Three years ago, CEB identified five trends that are rapidly reshaping IT. The trends include the rise of information management, the emergence of business services organisations, the move to the public cloud, and growing business ownership of IT decision-making. The changes are happening fast and need a flexible response. At the same time, business conditions remain volatile, which requires flexibility and a close eye on costs. While CIOs have always tried to be fast and efficient, these five trends make the challenge much harder.
IT’s current, stove-piped model no longer works. It is slowed by its reliance on functional teams, linear delivery, and consolidated decision making. IT teams struggle to deliver the outcomes their business partners want. And even if they can deliver, they can’t turn around and deliver a different set of outcomes tomorrow.
- More than 90 per cent of CIOs are responding by reorganising, or by adopting frameworks such as ITIL. But these approaches only compound the problem by adding yet more structure and rigidity.
- Looking for a new way forward, a handful of organizations have adopted end-to-end IT services.
End-to-end IT services map directly to business outcomes by taking all the technology and resources – applications, infrastructure, data, people, etc. – needed to enable a given outcome and packaging it as one service with one service manager. End-to-end IT services offer six benefits:
- Rapid Innovation: In the end-to-end services model, service managers are responsible for innovation, not just delivery. Where needed, they have the autonomy, focus, and expertise to drive rapid and continuous enhancements.
- Portfolio Efficiency: By promoting the use of shared resources, we estimate that end-to-end IT services can generate savings from legacy rationalisation and other sources equal to 17 per cent of IT spend.
- Outcomes Mind-Set: Services force IT staff to think and communicate in terms of business outcomes, not technologies.
- Cost Comparability: The model makes it easier to compare the cost and performance of internal and externally provided services.
- Information as a Service: The model helps IT better define activities such as information management and analytics.
- Multifunctional Services: The model can offer a stepping stone to multifunctional business services where IT and other corporate functions combine to deliver integrated services. A successful services implementation in IT sets up the CIO to lead this broader transition.
While the benefits are attractive, the transition is difficult and time-consuming. Done poorly, the model adds overhead and duplication, leaving IT slower and less efficient than before. To avoid these problems, CIOs need to consider five major pitfalls:
- Business Case: The first step is to articulate the business case. It’s easy to fall at the first hurdle if business partners view the effort as IT-centric or don’t understand the benefits.
- Service Design: Getting service design right is critical. Services must align to business outcomes. You can’t just slap a new label on a technology and call it a service. When this happens, the service is too technical and doesn’t link to business outcomes. To avoid this pitfall, many organizations develop a business capability model as the starting point for service definition.
- Service Roadmapping: Organisations also need service roadmaps. The key here is to move away from project roadmaps and build roadmaps that show how services develop and interrelate with each other and with shared technologies.
- Service Governance: The services model changes the way IT sets priorities and manages resources. It also changes decisions rights. IT governance is hard at the best of times, so a change on this magnitude is difficult to get right. The problem is that governance becomes unwieldy if IT tries to force-fit all activities into the service model.
- Skills: There’s a huge skills migration challenge, particularly for service managers. If this role is poorly designed service managers will fail to engage business partners or become swamped with responsibilities. Even if the role works, the availability of suitably skilled staff is often the rate-limiting factor in the services transition.
The end-to-end IT services model is not just another reorganisation, it is a fundamentally different operating model. While the implementation has numerous pitfalls, done correctly, the model offers CIOs the best hope yet of squaring the circle between IT speed and efficiency.