August 22

A couple of months ago at a Boston Chapter meeting of the Society for Information Management, Alex Cullen, VP & Research Director from Forrester Research made a presentation on the CIO of the future. That's a common topic these days. One of his key points was the commoditization of technology, and the extent to which those in the user community want to use commodity consumer technology in the workplace.

Of course, we're not surprised any more when we hear of business team members pressing IT team members to incorporate iPhones and Web 2.0 technology -- social networking, blogs, wikis -- into IT's portfolio. Business folks are leading, and they understand how to use consumer technology to their ends better than IT does.

Forrester's conclusion? "Business Technology" is emerging as the way of the future, and they define it as "pervasive technology use that drives business results". They also characterize it as a partnership between "IT" and the business, a partnership in which business takes responsibility for many tasks previously done by IT. How much responsibility is shared? To find out, Forrester surveyed 186 global business executives about the six major tasks performed in deploying a commercial off-the-shelf application - defining, choosing, negotiating, configuring, project-managing, and operationally managing.

So, to what extend was IT partly or totally responsible for the tasks, on average? About half the time, a far cry from "the old way".

Business is taking a larger role in deploying technology, apparently with good results, particularly time-to-market. Following Forrester's conclusions, the CIO of the future and the Business Technology department are going to have to let go of most development and operational matters, keeping architecture, strategy and planning, and "synchronization".

This is NOT decentralization! IT teams or units are not dispatched or dedicated to sub-enterprise organizations. The business organizations themselves take on IT roles. It's the ultimate in project (vs. functional) organizations in that the skills are integrated into the business.

The good news: Higher responsiveness.

The bad news: The risk of authorizing a class of "rogue" IT organizations embedded in business organizations. Time will tell.

Opposing: Centralization

In tight times like these, cost cutting pressures drive some companies to centralize IT. Why duplicate services and staff positions? It's easy to argue in favor of "economies of scale", and a purely financial view seems persuasive.

But consolidation doesn't always work. The real question is whether the company can consolidate the work, not the organizations. It's very likely that organizations can consolidate utility services like user administration, email, helpdesk, and infrastructure. But what about the applications and services that directly support each line of business's revenue generation, customer services, and supply chain?

If the businesses or elements of their work are the same - similar enough that they can ultimately use the same applications - consolidation may work and may bring benefit. Examples include HR, financial, and perhaps relationship management applications.

If the businesses are not the same, consolidation beyond common services is a delusion. Like the "re-engineering" of the 90's, it's cost-cutting dressed up as "leaner and more efficient". Let's face it, you can put two apples in a bag and label it "fruit for three", but someone's going hungry. If it's necessary to cut, one might as well pick the line of business least sensitive to a cut and reduce their IT staff. Save the company the pain of reorganization.

Balance in All Things

Consolidating an IT department into a group that's not congruent with the business is a recipe for diminished service. On the other hand, the extreme IT department "of the future" with near-total dispersion of IT into the business community is, in my opinion, a risky proposition; good governance is critical. The risk of detrimental results for both is high.

How about a balanced approach?

• Consolidate common and "neutral" utility services and infrastructure. This reduces cost but not service. (Assume it's done in the right spirit.)
• Centralize - whether by governance bodies or working groups with real power - matters of application architecture, data architecture, policy, technology, and IT service principles that affect the whole organization. This indirectly reduces cost by minimizing duplicated and contradictory effort and guiding development of reusable capabilities. And centralize corporate-wide applications.
• Decentralize or disperse business-specific applications and services, whether by decentralized IT organizations, dedicated teams, or IT-capable businesses, all of which must collaborate and integrate tightly with the central business technology team. This closely aligns work with the business, allows the businesses to justify the work, and allows allocation of the right number of resources, no more and no less than justified by business.

You may find that one extreme or the other works for your organization. An organization of 25 doesn't need diffused IT skills, for example. For most companies, consider a balanced approach.