Run IT As A Business? Do You Know What It Means?

The IT Infrastructure & Operations (I&O) community has long been awash with management buzzwords and phrases such as "think outside the box," “bare metal,” “IT-to-business alignment,” “ivory tower,” “NextGen,” “people, process, and technology,” “innovation,” "what does good look like?" and “resonate.” More recently we have had to endure such gems as “cloudwashing,” “hash tag abuse,” “virtual sprawl,” and “cloudenomics” (please take a deep breath, don’t let them wind you up).

Another longstanding “buzzphrase” (no, I didn’t make this word up) is that I&O organizations need to “run IT as a business.” I imagine that most of us have used it (I plead “guilty” milord), at least in conversation, but do we really know what it means or what we need to do for I&O to achieve a business-like state?

Firstly, the “run IT as a business” mantra is wrong – well, partially. I&O organizations must indeed adopt practices to run as a business function, but not necessarily as a full business in itself.

One of the most prevalent areas in need of attention is that of the ITIL-espoused discipline of IT financial management. In that business-success not only stems from having a great product (or service) coupled with great customer service, there also needs to be an understanding of the cost of provision, the cost drivers, and the margins involved. Not having this understanding can only expose I&O’s lack of business acumen and capabilities, and make it difficult to compete in the new IT delivery landscape.

Taking a simple example: If your CEO or CFO stopped you in the corridor and asked, “I like the look of this Gmail-for-business thing, how does it compare cost-wise with our internal email service?” How would you react? Do you know the per-unit cost of delivering an email service? Unfortunately, being unable to answer such off-the-cuff questions around costs and value can only expose the absence of I&O’s business savvy and lack of cost-awareness.

Expect this type of questioning to proliferate with cloud and outsourced data center services, and the consumerization of your desktop and mobile environments. I&O professionals really do need to have answers, however embarrassing, before the business starts to ask awkward questions about costs and value.

Unfortunately, effective financial management is still only one piece of the “run IT as a business” jigsaw. I&O organizations also need to strengthen their business competencies by:

• Acquiring appropriate skills for asset management and value-definition.
• Developing sales and marketing expertise for customer service.
• Practicing systems engineering to provide quality services.

And, in the days where the internal I&O organization no longer has a monopoly over IT-provision, everyone within the I&O organization must learn how to be more business-centric to help ensure high-quality service delivery and customer satisfaction. Ultimately, IT delivery needs to be demand, rather than supply, driven. It’s about the business outcomes not the IT inputs.

Forrester will continue to be focused on this area as I&O organizations strive to adapt to both the changing business and IT landscapes. If you’re an IT Infrastructure & Operations professional wanting to discuss such challenges and potential solutions with your I&O peers, IT vendors, and Forrester I&O analysts, I encourage you to join us at the upcoming Forrester's Infrastructure & Operations Forum on November 9-10 in Miami, Florida.