Mohan Gandhi, Senior Sustainability Consultant, STG Advisors, explains the first, second and third ages, how this is relevant to sustainability and how CIOs can grasp it.
Enterprise sustainability is the act of getting the right data into the right hands at the right time to make the right decisions – what I call data fluency.
However, data fluency requires an enterprise to be somewhat IT mature. How else does one create, combine, deliver and act on the necessary data? Only when an enterprise becomes IT mature can it begin to measure, then improve, sustainability. Long story short, IT maturity enables CIOs to grasp the sustainability agenda and we’re on the cusp of a new age of IT maturity – the Third Age of enterprise IT.
What is this Third Age? What were the first and second ages? How is this relevant to sustainability?
The First Age – Siloed and subservient
First Age IT saw individual functional groups contribute their own expertise to different project phases. Silos made sense because they created accountability and this approach served the enterprise well.
However, projects became rigidly sequential and trapped in one speed. This model encouraged ‘over the wall’ engineering, where team members worked locally on immediate tasks without knowledge of upstream or downstream strategic or business context.
Different teams used a myriad of tools to monitor and manage application and infrastructure performance, user experience, conversions etc. As a result, there was no single and consistent source of truth. Hence it was difficult for teams to identify the full context behind the data, or collaborate with others to improve business outcomes.
The Second Age – New priorities, old delivery model
As businesses became more reliant on digital services, enterprise IT became more critical to an organisation’s ability to drive new revenue, enhance customer relationships, keep employees productive and safeguard business operations. Over the last 20 years CIOs have continuously transformed their IT to keep pace with both technological advancements and changes to IT priorities.
The Second Age saw the role of enterprise IT transform from back-office support to essential business enabler. What once merely enabled the company strategy now actively defined it.
Fundamentally the Second Age saw the CIO transform the role of IT within the business, without transforming how it was delivered. It’s an incredible sleight of hand that is worthy of applause. CIOs transformed capabilities, aligned IT with business units, modernised infrastructure, optimised traditional cost models and found or freed budget for digital transformations. But they’re still fundamentally using the same traditional operating model, which has thrown up challenges of its own.
CIOs caught in the Second Age contend with resource struggles, conflicting priorities and difficult trade-offs. This approach creates IT integrity and security risks. Piper Sandler’s 2022 CIO survey found security remains the top concern for 78% of CIOs and Gartner’s 2022 study found 74% of technology purchases are funded at least partially by business units outside of IT, creating conflict and complexity for CIOs.
The Third Age – New priorities, new delivery model
It’s becoming increasingly difficult for IT teams to meet new demand for faster innovation under the traditional operating model of siloed teams. Second Age IT is insufficient for the needs of the modern ‘digital first’ business. The Third Age puts IT at the centre of both business strategy and operational delivery. As a result, changes are coming:
C-suite dynamics: As technology dominates strategic business priorities, company executives will require improved technological understanding. In 2011, only one-in-five CIOs ranked themselves as a critical enabler of business success. Now, CIOs rank in the top three of C-suite executives most critical to organisational success.
CIO role evolution: “The role of the CIO is becoming less of a tech leader and more of a business leader. It’s how you apply the technology that makes a difference,” said John Gibbs, CIO at International Airlines Group (parent to British Airways). CIOs will become the ‘Chief Operating Officer of technology’ and assume leadership roles in strategy development and execution.
Seamless alignment with business priorities: Value stems from the ability to bring assets, resources, insights and opportunities together. Aligned IT and business goals and aligned financial and operational incentives will help companies deliver this value.
Blurring of IT and business: The boundaries between IT and business will blur significantly. Business analysts will configure business rules and functionality that would have previously required IT teams to develop, test and deploy code.
Breaking down of silos: As a result of aligned priorities and blurred boundaries, the Third Age will see the creation of multifunctional teams across IT and business – what Gartner calls ‘fusion teams’. Technology will become an integrated part of business processes.
IT SLAs will become business KPIs: IT will define success based on the function’s ability to support the business’ key objectives. Metrics hierarchies that reflect the technical and business outcomes will help deliver dividends and identify the chain of accountability. Note, this doesn’t mean that IT abdicates responsibility for uptime, scalability, resilience etc.
IT governance will change: IT will decide where it can relax ‘ownership’ of applications. Governance will transform to balance the business’ desire to move quickly, while mitigating operational or security threats. This will require overhaul of models, processes and supporting systems.
Unilever has already begun its Third Age transformation. “Everything we’re trying to do and every choice we make as a business is to be as data-informed as possible. We want to surface data at every decision point — the right data at the right time to the right person, when it matters most,” said Steve McCrystal, Unilever.
Sustainability enabled
I’m sure at some point you asked, ‘what does this have to do with sustainability?’ The Third Age is not the age of sustainability, however, it’s the age where the CIO has the ability to impact sustainability. As IT becomes part of daily business operation and delivery, it embeds itself in every business activity. Thus, it becomes possible to conduct activity based environmental accounting using data that is already being collected and used for activity based performance and monitoring.
The Third Age creates the right environment for data-based decision-making, data-based reporting, data-based accounting – hence CO2e accounting – benchmarking and auditing and so on.
Conclusions, caveats and calls to action
I appreciate that I have taken many liberties in summarising IT transformations into three distinct ages. In reality, enterprise IT has and will continue to evolve at an uneven pace. I also acknowledge that I use the term ‘CIO’ as though it had a common job description. CIO roles vary more than any other C-suite role and often include partially or wholly, the role of the CTO.
Nonetheless I think the argument carries that a) as enterprise IT matures, it embeds IT further into the business and b) the further embedded, the exponentially easier it is to measure, track, reduce, report and improve enterprise sustainability performance.
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