Whilst noodling around the net looking at stuff for a longer post I’m writing I came across an excellent Peter Evans-Greenwood piece from a few months ago on a related theme – namely the future of the IT department. I found it so interesting I decided to forgo my other post for now and jot down some thoughts.
After an interesting discussion about the way in which IT organisations have traditionally been managed and the ways in which outsourcing has evolved Peter turns to a discussion of the future shape of IT as a result of the need for businesses to focus more tightly, change more rapidly and deal with globalisation. He posits that the ideal future shape of provision looks like that below (most strategic IT work at peak):
Firstly I agree with the general shape of this graphic – it seems clear to me that much of what goes on in existing enterprises will be ceded to specialised third parties. My only change would be to substitute ‘replace with software’ with ‘replace with external capability’ as I believe that businesses will outsource more than just software. Given that this diagram was meant to look at the work of the IT department, however, it’s scope is understandable.
The second observation is that I believe that the IT “function” will disaggregate and be spread around both the residual business and the new external providers. I believe that this split will happen based on cultural and economic factors.
Firstly all ‘platform’ technologies will be outsourced to the public cloud to gain economies of scale as the technology matures. There may be a residual internal IT estate for quite some time but it is essentially something that gets run down rather than invested in for new capability. It is probable that this legacy estate would go to one kind of outsourcer in the ‘waist’ of the triangle.
Secondly many business capabilities currently performed in house will be outsourced to specialised service providers – this is reflected in the triangle by the ‘replace with software’ bulge (although as I stated I would suggest ‘replace with external capability’ in this post to cover the fact that I’m also talking about business capabilities rather than just SaaS).
Thirdly – business capabilities that remain in house due to their differentiating or strategic nature will each absorb a subset of enterprise architects, managers and developers to enable a more lean process – essentially these people will be embedded with the rest of their business peers to support continual improvement based on aligned outcomes. The developers producing these services will use cloud platforms to minimise infrastructural concerns and focus on software-based encoding of the specialised IP encapsulated by their business capability. It is probable that enterprise architects, managers and developers in this context will also be supplemented by external resources from the ‘waist’ as need arises.
Finally a residual ‘portfolio and strategy’ group will sit with the executive and manage the enterprise as a collection of business capabilities sourced internally and externally against defined outcomes. This is where the CIO and portfolio level EA people will sit and where traditional consulting suppliers would sell their services.
As a result my less elegant (i.e. pig ugly :)) diagram updated to reflect the disaggregation of the IT department and the different kinds of outsourcing capabilities they require would look something like:
In terms of whether the IT ‘department’ continues to exist as an identifiable capability after this disaggregation I suspect not – once the legacy platform has been replaced by a portfolio of public cloud platforms and the ‘IT staff’ merged with other cross-functional peers behind the delivery of outcomes I guess IT becomes part of the ‘fabric’ of the organisation rather than a separate capability. I don’t believe that this means that IT becomes ‘only’ about procurement and vendor management, however, since those business capabilities that remain in house will still use IT literate staff to design and build new IT driven processes in partnership with their peers.
I did write a number of draft papers about all these issues a few years ago but they all got stuck down the gap between two jobs. I should probably think about putting them up here one day and then updating them.