In a full-house debate attended by more than 200 of the delegates at the Gartner Symposium/ITxpo Emerging Trends, nearly 40 per cent voted that most traditional IT organisations will be closed down by 2012 as tech-savvy business managers embrace powerful new business-driven technologies and outsourcing. Between now and 2012, we will see five dimensions of transformation that may lead to this happening. Let’s take a look at the pros and cons of the argument to see what we can predict.
First, the focus on value will shift from technology services to information and business processes. Second, where sourcing was typically by single-point service level agreement (SLA) based contract, it will expand to multi-sourced partnerships. Third, IT infrastructure will move away from the asset-based internal default towards a service-based external default. Fourth, any complexity will be in business processes and IT ‘ecosystems’ as opposed to the current business structure and IT integration. Finally, key competencies will no longer be technology and technical process but business relationships and processes.
Case for change
Consequently, those in favour of doing away with the traditional IT organisation have their argument: it seems to serve little function in the company of 2012. Indeed, some C-level executives hold the view that IT is a major inhibitor to corporate progress and rarely the source of innovations that most companies are anxious to find. Some business leaders still feel IT is just an overhead and costs too much.
At the opposite extreme, many C-level executives seek to use technology for competitive advantage in new, innovative ways. IT can also be used to disrupt a market with radical new virtual generation (or Generation V) services such as MySpace or Second Life. But the ability to implement the technical, compliance and business skills required to leverage IT is an enormous and difficult task. It’s a task better suited to specialised organisational units.
So, for IT organisations to remain relevant to their organisations and continue to contribute value, this argument says they need to split into three distinct competencies that work together:
a business solution office, focusing on business needs;
an ‘IT power source’, containing the technical skills of creating technical capacity to meet business needs; and
a transformation and change management office.
The proponents of this view say the time is right for this new approach, as demonstrated by firms who are already making the business, not IT, responsible for community business process management and business changes.
Case for status quo
So far, so bad for the traditional IT organisation. But is its future as bleak as the arguments above suggest? Perhaps not. The whole may well be greater than the sum of its parts, so dividing the traditional IT organisation could weaken it. The three roles of IT – utility, enhancement and innovation – reinforce each other. When they’re split, separate optimisation of the parts can undermine the synergies of the whole.
IT infrastructure and operations are not just passive commodity providers. They offer customer-facing services – such as bringing new devices for employees and change management on board. So, rather than eliminating the IT organisation, some business leaders want it to play a more strategic role to meet the imperative for synergy in the application of technology.
Crucially, say the supporters of the continued role of traditional IT, the IT organisation is not an isolated commodity. Like other support units, such as human resources, finance and marketing, it helps to create a more powerful, flexible, agile organisation. The challenge is not narrowly cost-focused, but about leveraging people, investments and business processes to drive operational performance globally.
Both sides of the debate
How organisations manage technology will diverge more during the next five years than in the previous 15. The riskiest organisational design positions are the extremes – either trying to make everyone an expert in everything or creating isolated compartments.
Although continuing unchanged is not a viable option, complete closure of the IT department seems unlikely. If we define the IT organisation as one in which ultimate decision-making on IT investments resides in a single place, the traditional IT organisation will continue through 2012 and beyond. Significant transformation away from traditional IT organisation models is, however, the future that awaits most IT organisations.