The role of information technology in a business has changed rapidly in the past five years. Since its conception, the primary goal of the IT department has been to improve efficiency and reduce cost. The emergence of the outsourced IT function, using a low-cost workforce to run low-impact operations, only enforced this view. However, those days are set to come to an end as cost-cutting, while still vital, is no longer enough. According to a recent survey by the Economist Intelligence Unit, 83 percent of chief executives now believe that within three years, IT's predominant purpose will be to enable revenue growth and actively drive business performance.
At present, many organisations still regard IT in a solely cost-cutting capacity. In order to maximise its potential, IT must be recognised as a transformational tool which, if managed effectively, can be used to maximise investment, while simultaneously achieving reduced cost and improve overall business performance.
Changing perceptions
The good news is that revenue contribution from IT can come in many forms. The most obvious method can be seen in the online environment, through state-of-the-art websites and complementary e-commerce channels. However, it can also be used to improve internal knowledge sharing, help share crucial intelligence across the enterprise, improve understanding of the customer base and tailor services to meet consumer demand. Mobile technologies are also delivering huge benefits enabling employees to stay in touch and react to opportunities faster than ever. In addition, collaboration with partners can be expanded far more easily so projects are completed more efficiently and in less time. Failure to create an adaptable IT framework can place your organisation in serious jeopardy, with those businesses who fail to appreciate the importance of IT to grow revenue likely to be left behind.
The Economist's research also highlights that one of the challenges faced by organisations is the difference between chief executives and IT managers in how they see IT's future contribution to business goals. IT managers' day-to-day responsibilities have traditionally focused on operations management and reacting to recurring faults in poor system and applications design. When investment is made in implementing technology, it is often to cut costs rather than to support and enable business transformation. This gap in perception of what IT needs to deliver is a real hindrance in the alignment of business goals and technological operations.
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Companies that continue to rely on the financial function to control IT must break with tradition — the starting point is for the chief executive to get actively involved in IT's management and communicate the evolved role he sees for the department. Organisational structures, too, are not designed to facilitate revenue growth, as customer-facing functions and the IT function have traditionally been very separate, making collaboration difficult. While the perceived potential of outsourced IT has only recently begun to change, landmark outsourcing deals have started to deliver genuine business value, proving how the application of a new approach to outsourcing can help organisations' IT investment fund revenue growth.
The outsourcing evolution
When the concept of outsourcing first emerged, clearly its real goal was cost-cutting. Imported, low-cost labour on temporary visas was used to supplement existing staff. The second generation corrected some of the limitations of the first, with work sent offshore while regional marketing offices representing the outsourcer were established to provide a degree of local contact and support. Cost-effectiveness immediately improved — through the offshore relocation — but the model was still insufficiently equipped to perform anything beyond basic engagements. In many cases early outsourcing deals failed because work was very poorly defined before being "thrown over the wall". When inadequate results were delivered, the immediate need to revise and resolve meant that any short-term cost savings disappeared.
So the model evolved once more: a stronger focus was again placed on local geographic and industry expertise, but with reducing operational costs still the primary objective. Local offices with project-management capability were set up to enable productive, day-to-day liaison and to resolve previous issues with poorly defined functional and technical specifications. With this model, outsourcing providers could be relied upon more to deliver complex projects that required significant ongoing discussions.
Today we're seeing a fourth-generation model, which puts long-term business impact at its core. Characterised by seamless integration between provider and customer, IT providers taking this approach combine…
Talkback
Building bridges and tall buildings with pretty pictures and spreadsheets promising delight in nifty board rooms is all dandy but as usual the boring basics are forgotten or grossly underestimated.
The IT building blocks will crumble if the foundation isn't sound and durable. And the only foundation that matters is one that takes into account, for the long term, the only two constants in IT: damage and change. Overall. Which encompasses much more then just hardware and software. Logistics, agreements, training, procedures, authorization, etc, etc. The whole shebang.
I know, the boring basics are a tall order, difficult to explain, dreadful to lobby for and usually viewed as a waste of money, standing in the way of progress, over detailed and non strategic. Sigh.
Without a solid foundation with future planning in mind (damage and change) entire towns turn out to be build near or on quicksand, vaporizing water supplies, retrieving shore lines, earthquake areas, tornado areas, flood lands and what not. Just the little facts of life for which it helps to plan ahead for because else buildings crumble, drainage pipes crack and people start to find their luck elsewhere (usually the first to go are the ones you then need the most but ignored before). Maintenance costs start climbing, revenue goes the opposite way, the investments needed to turn the boot around are ouch while available budgets are declining.
Not that there's a need to plan for Armageddon, but rather make use of common sense. IT is all interconnected. Often in various, not parallel, ways. Details matter. Change something here, add something there, and the whole nature of the beast can alter. Again, it's more then just hardware and software.
Of course, techs are essentially business enablers. Their job is to make sure that what the business requires works as planned. It's not their place to decide what the business requires. However, listening to their suggestions about the how to get the what should be taken into consideration. It's not that their goal in life is to frustrate the business, rather the opposite. And they're not afraid of change, it's their mantra.
Nothing worse then a decision maker with no more then a conceptual understanding about the nuts and bolts that makes a business tick who doesn't take no for an answer while refusing to take into account internal expert advise. Or worse, lays down not only the what but also the how. Often, such decision makers end up getting exactly what they want. With such power management comes a lot of liability and your trusted external advisers will make sure that that ball lies in your department.
The real lesson? Before driving change through the IT landscape make sure you form a top-bottom team that acts and operates as a team and not as individual work groups. Yes, there needs to be leader, but more often then not he/she needs to be a people manager. IT is a team sport in which also the ball boy can make the deciding difference, simply by announcing that small, but all so important, little detail. And that does include the rest of the (user) organization. Lots of various expertize to be found there that can also reveal seemingly unimportant details.
There's only "we", not "us" and "them". Don't care how many project management rules that breaks.
I’d agree wholeheartedly that getting the foundation right is important. While its possible to have separate platforms, they should each be stable in their own right.
And having said this, this brings me onto the next issue. I believe that diverse platforms should communicate seamlessly, and should interoperate seamlessly.
I see IT in fact as having a destroying role. I want to see IT break down the barriers of existing systems. I want it to force systems into talking to each other. I want to see multiple systems replaced with single instances.
I believe the role of IT is to keep things simple, by breaking things down to the lowest common denominator.
Systems are complex, and frequently this is due to political reasons, rather than technical ones. The number of times individual businesses have implemented things because it suits them, with no regard for the overall business, has me shaking my head. It’s a short term view that focuses entirely on the bottom line, with corporate citizen behaviour being the last thing on managements mind. And it is a very thorny issue to resolve indeed.
Roberto, well worded feedback. My compliments.
However, rather then seeing IT in a destroying role I rather like to see IT as an enabler. The translator between everything common.
Furthermore, I sincerely believe that diversity and decentralization is the key to keep the whole secure, highly available and inviting to innovative new solutions to thus forever thrive markets and businesses.
Indeed, by keeping things simple (KISS), breaking things down to their common denominator, will only help. After all, seamlessly interoperating capabilities are not limited to single instances. It's just a question of making sure that diverse systems can interact with each other. Just like the alphabet, morse code, ASCII, SMTP, DNS, and others have done before.
Perhaps the trick is to see things not our (or theirs) way, but everyones way. In the long term view that would help us all (and thus the individual) but short term views, greed and personal interests do stand in the way of overall corporate (and social) citizen behaviour. It's a dog eat dog world today but until the dogs understand that "one far all, and all for one" is the way to make sure that the third dog doesn't run away with the bone we'll have to educate the lot of the benefits of an equal level playing field for all market involved.
My usage of words such as "destroying" is more for my own enjoyment, rather than any true sense of destruction. I'd agree that enabling would be another word that could be equally apt.
As far as interoperability, I agree wholeheartedly.
As far as decentralisation, I disagree. I've worked for Lloyds TSB through Fujitsu, and I've seen for myself what a mess things like security patching can be, particularly when one looks at not just the number of workstations and servers that are offline, but also the virtualisation trend thats approaching like a tidal wave ( run for your life).
Its much easier to manage one big machine than tens of thousands of small ones, and the support costs in a large business are truly staggering, if people only knew how much effeort needs to be employed due to the decentralised nature of the business.
I'd agree that being decentralised allows many benefits. These benefits must be measured against the hard costs that the accounts department are only too eager to tell us about.
But, how do you measure flexibility???