There can be no doubt that enterprise technology procurement has been well and truly revolutionised since the emergence of third platform (cloud, big data, social, and mobility).
When combined with the rampant consumerization of IT, the widespread adoption of these third platform technologies across the enterprise has the potential to cause considerable confusion: Who’s responsible for providing what? Where’s the funding coming from? How much is the organisation actually spending on IT?
These are the conundrums facing the modern digital enterprise, and lines of business (LoBs) are now at least partly involved in funding up to 70 per cent of all IT-related projects themselves, it is clear that the IT department’s role in technology procurement is being squeezed, if not redefined altogether.
While third platform technologies may be hosted outside the internal IT datacentre, they are not delivered outside of the IT infrastructure. Rather, they must be seamlessly incorporated into the IT infrastructure and linked into existing IT services, databases, security policies, and management processes. This integration is not simply a technical challenge; it forces IT to upgrade its professional management practices to operate more as a true service business.
From a management practices perspective, third platform providers promote absolute clarity into their service features and functions, provide clear pricing schedules per consumption unit rates, and guarantee that SLAs and support services are well founded in their contractual obligations. This level of professional service management is extremely attractive to LoB leaders and needs to be replicated for internal IT services if IT is to compete beside the third platform providers.
Simply put, IT’s “free ride” as the single-source supplier to a captive customer base is over. The internal IT fortress is being attacked on all sides by third platform providers, and this onslaught of highly professional and cost-efficient alternative solution providers is only the first wave of competitive forces that the CIO must confront and engage. Indeed, more disruption is on the way from so-called ‘innovation accelerators’ such as the internet of Things, augmented and virtual reality, robotics, cognitive systems, and 3D printing.
There are two very different outcomes that can result from this clash of IT titans: In the first scenario, the CIO and the IT department assume a diminished role that constricts around the legacy business systems; in the second, third platform providers take on a more strategic role in direct business relationships and the CIO transforms the IT function into a value-added service innovation business.
However subtle they may currently appear to be, changes in the relationships between end users and the technologies they consume are happening right now, and CIOs must react today in order to secure their role in the digital enterprises of tomorrow. This can only be achieved by transforming the IT department away from the centralised single-source provider mentality that has traditionally dictated their approach.
To this end, IT must operate as a true service business that brokers and manages third platform service providers as part of its innovative service offerings. Otherwise, it risks losing out to the external IT interlopers that are threatening its very existence. To execute this game plan, IDC urges CIOs to design and implement a new business-oriented service management architecture.
The ultimate aim of such architecture would be to enable seamless integration of third platform solutions with internal data, apply company security policies to data in the cloud, communicate the true cost of each business-oriented service to the “customer”, and provide C-level and LoB management with an all-encompassing overview of activities across the entire decentralised landscape of IT services.
For example, even if the central IT budget becomes only a slice of the actual total IT spend, and LOB budgets grow as they directly purchase third platform services and build their own IT services, an IT service-based cost model would help to consolidate all this information into an all-inclusive cost model that pulls data in from across the entire organisation.
Such a move would enable the CIO to get a complete, end-to-end picture of the actual costs of service being consumed by the business — including third platform services — and communicate this to senior management. If this all-inclusive view is not incorporated into the service-based cost model, then no one in the company, including corporate management, will be able to answer the key question: “What are we spending on IT overall, and how could these costs be optimised?”
Given the introduction of third platform technologies and the inevitable adoption further down the line of emerging innovation accelerators, CIOs must recognise that IT needs to compete with the outside market by either upgrading internal services, integrating the third platform into existing services, or creating entirely new digital services through third platform capabilities.
To achieve this level of business planning, service innovation, and service life-cycle management, the region’s IT leaders need to upgrade their management practices so that their departments can become fully focused, competent service management organisations that truly address the needs of the modern business.
— The columnist is group vice-president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC) He can be contacted via Twitter @JyotiIDC