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Directors need to act quickly to allow their IT departments to evolve.

Are IT departments evolving or devolving?

| Corporate insights

Survival of the fittest has been ensuring the evolution of species for millennia. From the moment the first single-celled organisms sprang to life 3.8 billion years ago, people and animals have been evolving to solve problems and become, well, better.

A massive 90 per cent of all IT expenditure adds absolutely no value to the company.

The same can be said of businesses. Those who adapt keep going, while the companies that fail to keep up with their rivals eventually become extinct. We can see this today in entire industries. Australian manufacturing is struggling to keep up with countries that pay less in labour, postal services are relied upon less in the age of email, and retailers that don't also use ecommerce are finding their abilities to make sales severely limited.

More specifically, executives, directors and shareholders in all individual businesses need to look at how they their companies will evolve, if at all, in order to survive. The last thing they want is to devolve.

One thing that is deciding this for them is how their IT departments are changing – how these departments are also finding their own path of evolution, and what decision makers are doing to help or hinder them. It will be a difference maker in the age of information management.

A maturing department

IT is now an issue for the board in many businesses, and those who don't currently take this stance will probably start to do so as risks develop and the department in general matures from its humble roots.

No longer are IT staff members restricted to their dark corner of the business; their responsibilities are considered integral to success, as recent Gartner research showed.

"Increasing awareness of the impact of digital business risks, coupled with high levels of publicity regarding cybersecurity incidents, are making IT risk a board-level issue," explained Gartner's vice president, Tom Scholtz, last year.

"Seventy-one per cent of respondents indicated that IT risk management data influences decisions at a board level. This also reflects an increasing focus on dealing with IT risk as a part of corporate governance."

What businesses now need to do is develop better governance frameworks around how their information is used and who is responsible for it – whether that's a CIO, CDO, CKO or any other person they've hired to drive success with information. It's a solution many board members are yet to realise, though that will change, at least in top-performing companies.

IT, business, statistics, research, information management, success, governanceIT departments are now getting around the table to understand business objectives.

"If [directors] don't impose information governance standards, they will fail."

Executives need to step up

Unfortunately, as it is, a lack of information-focused governance is costing companies too much, as their IT departments make business decisions without an executive direction.

John Mancini, president of the Association for Information and Image Management, says that a massive 90 per cent of all IT expenditure adds absolutely no value to the company for a third of all organisations.

It's hardly surprising. IT staff are not equipped with the business knowledge to decide how money should be spent for the good of the business. They can invest in shiny new technologies like cloud computing, automation and big data analytics, but the vast majority of them are not doing so with the executive experience needed to add real value for the business – the type of direction that helps IT evolve.

As Experience Matters' Managing Director James Price told the Australian Institute of Company Directors recently, the problem is more critical than many understand.

"If [directors] don't impose information governance standards, they will fail," James explained, "and information governance itself will fail without business governance".

IT expenditure, how to spend your IT money, information management, big data and analytics, directors, cloud computing, automation, governanceIT departments love spending money on new tech, though most adds no real value.

"First and foremost, business units see IT as a partner, someone to share responsibilities with to guarantee successful operations."

A glimmer of hope

A recent piece of research from CompTIA suggests that some businesses are indeed understanding how IT affects business objectives. In a 2015 survey, around half of IT professionals and 57 per cent of business executives said decisions on technology expenditure and strategy are now more intently focused on how they will deliver results for the wider company.

"First and foremost, business units see IT as a partner, someone to share responsibilities with to guarantee successful operations," said CompTIA's senior director of technology analysis, Seth Robinson. 

"Business units expect to work jointly with IT."

It's an early sign of evolution in IT departments – survival of those fittest to affect business change with their technology investments. That can't happen without leadership from the boardroom, so it's imperative that organisations understand how this stuff works.

Making a change couldn't be easier. It starts by opening your eyes to information management. We think this can be done by asking one simple question: If you managed your money like you do your information, what would your business look like?

The answers we've received in the past are usually not good, so we'd like all directors to pose the same query to themselves. If you'd like to find out how you can treat your business like you would money, we have a short (and free) white paper on the matter.

While some IT departments evolve, some are definitely devolving – survival of the fittest in its purest form. Make sure your organisation is around for the next generation.

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