Executive Briefings

Do You Really Need an IT Department Anymore?

We got rid of the telephone operators, the data entry department and the secretarial pool long ago - why do we still have an IT department? Well-run companies are always looking for ways to improve productivity by empowering employees to do things for themselves that used to be done by "specialists." We now expect people to type their own letters, make their own travel arrangements, purchase their own supplies, and administer their own payroll deductions and benefits. Isn't it about time that we made departments responsible for managing the applications that support their processes and activities?

IT Departments Are Inevitably a Target

Any department that spends 2 percent to 5 percent of revenue per year, but always seems to be saying "no," is bound to be unpopular. And IT costs never seem to go down, even with the price/performance of technology improving at Moore's Law rates and the cost of external IT services dropping because of offshore resources. Even with 40 years of investment and experience, we haven't driven down the cost of corporate IT. Realistically, IT departments, like most other organizations, simply have no incentive to shrink themselves - someone has to do it for them.

Business and IT Alignment Should be Unnecessary

Analysts, academics and industry practitioners have written volumes about how to align IT investment and business priorities. Once companies made IT a separate department, they created the alignment problem. The business leaders should be the ones deciding what IT services and applications they require. They would certainly have to stay within investment guidelines, adhere to company standards and coordinate with other departments, but they do that routinely with every other aspect of their operations.

The primary reason that companies have a problem aligning IT with business strategy is that the department managers don't take responsibility for determining their information system requirements. Expecting the IT department to plan your systems needs is like asking the HR department to determine your head count requirements!

Most IT Functions Should Be Absorbed Into the Business

To make IT more responsive to the business, companies often hire into the IT department people with operations backgrounds, setting them up as translators and liaisons between the "users" and the "techies." But sprinkling a little business expertise on the IT department is not the answer. The business should be staffed to manage its own systems. They may need to add some technical expertise, but that makes much more sense than the typical situation of having the company's financial systems managed by a bunch of IT technical folks, augmented by one person with some accounting experience.

What About the Infrastructure?

When I suggest that IT should go away, people always ask about the plumbing. "What happens to servers and networks? Who will back up the systems? What about integration and maintenance?"

Sadly, too much of this overhead is still with us, and, in most cases, it wouldn't make sense to burden individual departments with this kind of low-level technical stuff. Most IT infrastructure only exists to support the applications that truly add value to the business. It's largely commoditized, but it stubbornly refuses to disappear, and it still consumes an inordinate percentage of IT spending. Part of the reason for this is that we have IT departments where many of the employees justify their existence by selecting, deploying, managing and replacing infrastructure. The other reason is that there are giant vendors generating billions of dollars by making infrastructure seem strategic instead of simply necessary. My view is that there are very few companies that could really claim that application management or data center operations are either a core competency or a business differentiator, especially since there are lots of options for cost-effectively outsourcing this stuff to organizations that do it for a living.

Hand Over Your Keys

For many years, our IT departments labored to build, acquire, deploy and support the systems that power our businesses. They battled for greater investment, and educated and proselytized at every level in the organization. We have now reached a point where much of that work is no longer needed. A new generation of employees and managers enthusiastically accepts information systems as a fundamental part of how they work. They don't need IT telling them what to buy or how to use it. In many cases, they are savvier about new technologies than their IT counterparts, and they are certainly more creative in how to use it to improve their specific tasks. Isn't it really time for IT to outsource the commodity activities, handing the keys to the remaining system over to the departments that use them?

If you work in IT, or just have a strong opinion about it, I would love to hear from you. As always, I can be reached at jim.shepherd@gartner.com.

Source: Gartner

We got rid of the telephone operators, the data entry department and the secretarial pool long ago - why do we still have an IT department? Well-run companies are always looking for ways to improve productivity by empowering employees to do things for themselves that used to be done by "specialists." We now expect people to type their own letters, make their own travel arrangements, purchase their own supplies, and administer their own payroll deductions and benefits. Isn't it about time that we made departments responsible for managing the applications that support their processes and activities?

IT Departments Are Inevitably a Target

Any department that spends 2 percent to 5 percent of revenue per year, but always seems to be saying "no," is bound to be unpopular. And IT costs never seem to go down, even with the price/performance of technology improving at Moore's Law rates and the cost of external IT services dropping because of offshore resources. Even with 40 years of investment and experience, we haven't driven down the cost of corporate IT. Realistically, IT departments, like most other organizations, simply have no incentive to shrink themselves - someone has to do it for them.

Business and IT Alignment Should be Unnecessary

Analysts, academics and industry practitioners have written volumes about how to align IT investment and business priorities. Once companies made IT a separate department, they created the alignment problem. The business leaders should be the ones deciding what IT services and applications they require. They would certainly have to stay within investment guidelines, adhere to company standards and coordinate with other departments, but they do that routinely with every other aspect of their operations.

The primary reason that companies have a problem aligning IT with business strategy is that the department managers don't take responsibility for determining their information system requirements. Expecting the IT department to plan your systems needs is like asking the HR department to determine your head count requirements!

Most IT Functions Should Be Absorbed Into the Business

To make IT more responsive to the business, companies often hire into the IT department people with operations backgrounds, setting them up as translators and liaisons between the "users" and the "techies." But sprinkling a little business expertise on the IT department is not the answer. The business should be staffed to manage its own systems. They may need to add some technical expertise, but that makes much more sense than the typical situation of having the company's financial systems managed by a bunch of IT technical folks, augmented by one person with some accounting experience.

What About the Infrastructure?

When I suggest that IT should go away, people always ask about the plumbing. "What happens to servers and networks? Who will back up the systems? What about integration and maintenance?"

Sadly, too much of this overhead is still with us, and, in most cases, it wouldn't make sense to burden individual departments with this kind of low-level technical stuff. Most IT infrastructure only exists to support the applications that truly add value to the business. It's largely commoditized, but it stubbornly refuses to disappear, and it still consumes an inordinate percentage of IT spending. Part of the reason for this is that we have IT departments where many of the employees justify their existence by selecting, deploying, managing and replacing infrastructure. The other reason is that there are giant vendors generating billions of dollars by making infrastructure seem strategic instead of simply necessary. My view is that there are very few companies that could really claim that application management or data center operations are either a core competency or a business differentiator, especially since there are lots of options for cost-effectively outsourcing this stuff to organizations that do it for a living.

Hand Over Your Keys

For many years, our IT departments labored to build, acquire, deploy and support the systems that power our businesses. They battled for greater investment, and educated and proselytized at every level in the organization. We have now reached a point where much of that work is no longer needed. A new generation of employees and managers enthusiastically accepts information systems as a fundamental part of how they work. They don't need IT telling them what to buy or how to use it. In many cases, they are savvier about new technologies than their IT counterparts, and they are certainly more creative in how to use it to improve their specific tasks. Isn't it really time for IT to outsource the commodity activities, handing the keys to the remaining system over to the departments that use them?

If you work in IT, or just have a strong opinion about it, I would love to hear from you. As always, I can be reached at jim.shepherd@gartner.com.

Source: Gartner