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Making sense of the new business of IT

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Lab You may be heartily sick of hearing that ‘change is the only constant’, ‘everything’s getting faster’ and ‘business is more competitive than ever’. However, a direct consequence of what’s happening today is that the expectations placed on IT to help the business thrive in the midst of all this ‘change’ has never been greater.

We’re all familiar with ‘the changes’; it’s the stuff we’ve been talking about for the last few years. On one hand the economic climate has heightened the focus on cost reduction, savings and efficiencies. On the other, the desire of business to ‘be better’ in the midst of all this has led to higher expectations of the ‘effectiveness’ and ‘value’ we get from using IT.

Thanks partly to today’s shifting market dynamics and the requirements they create, a number of ways of exploiting technology are emerging. These are challenging the traditional ways of defining value, return on investment, cost of ownership and how we source and pay for our IT kit and services.

At the technical level, a key change has been brought about by virtualisation technology. The ability to divorce the hardware layer from the software layer provides the opportunity to increase the bang per buck we can extract from technology, by increasing utilisation rates on individual servers and pooling resources across them.

In parallel, the blindingly obvious fact that IT feels very expensive when paid for in one go is being challenged by numerous emerging financial models. You don’t need to talk to a ‘cloud vendor’ to explore alternative financing options for the hardware and software we already buy from familiar vendors. The option to sidestep major capital outlay in favour of a leasing or pay-per-use model may be available; opening up a range of choices in terms of how we can account for IT related assets.

So we have an interesting combination of IT becoming more flexible, and at the same time, more flexible payment models emerging. Of course, taking advantage of all this is not always as straight forward as some would have us believe.

Imagine telling a line of business owner that ’their’ application resides on a large server, and shares compute and storage capabilities with applications used by other departments. Or try divvy-ing up the IT budget into ‘compute’ ‘storage’ and ‘network’ layers and then ask each department to pay for what they use, which may change on a daily basis.

Furthermore, IT budgets in general are not geared up to be flexible. Many organisations will need to overhaul the way they currently work them and at the same time, revisit how ‘ownership’ is understood and governed internally in order to exploit these new models.

Ultimately it’s going to be difficult to achieve flexible IT with inflexible budgets and inflexible views on ownership and sharing of resources. The business wants faster, more flexible and cheaper IT but hasn’t quite got its head around how to achieve this in practical terms just yet.

IT is therefore going to have to get its hands dirty. Of course, it cannot do everything by itself, but it may have to initiate the discussion. As the custodian of existing services, a key role will be to help the business understand and appreciate what it already has, and where it needs to get to. IT will have to demonstrate how to re-assess ‘value’ (for example measuring what the service actually does for the business) and ‘cost’ (for example looking at users/transactions/throughput instead of the traditional ‘software licence plus server plus storage’ model) in an era where it really is starting to make more sense to look at how IT is used at an aggregate level.

Of course, it would be easy to simply ignore all this. The risk, though, is that the business could make some rash decisions if left to its own devices. Yes, ‘cloud services’ look like they might offer all the flexibility in the world, but someone’s got to make it all work, legally and financially, with everything else you already have. If IT can take the lead here, not only can it re-state its position as a trusted advisor to the business, it protects its own backside in the process.

Eventually, if not right away, some of these emerging models will play a big part in how your organisation approaches IT. We’d like to know if, how and where in your organisation this stuff is starting to make its presence felt. We’ve even done a webcast on the topic. Whatever your preferred medium, let us know what you think.

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