Wednesday, July 14, 2010

Does your company need an IT Department? Really?

What if your company built its factories and offices the way they build IT solutions?

Say that your company needs a new factory or office. It would form several subsidiary companies and a department to oversee them. One subsidiary would provide architectural services, one would serve as general contractor, and others would provide concrete, electrical, plumbing, and carpentry services. Still others would be formed to provide interior design services, and equip the offices and cubicles. Through these subsidiaries, your company would hire architects, managers, engineers, concrete workers, plumbers, electricians, carpenters, bricklayers, interior designers, and other laborers. None of these actually make the products or provide the services your company sells to its customers!

These subsidiaries would then create their respective processes and standards. These would differ from industry accepted processes and standards because ‘your company does things differently’. Finalizing the architecture and designs for the new factory or office would be a real challenge. The carpenters would have one set of requirements, while the managers would have another set; and so on across the subsidiaries. After reworking the requirements, the managers would solve the problem by creating a new role, the ‘Relationship Manager’. The Relationship Managers would be the points-of-contact for gathering the requirements from your business executives and managers. When a requirement appears too difficult, it is the Relationship Manager’s job to tell the business why the factory or office can’t have the required feature; such a double door or an escalator. Finally your company’s new factory or office would be delivered – late and over budget; assuming that the project did not fail – an all too frequent outcome!

When the factory or office was complete, your company would form another subsidiary company to run the facility. The workers in this ‘Operations’ subsidiary would spend most of their time compensating for and patching significant building defects just to keep the building running. Disasters would be common. After such disasters, the workers would restore the electricity following an ‘Uninterruptible Power Supply’ (UPS) failure, brace walls and floors when they ‘Went Down’, rebuild the elevator system following a ‘Crash’, or spray large quantities of toxic chemicals for ‘Bug’ infestations. Security breaches would be common as well. Intruders would enter the factory or building; some brought in as guests by careless employees. They would install viruses, worms, and Trojan horses to spy on your company, steal its secrets, and damage its ability to conduct business. Workers in both the ‘Security’ and ‘Operations’ subsidiaries would apply still more patches to prevent intrusion as well as detect and neutralize the viruses, worms, and Trojan horses. None of which actually make the products or provide the services your company sells to its customers!

Finally, your company would seek to make changes to the factory or office, or even build more factories and offices. This is necessary to keep the workers in the various subsidiaries busy. Remember, your company just made a large investment creating these subsidiaries!

So how do companies really get their factories and offices?

In the real world, there are two common approaches.

In the first case, your company would recognize the need for a new factory or office. It would engage an architectural firm specializing in the type of factory or office required. The architectural firm would present a few options that meet the business requirements. After some revisions, the selected option would be placed out to general contractors for bid. These general contactors likewise specialize in the type of factory or office required. The general contactor with the winning bid would then engage subcontractors for the concrete, plumbing, electrical, and so on. Your company would also engage a firm to design the interior, and layout the production lines, offices, cubicles, and other equipment. As planned, the new factory would be delivered ready for move-in. Your company would have contracts in place for janitorial services, and other routine maintenance. In this case, your company owns the facility but not the means to create it. In IT, this is referred to as ‘Out-Sourcing’.

In the second case, your company would lease the capability and capacity from a provider. If a factory is needed, a contract manufacturer is engaged. If an office is needed, a commercial space is leased. In this case, your company owns neither the facility nor the means to create it. In IT, this is referred to as the ‘Cloud’.

Does your company need its own IT Department?

Your company already trusts architects, contractors, and providers for the factories that produce millions, even billions, of dollars in products each year; or, for offices that safely support your workers and encourage their productivity. So why does your company insist on owning the computing as well as the means of creating it? Unless your company actually sells IT products and/or services, the IT is not a core business capability.

It’s time to bring in the professionals!

__Joseph Starwood (

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