Running IT like a business - Myth or reality

In January this year Bob Lewis posted an article in Infoworld titled “ Run IT as a business -- why that's a train wreck waiting to happen". In this article, Bob suggests that a lot of current thinking about running IT like a business is misguided and leading CIOs in the wrong direction. This article explores what is 'Running IT like a business' and what should a CIO do?

The myth of the internal customer – IT is expected to treat internal departments as customers and deliver them the software or projects that they have asked for. The problem is that customers don’t always know what they want and they are reluctant to commit anything to paper. Even if they do commit something to paper their thinking (and often budgets) demand a “silo” solution which only partially meets the needs of the enterprise. As a result, IT architecture suffers. IT becomes just an order-taker and not a partner.

IT Costs are always too high – Comparing costs of IT services to the external market is always fraught with danger. Why does a corporate laptop cost $2000 when I can buy a laptop from the local store for half of that price? It doesn’t matter that the other would not run corporate applications or the reliability is too low or it does not include software licenses. Similar stories are heard about the network costs, applications and hosting.

Challenge of the charge-back - IT as a business is expected to charge internal customers for its services. Charge-back is a popular mechanism for this. However, charge-back can create unintended behaviours, where departments try to reduce costs by avoiding IT services. I know a department, which stopped using help-desk for password resets due to the cost of the calls. This resulted in major security issues. Rather than figuring out how to reduce the overall costs, departments tend to focus on individual cost reductions.

IT seen as a vendor - Business begins to see IT as a vendor (usually an expensive one). This results in an arms-length relationship between IT and the rest of the business. As a result, trust begins to erode and outsourcing IT begins to look like an attractive proposition.

Bob believes, “The alternatives begin with a radically different model of the relationship between IT and the rest of the business -- that IT must be integrated into the heart of the enterprise, and everyone in IT must collaborate as a peer with those in the business who need what they do.”