By Barton Kaplan
IT organizations are at a crossroads. More technology savvy business partners, combined with compelling third-party cloud service offerings, are leading to an explosion of “shadow” IT. Gartner estimates that 35 percent of all technology spending will occur outside of IT by 2015.[1] As a result, traditional IT organizations face a stark choice: 1) fundamentally transform their operating models to win back the confidence of the business or 2) maintain the status quo and become full-time caretakers of the legacy environment.
In response, IT organizations have initiated efforts to roll out various XaaS offerings — infrastructure, platform, software, database, disaster recovery, and so forth. This is a necessary step, but ultimately insufficient. It will be extremely difficult for internal IT organizations to compete effectively in commodity-oriented services with external providers given the scale, low costs, ease of use, and rapid innovation they can bring.
IT organizations shouldn’t view these services as the end point, but rather as a stepping stone to end-to-end IT services. CEB defines end-to-end IT services as the “packaging of all the technologies, processes, and resources across IT needed to deliver a specific business outcome.”[2] Rather than offering separate services, applications and infrastructure organizations come together to offer integrated services (e.g., collaboration).
End-to-end IT services bring inherent advantages, including:
- More closely aligned to the business
- Focused on business and not IT outcomes
- More cost efficient
- More differentiated than XaaS offerings
When implemented successfully, the results can be dramatic. CEB estimates annual IT budget savings at 17 percent. One high tech company that adopted end-to-end IT services was on target to reduce “lights-on” spending as percentage of the total budget by nearly 50 percent over five years. An insurance company I worked with saw a 250 percent increase in spend on innovation.
So how do IT organizations get there? Achieving end-to-end IT services is a multi-year journey, not a flip of the switch. To reduce the risk of increasing irrelevance, however, IT needs to start now. Here are five proven tactics that leading practitioners have followed to successfully implement end-to-end IT services:
1) Pursue an evolutionary approach, not a big bang. Successful organizations focus first on a single service that they can roll out enterprise-wide, or a willing business unit around which they can develop an initial set of services.
2) Define your services based on business capabilities. Don’t define your services in terms of technology, but rather the business outcome they can impact. The most effective means to do so is through business capabilities.
3) Adopt the goldilocks principle when it comes to the service portfolio. Not too many, not too few. A handful of services is likely too few; more than a couple dozen services is likely too many.
4) Govern and prioritize based on services, not projects. End-to-end IT services require a fundamental change to the IT operating model. Projects don’t go away, but they are subservient to the needs of the service, and no longer the primary means through which business needs are met.
5) Manage end-to-end services like a product in the marketplace. Service owners ought to act like product managers, not operations support. Key measures of business value should be based on adoption rates and service use.
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Bart Kaplan is a business solution strategist with VMware Accelerate Advisory Services and is based in Maryland.
