At a recent symposium on the future of IT organisations, Gartner predicted that by 2011, at least 10 per cent of IT organisations will be disbanded, 10 per cent will be relegated to commodity status and at least 75 per cent will change their role, based on extrapolations from current economic and technology trends.
“This is not the death of IT organisations — we would rather call it a renaissance,” says John Mahoney, Gartner’s chief of research.
“A new organisation is emerging, one that will take the lead on information and process.” But some people think Gartner’s predictions go too far, including Nicholas Carr, author of the controversial Harvard Business Review article ‘IT doesn’t matter’, which made waves in 2003. “They are making a provocative forecast; it sounds a bit aggressive to me,” he says.
“I would think one in 10 IT organisations would at least be moving towards being disbanded by 2011 but whether they’ll actually be gone is another thing.”
We spoke with four Canadian CIOs to get their reactions to Gartner’s predictions: Dietmar Reiner of Ontario Power Generation (OPG); Loren Hicks of Lavalife; Linda Weaver of Smart Systems for Health Agency (SSHA); and Mauro Lollo of Unis Lumin. All believe the timeline of Gartner’s prediction is premature. It is unlikely that 10 per cent of IT departments will disappear off the face of the earth by 2011 – a mere four years from now. But they agree it is quite likely true in the long term. Moreover, they say, IT departments are already shifting away from their traditional role of looking after the guts and plumbing of systems to refocus on loftier business goals.
All are in total accord that IT departments must become more strategic. Like ‘motherhood’, that is an issue not worth debating. But the devil is in the details. What does strategic use of technology really mean? Is outsourcing the answer to dealing with those bits deemed non-strategic?
Is IT comparable to electricity, a commodity that can be supplied via a socket, as Nicholas Carr suggests? What is wrong with IT departments and why does everyone keep trying to fix them?
The pattern of disappointment is probably what hurt IT most, says OPG’s Reiner. “IT has a legacy of disappointment. It’s never as perfect as the sales pitch. IT is here to stay. But IT departments? That’s a different question.”
IT tends to be one of the largest supporting costs inside organisations, he says. Unlike other support functions such as HR and finance – which are perceived as necessary evils and not services – shock sets in when organisations see the IT price tag.
“Because it’s big money, the questions about the value of IT get tougher and tougher and that puts IT departments at the forefront.”
He says in the traditional, operational IT space – making sure boxes run and that someone is there to fix or replace them when something breaks down – outsourcing providers will likely take on a bigger role in the future, serving companies such as OPG, which uses IT but is not an IT company per se. But in the avant-garde, strategic space, he believes IT is beyond commoditisation in many ways.
Reiner is well versed in the workings of both IT and electricity, and Carr’s comparison, he says, is interesting but limited.
“I can see where the desire to draw the analogy comes from,” he says. “But not all of IT can be commoditised like electricity. At the applications level, IT is different.”
No one disputes that certain generic elements such as financial applications, which are fairly standard from business to business, are commodities that are amenable to the utility model, says Reiner.
However, there are many critical applications that bring competitive advantage to the business, he says. But they run on the commoditised box and the box sits inside the utility. Box and application are conjoined and sometimes inseparable. This makes it difficult to have clear delineations between strategic and non-strategic investments. With electricity, the device that consumes it is always separate.
Loren Hicks, CIO of Lavalife, presides over a proprietary system that has been custom-built over the years as the company grew fast in the online dating space. The company uses an array of emerging technologies to reach its customers via web, wireless, instant messaging and video.
“Many companies are driving Fords, all standard. At Lavalife, we built our own car. We had to, because no one else was doing what we do,” he says. “I work at a firm where all our products are customer-facing and technology-based and I tell you, IT matters.”
Outsourcing is a red herring and an issue that has been over-blown, he says.
In his view, it is simply a different way of managing IT, rather than disbanding it. The technology components that provide no competitive advantage can be treated like utilities, as Carr suggests. Decisions to keep them or farm them out are purely economic. “Who provides Word on your desktop is completely irrelevant. It’s important it gets done but the company doesn’t get a nickel of revenue from it.”
No strategic value
In certain established industries, where the business processes and workings of IT are cut and dried, an inhouse IT department brings no strategic advantage and makes little economic sense, says Hicks.
For example, in the oil refinery business, the process controls and the technology needed to automate refining is an exact, well known science. “So does IT matter in that instance? Yes. But is it strategic? No. Could you outsource it? Yes. Could you have IT be part of the engineering department? Yes. Does it mean it’s not IT work? That’s debatable.”
Hicks points out that there may be a need to redefine what constitutes IT work as more aspects of modern life are computerised and connected and society grows more techno-literate.
“There’s a computer in your car. Does that mean the mechanic is an IT guy when he’s checking a fuel emission system? It all depends on what we mean by IT specialist,” he says.
IT shops face a fuzzy future. Everyone has an opinion about what is wrong with IT departments. They are too big, too decentralised, unstrategic. Like the six blind men exploring the elephant, different people focus on different parts. Achieving any consensus on the future of IT means assembling different perceptions of what ails IT.
Linda Weaver, CIO at SSHA, agrees with Gartner’s predictions at a gut level but sees difficult staff issues emerging as IT departments pare away lower-level work.
“As IT becomes more complex, staff must have a higher degree of knowledge to do the troubleshooting, assessment and analysis necessary to manage the more strategic aspects of technology,” she says.
Weaver believes many IT departments will likely shrink by 10 per cent due to the loss of entry level trainee positions. “In our own environment, we have fewer jobs for what we consider tier-one staff, which are the first five years out of school. A lot of
the work they do – gathering, recording and structuring information – is being done by automated tools and presented to tier-two staff, people with five to 15 years experience,” she says.
Weaver says this will ripple through the food chain, as fewer tier one’s means fewer tier two’s and three’s eventually. This will raise many issues in the future.
“Organisations today are looking for IT staff with experience in multiple technologies but if we don’t give them a place to learn, they won’t exist on other levels.”
At SSHA, different paths are being developed to help staff get to higher levels of expertise by involving them earlier in design and architecture work, while giving them operational experience along the way.
What is fundamentally wrong with IT, she says, is the disconnect between the way IT departments and business units solve problems. People in IT and engineering tend to approach problems in a very analytical, structured manner, but the business and health-care spheres require a certain amount of intuition.
Weaver is convinced many problems in IT spring from the types of individuals involved: analytical IT people on one side and intuitive business people on the other.
“IT folks are not deliberately obstructive. Typically, if they don’t understand the business, it’s because no one’s explained it to them in their analytical way. I think we need to identify and train people who can be both analytical and intuitive,” she says.
At this point in time, those skills rarely coexist in the same person, she says. “But the education system is accounting for this and starting to make adjustments. In technology and engineering faculties, almost all include more social courses, like economics and organisational dynamics. But that adjustment was only made in the last 10 to 12 years so those people are just starting to get to the middle management levels.”