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Running IT as a business: don't be daft
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By: Neil Ward-Dutton, Research Director, MWD Advisors Published: 21st January 2010 This work is licensed under a Creative Commons License |
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StumbleUponIn the past couple of days I've read a couple of articles (IT cant be a service provider and a partner too and Run IT as a business—why thats a train wreck waiting to happen) that riff on the same theme: that the exhortation to run IT as a business leads you down a road to organisational exile.
Put briefly, the thinking seems to be: "if you set an IT organisation up to run as a business, you create a supplier-customer relationship with other parts of your wider organisation and this relegates you to being a simple order taker. Youll have to implement the requirements youre given, and often these will be out of whack with what the organisation will really need and will raise IT costs over the long term, making an internal IT operation even less attractive and making you more likely to be outsourced".
In my experience this analysis is plain wrong, and comes from simplistic thinking about what the phrase run X as a business might mean. Being more business-focused has multiple facets to it, and blindly interpreting the idea leads you to daft, simplistic conclusions. Applying similar thinking to cooking would lead to the advice "don't use sharp knives; if you do that it'll only be a matter of time before you chop a hand off".
To be clear: my experience and advice diverges with these other opinions not because I disagree about the risks of IT becoming a simple order-taker; but rather because I disagree that running IT as a business means you have to become a simple order-taker and everything else is excluded. There's much more to it than that. The key is to see the relationship between IT and other areas of a business as having three key layers.
When I look at IT leaders who have really become strategic players at board level (and I've been talking to them ever since my work on The Technology Garden), it's not the case that their organisations have stopped becoming service-focused and focus wholly on hanging out with senior business managers. If anything, their organisations are more service-focused than the norm.
In the best-performing organisations, the 'run IT as a business' idea is primarily about an inward-looking perspective. It's about putting repeatable processes in place, creating a service culture, figuring out the actual costs of delivering IT services through IT processes, and looking for ways to increase IT process efficiency and effectiveness.
In high-performing IT organisations, when it comes to the outward-looking perspective (the relationship between the IT organisation and other parts of a business) the relationship has at least three layers:
- As a foundation, IT teams have to deliver reliable operational services in line with clear promises and in the context of defined cost expectations and budgets.
- When it comes to using IT to enable business in new ways the relationship works at a higher level, using different teams, reporting structures, skills and incentives within multi-disciplinary joint IT-business teams.
- The top layer acts to mitigate the risks of individual business units driving change that is counterproductive to the organisation as a whole, typically through some kind of IT governance structure that helps to ensure that significant IT investments are considered in their proper strategic context and that the costs and risks are properly understood by all.
Thats three layers: IT operation/service delivery; IT-business engagement; and governance/strategy. You can be focused on service provision and also on partnering. As long as you understand the bigger picture.
Reader Comments
Do you agree with what Neil Ward-Dutton, Research Director, MWD Advisors is saying? Perhaps you feel, or even know, different? Why not post your opinion on this issue?
22nd January 2010: 'Geoff Codd' said:
The problem is that such terms as 'Runnibg IT as a business' is interpreted differently depending on the culture within any organisation.
I would say, forget talking about 'IT' and instead talk about 'IT Services' (ie the IT factory) and 'Business IT exploitation' (ie the combined business/IT partnership at all levels from the board down) where business change is a collaborative venture with shared cultural drivers and strategic aims.
In this environment, eficient technological service delivery is driven by a 'meeting of the minds' that fully understand the technological drivers and disciplines that need to be adhered to as well as the business imperatives that must have equal weight.
The business change organisation and management model that flows from such principles is partly dependent on each organisation's culture and power structure, and it certainly does not follow the somewhat simplistic us-and-them models of the past.
25th January 2010: 'Neil Ward-Dutton' said:
Thanks for your thoughts Geoff - good perspective.
25th January 2010: 'Geoff Codd' said:
If I could take the above arguments on business IT organisation and management a little further; through the ages there has been a total preoccupation with the issues surrounding the management of technology, rather than the softer cultural issues.
The latter often lie at the heart of many very dramatic IT exploitation failures, and those lessons often emerge in the inevitable post mortem; and yet the lessons are not learned by those who are in a position to really address those issues - namely top business management.
With the advent of the 'Cloud', we see history repeating itself once again, with many failing to realise that the whole concept has three parts; the technology issues (which are at least partly understood, the process issues which are little understood, and the cultural issues which are not properly understood at all.
The key is an IT exploitation structure and driving ethos that creates and cements the combined IT/Business driving force that then cuts through existing silo power structures and creates an unstoppable force for beneficial change throughout the business.
This demands a slight but fundamental change in business attitude and participation in the change process, from the top down. Perhaps the really surprising thing is that the resultant closing of the business/IT culture gap is not necessarily welcome by either side for their own reasons.
I could go on, but that would lead me into much wider issues, of which the 'running IT as a business' issue is just the start of it.
24th January 2010: 'Bob Lewis' said:
Neil ...
For whatever it's worth, in "Keep the Joint Running" I draw a distinction between running IT as a business and running it in a business-like way.
It appears that, phrasing aside, that's what you recommend as well.
25th January 2010: 'Neil Ward-Dutton' said:
Bob,
I agree - kind of.
My issue is that saying "trying to run IT as a business is bad" is too simplistic - not all businesses have simple transactional relationships with their customers.
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