IT organisations should focus on developing two dedicated value chain archetypes, each archetype optimized for specific innovation goals as listed below:

  • differentiate, the ambition of this innovation goal will usually be to become best-in-class compared to your competitors, you can never spend enough money here because this is what makes you survive!
  • neutralize, the ambition of this innovation goal will usually be to become (just) good enough compared to your competitors; you should spend no more money than needed to neutralize (become just as good as your competitor); you should certainly not try to become better than your competitor here by spending more money
  • productivity, the ambition of this innovation goal is to become (just) good enough compared to your competitors; there is no need to become better than your competitor so keep the money in your pocket or rather spend it to differentiate

These innovation goals are realized using Business value chains. To support these Business value chains with IT Products/Services,  there should also be two distinct IT value chains that drive the (internal) IT organization:

  • Commodity IT value chain: probably every organization needs IT products/services that are simple, based on non-differentiating routine tasks, often need for high-volume operations, focus on commodity type of services, sometimes these will be long-lasting services, implemented by simple architectures etc. which if combined together, can become a typical candidate for an Operational Excellent innovation strategy. This IT strategy can be allmost fully decoupled from the overarching Business strategy (whatever that is) and thus have it’s own, dedicated life cycle management.
  • Adaptive IT value chain:  besides commodity IT services, every organization might also have a need for IT products/services that are more complex, sometimes implemented as one-off initiatives, driven by fast time-to-market, driven by the need to differentiate the overarching business processes, sometimes focussed on low-volume operations, often realized with complex and/or adaptive architectures, sometimes implemented as short-lasting services etc.  These IT products/services are mapped to dedicated innovation strategies and will highly depend on the type of IT service needed to support the Business innovation.

So in order to optimize IT efficiencies when having two IT Value Chains, the commodity IT value chain should be setup to become operationally excellent. Here we will only spend the necessary money. We will decouple it’s innovation lifecycle from Business lifecycles to the max. This calls for a very special type of funding since Business usually sees IT as a short-term resource while commodity IT value chain investments usually will call for a more longer-term investment.

The adaptive IT value chain should maximally align with the Business (innovation) lifecycles and should optimize primarily on Business benefits.

This vision leads to the notion that traditional Business-IT alignment strategies might not be optimally suited to support decomposed IT value chains. This is however still a hypotheses which  needs further research. In a next post I will investigate which strategy logic is best suited for either IT Value Chain: Strategy Pyramid vs Strategy Stretch.

Comments on: "An IT Value Chain must be decomposed to match different Innovation Goals" (1)

  1. […] we look at the value chain types (as described in post An IT Value Chain must be decomposed to match different Innovation Goals) it seems as if a good match can be made between the value chain types and the strategy logic […]

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