To better serve companies, perform effectively, and meet emerging challenges, executives say their IT organizations should collaborate as partners with the business.
When IT acts as a partner to the business, rather than as a technology consultant or supplier of IT services,
the benefits are striking. According to the newest McKinsey Global Survey on business technology, IT
organizations that play a partner role—that is, actively collaborating with the rest of the business to shape
an overall business strategy that effectively leverages technology—tend to perform better on a number
of dimensions, including the delivery of core services and the creation of a healthy organizational culture.
But while most respondents, from both the business side and the IT function, believe the IT organization
should be a partner to the business, few say IT plays that role today.
The results also suggest that the pressure on IT to perform will only increase with the growth of third-party
services (such as cloud offerings and infrastructure as a service) and of digitization. With digital initiatives,
too, the companies where IT plays a partner role are further along in both implementation and achieving
business impact. The results suggest that the best opportunities for improving IT’s performance overall lie in strengthening the model the IT organization is structured, run, and managed around, and in defining
more clearly IT’s role and priorities. Nearly all executives say acquiring talent is a challenge and
a possible longer-term barrier to improving IT, which could require preemptive moves on the part of
Why partnership matters
We asked all executives about the role the IT function plays at their organizations—specifically, whether IT works as a partner to the business, a consultant on technology matters, or a supplier of IT services. Few say the IT function is currently a partner. But both in IT and in the business function, about three times as many executives believe IT should be a business partner at their organizations (Exhibit 1). The results show that when IT partners with the business, the benefits are far-reaching—and striking. We looked at
14 specific dimensions of IT’s performance and found that partnership has an impact on its effectiveness in each one—even for relatively standard (or less business-facing) IT processes, such as providing end-user services, managing IT infrastructure, and maintaining applications. Thirty-five percent of executives at companies where IT is a partner, for example, say the IT function works very or completely effectively with the business to develop new capabilities; only 14 percent say the same at companies where IT is a consultant or supplier.
In a few areas, the benefits of partnership are exceptional (Exhibit 2). For instance, at organizations where
IT is a partner, respondents are more than three times likelier than all others to say that the IT function
is very or completely effective at implementing bottom-up innovation and at creating a healthy IT culture.
Similarly, in many other dimensions—from bringing new ideas to the business to delivering projects
on time and digitizing business processes—the partner respondents are at least twice as likely as others to
report that IT is effective.
That said, the results also indicate continued misalignment between IT and business executives on IT’s
priorities, with little improvement over time. For the fourth survey in a row, the results indicate
sizable gaps in how business and IT respondents view priorities for the IT function. In the newest survey,
for example, 44 percent of those in IT say that cutting costs is one of their organizations’ current
priorities for the function—behind only improving the effectiveness of business processes and tied with
improving the cost efficiency of business processes (Exhibit 3). Business executives ranked cost
cutting last, with only 16 percent citing it as one of their companies’ priorities for IT.
Pressure on IT and the partner advantage
IT organizations are under increasing pressure to deliver better performance—as the partners already
do—partly because of the growing availability and capabilities of third-party services such as cloud
computing, infrastructure as a service, and software as a service. About one-third of business executives
see third-party providers as a significant or complete substitute for the IT function’s services.
Another source of pressure is the expansion of digital programs. Nearly all respondents (91 percent) say
their companies are already pursuing a digital agenda, suggesting that the partnership between business
and IT will become only more important over time—especially with so many organizations in the early
days of their digital efforts. At companies where IT plays the role of a consultant or supplier, a mere 14 per
cent of executives say their companies have implemented digital initiatives across the business. Just
one-third say the IT function and the business collaborate on these initiatives, while half report that IT
either is completely uninvolved in digital or supports it only as a supplier of technology services.
By contrast, digital initiatives have already begun to thrive at organizations where IT operates as a partner
with the business. Compared with their peers, respondents at these companies are roughly twice as
likely to report that digital initiatives are being implemented across the organization, that the business
impact from the initiatives has been significant, and that the IT function shares accountability for
digital initiatives rather than simply playing a supporting role (Exhibit 4).
Redefining IT’s role
The results suggest that executives recognize the potential benefits of an IT–business partnership. So what
is keeping organizations from establishing IT as an active partner? When we asked technology executives
about the root cause of the function’s shortcomings, they most often identify weaknesses in IT’s operating
model (how the function is structured, run, and managed overall), followed by a lack of clarity about IT’s
priorities and role (Exhibit 5). These elements were cited far more often than the others we asked about:
suboptimal technology, undisciplined IT delivery, and talent. This emphasis on the operating model
and IT’s organizational role is not surprising, given how instrumental these two elements are in aligning
the organization on IT’s priorities, developing a stronger IT culture, and establishing and operationalizing
IT’s role as partner.
While talent doesn’t top the list as a root cause of IT’s problems, it continues to surface as a major obstacle
to the function’s effectiveness, regardless of whether or not it works as a partner with the business.
Almost all respondents (93 percent) say attracting IT talent is a challenge for their organizations, which in
the longer term could pose a bigger barrier to improving IT.
Respondents say their most pressing needs for IT talent are in analytics and in joint business and IT
expertise—areas they cited most often in the past two surveys—along with the cloud, mobile development,
and cybersecurity (Exhibit 6). While four out of five of these areas are technical in nature, joint business
and IT expertise could have an impact on future operating-model improvements and alignment between
the business and IT sides on technology issues.
At the highest level, align on IT’s role. Given all the pressures of implementing digital strategies and the
advent of new delivery models, redefining the role of IT is rapidly gaining importance as a management
issue. To move to a partnership model, a company’s senior leaders must first align on IT’s role (and what it
means for the overall operating model). IT organizations and their business counterparts must then
rethink the business–IT engagement model and processes, as well as decide how they can work together
to implement large technology initiatives that support the business. In this new model, there are also
talent implications for IT to address, specifically in the area of joint business and technology expertise.
Change hearts and mind-sets. Implementing a partnership model also requires a shift in mind-set from
the leadership team down to the front line. True partners can proactively help the business to think
about enabling technology and delivering IT services that truly fit the needs of both the business and
customers. To reap the full benefits of partnership, stakeholders across the board must adopt
a partner mind-set toward the services (and value) that IT provides rather than thinking of their IT
colleagues as consultants or suppliers.