Future of Corporate IT – Cloud/SaaS initiated Tectonic shift
This is no star-war kid of hype this is real. Cloud and SaaS will change the role of corporate IT in the coming years. The change would be in next 5-10 years than 2-3 year but the tectonic plates have already started moving. Historically corporate IT used to be based on providing end to end services using IT resources either in-house or outsourced but this will be changing. The IT function of 2017+ will bear little resemblance to its current state. Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced.
This will mean that fewer of employees currently within IT will remain, while CIOs face the choice of expanding to lead a business shared service group or managing technology platforms externally sourced.
This tectonic shift will be an outcome of “aggregation of marginal gains” that SaaS/Cloud based solution will have in corporate space.
*** “aggregation of marginal gains” was used today for Dave Brailsford – Cyclist Team GB performance director. I could not stop myself to use this.
The shift will come from :-
1: Information Over Process
The rise of technology delivered as a service, or the cloud, will significantly reduce competitive advantage for IT. In theory, a start-up could use the cloud to obtain the same functionality, scale, and quality as an industry leader. Differentiation will lie in how an organization manages customers & change, integrates its service portfolio, and critically, exploits the information the services generate. That will make sure that information management ( BI/IM) will continue to gain importance for information collection and end to end management and operational view.
2: IT Embedded in Business units
The organizational corporate is in flux. All corporate functions have the same problems: their capabilities overlap; they do not control the outcomes they enable; and after many cuts, they are struggling to find the next big efficiency. And for organizations growing in emerging markets, no corporate function has the scale or expertise to provide sufficient local support.
The IT function shares these problems. It has skills in strategy, program management, business process design, and sourcing. All are valuable, but none are needed solely for delivering technology, and so they can all exist elsewhere. Second, no amount of alignment and partnership changes the fact that the IT function enables business outcomes that someone else controls. Finally, cost pressures mean many CFO’s/CIOs will face the unwelcome choice of cutting delivery resources needed to “build things right,” to IT “Manage the right things.”. Externalization of IT systems or in other words SaaS is going to shift IT manage responsibility to business units as IT will no longer build them.
Externalization of applications development, infrastructure operations, and back-office processes continues, gradually eroding the “factory” side of the IT function. The pace will accelerate as the cloud enables the externalization of application lifetime spend. As this occurs, internal roles will shift from being technology providers to technology manager/brokers. The technology manager/broker (IT) will manage/broker the deal ( SLA, DR, Performance level etc) on business unit behalf.
4: Greater Business Partner Responsibility
A generation of business leaders and end users is emerging with greater technology knowledge and confidence. They see advanced, user-friendly technology as an everyday occurrence, and can recite stories of companies gaining industry leadership through technology. At the same time that business leaders’ expectations are quickly rising, the SaaS/cloud gives them access to unprecedented technology scale and expertise. The fact that cloud services cannot be extensively customized levels the playing field; business units cannot customize cloud applications but neither can the IT function. As Cloud/SaaS cannot be modified by either IT or Business, role of business increases considerably in this emerging landscape.
5: Diminished Standalone IT Role
As IT roles migrate to business services or are externalized, the scope of the IT function will diminish and its headcount will fall. This headcount will be absorbed by business units who will need people who can act as SaaS/Cloud brokers. Strategy, risk, program management, user support, and relationship management will exist at the business services level, not within the IT function. The CIO position will expand to lead this broader group or shrink to manage technology procurement and integration. Roles remaining in the IT function will organize around integrate and run functions. Most of the IT internal roles will be integration and business knowledge expert who will deliver integrated platform for cross system integrations.
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