Synergies and Tensions: The Evolving IT-Business Relationship

Greetings! In our last post, we discussed the general outline of “the Business of Information Technology”.  Lets start peeling the layer and get one level deeper.  In this post, we will explore the complexities of IT-Business Relationships.  

“Unicorn in Hipster Glasses” – no prizes for guessing the right question for this Jeopardy clue.  Started as an online eyeglass retailer by four Wharton classmates in 2010, this company has steadfastly grown over the last decade, and is a good example of how Information Technology can truly take a traditional non-tech business to great heights through innovation.  (Warby Parker also has had its wobbles, its stock hasn’t performed as promised, but that’s a question to another answer!)

IT has been traditionally seen as an enabler, a support function.  And it has served that purpose quite remarkably – from being a humble data entry system, to financial accounting, to industrial automation, to bridging the last mile of communication, IT has always been available (barring the odd outages, of course).  

However, the role of IT in Business is changing. From the perspective of the end customer, IT and Business are often quite indistinguishable, and therefore are true partners.  

IT is a cost center; at the same time, IT is also an investment that can generate value.  This duality creates a very narrow window of opportunity for companies to break shackles and rise above their competitors.  Or, as in the case of some of the highly valued companies in the world, they can generate exponential returns.  Case in point: Warby Parker, Microsoft, Apple, and even Tesla – where it has become exceedingly difficult to know where one ends and another begins.  (this will also be its separate post – “product” being the business is a fascinating construct) 

IT initiatives have often led to significant changes in business strategy, in some cases they have acted as the proverbial cart before the horse, on a mobius strip!  Case in point: General Electric.  Jeff Immelt was the CEO of General Electric (GE) for 16 years. During his tenure, he transformed the company from a traditional conglomerate to a digital industrial giant.  GE went through a serious drop in its fortunes and is well on its way riding on the back of its core competencies around aviation and energy.  Even so, GE will always be known for its leadership in defining the Digital Factory.

IT also takes on multiple roles – marketer, HR facilitator, compliance manager, risk assessor, and even a ‘fall guy’ in challenging times.  Even before the rise of Generative AI, IT has played the role of a Doctor through telehealth platforms, a Teacher through edutech platforms, a Soldier leveraging remote controlled drones, and so on.  

ROI in IT is not limited to revenue growth and cost reduction. Information Technology has led returns in innovation, efficiency, and market positioning.  Energy efficient solutions have led to a reduction in emissions of greenhouse gases; better access to information and efficient healthcare has resulted in reducing mortality.  Countries like India have seen a huge increase in their GDP because of increased digitization at all levels.  A better quality of life has been enabled through digital access to entertainment, knowledge and physical well-being.

There are several ways for organizations to measure and track the health of IT-business relationships.  SLAs and KPIs are objective measures that can be tracked over time to predict future issues.  Relationship Maturity Models and Balanced Scorecards are more advanced techniques to track multiple dimensions and their inter dependencies, especially viewing through the lens of customers and employees.  Ultimately a strong business-IT Governance mechanism needs to exist for stakeholders to realize the health and stability of this relationship, as well as futureproofing against the unknown.