If you take the outsourcing trend to the ultimate degree, there will be no IT department; just a chief information officer (CIO) and a small team managing vendor relationships and plotting IT strategy, without getting their hands dirty.
This may be an extreme view, but outsourcing and the changing stature of the CIO and IT function in firms is having a profound effect on the way IT departments are organised and the skills of their staff.
‘We are moving from having to know your technology to a have-to-know-how-to-deliver-a-service culture,’ says Stephen Elliot, research manager at analyst IDC.
The business perpetually wants things better, cheaper and faster. The difference now is that, in addition to fulfilling those demands, IT is evolving a support role into becoming a service provider. Many companies are going that step further and beginning to initiate business change.
For example, Huntington Life Sciences, internet publishers of science, medical and mapping publications, has centralised its IT department to become a central services function. The organisation comprises many small businesses, each of which used to handle its own IT.
‘We had an office in New York with 20 people and its own email system, which was stupid,’ says Tim Hyde-Smith, who manages the central IT department.
Now, elements such as email, networking and storage are managed centrally, while brand-specific web sites and graphic design are handled on-site by each company.
Centralisation has had a marked effect on the way IT is run. ‘We see ourselves as a monitoring and management team and have relationships with companies that do things that we don’t,’ says Hyde-Smith.
The firm outsources commodity IT such as hosting to Globix and leased lines to Colt, while the five-strong central services team focuses on providing the businesses with networking, email and other key services. Centralisation has also changed the skills needed to service internal customers.
‘Previously, the skills were at a much lower level. People were doing things for an individual company, looking after PCs for 20 people, say, and an email problem took up five minutes of their time. Now someone looks after email and is therefore much more knowledgeable,’ says Hyde-Smith.
‘The danger with the centralised model is that someone who deals with nothing but email is the opposite extreme and could become blinkered if all they do day-in and day-out is Exchange. We have the right size team – you’re a specialist, but a specialist in several things and open to change.’
In contrast, insurance intermediary The Budget Group of Companies is not an outsourcing convert and develops its own applications in-house. But the changing demands of the business are making the department shift and change.
‘Budget Group has been growing very quickly and as a consequence there are more demands on the IT department,’ says director for IT systems, Peter Maddigan.
Change management skills have come to the fore, as the IT department needs to respond faster. To cope, Maddigan has introduced a fast-track team to handle quick projects for the business.
Marie Lancup, a former IT director and now principal of James Lambert Consulting, agrees that this demand for change management skills is becoming more important. She sees the CIO as a business person rather than an IT specialist. But she believes there needs to be someone below CIO with a deep understanding of technology, as well as a change director. ‘This person would be an advocate of what new technology can deliver,’ says Lancup.
Irrespective of IT being decentralised or centralised, outsourced or in-house, Ross McAllister, associate partner and head of IT governance and management at Atos Consulting, believes IT has a new role to play that requires changes to the way departments are organised.
He describes IT as the jam in the sandwich between business demand and vendor supply, handling governance, sourcing, business assurance and other key services.
‘They manage supply and contracts, but also look at governance and innovation,’ says McAllister. ‘If you’re focused on innovation, then you need to understand how technology adds value.’
The people in this new-style team need to be account managers, strategic managers, business analysts and high-level technical design specialists. Some will have traditional IT backgrounds, some will come from business units.
‘It’s moving away from the old classic supply-demand model and the attitude of “tell me what you want and we’ll do it”,’ says McAllister.
IT professionals will be so drenched in business understanding, that they can spot ways in which technology can transform the business. Many firms are beginning to create these account or relationship management roles to spot such opportunities.
‘We have to understand the business as well as the business does, and preferably better,’ says Budget’s Maddigan.
But it is still early days. ‘If you go to the recruitment pages of Computing you won’t see those roles advertised,’ says McAllister.
He believes the IT professionals that do fill these roles will increasingly need to have MBAs or deep business knowledge. The IT department of the future will need IT specialists, but they will also be equally experienced business people.
Best practice
‘Best practice is what works for you,’ says Ross McAllister at Atos Origin. While one company may outsource everything, another can hoard everything – and both approaches are equally valid.
Governance is key to any scenario. ‘When I think about best practice, governance is the area that springs to mind – it’s less about organisational models and more how to govern that,’ he says.
So, however an organisation is set up, it is necessary for it to have:
* close business and IT alignment
* disciplined approach to IT investment
* proactive risk management
* corporate performance management
* innovation brokering
* clear lines of accountability.
To deliver those elements, companies need staff with more than standard IT skills; commodity-style IT will be handled by external suppliers.
Internal IT professionals will need to have higher-level skills and there will be greater cooperation between the business and the IT department.
This will be aided by the increase in relationship or account managers who will do more than interpret business needs, but identify those requirements and influence the business.
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