Delivery of Application Managed Services (AMS) requires a robust IT operating model to be successful. A well-designed operating model clearly defines how to utilize spending to maximize ROI with best-in-class integration with the available functional teams. This is done by making the best use of the resources that are already available while maintaining the ideal balance between process and technology. This is crucial to gain an advantage in difficult situations like the COVID-19 epidemic.
This blog examines NextGen technology-based new paradigms for IT operating models and emphasizes how this modernization can result in a striking improvement over conventional IT operating models. Additionally, it makes it possible to accommodate customers’ quickly shifting needs, technology improvements, various form factors, and portability. Here, we aim to answer several questions, such as:
An operating model aligns with strategic goals for effective application management and serves as the blueprint for an organization’s business vision. The strategic and operational degrees of collaboration, interaction, and integration across organizational capabilities, internal service groups and functions, and outside providers are shown. Its goal is to provide a unified understanding of how services are provided inside the company.
For the sake of this article, we will limit our perspective to the IT operational model (not the overall business operating model, which has a much larger scope and plays an essential role in how the IT operating model is organized).
The success of the IT operating model depends critically on how well it integrates with the rest of the organization, both culturally and in terms of value creation. Determining whether the model fosters growth and agility or stifles innovation and hinders organizational development is essential.
A simple structure where a few strategic contractors support internal IT teams used to be an IT operating model. The model is complex for today’s firms and involves many internal and external stakeholders. Additionally, the importance of the business teams in the IT operating model is growing, and as a result, we can see the alignment toward business-focused structures.
According to a typical operating model, fundamental business competencies and auxiliary organizations/functions are synchronized with various business lines (verticals), internal and external suppliers, and operational and strategic levers (expansion, presence, market, global reach) (process, technology, changes for the operating model, organizational structure). It stands for a distinct set of skills suited for providing application management services in line with corporate strategies, internal line of business (LoB) core competencies, and interfaces with outside drivers/providers. It takes shape as a result of decisions made in the five areas of the operating model listed below:
The business and IT visions must align better with the typical IT operating paradigm. The company has a presumption that the IT function is mainly responsible for domain-related demand and supply. While the business (LoBs) provides customers in a coordinated manner, the IT function is more inclined toward technical elements and depends more on the technological capabilities and size of operations. However, company operations are siloed, and each LoB adheres to its procedures. Therefore, improvements in the collaboration between business and IT delivery and process standardization are required.
Enterprises are forced to reconsider their approach to application IT operation and service management due to the needed speed of change and significant evolutions in digital technologies. In the upcoming years, the speed of disruption is expected to quicken. While modernization is now accepted as the COVID-19 answer, most CIOs now see that it is the only strategy for success in the long run.
In recent years, numerous developing technologies, such as business systems, mobile endpoint devices and apps, big data analytics, social robots, sensors and IoT, blockchain, intelligent contacts, cloud computing, etc., have been seen. These are causing changes to the entire business model and altering how technology is delivered. Organizations are increasingly under pressure to reconsider their entire operating strategy rather than just their approach to technology.
Due to all of this, CEOs and CIOs are now searching for new ways to integrate the delivery of IT services into the whole business environment, making IT a true differentiator. Only cutting-edge business and IT collaboration will be able to bring about this revolution. To ensure speed, flexibility, better time to market, and operational optimization, a suitable modification in the current IT operating paradigm is essential. Constants constantly change along with variables, yet most conventional operational models cannot handle continuous change. The impact of these changes may be so significant in some industries that organizations must alter their primary business models to survive. The following infographic demonstrates how the IT responsibilities were coordinated to cooperate in the old and new IT operating models.
CIOs must now reevaluate their Target Operating Model (TOM), which describes how they set up operations to carry out business IT strategies. Organizations must balance various challenging options, such as security against openness, proprietary versus shared, vanilla versus best-of-breed, reliable and predictable versus speedy failure, etc. This is a challenging process. They will need to adapt TOM to the organization’s present needs while accounting for emerging digital information and technology demands. Most importantly, businesses will need to optimize TOM to reap the benefits of application management in the short and long terms.
Utilizing these digital technologies, the NextGen operating model for application-managed services integrates business and IT effectively. It makes it possible for smaller, more focused teams from operations, finance, marketing, sales, and even business user communities to create more decentralized, dynamic, and agile changes. Agile, DevOps, cloud ecosystem, BYOD, open-source, API platform, social media and mobility, and PESTEL are some of the maturing themes shaping the NextGen operating paradigm (Political, Economic, Sociological, Technological, Environmental, and Legal).
To stay up with the present trend of constant technological development, this model strongly emphasizes flexibility and personalized services depending on customer needs. Cloud, mobility, and automation are emerging technologies that can increase potential while enhancing agility and speed. Customers may accelerate digital transformation in their businesses and enable seamless interaction between the virtual and real worlds, improving customer experience using digital technology, social collaboration tools, mobile channels, and business analytics.
Additionally, PESTEL analysis can assist firms in continuously evolving by helping them rethink the function, organization, and procedures of crucial tasks like IT risk & compliance. It will also assist in examining various essential and varied application management elements that affect an operating model’s effectiveness. However, the model must withstand PESTEL examination or other considerations.
An organization needs to alter its thinking to successfully transition from an IT operating model to a NextGen operating model. It needs to reinvent the IT operating model to accelerate digital business and align itself with business, IT, and technology.
By making small, gradual investments, it is possible to plan the gradual transition to new ways of operation. A good balance of new ideas and capabilities should be developed to power the NextGen operating model.
NextGen Operating Model: Business, IT, and Technology Alignment
The NextGen IT operating paradigm can aid in lowering costs, increasing high availability, reducing and expanding restrictions, reducing risks, and accelerating time to market. Although there might not be many substantial changes from a tactical and strategic governance standpoint, implementing an “information-push” approach might affect the communication channels. The IT, business, and operations have become more interconnected thanks to the NextGen operating paradigm.
Agile cross-functional teams (business and IT) and product owners play crucial roles when the operating model transitions from the conventional to the NextGen. The business is more closely integrated with technology (especially application development and maintenance). A center of excellence and innovation laboratories aid in developing and supporting cutting-edge technological capabilities that go beyond the model. Thanks to cloud computing, business divisions can swiftly embrace cloud solutions without being engaged. It takes time and effort to adjust to new technologies, ways of doing things, and changing circumstances. Even if the transition to Nextgen is already underway, it will take some time to start, develop, and master.
After the COVID-19 pandemic, we are already seeing a paradigm shift in how businesses are run, including in terms of the need for IT infrastructure, process changes, the work-from-home model, application enhancements, monitoring aspects, changes to the governance model, new communication channels, facilities management (HR, offices within homes, logistics), and customer experience, among other things. Additionally, putting in place an apt goal-operating model will increase the effectiveness of your application management activities. We already see a shift in our work, relying increasingly on digital tools and virtual connections to complete our tasks. Technology advancements and digital acceleration are here to stay and inspire success.