Esteban  Herrera
Esteban Herrera
Partner and Global Leader
ISG Research

Professional background: Before joining ISG Research six years ago, Esteban had served in a variety of research and consulting roles for Accenture, The Concours Group, Infosys, HFS Research, and others.

Education: BA (business), Babson College.

From the invention of paper to the cell phone, advances in communications technology have always had a profound impact on organizational structure. Today, many executives, even CIOs, are making the mistake of using 20th century technologies to lead 21st century organizations. Esteban Herrera, a Partner and Global Leader of ISG Research, spoke with Straight Talk’s editors about how IT leaders can become successful “digital leaders.” 

What does 21st Century IT leadership look like? 

It’s more about influence and less about command and control. 

You hear that a lot about business leadership. But why is this happening to CIOs as well?

Shadow IT is rampant and growing. With technology decisions getting distributed throughout the enterprise, the line between business and technology is quite blurred – hence the importance of influence, over people who don’t report to you and probably never will, as a component of leadership.

How should the CIO respond?

You have to recognize that although you may still be the CIO, there are now a lot of digital leaders within a company. Those people are building things and making important decisions on their own. They’re buying and using digital technology  and leaving it up to the IT leader to figure out how it all fits into an enterprise’s IT architecture plan. Whether you like it or not, you’re going to end up owning the mess created by a lot of these independent digital decision-makers. 

You get none of the credit and all of the blame! How can you minimize the risk?

If you intend to stay in your job a long time, the time to start influencing those decisions and getting involved is this moment. You’re never going to get complete control again – that’s just not realistic – but knowing what’s coming down the pike allows you to set realistic expectations and realistic budgets.

But most companies run an agile shop these days. Doesn’t that resolve some of these problems?

Only some. Agile speeds things up, but it  doesn’t help in coordinating activity. For example, the CIO of one of our clients, a chemicals company, did everything right from our perspective, and the agility he brought into the enterprise was very much appreciated by  the individual business units, the COO, and the CEO. Benefits started accruing after nine months, and the transformation was completed in two and a half years. It was widely regarded as a huge success. 

But now, 18 months after they declared victory, we realize they didn’t really match enterprise governance to enterprise agility. So, everyone has agility but the company’s decision-making has devolved and become very decentralized.

What went wrong?

People were individually faster than they used to be, but they made duplicate investments because architectural governance wasn’t strong enough. Different business units were buying their own IoT technology, instead of thinking, well, could we have one IoT platform for the entire enterprise? 

The answer is going to be different every single time you ask this question, in every single company. Sometimes you will be faster by having a standard platform, and sometimes you won’t, and in the case that you’re not, then you have to look at costs and say, okay, is that speed to market worth this cost? 

Why is this happening?

Organizations have always been designed to be slow-moving entities. That’s because they are risk averse. That’s sort of the hallmark of organizational design; it’s what’s changed least in business in the last hundred years. But now we’re at the point where we can actually conceive, develop and introduce products faster than these recalcitrant organizations are able to make decisions about them.

Very few companies can manage this well yet. Even my most successful digital transformation clients haven’t really gotten to the level of maturity, where they’re able to have the conversations about this stuff as quickly as they can build it.

What makes governance of an agile firm so hard?

A large part is because the particular skills needed to manage it are so rare. A lot of people can call themselves an enterprise architect, but a real enterprise architect understands everything from the nitty gritty of the code and the way the boxes and cables are wired together all the way up to the most sophisticated business processes. Finding a person who can do that is really, really hard. Right now, there are only a few of them in the world. 

Assuming you can find one, what would having one of these paragons do for your organization?

Enterprises that have them generally succeed.

Recruiting, on the other hand, stays the same, doesn’t it?

No. We believe that corporations are going to keep trying to own less and less, and part of it is owning less of the employment contract. If that’s the case, the way you attract top talent is by building their resume, not necessarily paying them more or giving them stability, but allowing them to work on the coolest technology from the enterprise perspective, you know, in this sort of migrant economy.

What if I replace all my employees with bots?

Actually, AI is going to be another major management challenge. How do you manage stateless, personality-less bots that work 24 hours a day and never make mistakes but don’t respond to praise or criticism and aren’t good at learning anything unless you teach them? And how are you going to integrate them with the rest of your enterprise? 

That replacement process is not easy either. Robotic Process Automation is hard to get  right. The first difficult thing is finding the process where it will succeed. That takes some effort. The next most difficult thing with bots isn’t training them or installing them or even fixing them – it’s getting the humans out of the way. One of the big problems now is the sabotaging of RPA and AI initiatives, and it’s happening everywhere. In a way, the challenge is the same as it always was: the complication of the technology pales in comparison to the resistance of the people who would ultimately  be its users.

None of this sounds like good news for CIOs. Will they even exist?

I don't subscribe to the idea that the CIO is going away just because now everybody can buy their own technology. At the end of the day, whatever the technology you have, you have to produce a balance sheet and income statement. Somebody has to put all those elements together in a way that functions for the enterprise. Too often, companies are buying digital technology that gets integrated into the enterprise in an analog way. 

The Takeaways

Shadow IT is not a bug in the new world of IT, it’s a feature. You need to get used to it.

You’re no longer the only technology leader in your company, but you’re still responsible if something goes wrong. To keep your job, you will need to continue to understand and coordinate everything technology-related that is happening.

It’s not enough to build things in an agile way, you need to manage them agilely as well. Organizations have been taught to make decisions slowly. Now they need to be taught to make them quickly just to keep up with the technology available.