Enterprise IT is at a watershed moment. Three distinct trends- cloud computing, the consumerisation of IT, and the globalisation of markets- will soon force businesses to re-evaluate the current model of delivering IT services. The future will see business people becoming IT managers, and that won’t be a bad thing.
Information technology has evolved from its original function of providing data processing. The last half of the 20th century saw IT grow up from the punch card era to information systems managing global transactional data in real time. The first decade of the 21st century has been a battle for senior IT managers- many of whom started as punch-card terminal operators- and that battle has been one of relevance. Traditional IT roles are being commoditised by the global economy and consumer technology is trumping enterprise IT in network speed, the accessibility of information, and the cost of applications.
IT doesn't have taste, style, or marketing acumen
The IT mission for CIOs in the 2000s was to cut costs while also pursuing new revenue generation. CIOs were positioned as strategists in executive teams. Some companies have had success- typically where internally developed systems could be productised and marketed vertically. But many CIOs have faced their biggest challenge with e-commerce. B2C web presence has become critically important to the relationship a business has with its customer, and for the most part IT has lacked the business acumen and marketing skills necessary to make that relationship meaningful. Efforts in e-commerce then suffer when IT needs to engage people in the business units with those skills- because from the business’s point of view, it’s all computer stuff, and IT are responsible for that.
IT is untrustworthy
Further hampering the relationship between IT and the business is the shared services model used to distribute the cost of providing IT services. The most common form of chargeback model is a per desk annual charge in order to recover the IT budget, however complexities are created when some business units decide not to license certain pieces of software, other other parts of the organisation have demonstrably higher network capacity requirements. The result is a chargeback system that requires numerous accountants to manage- both inside IT and within the corporate structure- and budget time is a period of intense negotiation. The more complicated the structure of the company and the systems IT manage, the more unclear the model will be to the business unit CFOs- and the less trust they will have in the method IT uses to calculate cost.
I’ll just install it myself
Complicating the relationship between IT and the business has been the growth of the cloud. The IT departments of many SMEs can not provide any deeper discounts for cloud apps or software as a service than if departments sought and implemented it on their own. In fact, some departments might be happier to do away with more advanced functions in their software suites in order to drive down support complexity and cost. Certainly, there is an attraction for business managers to source online applications at a lower cost with immediate availability, diminishing IT’s role as the security arbiter. From ITs point of view, this also undermines their ability to provide cost effect support for a common set of applications.
The internet is faster on my phone
As children of the 90s enter the workforce they are bringing with them the experience of managing WiFi networks at home; they've helped parents and grandparents purchase their first smartphones; they are familiar or even conversant with basic networking and computer terms and technology. They are joining organisations where a centralised IT body controls the types of devices that can connect to the network, what software can be installed, what settings can be changed, what they can connect to on the internet. Change is slow; support requests through a central helpdesk might take hours for a response for basic issues. Users will typically have a faster internet connection on their 4G smartphone than on the enterprise network. While their mission is to ensure security and to minimise the cost to support the technology of the company, the reality is that IT has the appearance of disrupting business rather than enabling it.
Break up your IT department
So- what will IT departments look like in the future? In my opinion, there wont be IT departments as they are today. Most of IT will be decentralised, with two new functions replacing it- Connectivity, a central shared service; and Intelligence, an internal consultancy. The job of managing data, applications and devices would rest with the business units.
Connectivity- The utility of IT
The operations teams in IT departments will refocus on the key enabler of tomorrow’s systems- Connectivity- internet connections, remote access, security, and network management. These functions should be viewed by the business as being just as important as the company supply chain, and must be owned by corporate management. The administration may be outsourced, however the ownership should remain central. The Connectivity group should be financed through the same method used to distribute other corporate costs like treasury or HR.
Intelligence- The value-add of IT
The IT experts that exist in SMEs and larger organisations- Application Developers, Business Analysts, Enterprise Architects etc- that till now have been located in the IT central function, should be moved out to the business units that need them. Collectively, they could be named the Intelligence team, and they would help the business utilise technology- assisting in desktop strategy, business intelligence, and application development, and ensure that standards are maintained for industry and regulatory compliance. The business units would be responsible for the retention and remuneration of their Intelligence team members, while also reporting to an executive that supports the C-Level team. At a minimum, units would be required to retain a Business Manager. The BM would consult the business on the application of technology to support their goals and act as an interface with the technology practises in the other business units. The executive in charge of the Intelligence group would provide the interface with senior management to ensure group strategy was being disseminated and was influential. In some cases, the existing CIO might be suitable for this role.
Not everything that plugs in to the wall should be owned by IT
A typical reality for many IT organisations is a company culture that assigns the responsibility of anything technical to the geeks. For example- does a system computerise or automate a previously manual process? Up till now, IT have owned it. IT will project manage the implementation, the business will take a hands off approach. Business requirements for the system will end up being written by the IT project team. The business sponsor of the project will become absent from meetings. IT becomes the owner of the business case. Project costs escalate, schedule slips, and IT eventually deliver a product that the business isn't even sure it wants, because the sponsor has distanced himself from the project to avoid poison. A solution to this is to implement (or, if it already exists, consolidate) a business function tasked with project delivery, that exists completely separate from the IT hierarchy. It should provide the oversight and methodology to monitor projects regardless of whether they are renovating an office or building a new website. They will ensure project sponsors remain engaged and that projects are delivering against scope and requirements. IT then becomes one of the wheels of the project, rather than sitting in the driving seat.
How will the business supply its own IT?
For the rest of the functions that IT currently delivers- the business will deliver themselves. From the desktop (or lap) up, technology is a commodity. With the guidance of the Intelligence team, business units will procure what they need directly from vendors. Cloud compute- server resources owned by third parties- can be utilised pay-as-you-go. Application development can be outsourced to expert providers. Even the management of ERP solutions can be outsourced to the software vendor. Many of today’s leading organisations already support Bring Your Own Device policies; under this model, hardware becomes a personal choice for the end user. With all applications browser based, users can be platform agnostic.
How will this fix anything?
Breaking up the IT department will:
- reduce the central IT function to providing secure connectivity, with simplified cost recovery
- transform technology from being a cost centre to an integral part of the business
- provide a more agile environment for change
- provide business units direct control of their IT spend
- provide technology staff a greater opportunity to have a positive impact on the business
- cut out traditional IT as the middle-man between conception and delivery of new systems, ensuring scope and deliverables remain business-focussed
- increase end-user satisfaction of technology through choice of personal hardware
Obviously, my model represents significant change for any organisation, and the steps between the as-is and to-be are complicated and maybe controversial. But in the not-too-far future, all the leaders of business will have grown up with a computer in their home, and they will expect to play a big part in managing the technology that powers their business.
The IT department will be gone.
Jason O’Donnell is a technologist with 23 years experience in running IT programs and teams, and consulting in the use of technology to empower the business. http://www.jasonodonnell.com