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It was predicted in the early '90s that outsourcing your IT operations to IT experts like IBM and EDS would be the wave of the future. The thinking was that organizations should focus on their core competencies, whatever they may be, and let IT companies come in and do what they do best. Large professional services organizations hired the IT staffs of the very customers they had contracts with so that the transition would be seamless. Service-level agreements (SLAs) were created so businesses would be assured that their IT needs were being met. In turn, IT service providers were free to optimize and streamline as long as their customers were happy with the service. There was a ton of buzz around this idea: It was heralded as the new way to manage IT and was going to revolutionize business. But the IT outsourcing market ultimately failed after a short period of massive growth.
Some of the same outsourcing language is now being used in IT cloud services. CEOs are considering handing over their entire IT infrastructure to companies that know how to manage it better than they do. Again, the logic is that they want to get out of managing IT and instead focus on their core competencies. And there's a ton of buzz, hype and rhetoric. Sound familiar?
However, the logic is flawed
I had an interesting conversation with the director of IT for a financial firm in New York City. He told me his CIO was interested in getting lower prices from their IT vendors, but not to reduce the IT costs to the business -- any money saved was to be used to fund other projects. This seems reasonable since the role of IT and the goal of the CIO is to ensure that the "lights always stay on." Then he said something that's probably obvious to everyone but me: "The last thing our CIO wants is to reduce his budget. Money is power, and the bigger his budget, the more power he has."
I was talking to an IT professional about implementing a storage system that was easier to manage than his current setup. I told him the customers I've talked to about that particular system said it required practically no expertise and little management. "I guess that would put me out of a job," was his response. He was a stone-cold expert at their expensive and complicated storage system and had no interest in changing products.
I met with a team of IT professionals who were moving in a direction on a particular project that was driven by one person. Most of the team felt it was the wrong decision but they had no alternative solution. However, the person who drove the process was willing to put a stake in the ground and make a choice. In a room full of silent people, the one voice that speaks up will be heard.
The entire leadership chain in businesses and other organizations doesn't serve IT very well. The CEO is typically not an IT expert, and lacks sufficient knowledge of or passion for technology. The CFO considers IT as overhead. The CIO is focused on keeping things up and running, as well as maintaining or increasing their budget. And the IT professionals themselves either cling to what they know or don't have enough information about what is out there. In the midst of it all, none of these stakeholders considers how IT can merge with the business or how IT can be leveraged to come up with new ways to generate revenue, create new markets or change business models.
There are, of course, exceptions that counter this analysis. But the majority of businesses are caught in this quandary. It's easy to solve this problem on paper, but nearly impossible in practice. Business executives need to be more IT savvy; CIOs need to be "incentivized" to have a greater impact on the success of the business; and IT professionals have to make it a part of their job to be up on the latest and greatest architectures and technologies. And they all need to use the right sides of their brains a little more to come up with creative ideas on how IT can improve and grow their businesses.
BIO: Tony Asaro is senior analyst and founder of Voices of IT.
This was first published in August 2010