Bimodal IT Approach to Digital Transformation
Enterprise Information Technology (IT) departments are beginning to recognize the importance of leadership in their digital transformation efforts. Chief Information Officers (CIOs) almost invariably find that traditional IT modes cannot cope with the challenges brought by digital transformation. They need a completely new working mode.
In 2014, Gartner proposed the bimodal IT concept with the aim of helping CIOs ensure normal operations while supporting and leading the digital transformation of their companies.
“CIOs can’t transform their old IT organization into a digital startup, but they can turn it into a bimodal IT organization,” said Peter Sondergaard, Senior Vice President, Gartner Research. “Forty-five percent of CIOs state they currently have a fast mode of operation, and we predict that 75 percent of IT organizations will be bimodal in some way by 2017.”
Big Data, cloud computing, social media, mobile Internet, and other technologies are reaching higher levels of maturity. Meanwhile, disruptive technologies such as Machine Learning (ML), the Internet of Things (IoT), 3D printing, Augmented Reality (AR), Virtual Reality (VR), and blockchains are emerging.
These technologies are bringing profound changes to the business models of every industry, involving various aspects of enterprises that include marketing, R&D, supply chains, manufacturing, and service. To survive in today’s markets, where competition is becoming increasingly fierce, enterprises must become digitized or otherwise perish.
Bimodal is the practice of managing two separate but coherent delivery modes. One focuses on predictability while the other concentrates on exploration. Mode 1 is optimized for reliability, availability, and low costs. A typical example of this is Enterprise Resource Planning (ERP), for which the requirements of the customer must be clarified during the requirement analysis stage.
Mode 2 is exploratory, with an eye to resolving new problems. A typical example is the use of social media for marketing purposes or the use of Big Data to analyze consumer behaviors. When initiating such a project, users form theories on the expected results but have no idea about the detailed requirements for achieving those results. This is an area they must explore with the help of their IT departments.
Bimodal IT functions can be compared to the way a feudal lord in ancient Japan utilized his resources. In mode 1, the lord had an army of Samurais to fight with the Bushido spirit, which included predictable and well-regulated actions (aka Samurai mode). In mode 2, the lord relied on his Ninjas, who were exempt from virtuous Bushido restrictions, to carry out special tasks, such as sneaking into the houses of other lords at midnight to steal something or assassinate someone (aka Ninja mode). Any lord who wanted to prevail needed both Samurais and Ninjas. There was no way to win with a single mode. This also applies to contemporary enterprises, which must have bimodal IT to complete the digital transformation process.
The following is a comparison of features between the two modes:
- Application Development: Mode 1 is more likely to be waterfall-based (downward flow of progress); Mode 2 prefers an agile and open approach.
- IT Governance: Mode 1 is plan-driven and focuses on security and reliability; Mode 2 requires more agile governance.
- Supplier Selection: Mode 1 prefers long-term, traditional suppliers; Mode 2 requires innovative suppliers that enterprises need when exploring new business models.
- Talent: Mode 1 needs experts who are able to resolve complicated problems; Mode 2 requires specialists who help enterprises clear up uncertainties.
- Culture: Mode 1 is more concerned with economies of scale; Mode 2 focuses on discovery and exploration.
- Team Composition: Mode 1 needs a technology-oriented team; Mode 2 requires a team consisting of various disciplines such as software engineers, data scientists, and marketing experts.
- Financial Decision Making: Mode 1 makes investment decisions based on Return on Investment (ROI) figures; Mode 2, unable to produce exact ROI figures, must be supported by funds that focus on investment in innovation.
Facts and Data
Gartner’s bimodal IT analysis has attracted widespread attention. Some companies also proposed similar concepts such as McKinsey’s two-speed IT, Huawei’s New ICT, and Lenovo’s two-state IT. Accordingly, some IT consulting firms like Accenture and Deloitte have started to provide consulting services to help enterprises implement their bimodal IT initiatives.
A 2015 Gartner survey with more than 2,800 CIOs around the world shows that 38 percent of enterprises have implemented bimodal IT, with 26 percent planning to go bimodal within 3 years. Only 13 percent of enterprises say they have no plans for bimodal IT, and the remaining 23 percent are unsure.
Of those enterprises with no bimodal plans, 41 percent say it is unnecessary, whereas the others are unable to go bimodal due to various factors, including a lack of organization maturity and funding, enterprise size, and resistant cultures.
Enterprises that claim bimodal IT is unnecessary typically fall into three categories:
- Category 1 enterprises believe that mode 1 is sufficient for them. These enterprises have yet to bear the full brunt of digitization.
- Category 2 includes enterprises that prefer mode 2 over mode 1. They are mostly Internet companies that were born with innovation in their genes and have always followed mode 2 in their business practices.
- Category 3 enterprises think bimodal IT is insufficient because they are facing complicated environments that require more modes. These enterprises may not fully understand the meaning of bimodal IT.
Gartner advises all enterprises to follow the path of bimodal IT because none of them will be immune from the impact of digitization and all must be able to deal with predicable tasks as well as carry out exploratory work.
Survey results also identified the most common barriers to enterprises when implementing bimodal IT.
The biggest barrier is a resistant culture. This occurs because mode 2 focuses on exploratory work and requires an innovation-oriented culture, which many traditional enterprises lack. The second biggest barrier is priority. Enterprise CIOs and other corporate leaders believe they have higher-priority work to do. The third biggest barrier is legacy IT environments.
Constructing Bimodal IT
Multiple approaches exist for the construction of bimodal IT, including agile development, Development & Operations (DevOps), multi-skilled teams, differentiated Key Performance Indicators (KPIs), formal innovation management, and crowdsourcing. Gartner thinks that agile development is the most appropriate starting point for bimodal IT construction and defines three application layers that are involved in its implementation:
- Systems of Record: Systems at this bottom layer are comparable to those of other enterprises. For example, every enterprise uses similar financial management systems they buy from other vendors.
- Systems of Differentiation: Applications at this middle layer are usually implemented by deploying some additional components to the systems of record or adopting some customized configurations and adjustments.
- Systems of Innovation: Enterprises are not always sure what systems they need at the top layer, but they do recognize the need to take exploratory innovative initiatives. The higher the layer, the more applicable mode 2 is.
Enterprises that are going bimodal can choose a project from their existing systems of differentiation or innovation to make a tentative attempt at agile development. Once the enterprise has mastered the agile development methodology, it can apply this approach to other projects.
‘Flipping’ to the Digital Promise
Digital transformation is a movement no one can halt. If enterprise CIOs stick to the traditional mode, other departments may have to establish their own digital teams. For example, the marketing department of an enterprise might set up a digital marketing team independent of the IT department. As a result, the CIO could be marginalized in the enterprise.
“To grasp the digital opportunity, incrementally improving IT performance isn’t enough,” warned Dave Aron, the former Managing Vice President and Gartner Fellow who is now Global Research Director for CSC’s Leading Edge Forum.
“Digitalization is no longer a sideshow — it has moved to center stage and is changing the whole game. CIOs now have a unique opportunity, but they must ‘flip’ their information, technology, value, and people leadership practices to deliver on the digital promise.”