Bimodal IT: A two-pronged approach to delivering innovation and maintenance
Given that pressure, some IT leaders are taking the bull by the horns and creating what's called bimodal IT -- where one group is tasked with the keep-the-lights-on functions while the other handles more innovative, business-advancing tasks. As Gartner describes it, the first mode is traditional -- emphasizing scalability, efficiency, safety and accuracy. The second mode is nonsequential -- emphasizing agility and speed.
"CIOs can't transform their old IT organization into a digital startup, but they can turn it into a bimodal IT organization," says Gartner's Peter Sondergaard, senior vice president and global head of research. "Forty-five percent of CIOs state they currently have a fast mode of operation, and we predict that 75% of IT organizations will be bimodal in some way by 2017."
Schindler Group, a Lucerne, Switzerland-based company that manufactures elevators, escalators and moving walkways, is embracing the bimodal IT concept.
CIO Michael Nilles says the IT department needed to bring more innovation more quickly to the business, so the company in 2013 created Schindler Digital Business AG, the company's digital business unit. Nilles is CEO of that unit.
"It's very important when you have an established organization to give room for innovation, and you usually can't do that within the boundaries of an established organization," he says. "So whatever you call it, you have to have it within another unit. You need teams focused on a new innovative piece."
He says the move is paying off for the company, which has embarked on a digital transformation that has used technologies, such as the Internet of Things and mobile platforms, to make its equipment smarter, its workforce more efficient, and the company better connected and more responsive to customers.
"It's really allowing us to have a faster, more risk-taking approach. You have the start-up mentality," he adds. "Traditional IT organizations have been taught to focus on standardization and 100% perfection. Now in this new world, you have to be fast and put the user in the center."
He says a large chunk of the team is located in Shanghai, China, which is one of the company's big growth markets. "You have to be close to the customers," Nilles says. Team members also work in Morristown, N.J., and Lucerne.
Jerry Luftman, professor and managing director at the Global Institute for IT Management, says the task for IT in this era of amped-up business speed is multifaceted. "The CIO and his or her team have to ensure they have the people, resources and skills to [both] keep the ship afloat and to do the important initiatives that are being demanded of their business partners," he says.
"You've got to keep the environment running, keep the applications accessible and maintained, and come up with revenue-generating initiatives for the business," says Luftman. "You have to do it all. And if you can't do that, you won't stay on the job very long."
Robert Quarterman, vice president of infrastructure architecture and technical services at Service Benefit Plan Administrative Services Corp., is wrestling with that challenge now, figuring out how to bifurcate his IT team of 360 IT employees and 90 contractors.
Right now, the technologists on his team who are assigned innovative tasks are also expected to continue with their regular operations duties, Quarterman says. That means they're sometimes pulled off a strategic project to handle an operational issue, which impacts IT's ability to deliver projects as quickly as possible.
Quarterman says he plans to draw a brighter line between the two responsibilities sometime in the next 12 to 18 months. "We don't have the specifics mapped out to put an end date on it," he says, adding that leadership expects to change up teams as part of the bifurcation. He says he anticipates more innovation teams to be embedded in the business units -- something that he has already begun doing for agile projects such as those that deliver mobile applications for external customers.
But Quarterman is moving carefully down this path. "I think in the beginning there will be some tension between the two [groups], and it will have to be balanced out," he says. He and his leadership team "will have to be very good at articulating the value of each and the co-dependence of one on the other."
In the end, dividing an IT department into two teams will eliminate inefficiencies as team members shift focus from innovation work to their daily maintenance jobs, says Quarterman. And there are opportunities for advancement and challenging roles in both groups. But making the move without thoughtful communication and attention could alienate some workers, particularly those on the operations side, he says. Their work remains essential -- after all, if the engines aren't humming along, the business can't operate, let alone focus on the next big thing.
"When you get to the guts of operations, that kind of support, that's very challenging work and there are a lot of people who get excited about that," says Quarterman.
"It has to be viewed as two equal parts for the same purpose: The same purpose is the delivery of the product and the service," he says. "And I don't mean just delivering innovation; it's also delivering operations on a daily basis. For us, it's all about agility and flexibility for speed to market."
Rob Meilen, vice president and CIO at Hunter Douglas North America, is starting to review how resources are budgeted and allocated for both IT innovation and operations at his company but doesn't anticipate creating a truly bimodal IT department. He oversees an IT team of 120, supplemented by another 30 to 40 workers in outsourced or contract positions.
"We are moving toward a harder-line distinction in how we budget for costs and allocate costs to business unit customers," he says. "We believe we can get a pretty clear picture on how these two spheres are operating without drawing an artificial line on an org chart."
Greg Davidson, a consultant at AlixPartners, says innovation work folded into operations positions adds spice to those jobs and inspires workers to keep current, which in turn helps employee morale.
Just as important, when staffers work on a mix of operational and innovative tasks, projects tend to be more successful, Davidson says. "The infrastructure people who do the keep-it-running work can plan better, they're aware of the resource requirement," says Davidson. "They may know and often do know about performance issues -- something that the other team might not be aware of -- and those are the hidden land mines."
Others see staffing challenges in a bimodal IT department. Dale Denham, CIO at Geiger, has a 25-member IT department that supports 750 workers. He worries that a bimodal IT department could easily develop a "throw it over the wall mentality" -- that is, once the innovation team is done, it tosses the completed project to operations without adequate transition and concern moving forward.
Denham says nearly everyone on his team is responsible for both operations and innovation. A handful of help desk folks and networking staff are straight operations, he says, although they do help support strategic initiatives by, for example, spinning up a server when needed.
But overall, Denham explains, "when we launch new projects and new tools, the same people who support old tools are creating the plans and executing the plans for the new tools. And they support the new tools when they move to operations."
That's a big benefit, he says. "You don't have brain drain, you don't lose out on the knowledge piece when a project transfers from innovation to operations," Denham adds.
Moreover, the operational experience of those staffers may give them insight into how an innovation project in one area could apply to other areas within the organization. But although Geiger is too small to support a dual operation, Denham says he does like the idea that, in a bimodal IT department, the innovation side is tasked only with completing projects.
"I don't plan to completely [divide], but I plan to continue to shift people more towards operations or innovation," he says. Like others, Denham says such a shift is imperative "because the pace of business requires us to spend more time on innovation."
Jim Houghton, chief technology officer, Americas, at CSC, agrees. "I think the philosophy behind [bimodal IT] is right, but frankly I get a little concerned because [...] I have seen that taken to an extreme, and it starts to develop a culture where some employees are the innovators and the other guys are the ones down in the trenches working," he says.
"I recognize and embrace the fact that you need to have an innovation program and some people designated to try to support the program. But I would be very, very cautious about labeling someone as an innovator and someone the light keeper." (Hear more of Houghton's thoughts on innovation in this video clip, below.)
Given the commoditized nature of the operational work, many CIOs are already turning to third parties to handle a large chunk of the operational tasks, says Arjun Sethi, a partner at global consulting firm A.T. Kearney, where he leads the strategic IT Practice for the Americas.
But CIOs aren't outsourcing the whole department -- as many sought to do six to 10 years ago during the last big push for outsourcing, he says. Instead, they're outsourcing very standard parts, such as low-level programming. High-value functions are kept in-house so internal workers have the skills and organizational knowledge needed to help define the CIO's overall infrastructure strategy.
Within this emerging two-mode IT organization, some IT professionals are finding themselves locked into one group or the other. That's because IT workers typically stay where they are as they develop specialization in certain areas throughout their careers, Sethi says, progressing along their own division's path but not necessarily moving over and up on the other path.
Sethi says each avenue has its merits as well as steps to senior levels. Operational professionals can move into senior technical roles, CTO jobs and positions with hardware and software vendors. Those on the innovation side can become CIOs. "In the past, it was people from the ranks, developers, who used to grow up and become CIOs. What I see now is the business analyst, those are the folks who grow up to be CIOs. We already see that trend," Sethi says.
Although Schindler Group doesn't disclose staffing figures, Nilles says he staffed the new unit with both new hires and existing IT workers, who were important for integrating innovations with back-end systems. Looking ahead, Nilles says he believes IT employees will continue to move from operations into innovation divisions where they can apply their skills in a more agile, creative way. However, he says he doesn't expect workers will flow the other way because the workers may not adapt as well to the less agile pace and the focus on perfecting systems required for operations.
Global Institute for IT Management's Luftman agrees that opportunities will be there, but workers will be found in new places, with more operational staffers coming from third-party providers and innovation talent coming from business units.
"Infrastructure is essential. You can't run a business without the infrastructure, like you can't run without telephones and electricity," Luftman says. "But the strategic value comes from those in IT who can work with the business partners."
Even as more IT departments segregate their operational and innovation teams, IT professionals will still have great job prospects, Luftman believes. Operational staffers will have jobs either in-house or with third-party providers, and many of them will command hefty salaries. He says he's heard of some of the larger financial service firms paying infrastructure leaders $300,000-plus including bonuses.
"But the bigger bucks will be for people who are closer to the business and for those who understand how to leverage technology for the business and can do so to drive business value," he says. "If someone wants to make real big bucks as CIO, you've got to look at these other skills that are essential, like leadership and management and communication. And you've got to get closer to the business."