What would enterprise IT do if it could offload its commodity infrastructure and applications, and focus on new ways to apply IT to the business?  What new models would emerge, and what new skills would be required?

The Leading Edge Forum has identified trends that will affect every business – whether they aggressively source third-party IT services or not – we chose to speak mostly with firms that do a lot of sourcing because in these cases enterprise IT’s need for a new agenda is more immediate.

Our findings uncovered four emerging models:

• The Studio model.  The metaphor is that of a Hollywood studio where a variety of skills – directing, acting, cameras, sound, lighting, and so on – are brought together in flexible, ever-changing teams to take on sophisticated projects.  In this model, IT will be increasingly expected to work seamlessly with scientists, engineers, marketing professionals and others to deliver projects of high strategic value to the business.
• The DIY model.Although stores such as B&Q in the UK provide a huge range of goods (like the IT marketplace itself), a key part of their value proposition is their knowledgeable staff who provide ‘free’ information and advice.  Analogously, many employees and departments will increasingly do their own IT, but will occasionally need expert support.
• The Process model.No one understands the details of many key business processes better than enterprise IT.  In most cases, it is the underlying sequence of information processing steps that defines how a business process actually works.  Increasingly, IT will take responsibility, and even ownership, of end-to-end business processes, greatly strengthening the CIO/COO relationship.
• The Stewardship model. The word ‘steward’ has many connotations, but we particularly like its root meaning of a ‘keeper’.  In the past, this role has been largely focused on information security and associated risks, but going forward, it will expand to include issues such as information architecture and master data management, especially in firms that seek to be information and data-driven.

Together, these models encompass much of the future of the enterprise IT function, where business and IT co-evolve and funding is increasingly bundled into wider business initiatives.

Almost all of the organisations we interviewed recognised the need for enterprise IT to acquire new skills and probably new people in order to add significant value in the future. Skills and competencies required for the stewardship role were deemed critical, as were skills associated with the business itself, such as business consulting and change management.

On the supply side, vendor management (or ‘smart procurement’) was cited almost universally as a vital competence for enterprise IT.  Most interviewees were happy to delegate the operational side of IT services management to their sourcing partners, as long as enterprise IT retained oversight and control of service delivery.  Service integration emerged as a further important responsibility of enterprise IT, particularly in a multi-vendor environment where application support, hosting and network services may all be managed by different service suppliers.

So to conclude, enterprise IT is being transformed by the development of ever more pervasive technology, by a steadily expanding and improving IT services sector, and by the emergence of a generation of increasingly tech-savvy employees.  These forces are reshaping the mission of enterprise IT along three main lines – Virtualisation, Consumerisation and Repurposing:

•      As Enterprise IT’s vendor management skills improve, most back-office delivery tasks will be virtualised – that is, moved to various types of third-party suppliers, with the exception of the most ingrained legacy systems.

•      In the front office, consumerised, largely self-service technology will be put directly into the hands of professional employees who will need to become skilled in not just their particular job function but also the relevant information technologies in business and IT to succeed in their fields.

•      In most industries, competitive pressures will require that IT be increasingly built directly into product and service offerings, requiring close-knit, joint business and IT teams. Successful Enterprise IT organisations will be repurposed to participate in this work.

As enterprise IT steps back from the in-house IT development and service delivery activities, it will tend to migrate towards one or more of the emerging higher-value models, where each will require very different skills and competencies.

To obtain and retain these new competencies, enterprise IT will need to look to accept and even seek higher levels of staff turnover and recruit many of its people directly from the business, as well as from the supplier and management consulting communities.  Over time, enterprise IT will become smaller, more highly skilled and more strategic in its focus, but will also be more transient.  Many more executives and employees will spend time in the function, but fewer will make an entire career there.

The net result of these shifts will be a reinvigorated IT function that has rightfully discarded its ‘Retained IT’ label:  a function that will enjoy a new and more valuable future at the front of the firm.

CIOs focus their budgets on transformation and collaboration

About the author:

Richard Daviesis Vice President and Managing Director for CSC’s Leading Edge Forum, a global research and advisory service that develops next practice roadmaps that address the major challenges at the intersection of business, IT and management. To learn more on this research, download the FREE Executive Summary The Future of Retained IT – Repositioned at the Front of the Firm.