The concept of providing IT-as-a-service (ITaaS) is a high priority for CIOs as they look to shake off the traditional view of their departments as costly and inefficient parts of their businesses.
Several CIOs and their teams are now undertaking initiatives to position the technology team as business enablers. However, many have only made moderate progress towards IT as a true service broker – providing networking, software, hardware and support cost-effectively and efficiently – usually for a fee.
IDG Research Services, EMC and VMware recently spoke to more than 450 IT and business unit executives globally to get their thoughts on ITaaS. Despite most citing ITaaS as a critical business priority, 25 per cent of respondents felt little or no progress had been made, while half reported staff sometimes turned to outside providers to supply IT.
Technology leaders from several industries echoed these sentiments during CIO’s recent IT-as-a-service roundtable discussion in Sydney, which looked at how much progress has been made towards setting up IT to run like a business. The roundtable lunch was sponsored by EMC and VMware.
General manager of IT at Schenker Australia, John Jessen, says his organisation is working to become more transparent around the IT services it provides to users. The company recently signed a new data centre outsourcing agreement under a full “operational expenditure” model, which enables it to view infrastructure services and costs at a more granular level.
“Every aspect of IT service delivery should be visible down to the lowest common denominator,” says Jessen. “It’s important when we are charging back to the business to show exactly what services are being provided and convince the organisation to invest in systems that can drive productivity gains.
“This has been tough but it’s a journey that has well and truly started at our organisation.”
Westfield Group’s IT division is delivering a range of services as a “true service provider,” as the organisation goes through a digital transition, says CIO, Peter Bourke. “We are looking at increasing our participation in the cloud; we’ve always used outsourced data centres, and we will be using more co-location sites moving forward,” he says.
“We are very much working with the business to deliver software-as-a-service apps to our users and ensuring they’re fully integrated; we’ve just combined the Salesforce CRM platform with our core ERP systems.”
Meanwhile, the IT department at the The MAC Services Group, an Australian workforce accommodation provider, is almost working as a ‘sub-contractor’ to the organisation to ensure it is meeting the expectations of users, says GM of IT, Daniel Schubert.
“We are moving more towards providing cloud-based IT services, and have quickly recognised the need to be a broker of technologies that best meet the requirements of each of our individual business units,” he says.
According to Tim Fleming, CIO at Deloitte, the concept of brokering services on demand means his team must always find a better way to deliver IT. “We can’t be sitting around building servers and taking weeks to deploy things,” he says. “There are cost demands and increasingly we are getting services from anywhere and everywhere.
“Every week, I have seen more services that we are not directly supplying but we still need to be there to broker them and make sure the data architecture is correct.”
All attendees agree that for the IT group to be seen as a business enabler, cultural change is needed. Steve Shipley, director of consulting at EMC Australia and New Zealand, says IT needs to define services in business and not IT terms, and also speak the language of business.
“The ITaaS governance and target operating model must have clearly defined processes using an integrated business and IT team to define and manage services as an ongoing asset,” he says.
According to Geoffrey Brown, director, innovation, solutions and engagement services at The University of Sydney, IT people are treading established tracks which have proven to be right and valuable in the past. The trouble is, the direction has changed.
“Where we are in history is fascinating in terms of the challenges businesses are facing, but unfortunately traditional IT is becoming more of problem than a solution in my view,” he says. “Some people in IT are resisting change as we move towards digitisation of much of what we do. The legacy problem we have is that thinking needs to change in IT.”
Jessen claims his IT group has gained more respect and trust from the rest of the organisation in recent times. “They trust that we know what we are doing and we are not bloated in terms of cost and we can actually show them why we are running IT systems and why we have what we have,” he says.
The ‘shadow IT’ threat
Users have more opportunities than ever to purchase their own IT services. It’s as simple as whipping out their credit cards to purchase storage and other services from organisations like Amazon Web Services and Dropbox. The puts the onus on IT departments to provide comparable, if not better, services than those offered by these third-party providers.
Daniel Johnson, head of information systems at the Sydney Opera House, says IT departments “need to become architects rather than stoppers” and have a more holistic view of their organisations. “People will often think in the silo of what they need to achieve and if we try to stop that, they will just go off and buy what they need anyway,” he says.
Another attendee says her IT department had gone through a transformation recently, moving it from a decentralised to a centralised function. This means its IT team is under more pressure than ever to provide innovative solutions to users as quickly as possible.
“We are completing a large acquisition of another organisation, and it’s a challenge to provide a holistic picture of all the IT services that we can provide to our users,” she says. “But it’s quite simple: If we can’t deliver IT services that the business users want, they will look elsewhere.”
The CIO of a large retail group adds that IT groups need to start giving users guidelines around the consequences of purchasing IT from outside providers. “They need to be able to tell a story to users, paint the picture and convey to users that there are ramifications if they go outside the IT department.”
Applications people purchase from third-party providers outside of the internal IT department need to interact with the corporate systems and data warehouses.
“Often that’s an afterthought,” he says. “What you want to do is introduce dashboard reporting that shows all data sources in one screen shot for analysis so people start to understand the consequences of shadow IT.
“The strategy we adopt is ‘ok if that’s what you want to do, that is fine but we can’t deliver our technology, our system our application to that environment apart from basic things such as email and Internet access.
“That’s where people slow down a bit, particularly when we tell them that we can’t provide that comprehensive support.”