Viewing IT as a Profitable Business Unit
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A truly IT-as-a-service paradigm does not entail that IT be run as a utility, but as a profitable unit of business.
By Rens Troost
In the big picture, Nick Carr is right. IT eventually won’t matter, at least in this sense: we’ll one day think about IT infrastructure as much as we think about the power plants that make the electricity for our juicers when we plug it into the socket. It will still be important; but it will be simple and expected.
But what will that world look like? And what role should today’s IT function play in getting us there? A truly IT-as-a-service (ITaaS) landscape will be made up of services that create value: applications and data. Over time, the resource-intensive, cost-laden back-end infrastructure will dissolve into the background.
How the most forward-thinking companies are driving this change right now is, perhaps, where history is parting ways with Carr’s prediction. Visionaries are not gravitating toward the power plant model that Carr conceived in his famous post more than a decade ago; instead, think of supply chains like those in the automotive industry. A truly ITaaS paradigm does not entail that IT be run as a utility, but as a profitable unit of business. To do so, technology and its corresponding contract terms need to be flexible—akin to the relationship auto manufacturers have cultivated with their suppliers over the years. IT will be able to respond to business needs expediently by delivering services when they are needed and dispatching them when they are no longer useful.
Although you would think the cost savings and flexibility would incentivize IT folks to move in this direction, the truth is that many have carved out careers maintaining labyrinthine, highly customized infrastructures. For them, this change is scary.
Resistance (to change) is futile
The ITaaS journey demands a shift in the nature of IT professionals, who will not only need new technical capabilities, but also a more finely attuned business sense and much sharper contract negotiation skills. Fear of change is human; reinventing oneself is never an easy task in any profession, but that’s what IT needs to do in order to survive, let alone thrive, in this new world. The forces of dynamic, global business are chipping away at the IT Industrial Complex, and the inherent unwieldiness of the technology stack that has evolved within enterprise over the years can no longer serve as a roadblock to progress or an excuse for inaction.
The old guard is starting to acknowledge its shortcomings; this survey indicates half of CIOs are increasingly using outsourcers to supplement skills they can’t find in house—an ironic revelation when you consider that the survey sponsors have been major purveyors of this soon-to-be-obsolete IT paradigm for years. But they can’t supplement their skills externally forever. Like it or not, IT leaders must transform themselves or risk being the last dinosaur standing in the old prehistoric IT era.
Survival skills for the new world of IT
So what new skills are paramount to thriving in tomorrow’s IT landscape? In a nutshell, CIOs and IT higher-ups must learn to treat business units the same way manufacturers deal with product lines, and develop a deep understanding of their core “customers:” both internal and external end users and internal application developers. The IT department should be able to evaluate each line of business’ core strategic objectives and match applications and functionality, accordingly.
Furthermore, IT stewards will need to be steeped in how to deliver these services without compromising agility. For example, they will know to externalize technology to the cloud only when there are multiple suppliers of that service, thereby providing the leverage to avoid being locked into an onerous long-term contract. Each business line’s services will be sourced in a coherent way, one in which all applications adhere to the same broad security, auditing, monitoring, event management and service management standards (i.e., ensuring compatibility between apps throughout the enterprise). IT Procurement will need to step up its game, focusing on strategic sourcing and not just transactionally driving a hard bargain.
Perhaps it is time for IT to heed scholars’ interpretation of Charles Darwin’s Origin of Species: “It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.”
Simply put, if IT doesn’t adapt to the new ITaaS paradigm now, their organizations won’t be able to evolve quickly with the business world—and ultimately survive.
Rens Troost is president of Virtual Clarity, a consultancy that is helping some of the world’s leading companies make IT-as-a-Service (ITaaS) happen. Rens is a leader in the transformation of enterprise IT, and in the strategy and practice of enterprise cloud computing. His career has focused on delivering business value through IT innovation in advisory and executive roles.