Poking Holes at Running IT as a Business

By Donald Sears  |  Posted 2010-01-22

Bob Lewis, president of IT Catalysts and a prolific writer on technology issues, is not afraid to tell you what he thinks is wrong with how most IT shops are run, and how CIOs and the business side are asking for the wrong things from IT.

In his recent article for InfoWorld, "Run IT as a Business--Why That's a Train Wreck Waiting to Happen" (worth a full read), Lewis said he thinks there is a fundamental flaw in the now-traditional approach of seeing IT as being in the client services business, where IT is the service and the business side is the client. Lewis advocates for a more peer-to-peer partnership approach that asks business folks, "Where is your pain?" and says, here are ways to address it you might not even know we can figure out with technology.

Lewis is clear in his view:

Nobody in IT should ever say, "You're my customer and my job is to make sure you're satisfied," or ask, "What do you want me to do?"

Instead, they should say, "My job is to help you and the company succeed," followed by "Show me how you do things now," and "Let's figure out a better way of getting this done."

In Lewis' eyes, there is far too much dictating from the business side based on what they think they want, rather than on what they really need to improve, simplify or exploit--and not nearly enough focus on customers. Treating an IT department like a vendor is not the answer to Lewis, as most businesspeople inherently do not trust vendors: It sets up a distrustful relationship from the outset with a group that works in the same company.

Lewis also said he believes the running of IT through the use of chargebacks (aka "transfer pricing") is another major no-no. Here's why:

When the only incentive managers have to promote efficiency is the impact of chargebacks on their departmental budgets, chargebacks are just a Band-Aid. They won't fix the real problem: that nobody cares about the success of the business, only their own fiefdom.

Anita Cassidy, president of IT Directions ... has seen the damage that chargebacks can do. "Although charging back IT costs can discourage frivolous spending," she acknowledges, "I've seen it create too many undesirable results.

"I watched one company make several poor strategic decisions for the enterprise as a whole," she adds. "Because of its chargeback system, its managers were more concerned about reducing their individual costs than doing what was best for the enterprise. I watched another significantly increase shadow costs and inefficiencies within the business. Chargebacks had a chilling effect on using the central IT services."

Chargebacks are an attempt to use market forces to regulate the supply and demand for IT services. If that's the best a business can do, it means the business has no strategy, no plans, and no intentional way to turn ideas into action.

The solution? Better governance, support and leadership across all departments, said Lewis.

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