Stepping Out of Shadows, the Era of the IT Mirror is Here
Though exclusively technology departments within businesses are quite commonplace at the present time, company IT departments are slated to become obsolete with the eventual reality of skilled programmers and technicians running entire companies. In the next 20 years, it will be a necessity for business departments to know the basic characteristics of programming, and presently we are in a transitional phase as most business departments have not reached that level of understanding at the technical level yet. This is the period of the IT Mirror: a transitional phase between the previously standard organizational structure, where IT is the main department of the matrix, to a structure where all employees, as well as their functions, will also have technical skills.
Years ago, the typing pool was one of the key departments of the company matrix. With the arrival of the personal computer, technology has made typists of all of us, rendering useless the need for “typing specialists.” The same type of change in the profile of professionals in 20 years’ time will be similarly drastic; everyone will know how to program. Similarly to how it is a basic requisite for everyone to know how to “type” or “translate” English. This change of professional profile will have a dramatic impact on the standard concept of the IT department. The typing pool died because the current professional environment requires that everyone type and use a keyboard efficiently and proficiently in daily communications. Why has the translation department in companies become obsolete? Because proficient use of the English language has become essential for the profile of the modern professional. Why will the IT department fade into a new range of required skills? Because in 20 years’ time, everyone will be a programmer, or at least tech-savvy enough to know the basics of programming. It is a matter of evolving with the times and technology. This changes nothing in our daily lives, however it is indicative of a more gradual change, where the impacts on our daily lives will go practically unnoticed. Today, IT drives the retail sector, and in the near and eventual future this will be a thing of the past.
Conceptually speaking, there is quite a lot that a retail company can do today to surf the digitalization wave. IT skills will soon enough be a part of the basic skills of every manager. Sales managers, marketing managers, operations managers and finance managers will all be people with the use of a range of technical skills. While we don’t expect this change immediately, we are predicting it to be an inevitable reality within the next 20 years.
The Organizational Structure of the IT Mirror
So, what will happen prior to having this generation of super-trained, super-technically-inclined personnel taking over management positions at companies?
Since these all-around tech professionals do not yet exist (for instance, programmers that understand marketing and/ or sales, or marketing managers that can program), companies currently meet their technical requirements by hiring more technicians to handle their IT departments. There is a clear division between departments in companies.
However, in the majority of cases of different businesses, this division doesn’t solve all issues necessary for efficient operations. It actually accentuates the symptoms of the inefficiency of the company’s technology sector. Hiring more people in itself is not the problem. The issue lies in creating large and inefficient IT departments in the matrix that are, in reality, just as big as the business areas. Is this truly effective? How much time is being wasted by having to align both aspects of the operation between IT and/or the business? An overly bureaucratized a company with excessive processes results in the equivalent of having created an elephant that is heavy, slow and expensive; which can be viewed as counterproductive to the overall business operation.
To fulfill the need within this bureaucratic and slow structure, Shadow IT was born as an organism of defense in an attempt to handle the many issues that continuously and constantly arise. However, though the aim is to harness the different areas that create issues within the business, this in turn, creates independent divisions of the company, each with their own problems that create the need to hire more technology services disguised as services/applications to control the outgrowth of problems. This need for constant supplementation with the hiring of its own suppliers in the IT department has made way for the term known as Shadow IT.
I propose a new way of thinking about business and IT: a manner in which the entire IT area is eliminated from the organizational chart. The concept of the IT Mirror is based on the notion of allocating a programmer/technician peer alongside each business-area person. For example, vice presidents would have their designated technology peer who would mirror (thus the suggested buzz word, IT Mirror) all of their functions while working at their side. For the IT Mirror to function effectively, the IT professionals must have the same compensation package, the same bonuses and targets as the business area person, reinforcing the importance of their mirroring position. My proposal is that all management functions within a corporation should have their respective IT Mirror, including a designated “CEO IT Mirror” in which the CEO has the appropriate technological backing during this transitional phase.
In principle, it’s easy to imagine that this structure will be more expensive in regards to business costs, however the actual effect is quite the opposite. As the formerly massive IT cost structure will no longer be a Labor and Capex line item being added into business costs, leading to a significant reduction in corporate G&A costs (the current major detractor of the retail sector), the ability to reimagine the business structure enables a more cost-effective strategy. The IT Mirror managers will be allocated to the business unit and will then be accountable for the exact same KPIs as the business area peers. An IT Mirror architecture brings with it the greatest of all benefits, already proven at several start-ups, including at VTEX (www.vtex.com), which is the epitome of the “no excuse environment” where business teams no longer depend on matrix areas in order to take action. This type of management creates a structure that holds no need for inventing excuses. The gain in focus on the business is robust, while the need for dependence on old-fashioned corporatism is drastically reduced.
Ask anyone in a management position in the retail sector of Brazil or Latin America, who works for an international company, if the expression “have you already reached out to IT?” or “have you already reached out to the business area?” doesn’t cause a cold sweat. The division and the complications are that evident.
Today, the retail sector is not only more efficient (with gains of up to 3% in margin) because company departments have a tight matrix structure and interdependence is very burdensome in terms of financial cost and time. Instead, adopting a premise that allows individuals to perform freely at their highest level of contribution within the environment, is the best method of harnessing talent inside the organization. To quote the insight from the book “Reinventing Organizations” by Frederic Laloux:
“Talent cannot tolerate this bureaucracy. And today’s retail world needs more talent than mass. The way to retain talent is to allow it to do what it knows in the most efficient manner possible, and to do so, mitigating dependence on areas of the matrix is fundamental. Retain talent by giving it a free reign.” >
Consequences of this New Structure
The IT Mirror concept implies that each department looks after its service unit in every aspect, deciding what is best for that unit in terms of technology solutions. If you were to do an abstraction, you will see that the retail sector is nothing more than a compilation of multiple micro-services. This will enable you take steps towards building several autonomous service units (units that will provide services for your company as well as others in the market – I will deal with this issue in my next article). This affords your business the speed of response, while also enabling it to focus on discovering new technology applications that exist around the world for improving the efficiency of the specific business unit.
Using the IT Mirror, the technical professional becomes familiar with the minute, intricate details of the business, while also being empowered to elevate their career standing in their specific business areas. The allows for professional development that enables one to be increasingly more focused and specialized in a variety of areas. Technical value is added to the organization, as the organization becomes further results-focused (instead of project- and people-focused). This is essential for obtaining operational efficiency. In the current form, this detailed focus often gets lost because the IT area within the matrix requires more technical people in order to control the budget and retain power. Using the IT Mirror, the business areas gain greater operational autonomy, which is what we refer to as a “full-stack squad.” Adding value, efficiency, and greater ability to streamline all aspects of function within the business for overall better performance in every way.
The IT Mirror Professional
The greatest asset of the IT Mirror professional is not the technical knowledge, but the specialty in which one finds themself. Whether they are an IT Mirror professional in the sales department, or a specialized IT Mirror in the logistics area; the versatility and capabilities they are equipped with add so much to the companies they work with. A greater sense of the “big picture” is an asset, and well-rounded individuals who have a broad range of skills are immensely valuable for this reason.
Within the IT Mirror, the need for a CTO or CIO disappears. The all-supreme technology leader is the IT Mirror CEO, who is the technical peer of the CEO, at equal levels of status. Both are accountable to the Board, ideally of which half the members should preferably have technical skills. The most dramatic change I am proposing is not the elimination of the Head of Technology, but rather the complete elimination of the technology area’s targets. The targets are intrinsically part of the business area, as the two are interdependent upon one another.
The understanding of continuous education is an important tenet to the IT Mirror professional, who is continuously on an academic search not only to improve his technical capabilities, but also in search of market knowledge and solutions that improve the unit’s performance. This isn’t commonplace in today’s business environments because technology professionals do not specialize in business, as it is not seen as the most important facet to their careers. They are experienced in technology within a range of different areas (a matrix structure), however adding in a diverse set of business skills improves their professional development from so many angles. In my proposal, the IT Mirror professional will continue to advance in their career by aggregating and specializing in the business area as much as in the tech sector. This will open up the need for careers such as the IT Mirror Operations Director, IT Mirror Sales Director, etc.
Today, an efficient IT unit is one that knows how to see the importance of the “big picture” while keeping together the puzzle pieces of the world’s best applications; they understand the micro as well as the macro and know how to execute accordingly. The IT Mirror ensures that the marketing manager and their peer, the IT Mirror market manager work closely together to choose the best marketing management applications available. In today’s technologically-advanced, high-paced world, a business truly has no need for a huge, single, inefficient monolithic system. Cloud reality has already streamlined everything in this sense. What is truly needed are IT Mirror technology managers who are experienced, knowledgeable, and versed in the business areas and are capable of fostering split-second business decisions. If data analysis is the goal, a business manager will be backed up by their IT Mirror peer, who has the same targets, and is prepared to help resolve the issue right then and there.
The current business paradox: Those familiar with IT don’t know the business, and those familiar with business do not know IT.
The solution: The IT Mirror is resolving this conceptual issue currently, until the time comes when all professionals at every level know how to program.
The retail sector is currently at a struggle, caught between two time periods and riddled with insecurity in understanding how to proceed while limiting losses and capitalizing on profits. And it is predicted that this conflict will only continue to spread until great, industry-wide change is adhered to. Margins will come under even greater pressure in the near future. Though it seems dramatic, this scenario is a reality, and businesses truly do require speed of response and low carrying costs, not to mention minimal or zero CAPEX. The IT Mirror organizational structure allows retail businesses to adapt to this change, adding up to 3% to the margin on the “bottom line”. Take a look at the balance sheets of the major retail companies and you will see that they spend between 3% and 8% of revenue on their IT areas (Capex and Opex). This kind of spending percentages need to be reduced for greater cost-effectiveness and efficiency. The use of IT Mirrors can assist in bringing down expenses rendering IT to merely 1.5%, in order to ensure that they retain relevancy and can continue to compete in this new digital world.
An IT Mirror organizational structure eliminates technology as an area of the matrix. IT becomes an intrinsic component of all business areas, transforming single units into full stack teams and creating a tactically highly-efficient environment with specialist and focused professionals. It fulfills multiple needs, increases functionality, and maximizes company spending in various areas; an all-inclusive solution that also enables the growth of professional individuals. IT Mirror is the solution to Shadow IT.