Navigating the Transformation Journey: Bimodal IT Function

1. Bimodal IT decomposes the IT function into two modes—Traditional and Agile—the former focused on stability, the latter on the speed and experimentation necessary to support innovative uses of IT in a digital business context. Our study identified four bimodal IT archetypes and the factors that drive an organization to adopt bimodal IT. We found that companies switch between different archetypes as they transform the IT function, and we describe possible IT transformation journeys they can take. The article concludes with guidelines for transforming the IT function in the context of bimodal IT.

2. Agenda • Introduction to the Bimodal IT Function • Insights from this Research into Bimodal IT • Navigating the IT Transformation Journey • Guidelines for Transforming the IT Function • Moving Beyond Bimodal IT

3. Introduction to a Bimodal IT Function • Bimodal IT – decomposes the IT function into 2 modes – Traditional and Agile • Traditional IT is focused on stability • Agile IT is focused on experimentation • Agile is needed to support digital transformation • Bimodal IT allows the IT function to operate in two parallel modes—Traditional and Agile • Bimodal IT enables organizations to transform the IT function to support digitization

4. Traditional IT vs. Agile IT Traditional IT Function Need for IT Agility • Designed to deliver reliability, scalability, security and efficiency • Functions as a service provider • Viewed as a cost center • Focused on stability • Risk averse • Demand to respond to digital environment • Focuses on customer experience and business outcomes • Works on projects with less certain outcomes • Employs agile methodology

5. The Bimodal IT Approach Resolves Conflicting Goals • A challenge to achieve optimal balance of explorative and exploitative IT while simultaneously deliveringagility and reliability • Firms must have IT agility and IT explorative capabilities while simultaneously not losing sight of the IT function’s traditional objectives • An increasing number of firms are considering bimodal IT approaches as the means to develop these capabilities

6. Agenda • Introduction to the Bimodal IT Function • Insights from this Research into Bimodal IT • Navigating the IT Transformation Journey • Guidelines for Transforming the IT Function • Moving Beyond Bimodal IT

7. Field Study and General Findings • Identified 3 reasons for deciding to adopt bimodal IT • Identified four archetypes of bimodal IT, each with specific advantages and disadvantages • Found that bimodal IT is used in the overarching transformation of the IT function • Field study with 19 European companies • Companies had a minimum of 250 employees, annual revenues of at least 50 million euros ($53 million) and an internal IT function in existence for at least 15 years • 38 interviews with CIOs and business executives

8. Reasons Why Companies Decide to Adopt Bimodal IT 1 2 3

9. Four Archetypes of Bimodal IT Identified four distinct archetypes with different levels of structural separation between the Traditional and Agile modes

10. Archetype A: Project by Project • Certain projects are “fast tracked” and tasked to explore innovative IT use cases while others follow traditional governance principles • Allows companies to gradually introduce Agile mode • Good choice for companies reluctant to engage in major changes because it

11. Archetype B: Subdivisional • Company subdivides the IT function into two distinct groups, one operates in Traditional mode and the other in Agile mode • Agile mode requires a different employee skill set from that typically found in traditional IT units.

12. Archetype C: Divisionally Separated • Establishes an Agile mode division outside the traditional IT function • The Agile division is frequently led by a chief digital officer (CDO) and is often referred to as the “digital division.” • Causes the highest level of internal disruption • Appropriate for firms that have fallen behind their increasingly digital competitors and want to signal their digital ambitions both internally and externally

13. Archetype D: Reintegrated • After establishing bimodal IT, firms may decide to reintegrate Bimodal IT archetypes and create a seemingly unimodal IT function • Operates with heightened levels of agility and explorative capabilities • Allows a firm to focus on its digital business transformation mission while moving traditional IT operations to outsourcing partners or to a smaller subdivision • The IT function retains its Traditional mode in the background while appearing to external stakeholders as a unimodal IT function

14. Difference between Four Bimodal IT Archetypes • The differences between the four different archetypes are: • Extent of internal disruption caused by the bimodal split • Level of cultural divide caused by split • Management of IT resources • Alignment mechanisms between the business and IT function and the two modes of IT.

15. Differences between the Four Bimodal IT Archetypes

16. Agenda • Introduction to the Bimodal IT Function • Insights from this Research into Bimodal IT • Navigating the IT Transformation Journey • Guidelines for Transforming the IT Function • Moving Beyond Bimodal IT

17. Switching Between Archetypes • Common practice to switch as firms gain experience and learn from the difficulties • Movement through archetypes is not necessarily sequential from A to D • Duration and effort required for a transition between archetypes can differ • Various motivations to switch

18. Switching Between Archetypes 1/2

19. Switching Between Archetypes 2/2

20. Pathways for Transforming the IT Function to Bimodal IT

21. Agenda • Introduction to the Bimodal IT Function • Insights from this Research into Bimodal IT • Navigating the IT Transformation Journey • Guidelines for Transforming the IT Function • Moving Beyond Bimodal IT

22. Guidelines for Transforming the IT Function • 1: Recognize and Promote the Importance of Bimodal IT • 2: Select a Bimodal IT Archetype and Articulate your Future Vision • 3: Continuously Re-evaluate Whether to Switch to a Different Bimodal Archetype • 4: Set up Appropriate Governance to Manage the Transformation

23. Agenda • Introduction to the Bimodal IT Function • Insights from this Research into Bimodal IT • Navigating the IT Transformation Journey • Guidelines for Transforming the IT Function • Moving Beyond Bimodal IT

24. Moving Beyond Bimodal IT • Firms may eventually move away from bimodal concepts to realize their future vision of corporate IT • Some companies strive for a unimodal agile design • Unimodal agile design can be achieved by outsourcing Traditional mode operations so that the IT function can fully focus on supporting digital business objectives