Do we still need IT departments?
A recent article in the Wall Street Journal argued that the concept of centralised IT is from a bygone era, and are ill-suited to the demands of a digital-first world. Computing disagrees, and here’s why…
Do we still need IT departments?
That question was raised in a recent article in the Wall Street Journal, and answered with a resounding no in the same piece.
It argues that the concept of IT departments is outdated.
'Having an IT department is exactly what will prevent companies becoming innovative, agile, customer-focused and digitally transformed. That's because IT departments are from a bygone era and are ill-suited to the demands of a digital-first world,' the article states.
It goes onto to suggest that a ‘...small number of pioneers are ditching their IT departments offering models for the rest to follow.'
The principle mistake the article appears to make is assuming that all IT departments are the same. We should do away with the entire concept of the IT department, it argues, rather than seek to improve the bad ones. The IT department is outmoded conceptually, not merely in practise, it claims.
'Traditional' IT departments
To counter this we need to draw a line between truly outmoded ‘traditional' IT departments, and modern technology functions which align with the business. The former should certainly be dismantled, but to do the same with the latter is to toss out the baby with the bathwater.
The best modern IT departments, and the kind of function championed by Computing, is a strategic business partner and an engine for growth. It ensures that the IT strategy is perfectly aligned to the overall strategic goals of the business. Do away with this department and who leads and manages the IT strategy?
"It would be insanely costly to allow local procurement and management of all these systems," says Mark Ridley, co-founder of CTO advisory service Ridley Industries and a former CIO and CTO of multiple organisations, most recently interim CTO of the Financial Times. "There'd be challenges with interoperability, a complete inability to get a 'single pane of glass' view across the whole business (who would integrate anything with no central team? A new central team!?). Data governance and compliance would be... useless. There would be no strategic thinking, no flexibility in moving people between teams as the technology might be different. You'd have higher training costs, higher recruitment costs... what a nightmare!" he adds.
However that's not to say that all IT departments function as well as they might.
"I would certainly agree that the traditional IT department is past its sell-by date for many organisations, although I still hear conference and webinar sessions on ‘starting to build a relationship with the business'," says Jane Deal, CIO of the Law Society, proving that many are significantly behind the latest thinking.
The article goes on to describe the IT department as an island, with the lonely CIO at the top running his insular organisation, divorced from the rest of the business. Again, this is describing an outmoded style of IT, one which rarely if ever emerges from the basement.
"I don't know what a CIO is in the States, but it's definitely not a role that I'd expect to seeing ‘running a metaphorical island'," says Deal. "The modern CIO straddles business and technology equally, and is savvy in both. The IT strategy should be integrated into the one corporate strategy, with the organisation working as one collaborative team towards a common strategy and plan - a bit of a Holy Grail for many - and a successful CIO bridges that effectively."
Who manages Shadow IT if there's no IT?
A further risk of completely decentralising the technology function and leaving it in the hands of individual lines of business is one of shadow IT.
Richard Calder, CIO of grocery and logistics firm Reynolds says: "As a CIO, decentralising the IT function to the extent proposed (in its broadest sense) increases the risk of shadow IT and of a disjointed approach to digital transformation. The idea of 'breaking up' the IT function so that it lies within individual functions risks a more disjointed/scattergun approach with a lack of clear accountability."
But there is some merit in the idea of decentralising some areas of responsibility some of the time. Ridley explains that the important starting point is to define the outcome, what the business actually wants to happen, rather than start by defining how the project should be run in a vaccuum.
"A lot of the approach I now take is to ensure that there are well managed teams of vertical disciplines, so there would still be an 'office of the CTO', and responsibility for certain types of (technical) governance and strategy would still sit with that role, just like financial governance sits with the CFO. It's better for those skilled individuals to be managed by similarly skilled individuals that can manage their career progression - imagine a data scientist being managed by a marketing expert.
"But here's the key - what we should do is define outcomes; perhaps something like 'implement a new finance system', which requires a burst of 'build' mode activity with a team comprised of financial and technology experts (who still need to think about out of hours support, data security, identity and access management amongst other factors). That is an initiative based team, with a shared goal, but made up of team members from different departments who will remain committed to the output until the end of the initiative. When complete, they go back to their teams waiting for the next initiative.
"For ongoing support - say to keep a CRM running, or providing BI tooling to the business - when the tools are back in 'run' mode, those teams will have a different shape and structure, perhaps with a form of matrix management. Technology is no longer confined to a department, it spreads tendrils through an organisation, but the important skill for organisations is to identify, hire, train and retain the best talent to look after it. For that reason it's often best to have a central function which supports, engages, collaborates and empowers teams within the business as the needs change."
A hybrid approach
Calder agrees with this strategy.
"What the past several years have shown is that IT departments are increasingly responsive to changing demands. Software developers have embraced agile methodology and having the resource centrally managed allows these developers to gain broad experience across different business functions.
"In terms of embedding technology in every department this is a matter of degree. To have key functional departments upskilled so that they have improved technology skills I would wholeheartedly support. Is there a hybrid approach? I believe there is - increasing the visibility of the IT department and in particular programmers gives them a more rounded view. But controls and security protocols require central management to be effective."
However, all of this remains a world away from dispensing with the very idea of centralised IT. Deal sums up the risks:
"What doesn't come from full devolution into the business? Oversight, governance, expertise, horizon scanning, risk and security management, consolidation of approach to maximise impact (e.g. vendor negotiations across the full range of services a single vendor may provide to achieve discounts and best price, rather than being picked off with services delivered at individual (higher) cost).
"Yes, you can outsource much of this to vendors but I would strongly question whether they genuinely understand and care about the business when supporting a myriad of other customers. And who manages the vendors (cohesively)? What happens when a service issue falls between the cracks and each vendor claims it's another vendor's responsibility to address? Full independence of IT delivery without oversight and an overarching technology strategy (that is built into the business strategy), creates a high risk of indiscipline leading to risk, architectural debt and cost inefficiencies/excess."
So yes, but all means do away with old-fashioned IT that kept itself at arms length from the business. That's not news, that's been happening for decades. But get rid of IT altogether? Good luck with that.