Virtual IT: The Next Five Years

Every so often, I get into the mood to take out my paintbrush and offer up a relatively sweeping canvas for your consideration.

I did this about six months ago with my "The Changing Face Of Information" series, and it ended up sparking all sorts of interesting discussions.

Now I'd like to attempt to do so again with a goal that's no less ambitious: charting the shape of future-state IT a short five years from now.

As before, this will take the form of a series of rather lengthy posts that hopefully tie together in a relatively integrated picture of the landscape we're all heading for, and -- perhaps -- some surprising implications.

So let's get started, shall we?

Why Does IT Exist? 

IT exists to serve the business, doesn't it?

If you've spent any time looking at IT maturity models in a wide range of organizations, you'll realize that IT's purpose spans an incredibly broad range from "keep the lights blinking" to "strategic business consultant" with reality being somewhere in the middle for most IT shops.

A useful abstraction here is the notion of an IT service catalog: a conceptual "shopping list" of things IT can offer the business to help the organization thrive and grow.  Talking about things in this manner is also useful to help better define the relationship between IT and the business.

If internal IT organizations are mostly an internal provider of IT services, it's very clear to see that they can be then measured in terms of the breadth, quality, responsiveness and cost of those services provided -- either in absolute terms (here's what the business needs from IT) or relative terms (here's how well you stack up to others).

This abstraction is increasingly working for business users as well.  More and more, they think in terms of a service required, and who can provide it -- rather than just assuming that the internal IT folks are the only game in town.

I was personally exposed to this when I was considering alternatives for implementing various social media platforms here at EMC.  Some people thought that there was only one available alternative -- use internal IT resources.  But I took the time to seriously evaluate external providers of those services and compare them against what I could get internally.

Now, certain folks inside our internal IT function didn't particularly approve of my broader perspective regarding this topic.  But, regardless of my specific situation, I think it's safe to say that more and more business leaders will come to regard IT as a portfolio of services that can be shopped broadly, rather than the only game in town.

Core Vs. Context

Rather then try and be all things to all people, most IT organizations have realized that they have a responsibility for the overall portfolio and integrity of IT investments the organization makes -- including those made to outside service providers.

Many IT organizations -- whether formally or informally -- conduct an orderly "marketplace of services" that comprise their own capabilities as well as those of trusted providers with particular specialties of need to the business.

IT organizations that fail to do this in response to business needs actually lead to encouraging people to take matters into their own hands: buying technology, contracting with outside agencies, and so forth with no overall rhyme or reason. 

Pity the poor CIO who is hired to clean up this type of mess and get things moving in the right direction.

This "frontsourcing" of internal and external resources is not entirely unique in the business world: it's very common in a variety of corporate functions, including marketing, manufacturing, services, legal, finance and more.  But still, to this day, I meet many IT organizations who are resistant to the whole idea -- they're not entirely comfortable with aggressively leveraging outside providers who can provide a needed service faster, better or cheaper.

Those that have embraced this expanded role of enhancing the overall service catalog with outside capabilities find themselves over time discussing the "core vs. context" question: what things are better provided internally, and what things are better done by an outside specialist?

Some IT organizations drift into a de-facto position on this topic through a series of tactical decisions; others frame the issue in a strategic context and make long term directional investments in areas where they see they can add unique value, and recruit the best providers for the remainder.

And, over the next five years, I think we'll see far more of the latter, and less of the former.

Virtual IT -- The First Interpretation

This discussion leads us to one of many possible interpretations of the term "virtual IT": the provisioning of a broad range of IT-related services to businesses whether or not they are delivered directly by internal IT, or through a managed engagement of external providers.

As we think about IT's evolution over the next five years, I think one of the macro trends we can safely point to  is the increased "frontsourcing" of these IT services.

Why?  Most businesses -- of any size -- are increasingly dependent on information and technology as an integral part of their strategy.  In many cases, these businesses are becoming entirely based in the online world rather than the physical world. 

Simply put, the demand side of the equation shows no sign of slowing down anytime soon.  Business seem to have an insatiable hunger from things as mundane as more hardware and software to more esoteric requirements such as consulting and strategy services.

Ours is an economy of specialization and differentiation, which leads to increasingly more external providers of IT services with a unique and potentially valuable proposition: meeting an existing need better, meeting a new need with expertise, or taking non-value-creating work off IT's hands so they can focus on things that really matter. 

Simply put, the supply side of the equation shows no sign of slowing down either.  Every few months, there are new products, services and delivery models to consider and evaluate -- with the inestimable "cloud" being just another step in this journey.

If you're an armchair student of economics as I am, anytime there's rapid growth in both demand and supply, the marketplace where they meet takes on an entirely different structure and complexity.

Over the next five years, I believe we'll see more and more IT organizations structured as "virtual service providers" that identify a business need, and respond with the best mix of internal and external resources -- while keeping a watchful eye on the broader integrity of the portfolio.

And, as an ardent fan of capitalism and free markets, I think everyone will be better served.

Courteous comments always welcome!

Comments

[Rodrigo Flores]

I agree with the general direction of moving to run a IT as business or Managed Service Provider. It's a tough journey and the service catalog is critical to the beginning of that journey.

One thing to understand is that the catalog has multiple views, of which the "shopping list" is one. The others are the business portfolio (including financial) and the operational views.