Friday, January 28, 2011

Biggest IT Trend in 2011: Business Units Absorb More IT?

This prediction-- that business and clinical units will absorb more IT functions and thus further the decentralization of IT-- was presented to me for reaction, based upon an on-line discussion forum on Tech Republic.  Below is an excerpt from the discussion.

Prediction:  “The biggest trend of 2011 will be the continued decline of the traditional centralized IT department.”   

Reaction: I only partially agree with this.  I’ve seen this cycle before and a totally decentralized IT function does not serve a company effectively when systems and applications must be managed and integrated across business units, especially at the workflow and data content levels of integration.  The easiest aspect of IT to distribute to the business units is specific configuration of the application, such as unit-level or personalized preferences, that does not affect enterprise workflow or data content.  I’m a strong advocate of designating Super Users in the business and clinical units who are empowered and trusted with greater than average access rights to the applications and systems; in essence, functioning as deputy members of the centralized IT team.

Prediction:  “More companies will continue to align their IT professionals with individual business units rather than in a central services group.”  

Reaction: I’ve aligned my centralized IT teams with business units in this fashion for many years by creating a culture and a sense of customer service from IT to the business units, so that day-to-day, my Analysts get their marching orders from their customers, not through me.  Likewise, I’ve used joint performance evaluations to reinforce this relationship.  In some cases, commonly in larger organizations, I’ve done the same thing with Desktop Support so that my Technicians are assigned specific customer areas—as shown successful with local policeman who are assigned to neighborhoods-- rather than the old-school first-in-first out assignment of problems in response to phone calls.

Prediction:  “The demand for corporate-savvy IT professionals who can serve as business analysts and project managers will continue to grow.” 

Reaction: Agree, but not necessarily suggesting that this demand will outpace the need for technology specialists.  Cloud computing has so far not diminished the need for locally qualified engineers and technicians in the data center, the Help Desk, and desktop support.  The biggest problem with the recent growth in Analysts is the assumption that these Analysts can succeed with a limited IT background or limited IT technical knowledge.  There’s nothing worse than a Project Manager or Analyst who is technically incompetent.  They mismanage projects and expectations, don’t understand the implications of their decisions, and cannot effectively perform meaningful options assessments.

Prediction:  Meanwhile, many of the technical roles in IT — from server administrators to help desk technicians to network engineers to software developers — will get outsourced to companies that specialize in those areas.   

Reaction: This would be true if the costs to outsource were affordable, but in most cases, they are not yet.  More likely than full outsourcing, I see modestly capable technical teams in small-to-medium size businesses, augmented by advisors and experts from companies who provide that type of outsourced service, on an as needed basis, usually through hourly contracts or block time purchase agreements.

Prediction:  “In return for giving up some control, these organizations will get 24/7/365 service and a fleet of IT professionals with more specialized skills at their disposal. This doesn’t mean that there will be a net loss of IT jobs in the market, but many of the jobs will shift from individual companies to service providers that work for lots of different companies.”  

Reaction:  Not true, until: (1) The cost outsourcing drops significantly; (2) Outsourcing companies can define a more effective way of structuring Service Level Agreements that protect their service levels guarantees, but yet give the customer the ability to interact with systems at a low level, especially data content and application integration, and hold the outsourcing company accountable for performance, in the same fashion as they would an employee in their own data center.  Complete dependence on an outsourcing company, who hosts your data and your applications, immediately places customers in a position of subordinate negotiating power because, at the end of the day, the vendor holds the cards if they hold your data and applications.

In Conclusion

Generally speaking, the attraction is greatest to a distributed IT function, with direct assignments to the business units, when: (1)  The CIO and centralized IT function are culturally more inclined towards technology than business processes; (2) The other C-level executives, such as the COO and CFO, are power hungry and want full control of the IT assets needed to achieve their mission; or (3) The CIO, despite having an inclination towards the business instead of the technology, has failed in some way to meet the needs and expectations of the business units.  In this last case, the business units will quite often find that they are no better, and sometimes worse, at meeting their own needs than was the central IT group, and the cycle towards centralization will return.

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Thanks to Ron Gault and Bob Bloss

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