Edit 2023-01-08 - this blog post was initially published on https://www.unic.com/en/competencies/experts-blog/2017/effective-it-strategy but deleted - I copied here for future reference:
One of the key challenges in IT is that not every system is created equal. When developing services we try to harmonize the way we manage IT systems and the applications provided by them. However, we see an increasing tension between flexibility and reliability. Very generally we want agility when it comes to systems that allow us to work and collaborate in new ways. On the other hand, we could not get things done if all systems were in constant flux. So we aim for stability for systems that provide standardized services.
Gartner! developed a classification system that might allow us to identify which application services require what type management to ensure agility and stability at the same time:
- Systems of Record: usually found in business capabilities with a clear focus on standardization and / or operational efficiency; these are also often subject to regulatory / compliance requirements. Good examples are finance and HR Systems.
- Systems of Differentiation: typically related to applications that enable unique company processes or industry-specific capabilities; these sustain a company’s competitive advantage.
- Systems of Innovation: new applications that are built on an ad hoc basis to address emerging business requirements or opportunities; these involve an experimental environment for testing new ideas and identify the company’s next competitive advantage.
Applied to our world as a leading Swiss web agency, here’s where I would see our various capabilities:
| Pace | Ideas | Focus | Example of Tools and Services |
|---|---|---|---|
| Systems of Record | Common Ideas | Business capabilities with a clear focus on standardization and operational efficiency to ensure quality and compliance. | ERP, CRM, Email, Clients, VPN, Network |
| Systems of Differentiation | Better Ideas | Enable unique company processes or industry-specific capabilities to sustain the company’s current competitive advantage. | Asynchrounous collaboration, continouos integration, deployment |
| Systems of Innovation | New Ideas | Ideas or opportunities to identify the company’s next competitive advantage. | Machine Learning, Blockchain |
We have several examples of systems starting as a side project in innovation and then graduate to a system of differentiation. Important to understand is that system of records done well, can be a differentiator. However, more often than not cost reduction is the main driver. We can map business needs to pace layers by a simple guide:
How does this help us in day-to-day activities? This strategy allows us to clearly determine how a specific system should be managed. Our tasks are therefore outlined as follows:
- Optimise cost / performance for systems of record: Outsource, streamline, offshore maintenance (like we did with Email and are now doing with SharePoint). No custom development, at best configuration of commercial off-the-shelf systems. No in-house development.
- Find new current growing services that are easy to implement for us, but hard for competitors. These will be new systems of differentiation. Can be commercial or open-source systems; some customizations. Some in-house development to glue systems together.
- Establish service development to identify and develop systems of innovation and differentiation into systems of differentiation. Predominantly developed in-house. The reality of business applications will be an interconnected mesh of applications in different states of maturity. I’m convinced that successful businesses will be the ones who manage to differentiate services based on these pace layers.