If you’ve read a couple of my blogs about the IT-as-a-Service model, you probably realize it’s a game-changer. To refresh your memory, it maximizes the value IT delivers because it aligns IT much closer with the business – a top objective for most CIOs today. It also enables agility, facilitates a consumption-based cost model and on-demand management. You probably think switching to ITaaS sounds wonderful. But you’re also likely asking, “What’s the catch?”
Machiavelli wrote, “It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.” And IT-as-a-Service is a new order of things. It’s a radically different way to manage IT.
As a CIO, the implications of switching to this model are that you have to rethink your IT organization, your technology investments, your talent model, your ecosystem and rethink your relationship with the business. This level of change is not something that is easy, quick or cheap to accomplish; and it’s not without risks.
Alternative to big bang
So I’m not surprised when CIOs ask me if there is a way to reduce the risks. My advice is that switching to ITaaS doesn’t have to be an all-or-nothing strategy.
As I’ve explained in previous blog posts, the traditional shared services structure of IT doesn’t work in the as-a-service model. But that doesn’t mean you have to abandon that structure for all IT. At Everest Group, we believe an alternative is to first shift to ITaaS only in the high-value areas, the areas where IT needs most urgently need to align with the business. Typically, these areas are around the digital theme, the area where business units are using technology to change the engagement with clients or change competitiveness. For a health insurance company, for example, a high-value area would be the process of enrolling new members.
By implementing ITaaS first in high-value areas instead of taking a big-bang approach changing all of IT, you can achieve three benefits associated with minimizing risks:
- Limit the area of change
- Potentially limit the extent of the investments
- Learn from the new organizational construct in this first phase before implementing in other areas
But there are some drawbacks in taking this limited approach. As CIO, I caution you not to make the mistake of thinking you can run the ITaaS organization inside the still-existing traditional IT construct. This approach of limiting ITaaS implementation to high-value areas first effectively requires that you create a parallel organization, which has some redundancies associated with it. But it certainly limits the risks of a big-bang approach.
Another caution if you take this limited approach: recognize that the new model will be fiercely resisted by the traditional shared service IT organization, and they will attempt to co-opt the new model whenever possible. Hence, they will try to impose their traditional standards and way of thinking on the new model. The as-a-service model needs strong sponsorship and that’s achieved by aligning closely with the business. But you’ll have the potential for, and probably the certainty of, friction between the two IT models. As CIO, you’ll need to manage that.
There is a third option – don’t switch to ITaaS at all. But if you choose this route, you will need to try to make your shared services structure more flexible; and it’s likely that this will allow shadow IT to grow and prosper. Effectively, the business units where technology is important will increasingly become dissatisfied with the performance of IT shared services, whose allegiance and focus is functional expertise, not technology alignment with business needs.
What’s next after the limited approach?
After an initial limited implementation in high-value areas, whether or not your organization chooses to keep going and move all aspects of IT to this model will be a function of the value you achieve, the learning curve you achieve in migrating to this different structure and the degree to which the business embraces the new structure.
Our experience to date with clients is once the business units get a taste of the alignment and the power of IT as a Service, there are vocal advocates for moving other components into that model.