Information technology is becoming a commodity. Vendors increasingly design computing systems as utilities, to be supplied in a similar way to electricity or water, so they are always available and can quickly be adjusted to meet changing needs.

Developments such as the provision of key applications as services over the internet and the continued interest in outsourcing support the trend. So, if Nick Carr of Harvard Business Review is right and now ‘IT doesn’t matter’, why do we need to continue to pay for expensive in-house IT staff?

We do not have in-house electricity staff. Has the IT function become a legacy of the past we no longer need? Should we get rid of these legacy people as well as the legacy systems they support? Perhaps we should just buy in the services we need.

At first glance it seems an attractive argument. We need to focus on the core business – and surely we can get an IT service more cost-effectively from a supplier who has deep technical skills and the benefits of scale. To an extent this has been happening for a long time. The outsourcing of a wide range of IT services is a long-established and continuing trend. And such services can sound the death knell for technology specialists in certain departments.

Better working practices

But those who say that IT should be treated as a commodity assume the purpose of the IT function is simply to provide a secure, reliable and cost-effective technology infrastructure. They believe that the value to the organisation comes from the technology itself. This is wrong. The value comes from how the technology enables people to do things differently – see Benefits Management by Ward and Daniel. This small change in perspective has huge implications.

The challenge for many businesses is to enable people to do things differently and to realise value from information and technology by changing working practices and processes. This involves people throughout the organisation, and increasingly also customers and other stakeholders across the value chain. This is the challenge of business transformation.

Business transformation is very different from simply providing an IT service: it is an organisation-wide issue and needs to be owned by the chief executive (CEO) and the top management team. It needs effective leadership – including a forward-looking chief information officer (CIO).

It is also strategic. Business transformation shifts the focus to creating value in the future. The need for transformation and change is not going to go away, and many organisations will want to seek help and advice on implementation. But change and transformation cannot be outsourced or handed over to a service provider.

So what are the implications of shifting the focus to business transformation for the role of the CIO and the IT function?

For some IT departments it is too late. Rightly or wrongly they are seen as legacy people. New transformation functions will be established to focus on change and value realisation. The IT function will focus on technology provision and will continue to be at risk of outsourcing.

For other IT departments there is a huge opportunity. The business-facing elements of IT can evolve to take on the transformation role, while the technical elements of the function will be developed or outsourced according to the context of the organisation and the characteristics of the specific services they provide.

A crucial part of the transformation role will be for the IT function to engage with the wider organisation, provide leadership and develop the capability of the organisation as a whole to succeed with change. The IT function is not about implementing all the change on behalf of the organisation.