Increasingly empowered customers and business users, external services, new methodologies, automation, and cognitive technologies will result in a significantly smaller, faster and more specialised tech organisation says Forrester.

New research by Forrester says the size, shape, and mandate of tech organisations will fundamentally shift over the next five to seven years. The result of this seismic shift will result in automated functions, increased role specialisation, and a shift in focus from internal capabilities to external services.

“There have been many ‘this will end IT as we know it’ events. The PC, client server, the web, and outsourcing have all changed tech organisations, but not fundamentally. This time things are different. Five to seven years from now, these organisations will resemble current ones, just as the first cell phones resemble the iPhone,” explains Marc Cecere, vice president and principal analyst at Forrester, who authored the report, “The Future Tech Organization: Smaller, Faster and more Specialized”.

According to Cecere, the structure of the tech organisation can have a significant impact on the efficacy of the company. Companies that organise themselves in a customer-centric structure enable the company to understand its customers better, develop deeper relationships with them and, ultimately, improve customer satisfaction.

However, the reverse is also true. Just as an organisational structure can assist in delivering customer centricity, it can also hinder delivery if it’s not appropriately engineered. Cecera references a 2015 Forrester/Heidrick & Struggles survey, which found that 51% of CMOs said organisational structures are impinging their ability to adapt to a changing competitive environment. This is up 12 percentage points over the last two years.

Supporting a customer-obsessed organisation requires an aggressive Business Technology strategy

According to Forrester, companies looking to support a customer-obsessed business model will need to overcome the traditional notion that tech organisations have an inside-out focus. Adopting a Business Technology (BT) strategy, however, requires an outside-in focus, starting with the needs of the customer.

In research examining how to implement a BT strategy, Forrester analyst and lead author, Bobby Cameron says: “CIOs seeking a leadership role in helping their firms become customer-obsessed should plan a BT strategy road map that enables the business strategy. Core capabilities common in a well-run, traditional IT organisation must be in place for a BT strategy to take root. These include portfolio management, governance, and performance management.”

Forrester advises that four principles need to be followed to shift an organisation from traditional IT to a more appropriate BT model:

1. Companies need to be customer-led. This means applying design thinking to better understand and respond to customer-led solutions.

2. Customer-obsessed companies use insights to drive action. Despite rich customer data, companies often have little customer awareness, or simply no ability to use it to drive action.

3. Companies must learn to respond to the fast paced change being driven by both customers and disruptive competitors. Complex customer ecosystems can change too quickly to be modelled in the traditional way and should rather be discovered through design-thinking’s iterative test-and-learn prototyping.

4. Finally, because customers’ needs span multiple processes and technologies, the customer ecosystem requires connected Customer Experience (CX) that reaches end to end across the ecosystem. Staying connected is key.

Armed with a strategy, adapt your structure

Once strategies are in place, CIOs and business leaders will need to prepare their organisational structure to deal with delivery. Forrester says tech organisations can expect a significant shakeup by 2022 and should begin laying the groundwork immediately.

According to the company, over the next few years tech organisations will be smaller, more specialised. Moreover, the use of apps and cloud will reduce the need for custom coding as well as engineering and other technical skills. They will also be faster because of cloud, agile methodologies and DevOps and will be driven by changing client expectations.

Forrester also notes that AI, machine learning, robots, natural language processing, and other automation or cognitive technologies are accelerating the replacement and enhancement of business and technology functions.

Cecera sums up his forward-looking researchby saying: “The structure of technology management five to seven years out will be very different from what we see today. These organisations will better enable the use of internal and external services and break down traditional technology, business and customer barriers. Furthermore, the separation between digital and nondigital will be greatly reduced as organisations rapidly move off their legacy systems.”

For more information about these risks and how to manage them, contact Joan Osterloh at josterloh@forrester.com.

Sources: “The Future Tech Organization: Smaller, Faster, And More Specialized”. Authors: Marc Cecere, with Matthew Guarini, Bobby Cameron, Michele Goetz, Rachael Klehm, and Ian McPherson.