The Great Lie
IT as a service?
One of the sweeping trends in the IT industry over the past few years has been the suggestion that IT should act as a service. From “on demand” computing, where computing power seamlessly increases and decreases as needed, to IT providing a “menu” of capabilities that can be chosen by a business unit. While capacity planning and management, and developing standardized, commodity-like offerings all have their place in IT, these approaches miss the boat.
Many proponents of the service concept take the ideas too far, advocating a service-based shop as the ultimate IT organization. IT as a service is something that is seen and not heard, waiting on the sidelines until summoned by a business unit to deliver its commoditized offerings, then returning to the ether, never to be heard from until its next invocation. This approach minimizes costs, but also turns IT into a utility, comparable to any other utility consumed by the business, be it long distance service or electricity. Utilities are by their very nature commodities. You chose from the available packages of services, and only summon the utility should your needs change, or should there be a problem. Sound familiar? Would you ever consider a strategic relationship with your electric company, or trust your local phone company with executing key elements of your corporate strategy? Of course not, and therein lies the rub for the “on demand” IT shop.
A utility is not expected to provide business insight, save for suggestions on how to optimize consumption of that utility. The other hallmark of a utility is that competing providers are easily compared; they have similar services and can easily be compared on a cost basis. These comparisons are so easy that the government has heavily regulated most utility industries to shield individual companies from too much competition. As a CIO however, you do not have that luxury.
The pinnacle of success for any service-based IT shop is that its costs are so low, and its services so standardized, that it can easily be compared to any external service provider. With few advantages other than physical proximity and relationships with internal personnel, outsourcing a utility-based IT shop is as easy as switching long distance carriers to save a few tenths of a penny on each minute of long distance. External providers can also wield massive economies of scale, and likely under price your IT organization. If you have fully and successfully implemented a commodity service model, price becomes your primary metric.
So what is the cure to the pressures to cut costs and become increasingly utility-like? Transitioning any recurring, commodity task to a utility-like function is a noble pursuit, however it must be combined with driving organizational strategy from the CIO’s office. The CIO can not be a maniacal cost-cutter, rather he or she should transition all their utility functions to a trusted manager, and establish a rapport with their C-suite colleagues. The CIO should strive to understand the organization’s strategy, and find processes that can be optimized and improved, or processes that can be enabled through technology, that he or she can implement in order to execute the organization’s strategy. This type of CIO not only maintains a disciplined cost structure, but actively delivers organizational value.
An ability to rapidly internalize high-level strategic objectives, and translate them into actionable process changes is a skill that is not easily commoditized or outsourced. If the CIO then builds the IT organization around executing on corporate strategy, they become an active and visible player in the organization, one that is trusted for its execution capabilities, not a group that is barely tolerated as it waits for the next call to deliver a commodity.