The Paradox of the
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
The Paradox of the CIO
How do CIOs fit into a utility computing model? Will they be relegated to the role of managers of utility services or of the on-demand contract? Or will utility computing free them from the mundane chores of IT management to become full strategic partners of their business-side colleagues? The latter, say many experts. And there's an added benefit, claims IBM's Mukherjee: "With the savings from a utility model, IT can actually be the funding source for business transformation. If you can turn your budget into real value-added, you have a greater chance of being a hero."
No one is suggesting that moving to a utility computing model will be easy, so a further role of the CIO is to make it work. "The CIO has to have a vision," says Gartner's Scott. "There are so many impediments to making this happen. And it's not just technology. How do you charge back? How do you share inside the organization? How do you reassure business units they'll still get the resources they need? This is an evangelistic kind of sell for the CIO, and he's extremely important to the process."
The role of the CIO as evangelical hero is an attractive one. But heading down this visionary path will require many cultural changes on the part of IT and the CIO. Consider the still-prevalent notion of the CIO as technology guru. Says Gartner analyst Ben Pring: "Moving to utility computing is not really about the actual management challenge. It's really more about the philosophy of what you're trying to do. It's whether you as a technology person, who has existed in the mystique of technology, really want to simplify what you're doing. A lot of people, whose careers and personal reputations rest on being the witch doctor, don't really want to. But if they don't, it's going to be wrested away from them."
CIOs have a lot to gain in the shift to utility computing, but they also have a lot to lose. CIOs who feel that their power base depends on the size of their budget and on their role as technology guru face the possibility of being outflanked. That's because the benefitseven if they're still largely theoreticalare just too attractive. "A year from now," says CGE&Y's Parkinson, "you'll be reading articles about companies that have already gained significant savingsand competitive advantageby moving to this model."
How should CIOs prepare to make that move? "Get real," says Parkinson. "Look very hard at the assets you manage on behalf of the corporation and simplify and standardize the heck out of them, because you can't justify having the range of ways to do the same thing you have today." You can capture significant benefits through server consolidation and standardization even before a true utility model is ready for use.
In moving to utility computing, Gartner's Pring advises taking a portfolio approach to IT assets: "CIOs have got to categorize their portfolio of applications according to their strategic value. Applications that aren't truly differentiating for the business should be provided as a utility." Once that process is completed, says Pring, CIOs can concentrate on looking for new applications that will truly give their companies a strategic business advantage.
A further concern will be the ability to equitably and accurately apportion IT costs among the business units, says IDC's Turner. "Internal service-level agreements are going to be the big thing to make this work. CIOs who come up with a good billing mechanism will have an advantage because that will make this much easier and much more acceptable to the business units."
The bottom line: Utility computing ultimately will bring IT and the business side even closer together, but that will demand a new level of cooperation between the two. Can they work together to develop new, streamlined business processes based on simplified, standardized IT architectures? Can they work out adequate structures for sharing, and paying for, computing services? Can they leverage the money saved to create new, strategically beneficial technologies? If so, the lovely vision of utility computing will finally become a reality.
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