After Cloud, will Business and IT merge?

This entry was originally posted on the CloudSource Blog in December 2011

Cloud has now been around for a couple years. Slowly but surely, the significance of cloud is daunting on people. Beyond the new technologies used to improve the utilization of the IT environment, the move to services and a service-based thinking is fundamentally transforming the way people look at IT. So, what will happen once cloud becomes the normal way of operations?

Before answering that question, let’s look at the evolution of the workers population. The baby boomers are slowly but surely retiring. This is massively affecting the initial IT generation, the people that have known the mainframes, the punched cards and the good old modems. It is also affecting the business people that had no understanding of IT and that looked at IT as something mysteriously delivered by the specialists of the IT department. They are replaced by the millennial generation, a generation that grew up with mobile phones, chat, SMS, Facebook and all the facilities we have today. In a small country such as mine, with only 10 million inhabitants, more than 500,000 jobs will become available in the next five years.

It’s actually already happening. Many CIO’s are realizing that IT services are consumed outside of their control as business people call upon public cloud services to deliver the functionalities and resources IT cannot provide in time. I call that “shadow-IT.” It’s existing and will only increase if IT does not re-invent itself.

The second trend is that electronics and IT are creeping into every product and service today. Look at the mobile phone. As we increasingly move to smartphones, we get powerful IT platforms in our hand that allow us to tap into many services we would only have dreamed of five or 10 years ago. The car industry, financial services, the publishing industry, all are using IT to change the experience of their users, to provide them with new functionality, to allow them to do many operations that previously needed to be done by the company’s staff.

So, the combination of the new generation, the increased capabilities at hand and willingness for companies to differentiate themselves result in IT percolating in all parts of the business. So, to answer the original question, what’s next for IT, I would dare to say that IT is becoming part of the business. IT is the business, and the business is IT.

Will the IT department disappear any time soon? Not in my mind because companies will continue living with their legacy environment. They have invested vast amounts of money to set-up their financials, their ERP and other critical operational systems. Those are no longer differentiators, but are needed to support the way business is done. Companies are not ready to dump them, or to spend more money to upgrade or replace them. They just want the benefits of the investments already done.

But either IT can get closer to the business and truly support the business in their effort to become more agile and responsive, to differentiate their products and services, and to become easier to do business with, or they will end-up being an entity that manages the legacy. Is IT ready to be measured with the same yardsticks as the business? They definitely contribute to the overall results of the company, so that seems obvious.

IT has a good understanding of the security and compliance issues associated with information technology and should become the guardian of the enterprise. IT may want to look at becoming the service provider to the business, as procurement is the parts supplier in the manufacturing industry.

Addressing these challenges will force IT to fundamentally change. I really see three key functions required in IT moving forward:

  1. A governance function that is shared with the business. This function is responsible to define and prioritize the services that need to be delivered for the company to operate
  2. A services management function that, once the service has been defined by the governance, sources the service from the right place (either internal development or public service), makes the service available to the appropriate people in the organization and manages the lifecycle for the service.
  3. A cloud platform function whose responsibility is to develop, maintain and operate a platform on which the internal services will run and that allows the sourcing of the external services

Such organization is different from most current IT organizations. It is not focused by technology, but by business needs.

So, will the separation between business and IT disappear? Not sure, but what I know is that business and IT will get a lot closer than what they have ever been. Actually, in a recent post titled “Is IT part of the Business or just a Supplier?”, Matthew Burrows puts it bluntly. His suggestion is that we ignore the words that don’t match with how we want our relationship to feel and the behavior we want to see. If IT wants to be seen as an integral part of the business, then maybe stop using the term “customer” to refer to the colleagues in the other departments and business units, and stop talking about “business alignment.” So, in the end it will be up to IT to decide whether they want to remain separate. IT should be driven by business drivers just as the rest of the organization. Maybe in the future, the term CIO may become the acronym for Chief Innovation Officer, wouldn’t that be nice?

Tell me what is going through your mind.

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