Corporate IT as a service

The general consensus regarding today's business IT best-practices swarms around the idea of treating the IT department as a service provider to the business. Defined best-practices like ITIL and CobiT call for establishing service level agreements between IT and all other departments, ensuring that business priorities are always the focus of us nerds. They call for the business driving IT -- not IT driving the business -- meaning that requirements of new systems should be derived from functional requirements and not IT capability. They call for IT to enable the business, just as pieces of paper enable a writer. If a writer has only ten pieces of paper in his printer, his book shouldn't be limited to ten pages -- he needs some more paper!

As a result of business relying more on IT, global IT spending has grown incredibly. If my savings account grew at the same rate as global IT spending during the past 15 years, I could probably buy a small country. Even many non-technology companies have lots of technology in-house: email, online storage, a website, instant messaging, electronic timekeeping, an intranet, etc. And many hire a small army of a staff to manage it all. But as time goes on, the differences in how competing companies use IT will become smaller and smaller. Look at real estate agents -- all over the country they use the same MLS database to track information about homes on the market. After all, it doesn't make sense for individual agents to develop their own property database if MLS does all that they need! Instead, they can focus on what they do best: selling houses. This kind of IT standardization will happen to more types of companies as they try to focus on core competencies and cut operating costs.

Right now, Software as a Service (Saas) is a big buzzword in the IT world. With salesforce.com offering standard business software for a subscription price, its customers no longer have to invest tens of thousands of dollars in IT infrastructure or hire consultants to tell them how to do it legally and efficiently. All of the hardware, architecture, development, and best-practice compliance are taken care of by someone else -- someone who's really good at it and whose business it is to be really good at it.

When I was a kid, we would let our household garbage pile up in the garage for a couple weeks, and then my dad and I would throw it in the pickup truck and take it to the landfill. I remember seeing many of our other friends from town at the dump on Saturday mornings doing the same thing. But as we got busier and eventually sold our truck, it became more cost effective to hire Russ, the trash man. All Russ did was haul trash. He had a huge truck that could load itself without the dirty work. He would come every Tuesday, so we didn't have to worry about maintaining a mound of household trash in the garage for two weeks. And on Saturdays, dad and I could focus on building, repairing, and mowing around the house instead of finding time to load the truck and make the trip to the dump. Russ had the infrastructure, the established service levels, and the means to provide a useful, standard service all for nearly the same price that we paid every other week when we dumped it ourselves. Needless to say, with our newly-commoditized home trash service, I haven't been to the landfill in years (not that I miss it).

In the future, as technology and IT become more commoditized, the key to succeeding in business for many companies will be their exceptional execution of timeless business functions like marketing, sales, and human resources. Starting with smaller, simpler companies like restaurants and stores and working upward to larger, more complicated companies like banks and pharmaceuticals, IT will become an increasingly outsourced function. And as corporate IT becomes more regulated and efforts increase to build a fail-proof IT architecture immune to natural disasters and hackers, a small collection of IT-as-a-service companies will emerge, serving all of the IT needs of everybody. And maybe those organizations already exist...Could it be Google? Microsoft? Salesforce.com?

Sometime in my lifetime, I expect most businesses to lay off the majority of their IT staff and replace them by outsourcing to an IT-as-a-service organization. This organization will provide the infrastructure, applications, support, and administration for its clients. It will have a department dedicated to each major industry in the world: manufacturing, research and development, finance, retail, and more, as well as a department for each industry-agnostic business function like human resources, accounting, and marketing. The organization would be able to provide stable, secure, high-class IT services for everyone and everything.

With our increasing dependence on technology as well as its rising complexity, many companies will pawn the self-managed equipment in their data centers, fire their IT consultants, and migrate toward a workstation-only, outsourced IT environment. In time, these companies will improve overall efficiency and save money by focusing on their core competencies and leaving the IT to the experts.