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Is Corporate IT Doomed to Bankruptcy?

By Kipp Bertke, Strategist, VMware Accelerate Services

Kipp_BertkeCorporate IT departments have been the best kept business secret in history. Evolution for IT has been a constant since the beginning, and IT departments have been the masters of their destiny. Who else has a captive customer base, a cost plus business model and a reward for slow and steady? If an IT department were a startup company, and you had invested in it from the start, the market capitalization would have been through the roof…until now.

A look back at history brings us to the defining moment facing today’s IT.

The First Disruptor
Most IT departments started with a mainframe and added a midrange due to the costs and complexity of the mainframe. The first disruptor of IT came on the scene in the early 80’s: the personal computer (PC). At first it was just a fad; it was fun and cool and any average person could do really neat things with it. (Yes, and there were the geeks, too, who did geeky things with it.) But IT departments had nothing to worry about, right? After all, they were in control of the real computers in the company.

But then something amazingly crazy happened. Accounting started using the personal computer for working on simple spreadsheets. They didn’t have to rely on IT and its inflexible systems. Over the next two decades the personal computer quickly spread throughout the business world and IT departments had a new technology to manage, like it or not.

New Layers of Technology
In the midst of the personal computer invading IT, another disruptive technology emerged: the x86 server. It was cheap, flexible and didn’t fall under the control of traditional IT departments. But for all the good it did, the x86 added yet another layer of technology for IT departments to support. This is the start of the ‘silo’-ing of technology and the people and processes that are the ecosystems around it, which largely still exists today.

With the x86 server came additional disruptors: the evolution of client-server and multi-tiered architectures. These, along with the multiple changes in form factors of x86 servers, impacted the ecosystem and significantly increased its complexity. It was the start of the x86 sever sprawl. Despite all the predictions of these architectures replacing the “old” mainframe/midrange computers, it never happened. And the silos grew deeper and wider, as did the complexity of managing, operating and budgeting.

The Internet Layer
Then there was the Internet. Not an IT disruptor at first. It was more of a social disruptor; innovating they way people shared information and communicated. Again, IT departments had nothing to worry about as long as they secured the connections.

This is where it gets good.

Power to the People
With smartphones and tablets, people started to bring their personal devices into work. At the same time, the Internet was taking a leap forward in evolution with software ‘as a service’ offerings. Again, IT departments largely saw these events as just another fad that they wouldn’t have to deal with, not a disruptor. There was no way they were going to let a personal device get on their network.

This is the dawn of the cloud and mobile era, which is liberating IT’s customers with flexibility, elasticity, accessibility and cost transparency.

The cloud and mobile era is a disruptor, but is a different from those of the past. It is not just another technology to adapt, integrate and support; it is a paradigm shift. It’s radically impacting the business of IT and forever changing the landscape of those who deliver and consume it. With infrastructure offered ‘as a service’ and the advent of the cloud, the bubble burst for IT.

A New Dawn…
History is rich with businesses that were once wildly successful, but due to a lack of innovation, lost their way and their customers. And those that didn’t heed the signs went bankrupt or out of business. There are also success stories of businesses avoiding or coming out of bankruptcy leaner and more competitive than ever.

If IT can adjust to the paradigm shift, knowing that its customers are empowered, emboldened, and liberated with cloud (XaaS) and mobile, they can avoid the painful process of bankruptcy. One of the keys to success in this new paradigm is IT acting as a broker of a portfolio of capabilities and services and being held accountable over a competitive landscape. Accomplishing these shifts will finally result in that ever elusive alliance between corporate IT and the businesses it serves — ensuring the health of IT for decades to come.


Kipp Bertke is an Architect and Strategist with VMware Accelerate Advisory Services and has over 25 years of professional IT and leadership experience. His passion is helping organizations develop actionable and prescriptive IT strategies and roadmaps, closely aligning them to their organization’s business strategy and mission for a measurable business outcome. He leads teams through strategic development engagements with VMware’s Enterprise clients.