Wednesday, July 27, 2011

IT-as-a-Service: IT Competing for Business vs. “Shadow IT”

As I begin to sink my teeth into the realities of IT Transformation and the operational change to IT-as-a-Service (ITaaS), it’s becoming shockingly clear that adoption challenges aren't technology issues.

Although debate continues over what cloud computing means, clarity is beginning to take shape as public/commodity cloud, private cloud, and hybrid cloud models evolve.

So if we now know how to build clouds, where does that leave our IT operations? What of our IT organization, skill-sets and CIO’s? How does the technology map to enable lines of business? How will infrastructure change the game for the enterprise?

IMHO, these are the questions we still must answer in order for “cloud” to be the next successful model for IT.

Enter IT-as-a-Service

Much the way that the internal combustion engine was the technology transformation catalyst for new forms of transportation and resulting commerce, cloud technology is transforming how information infrastructure impacts organizations and business models.  The Technology is the enabler of The Services.   But the automobile alone didn’t alter the landscape. It needed infrastructure, customization, and even rules for safe operation. Same goes for IT technology.

EMC’s own IT department, led significantly by Jon Peirce, VP of EMC’s IT and Private Cloud Infrastructure & Services, thinks of the infrastructure relationship this way:
IT as a Service is a delivery model leverages cloud infrastructure to enable business users to be more agile through readily-consumable IT services that have transparent prices and service levels.  While it is built on technology, ITaaS isn’t a technology.  It is an operational model that transforms our traditional approach to IT into a services-based world.
Good timing.  Because there is another trend afoot:  The emerging external set of services – from public cloud service providers – to attempt to compete for the same attention. And dollars.

Competing with “Shadow IT”

John observes that IT’s days as a “monopoly” on technology are gone because
  • Users are global, mobile and social, with impatience for having information at their fingertips.  They’ll instantly use any alternative if it’s accessible. IT needs to plan for this – or have a competitive alternative
  • Access:  iPads and other edge devices are pervasive. The days of “IT-approved” access devices (the corporate-issued laptop) are numbered. Users will demand their own type/style of devices.
  • Public clouds are clamoring for developer’s attention and $.  Essentially developer with a credit card has the potential to release corporate IP to the outside.  IT needs a model to deal with this… and an attractive alternative.
  • SaaS alternatives are courting business managers.   And worse, IT isn’t necessarily informed when business managers use these services. Governance and access models need to be created, since there will always be external SaaS options.
So, as users and LoB’s turn outside the company, this “Shadow IT” phenomenon arises : the use of external IT resources.  Appealing because of their on-demand nature, yet dangerous because of their security porosity, lack of usage governance, and lack of financial transparency/control.

So IT finds itself in a competitive position vs. Shadow IT. 

John then asks a question this way: If our internal line-of-business customers had a choice, would they use us (Enterprise IT)?  When IT was the only game in town, it didn’t matter what they charged or how good the service was because LoB’s had no choice.  But now there is. So we have an unavoidable imperative to be more competitive.

Unavoidable Implications for the New IT

As I think about IT Transformation to IT-as-a-Service-for-the-business, there are two implications that are inevitable and unavoidable.
  • IT cannot resist this transformation.  It will be forced upon them because of the use of, and competition from, Shadow IT - as well as from the increased demands from LoB.  So IT needs to be better-acquainted with the competition, their services, their SLA’s, their pricing.  Like any competitive situation, IT needs to do *external* benchmarking in all of these areas.   Because if they don’t their CFO will do it for them.
  • IT needs to think competitively.  IT orgs need to think in terms of winning the internal business by actively selling and creating demand for products (services). This is opposite from how they’ve been conditioned to behave – so IT has to develop basic business skills and even organizations to operate in a competitive business environment. These include product marketing, product management, financial management, and even competitive analysis and sales skills.
This is an exciting time for IT. And while most are focusing on the technology, I urge you to look at the business and operational aspects of this change.  While any change can be scary at first, it also can provide a brand new set of competitive opportunities for the business.

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Trace McQuaig said...

A lot of good thoughts here. We should sync up at VMWorld this year. My portion of the IT world is being pulled towards IT as a Service. I have felt it for over a year. Actually I think you and I talked about it at EMC World.

Charles Araujo said...

Ken -

Great post and I couldn't agree more. In fact, I have written about a lot of these ideas on a website called, The concepts around what I call The Quantum Age of IT are very much in a similar vein. I'd love your feedback.

I think that the concept of competition is foreign to many IT organizations and will be their undoing if they do not recognize this new reality. Great stuff.