for the IT management from the perspectives of the participants is that expected cost-benefits should be carefully analyzed. For example, synergies from cross-functional collaboration or similarly from joint enterprise architectures while having different business models e.g., for domestic and professional products are often overestimated, while the implementation efforts to realize a joint team or system landscape is often underestimated (see Quote 1). Thus, not every part in the IT needs to be in the value pattern.
Roles and Working Models
To react to “silos” in the organization different working models came up: For example, a matrix can be built with a responsibility for the end-to-end value chain and a functional process responsibility connecting for example business architects, sales, logistics and finance. This responsibility involves skills and knowledge in processes, people and communication and is thus comparable to an organizational consultant position or business architect. The responsible should not change frequently due to the importance of contextual knowledge and should report to someone with authority in the business units. If the responsibility for process optimization lies only within the process-oriented role itself without the business being involved, the business units may no longer engage in process optimization efforts. The challenge or disadvantage here is the responsibility that comes with it as the performance of this role will be measured through the process, she or he is responsible for. The role carries maximum responsibility for the end-to-end process and the respective KPIs but has minimal scope for influence. Adding to that, established power structures intervene, as for example existing leaders may want to retain their influence and power, rather than ceding it to someone else.
Speaking of new working models, a prominent one is a cross-functional team, that is multidisciplinary to work collaboratively on a product. As the team has a dedicated purpose the question is to what extent can this collaboration model work in the long run as collaboration models also evolve and change over time, too. For example, implementing a new technology will lead to a push back to the asset or process level for the IT team members after the new technology is implemented. This brings us to the conclusion, that such teams are suitable for a period of time and then hand their work over.
Capacity Management for Strategic Projects and Bottleneck of Talents as Prerequisites
Continuing with the example of a technology implementation, our CIOs stressed out the necessity for the IT organization to reserve capacities (and budget) for working on an asset after its rollout or to enable people to do so, as this aspect is often overlooked when starting a project. A special focus should be laid on bottleneck resources such as platform teams. Because projects are runtime-based and sequential, bottlenecks can otherwise block projects resulting in too many projects in progress. It is a strategic decision who the bottleneck is. For example, IT employees are expensive, so it might be the strategic decision that they are the bottleneck. To avoid potential friction between business and IT this decision should be transparent, as this transparency reduces the stress of IT management and employees.
Specifying bottlenecks on a more personal or skill-based level, the CIOs discussed the maintaining of overcapacity for bottleneck resources. In this context, they stressed out the importance to reflect which amount of bottleneck can still be labelled as healthy or as a strategic decision and where it is so critical as to maintain overcapacity. Bottlenecks become indeed problematic when one critical skill holder has too many running projects in parallel (see our Whitepaper Effective Resource and Financial Management via Rolling Planning). Additionally, finding idle capacity for highly qualified talents, such as SAP specialists, cloud engineers, DevOps, authentication and identity management, infrastructure as code, foundational development, business intelligence, master data, and security, is for all our CIOs currently challenging. In practice these resources typically do not have idle capacity. However alternative approaches, like gamification in learning and knowledge sharing can help to address bottleneck topics.
4 | The Reflection with Academic Theories and Evidence
Coming back to models in general, according to theory, there are several problems with stage models (Eidenschink 2020a): Firstly, a lack of clear definition of the stages and its boundaries. Secondly, missing that not every system reacts in the same way within the same timeframe, and it might not be able to explain certain individual phenomena. Thirdly, such models do not integrate regressions or relapses, and it is difficult to avoid devaluing the lower stages as our CIOs pointed out. Instead, one is putting too much hope into the last stage – this, too, was mentioned by our CIOs. Theory instead suggests to think more in an “evolutionary process” – adapting to the necessary context (Eidenschink 2020a). Comparably, the CIOs proposed having a look at the business model first and then matching the IT approach and seeing this as a circular action.
Regarding the CIOs wish for more collaboration and cross-functional focus, organizational theorists say that the opposite is a built in of organizations (Eidenschink 2020b): Organizations serve multiple purposes and are built around conflicts. Breaking work and responsibilities down to silos serves to reduce complexity, enable social identity, and manage workflows. Without them, the overall system would struggle with complexity. Similarly, the economic science perspective shows diverging interests with the principal-agent model where the focus is on own utility maximization under asymmetric information. Interest alignment can be achieved through aligning interests, e.g., via breakthrough projects, control, incentives, culture (e.g., team mental models), organizational structure, reputation, and trust (Levinthal 1988). Thus, having an aligned project working cross-functionally (for example in business units) as our CIOs mentioned might work – while creating their own silo and being in constant realignment: “The alignment between business and IT is a communication and understanding-intensive continuous process. It is not a final state but rather described as ‘dynamic and evolutionary’” (Riedinger et al. 2023).
In sum, there are always advantages and disadvantages for the organizational structure of teams: working decentralized leads to less centralized knowledge, while working centralized does not integrate decentralized knowledge. Diverging perspectives can lead to conflicts, but contrary to society’s perception they not only act as barriers to move but also as a driver for change, often referred to as creative disruption.
5 | The Essence of CIO’s Industry Experience and Academic Research
To sum up, we conducted a focus group with IT leaders from various industries to gather insights and addressing the practical complexities of IT business collaboration.
Our findings suggest that the model’s stage-like presentation does not reflect reality, as a cost-optimized IT focus can be equally valuable as a value-optimized one depending on the overall company business model. Accordingly, it helps adopting the perspective that the business model, not the IT, determines the IT focus. Every IT area in turn can have a different position when it contributes to the overall business model. To accommodate all the needed focuses of various areas that fit well with the individual situation, more patterns need to be added (efficiency driver and technology advisor). Then, it is a continuous process adapting to the circumstances.
Overall, statements we heard such as the following reflect typical organizational and human issues: “Other’s weaknesses can be easily blamed on IT,” “Collaboration, achieving something together, then it becomes fun”, “We want to be heard and involved,” and so on. These points highlight the importance of teamwork and the desire for active participation and recognition in any group effort. As organizational theorists highlight that organizations are built around conflicts and serve multiple purposes, which lead to silos to reduce complexity. The alignment between business and IT is thus a continuous, dynamic process while consciously deciding on the necessary IT positioning matching the business model.
References
Dhasarathy, Anusha; Gill, Isha; Khan, Naufal (2020): “The CIO challenge: Modern business needs a new kind of tech leader”,
Eidenschink, Klaus (2020a): “Agilität: Mode, Entwicklung oder Evolution?”, https://metatheorie-der-veraenderung.info/2020/02/22/agilitaet/
Eidenschink, Klaus (2020b): “Hat New Work auch Nebenwirkungen?”, https://metatheorie-der-veraenderung.info/2020/02/22/new-work/
Gartner, CIOs’ Reference Guide to Designing IT Operating Models, By: Thomas Nielsen, Donna Scott, Monika Sinha, Joanne Kopcho, 13 December 2024.
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
Levinthal, Daniel (1988): “A survey of agency models of organizations”, Journal of Economic Behavior & Organizations 9(2).
Pustovit, Sasha, Miao, Chao, & Qian, Shanshan (2024): “Fear and work performance: A meta-analysis and future research directions”, Human Resource Management Review, 34(3).
Riedinger, Constanze, Huber, Melanie, & Prinz, Niculin (2023): “Factors for effective communication of IT costs and IT business value”, 18th Conference on Computer Science and Intelligence Systems (FedCSIS), IEEE.
About the autors
Dr. Julia Schreier (Bee360)
Leveraging experience across different fields – from Industrial Engineering and Management to People, Julia‘s passion is enhancing knowledge and creating value by exploring and sharing innovative concepts and management insights. A key facet of her expertise involves effectively bridging the gap between academic insights and practical applications, particularly in addressing management topics and organizational challenges. This multifaceted background uniquely positions her to contribute valuable impetus to initiatives aimed at fostering comprehension, continuous growth, and progress.
Tamara Huber (Bee360)
With her extensive experience as an industrial engineer, Tamara looks at IT management challenges from both a technical and business perspective.
As an innovation expert, she is aware of future developments. She has
gained practical experience at the interface between science and business in numerous innovation and transformation projects, which has sharpened her understanding of the associated challenges. Her holistic view of companies and her drive to develop comprehensible solutions for complex challenges bring new ideas and aspects to the composition of the management of IT organizations.
Sönke Claussen (Bee360)
Sönke draws on decades of experience when it comes to managing corporate IT from a holistic perspective. Over the years, he supported and drove transformations of various firms in B2B and B2C industries. He is a generalist with an eye for details – whether it is the joint conception of a digital strategy or the precise implementation in various areas. His rich background enables him to draw the bigger picture and determine the right lever for driving change.
Uwe Herold (Miele)
Uwe has an excellent command of developments in the industry, and how enterprises should best exploit them as they move toward rapid digitalization. He has been in charge in the CIO role at Brose Automotive, SAP and Heidelberger Printing. Since 2014, Uwe is SVP for Information Technology at Miele & Cie. KG. In this role, he is responsible for the group’s global internal IT and, together with the Smart Home division, for Miele’s digital products for consumers. At Miele, he is particularly committed to transforming the company into a real-time networked digitalized Miele organization.
Mike Böhm (Zech Management)
With over 30 years of experience in IT and digitalization, Mike combines technological expertise with strategic thinking and execution, as well as exceptional leadership skills. As CIO and Managing Director of the Shared Service Center for one of Germany’s leading companies in the construction and real estate sector, he is currently responsible for designing and implementing innovative IT strategies and managing complex transformations. His professional career includes senior positions as CIO in the consumer goods and electronics industries.
Christian Popp (Grenke)
Christian is the managing director of Grenke Digital GmbH, the IT subsidiary of Grenke AG. Grenke is a financial services provider that focuses on leasing small appliances and mainly targets small and medium-sized enterprises (SMEs). The company operates internationally and works with over 37,000 partners, serving approximately 670,000 customers in 31 countries worldwide. Christian has gained a wealth of experience in digital and agile transformation and IT management over the last 30 years. Primarily in financial services companies, but also in industrial sectors such as automotive and mechanical engineering.
Björn Lügger (Canyon)
Currently Björn is Global Director of IT at Canyon. As seasoned IT professional with extensive experience in building and leading multinational IT-Organisations within various industries, he excels in integrating cutting-edge technology solutions with business processes always focussed on maximizing customer experience and business value. His expertise spans Digital platforms, Customer Experience, ERP solutions and IT security. He is known for his value-driven and analytical approach, strong leadership skills, and ability to drive digital transformation. With a track record of successfully implementing large-scale IT projects and optimizing operational efficiencies, he brings a blend of technical acumen and business insight to every challenge.