Todd Biske: Outside the Box

Back in February, Jason Bloomberg of ZapThink posted a ZapFlash entitled “Competitive SOA.” I didn’t blog about it at the time, but this topic was brought back to the forefront of my mind by this post from Ian Thomas, with some follow-on commentary from Joe McKendrick.

While I’m not one to take one side or the other strongly, I must admit that I have significant reservations about a competition model, whether it is internal competition as suggested in the initial ZapThink article, or it is competition between IT and outside providers of services. First, let’s get the easy part of this out of the way. Part of Ian’s article is about simply running IT as a business and having good cost accounting. I’m certainly not going to argue about this. This being said, there’s a big difference between being a division or department of a company versus a supplier to a company.

I believe strongly that a customer/supplier relationship between IT and the end users of IT in the business is a bad thing, in most cases. If IT moves to exclusively to that model, the business leaders should clearly always be considering outsourcing IT completely. In doing so, it definitely sends a clear message that technology usage is not going to be a competitive advantage for this company. I believe that outsourcing can make sense for horizontal domains, where cost management is the most important concern.

The right model, in my opinion, is to have IT be part of the business, not a supplier to the business. To be part of a business, you need to be a partner, not a supplier. Brenda Michelson posted some excerpts from a Wall Street Journal interview with three CIO’s: Meg McCarthy of Aetna, Inc., Frank Modruson of Accenture Ltd., and Steve Squeri of American Express Co. Some great quotes from this:

Ms. McCarthy: At Aenta, the IT Organization is critical to enabling the implementation of our business strategy. I report to the chairman of our company and I am a member of the executive committee. In that capacity, I participate in all of the key business conversations/decisions that impact the company strategy and the technology strategy.

Mr. Squeri: I believe that over the next 10 years, the CIO will get more involved in the overall business strategy of the company and see their role expand in importance. The CIO will be increasingly called upon not only to translate business strategies into capabilities but to become even more forward-looking to determine what capabilities the business will need in the future.

The days of tech leaders as relationship managers and “order takers” will go by the wayside and they will be called upon to create and drive technology strategies that drive business capabilities.

It’s great to hear these leaders calling out how IT is becoming a partner, rather than a supplier. While our business leaders are certainly more tech-savvy than they have been in the past, there is still significant value in having people that specialize in technology adoption and utilization on your leadership team, just as you have people who specialize in sales, marketing, operations, etc.

Ian suggests letting “self interest flourish within the bounds set by the organisational context as long as it delivers cost-effective services but punish it by outsourcing where it doesn’t.” Cost reduction is just one factor in a complex decision. Holding the threat of outsourcing over IT may certainly in a more efficient operation, but applying those principles to areas where the decision shouldn’t be based on cost efficiency, but strategic impact to the business is a risky proposition. Let the business, which includes IT, decide what’s right to outsource and what isn’t. It shouldn’t be a threat or a punishment, but a decision that all parties involved agree makes good business sense.

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