In a previous blog posting, I provided an exhaustive list of almost all technical components. Each one of the component plays a role to enable holistic IT service to support business function. However,to run a successful IT organization, does the IT organization required to have a handle on each component in the list?
Lately, my former colleague and good friend, who works for GE now, have been discussing the importance of oral and written communication skills in an executive level job. During those discussion, it occurred to me that the next generation corporate communication will be much more simplified and tailored to individual audience. An executive from Gen Y, may not have patience to read a document to understand the status of a company or progress of a project. The type of communication tools and channels will be used by Gen Y executives are yet to discovered but it is incubating for evolution.
Keeping those thoughts in my mind, instead of using a traditional method like Venn diagram to communicate direct involvement level in technical components by an IT organization, I would like to use the abstract pictures to demonstrate current involvement and transition to a different level by adapting managed service and cloud computing concepts.
When IT organization is a cost center (it means it does not directly generate revenue for the company), the organization required to focus on technology stack which provides competitive advantage to its core business. It is particularly essential during this challenging economical time to focus on technologies that impacts business bottom line. The IT organization must have no or minimum direct involvement in non strategic technical components.
The figure 1. abstract picture provides current IT direct involvement in four categories. I have seen, still companies have internally maintain and manage payroll systems for its employee. For an instance, if an IT organization is supporting financial service or retail business, there is absolutely no competitive advantage for that organization to manage internal payroll systems. The reason is not just for cost saving, but the key point is focus.
Around fifteen years ago, the options were limited to leverage outsourced payroll service but now, there are lots of options available to receive world class service on common business services. Common business services are, but not limited to, payroll, badge system, email, infrastructure system softwares, infrastructure monitoring, corporate communication tool set, learning and development, pension, benefits, IT asset management, IT Finance management and etc. These services are readily available from a third party providers as a service. These services are all required for any IT organization but, generally not a differentiator for cost center IT organization.
IT organization’s senior executives and CIO wanted their organization to focus on technologies directly contributes to their business bottom line. The systems/technologies that touches the end user of their core business, and the systems directly used to support the business process.
Managed service and cloud computing are two solution available to let the organization focus on differentiator technology and let the partner perform the rest.
Managed service is a concept to leverage partners to provide a pre-term service. IT organization manages the partner in a SLA level with no or very minimum involvement in solution design. Managed service deals are designed for fixed terms for fixed service portfolio. This deal package limits organization’s agility to fluctuate their service portfolio requirement based on its business needs.
Cloud computing is an elastic managed service concept and it provides flexibility to scale up or down based on business needs with no prior commitment on terms and service portfolio. On cloud computing service offering from various providers like google & amazon, IT organization required to FOCUS on differentiator technologies and manage the rest by managing the SLA but not by technology (technical component)