Making IT an enabler of business
In many respects, IT organizations are increasingly partners with business units rather than roadblocks to getting things done.
Historically, users viewed IT departments as the people who ran the basic infrastructure "plumbing," were inflexible when it came to doing anything new, and generally far more of an inhibitor to the business than an enabler. That take was at least middling unfair in most cases, but it was grounded in certain realities.
For most organizations, IT was primarily focused on a fairly common--if hardly standardized--set of tasks. Functions like enterprise resource planning, financials, human resources, and e-mail all had to work. But they weren't something that especially advantaged the organization most of the time. Yes, an accounting system is pretty important but most businesses don't win because they have a better accounting system.
This was the reality that led Nick Carr to write the book "Does IT Matter?" in 2004. His premise was overstated but it had a kernel of truth; a lot of IT wasn't delivering value to the organization.
Today we see the same underlying issue often presented in the context of the amount of money that companies spend on innovation versus keeping the lights on. The figures and the phrasing depend on which analyst report you're reading but typical numbers are something like: For every 30 cents spent on doing new things in support of the business, 70 cent gets spent on maintenance and the rest of the routine.
Are things today any different or are they at least changing?
With the important caveat that there's enormous inertia in existing applications, systems, and so forth, I think so. Let me point to a number of data points.
First is the excitement around cloud computing, whether it means using resources "in the cloud" or making in-house IT more dynamic and flexible. Sure, there's lots of hype around cloud computing but if its attributes weren't perceived as things worth aspiring to, the hype wouldn't have excited anyone. Importantly, cloud computing is widely viewed as an investment to help the business rather than primarily a way to just cut costs (as virtualization primarily was at first).
To get a bit more specific, IDC's Michelle Bailey presented the results of a survey at that market research firm's Directions 2011 conference in Boston last week. It found that "response to the business is a significantly more important driver for private cloud adoption than costs." In fact, organizations primarily interested in reducing costs were generally less interested in adopting private clouds. Among the drivers cited by those looking to adopt private clouds were: improve response to changes in workload, aids in disaster recovery, improved availability, and speed time to deployment.
Thinking about IT as an organization that can help drive revenue rather than just cost money was also a common theme when I was a panelist at a pair of CIO events hosted by HMG Strategy in January.
The CIO of electronics distributor Avnet talked of using "IT to accelerate profitable growth." He went on to discuss investing in IT for strategic advantage. He didn't dismiss the importance of efficiency. Anything but. However, it was more in the context of being able to support a rapidly changing global business and managing IT sustaining costs to allow for investments in innovation than about cutting the bottom line.
Rob Baxter, the CIO of Shamrock Foods, discussed how the payback for installing a high-definition video conferencing system was "priceless" from a business process perspective. The financial payback from travel savings wasn't bad either: 13 months.
This too was a common theme. Make IT projects successful for the business and the financial benefits will come. Another example came from the CIO of a community college. The school went with a broad-based client virtualization and public cloud e-mail approach to better accommodate a wide range of "bring your own" student devices. But they too saved money compared to their prior internally hosted approach.
Another theme was a more proactive IT group. Bertrand Odinet, the CIO of mining firm Freeport-McMoRan Copper & Gold, described IT as having "to set a vision for the executive team to understand what tech can do. What will differentiate us? Clarity of business imperatives is critical." It's easy to see that, more than ever, CIOs bridge the worlds of operating IT and supporting, even driving, corporate strategy.
In "Does IT Matter?" Nick Carr was largely correct that mundane, largely undifferentiated IT functions are often best farmed out to specialists with payroll the canonical historical example. Carr, I believe, underestimated the challenges of untangling legacy systems and processes--and probably gave short shrift to legitimate governance concerns as well. But the fundamental point is valid.
What the broader argument about undifferentiated IT misses though is that for every e-mail or customer relationship management system that would be better moved offsite to a software-as-a-service vendor, there's a new application or a new capability that IT can deliver that is differentiated. And that can support or even create new business opportunities. The old functions may be getting less differentiated but new ones taking their place are arguably more central to a company winning than ever.