Bob Lewis, writing in InfoWorld, says the information technology department should not be run as as a business -- in fact, he regards the practice as "a train wreck waiting to happen."
IT executives as business leaders versus order-takers
Why? Because unlike an outside vendor, IT is too heavily vested and tied into the day-to-day operations of the overall business, he says. He refutes the idea -- promulgated by analysts, consultants, and ITIL -- that CIOs should run IT as a business, serving internal "customers."
Lewis quotes Bassam Fawaz, CIO of a large global logistics company, who dismisses the IT-as-business approach as largely fanciful theories coming out of IT think tanks. Lewis agrees, saying that in reality, well-run businesses view IT is a strategic partner to the rest of the business, "not a subservient order taker content to process work requests while accepting the blame for everything that goes wrong."
The fallacy is acting as if everyone inside the company is a customer, Lewis argues. As a result, IT executives get endlessly haggled by business managers who want to know why internal IT services cost so much more than cheap outside services -- never mind security, redundancy and uptime.
As Fawaz put it:
"I am drawing on real-life examples, where a boneheaded software design was delivered to the requirements of the business process owner but made the software dead on arrival as users shied away from using the non-intuitive and unnecessarily complicated program.... IT should relinquish its increasing stance as an order taker, and earn and advance its intended role as the qualified engineer of what makes a business hum."
Lewis also takes on the chargeback model in his editorial, noting that chargebacks "are an attempt to use market forces to regulate the supply and demand for IT services. If that's the best a business can do, it means the business has no strategy, no plans, and no intentional way to turn ideas into action."
Instead of a vendor-client relationship with services chargebacks, Lewis advocates, IT needs to be deeply integrated into the core business, with proper governance driving IT priorities and how money is spent. This calls for CIOs and IT executives to step up and take leadership roles within their organizations:
"When IT is integrated into the heart of the enterprise, its priorities aren't defined by who has the budget to spend (by chargebacks). Rather, they're defined by a company leadership team whose members have a shared purpose, who understand what the company must do to achieve that purpose, and who understand the role new technology will play."
Bob Lewis raises some good issues. I've spoken with CIOs and IT executives that sit with their CEOs and CFOs in decision-making sessions, and there's a great deal of effectiveness in their ability in helping their organizations leverage technology for business expansions.
The bottom line is that with cloud computing and SOA, it is much easier for business executives to shop around for services from the outside world -- and they will do it. Lewis may see the supply-and-demand model as applied to internal IT services as limited in vision, but these forces will drive decisions. Will IT be relegated to being one of the bidding vendors, or will it be elevated to a role in which it is facilitator and manager of all services, whether they come from the inside or from the outside?