Why IT Departments Can’t Understand the Business

Introduction

The frustration from business units towards the IT department—”they don’t understand the business,” “they lack field sense”—often clashes with IT’s own complaints: “we’re not included in discussions,” “we’re consulted only after decisions are made.” This conflict is often dismissed as an individual competency issue, but its root cause lies in organizational structure. This article examines the causal relationship between management decisions and organizational design to clarify why IT has been structurally positioned to be unable to understand the business.

The Prerequisites for Understanding Are Not Provided

First, it’s crucial to acknowledge that in many companies, the IT department is not initially given the information or authority needed to understand the business. In reality, IT is often excluded from business strategy planning sessions, involvement in new business exploration phases, and the sharing of context behind investment decisions. In this state, the role expected of IT is to “implement what’s been decided, without stopping, cheaply and safely.” In other words, it is designed as a department that processes “how to implement” rather than one that questions “why we are doing this.”

Business Information Was Blocked as “Unnecessary”

Why was it designed this way? The reason is simple: in an era when IT was viewed merely as a tool for management and operations, leadership did not expect IT to understand the business. At that time, the information deemed necessary for IT was limited to “requirements,” “deadlines,” “budgets,” and “security conditions.” Information about business objectives, market environment, and competitive strategy was treated as unnecessary for IT. As a result, a fixed dynamic emerged where IT remained disconnected from business context, and business units viewed IT as mere “implementers.”

It’s Not a Lack of Understanding, But a Structure That Prevents It

The key point here is that IT’s inability to understand the business is not due to a lack of interest, insufficient study, or low capability. The problem is that IT has been structurally kept from touching business plans, excluded from decision-making processes, and placed in a position to only receive the final outcomes. In this state, demanding that IT “understand the business” is, by design, an impossible request.

Information Blocking Was a Rational Management Decision

However, it’s important to understand that this information blocking was not necessarily a mistaken judgment from the outset. In an era when IT was merely a means for operational efficiency or a management infrastructure, the division of labor where “business units think about strategy, and IT supports it” was rational. The problem lies in the failure to update the approach to information sharing and role definitions, even after IT transformed into a force that defines business structures, becomes a source of competitive advantage, and influences decision-making speed.

IT That Doesn’t Understand the Business Inevitably Creates Friction

An IT organization not premised on business understanding inevitably creates the following types of friction:

• Systems built exactly to specification go unused.
• IT is criticized for not matching the business unit’s pace.
• IT is viewed as inflexible.

However, this is less a failure of the IT department and more the result of demanding understanding from an organization designed on the premise that “understanding is not necessary.”

Conclusion

The “reason IT departments can’t understand the business” is not a problem of personnel or mindset, but a consequence of management decisions that assigned role definitions not premised on business understanding. If we seek genuine business understanding and strategic IT contribution from the IT department, management itself must redesign the prerequisites. Specifically, this means sharing information, involving IT in decision-making processes, and providing the context behind investment decisions. Without this organizational transformation (one of the essences of true Digital Transformation), the disconnect between IT and business units will continue to be structurally reproduced.