Today’s CxO is besieged with pressures, both from the macro level and at the company level. The uncertainties of the economy and the ever-changing regulatory landscape are just a sample of the macro-level issues. At the company level, C-level execs are constantly trying to find competitive advantages and be more innovative, while continuing to improve efficiency. When you then add in the impact of technology from social networks and the consumerization of everything (including IT), you have to wonder how these folks sleep at night.
Current Business Challenges
Business is at a crossroads with IT. At too many companies, IT is considered slow, reactive, and focused on spending most of its time maintaining existing systems. At the same time, the business needs to be agile and focused on a strategic agenda. If IT can’t respond to the needs of the business, the business will go around IT and find what it needs elsewhere.
Technology, such as virtualization and cloud computing, has definitely added some new ways for businesses to become more efficient and even more competitive. Efficiencies are gained through paying only for resources that are needed, when they are needed. Companies can use cloud computing for competitive advantage because of the flexibility it offers. It is faster and easier to test products in new markets and speed up the time to market by not having to wait for technology investments to be approved, ordered, provisioned, and released for business use.
These issues then bring us to the concept of IT evolving from a pure support organization to being a strategic partner in the business. It is the transformation of traditional IT into a service-oriented model, using technologies such as cloud computing, that make IT similar to an external service provider. IT has to offer standardized services, with associated pricing, backed by guaranteed support levels. In many cases, IT organizations also utilize external service providers for non-core functions, thereby tapping into the speed and capabilities of the provider. This model frees the IT organization to be more aligned with the overall strategy and the challenges facing the business.
There are four key areas that make up the heavy lifting needed for the transformation of IT to ITaaS that I want to address next. The key areas are:
Governance – IT strategy with specific policies that are aligned to the business needs
Finance – Moving from an allocation-based model to a charge-for-services model
Organization – Shifting the organization from a reactive support structure to a proactive services orientation
Technology – A highly standardized technology foundation based on virtualization and cloud computing
Key Focus Areas for the Transformation
The details are:
Governance – Developing an IT strategy with specific policies that are aligned to the business needs. For example, a service-based lifecycle process to manage services from end-to-end enables the business to see the benefits of ITaaS. These benefits include the directly measureable ability to improve time to market; enhanced customer experience; reduced costs; and complete transparency in conveying the trade-offs between cost and value. Managing the change in governance requires strong executive support for whoever owns responsibility for the transformation. Communications, and resolving issues such as financial and organizational changes that may occur, are keys to making a successful shift to ITaaS.
Finance – Migrating from a fixed-budget system that is allocation based, to a charge-for-services model that provides transparency from billing and accountability through fund transfers. For example, if the sale team needs demo facilities for 10 customers, it can request and provision them via the self-service model, run 10 instances for as long as the demos are needed, and then de-provision the systems. This model allows the resources to be returned to IT for other customers, as well as allows the sale team to only be charged for the length of time they use the demos, which drives down the cost of sales.
Organization – Moving from a reactive support model to a proactive services model. IT traditionally focuses on being reactive, supporting and maintaining existing systems. This model leaves few resources for new initiatives and is rarely responsive enough to the business needs. The changes brought with a new, more services-based organizational model include a new front office function that develops and sells new services to the business, based on business requirements. This model has an entrepreneurial spirit, and shifts from the 80/20 model of support/innovation to become more of a 50/50 split. These changes require new skills development and new roles such as product management, cloud architecture, and service management. A key to a successfully implementing such an organizational change is to continuously over communicate the reasons for executing the transformation, and championing the improvements and ‘wins’ as they occur in the process.
Technology – Fundamentally, the core of IT revolves around optimization and efficiency, which are enabled today by virtualization and cloud computing. Virtualization allows IT to optimize and standardize the large capital expenses, abstracting specific applications from dedicated hardware. This allows IT to place workloads as efficiently as possible, based on service-level requirements. Cloud computing permits the resources to be offered as on-demand services; transparency regarding usage and costs allows IT to show value to the business. Once IT has standardized on these technologies, IT can be viewed as a service provider. As a service provider, IT will also have to compete with other cloud service providers. The next phase in this transformation is for IT to become a broker of services. IT can then present services from a ‘menu’ that may include in-house services or those of a cloud partner. IT will become even more efficient, as well as become a trusted advisor for external services. This, in turn, helps mitigate risk by reducing the desire to circumvent IT and implement services without IT’s involvement. Transparency is also improved, both in the total costs of IT services, as well as value back to the business.
With ITaaS, CxOs have a unique opportunity to make their businesses more agile, more efficient and more competitive. Leveraging cloud computing and an ITaaS model lets CxOs move IT from a back-office function that is just a tax on the business, to IT as a strategic leverage for the business in the marketplace. ITaaS provides measurable value, increased innovation, competitive differentiation, and improved customer service. Want to learn more? Contact me about our new ITaaS classes for technologists and business leaders.