Forest For The Trees: Understanding the Future of IT

Pine ForestThe problem with this discussion on the future of IT and the future of the IT department is that it requires a broader perspective by IT professionals and consultants that view the world through an employment experience or client base that is often too narrow. Another problem is that if you sell products and services to CIO’s or you pay your mortgage by being a CIO I would not expect you to endorse a declining role of CIO’s or see the trends for IT more broadly.

What of the IT needs of the nearly 28 million businesses in the US? The total US tech market. If you have been paying any attention at all you should have a pretty good idea of what OEM direct (non-IT) sales, cloud services and outsourcing are doing to the future of IT and role of the CIO and the in-house IT department.

A broad perspective requires understanding that roughly 75% of the businesses in the US have no payroll and operate as unincorporated self-employment businesses by their owners. That’s just under 22 million businesses according to the most recent census data. Those businesses turn to Go Daddy, WordPress, Salesforce, MyERP, Google Apps, and other cloud services or crowdsourcing for their IT needs.

Setting aside the non-employer businesses, roughly 98% of businesses with a payroll have fewer than 100 employees. So just how many of those businesses do you suspect have an in-house IT department or a CIO versus relying 100% on a local VAR and cloud services. Doesn’t that say something about the future of IT departments and the role of the CIO?

For the critics of my position, what percentage of your technology portfolio and services are run in-house? Is that increasing or decreasing? What role does your CIO, if you have one, play in driving your technology decisions. Not sure. Just consider the role of the CIO in the last 5 applications, or cloud services, that were purchased.

The answer is as I posited, most companies do not need a CIO or in-house IT anymore than they need an architect, engineer or benefits administrator and can often do just fine with a non-executive manager.

Banking as mentioned is a great example of this very issue. Most banks are not the behemoths with massive IT departments and data centers measured in acres. They are small banks, thrifts and credit unions that use one of a handful of managed service providers for their core banking systems. They also rely heavily on web applications or ASP’s for the other essential applications and services.

The CIO of the typical local or regional financial institution is largely a procurement function responsible for desktops, vendor management and IT compliance. (BTW – offline processing in banks and the payments industry is a well established model)

And what of healthcare? Just consider what percentage of a hospitals health information technology portfolio is managed by in-house IT department and the CIO. It would be rare for IT to manage the biomedical, diagnostic and laboratory technologies even the information systems associated with these platforms which were probably procured with no input from IT.

What should we conclude the future of IT in healthcare when electronic health records and health information systems have given rise to the informatics department and the creation of the Chief Medical Informatics Officer. Will the formation of a regional and national health information exchange make it more likely that in-house IT will become less relevant or more relevant?

Similarly, in education, the feds just changed the privacy law clearing the way for states to aggregate and consolidate student data from elementary schools and secondary education with the community college and university. So what effect will the consolidation of student information systems have on the future of IT in your local school or college IT department if they no longer run or support the core business applications in their institutions?

Government is not immune. There future of the in-house IT department will see the most radical change from the cloud first strategy enacted by Congress in the NDAA which requires DoD to use cloud services and third party service providers.

And so too it goes in other sectors if you examine the role of IT in driving or supporting the revenue generating technologies. Just consider the future of IT and the role of the CIO in driving or supporting the new social business models. What conclusion should we make about the future of IT departments from what has already happened?

The IT department scope of responsibility for technology decision making (re: governance), operations and support is often very narrow relative to a typical company’s total portfolio. The role of the CIO rarely includes responsibility for production automation, command and control systems, or other operational technologies which includes fewer and fewer vendor relationships with IT service providers managed by the CIO.

I am willing to listen to arguments that I am just an idiot and way off base in my conclusions. But you will have to explain to me:

  • Why so many CIO’s complain about the business not including them in software and technology decisions.
  • Why the major analyst firms describe the role of the CIO in a cloud services world to be one of a broker-facilitator that helps the business navigate their choices.
  • Why the majority of companies do just fine with no IT department or just a mid-level IT manager reporting to the CFO.
  • And, you will have to explain to me what the rhetoric of “the business drives IT” was all about.

What’s this all mean ? It means that CIO’s must properly diagnose the likely future of IT and the changing role of the IT department before prescribing a solution. It means CIO’s must also understand the trajectory of the changes in the role of the CIO so they aim for where their target is going to be when they get there not where it is at now.

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3 Responses to Forest For The Trees: Understanding the Future of IT

  1. Remon van Riemsdijk says:

    Having been a CIO and CTO myself recently within mid-sized financial multinationals, I clearly have seen the IT department transform from an image of ‘home of wizards and magicians’ (also known as ‘programmers, architects and engineers’) where IT-illiterate board members (as well as most senior employees) were highly in favour of having a ‘top-magician’ (CIO) at board or management committee level.
    But right now people in their early forties as well as all aged thirty-something have been growing up amidst computers, word processing software and, for the last 15 odd years also the internet. The below-45 years of age generations are very open to using mobile devices and cloud hosted solutions like salesforce.com. The magic has gone and social media or cloud based infrastructure does not scare senior management (especially anyone below, say, 45 years of age) anymore. Bye, bye magic and hello utilities.
    Of course the fact that any business platform can offer highly customizable workflow that can be created and managed by any business person without any software programming background is helping too.
    Rereading this article within five years from now will prove that centralized IT departments will be very small in size and will have no C level executive running it.

  2. The Higher Ed CIO says:

    Remon – thanks for your thoughtful comments. I too see the increased capability of users and the simplification of the technology being the central force at work here. I imagine even in 3 years we will see a significant difference.

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