When IT is a Service function

I’ve been very quiet for the last year as I have been working at 3 different clients who were all undertaking significant pieces of work in the heavily regulated utility sector. One was vertical and the other two were in the water sector.

One thing that these organisations all have in common is that they view the provision of delivery of IT as a service function and as a result, they all have “Strategic Partnerships” with external firms mainly based offshore. Unlike other sectors who seem to keep some functions in-house, these have gone the whole hog and handed it all over.

Service Function or intellectual Property

Whilst this has a very good effect on the bottom line, in terms of costs, and understanding what you will need to spend on your IT, it does leave you exposed in terms of intellectual property. The whole logic behind partnering is for the provider to offer the commodity skills that the organisation deems as not a core competency. This may have been a good approach in the past but now that IT is so fundamental to an organisation it is now actually intellectual property.

One of the major side effects of this “promotion” of IT to be central to the business is that if you come to try and change your “partner” it becomes a very high risk and fraught with danger which could, in fact, lead to business damage both financially and reputationally.

I have worked in organisations that have been crippled by this type of transition and it has taken months for them to get anywhere near to business as usual.

Another observation I can make is that without the level of investment in IT you can become very old fashioned and behind your competitors very quickly. This would help explain the amount of “disruption” that many traditional industries are encountering in recent years.

I am convinced that there needs to be a complete mindset change within senior IT management roles to ensure that they become thought and business leaders and not seen as a subordinate service provider.

The interesting Paradox is that a lot of the “Strategic” partnership organisations should be the ones that take the lead and help the legacy organisation change and drive IT forward, however, this potentially means cannibalising their current revenue streams they receive from supporting the old way.

I have been in the industry now for over 30 years and am still excited about what IT (Technology) can do for businesses. In the 80’s and 90’s we radicalised things with ERP systems. In the 2000’s it was the rise of the Internet. In the 20-teens it’s been the rise of the App and big data. If the old way of thinking maintains then a lot of the organisation that exist today will not be around in the next decade due to looking at technology as a service function.