Why IT Transformation should be about competitiveness?

Here is another buzzword and a marketing jargon that you may hate, IT Transformation. But most of the IT executives that I speak to are dealing with it on a daily basis.

As demand for IT efficiency and doing more with less in a complex IT environment increases. More and more IT transformations are becoming about cost-take-out and inescapable process of commoditization of company’s product and services instead of delivering IT competitiveness in supporting R&D of new product and services.

Unless the enterprise that you are working for has a top-line growth that is higher than market expectations, company's focus on delivering shareholder value will be on improving profit margins. Now for a business to quantify the financial impact of running its IT over its life cycle a value to target becomes its Total Cost of Ownership (TCO) and the target for the IT Transformation to deliver improved profit margins becomes TCO reduction.

In order to deliver TCO reduction, most of the time, IT transformation process starts with looking at how to centralize and standardize a complex IT environment and IT executives start on a path towards out-of-the-box and one-size-fits-all cost reduction journey.

IT Transformation path towards commoditization precipitates a change in the basis of competitiveness and causes evolution towards modular architectures, which facilitates the disintegration of the industry which in turn makes it very difficult to differentiate the performance or costs of the product or services offered to customers versus those of competitors, who have access to the same centralize and standardize IT environment with out-of-the- box and one one-size-fits-all components and are integrated according to the same standard.

Competitiveness is far more about doing what your customers value and challenge for IT executives running IT Transformation is to; “rebuild their ship while at sea, rather than dismantling themselves plank by plank while someone else builds a new and faster boat with what they have cast overboard as detritus” Clay Christensen.