Decentralizing IT for a Digital-First Approach
Blog posted by: David Crouch – ITSM consultant, Beyond20, 18 March 2022.
Is it really time to get rid of the IT department and, if so, what happens then?
And how can best practice such as ITIL 4 help with when decentralizing IT, or not?
Principal research scientist at the MIT Sloan School of Management, Joe Peppard – writing recently in the Wall Street Journal – said: “having an IT department is what will prevent companies from being innovative agile, customer-focused and digitally transformed.”
In an expansive article, he adds that IT departments belong to a “bygone era and are ill-suited to the demands of a digital-first world” and notes the existence of “pioneers” that are “ditching their IT departments”.
It’s a provocative idea, but one that is both short-sighted and, in fact, not exactly novel. The concept of decentralized or “distributed” IT really isn’t anything new.
It wasn’t long ago when organizations experimented with distributed IT and it didn’t go so well. Consequently, they moved back from that model towards centralized IT. The reality is often multiple cycles of outsourcing, offshoring then insourcing IT again.
One of the decentralized IT approaches Peppard cites from a chief information officer is “freedom within a framework” which means “giving staff the canvas and the paint but leaving it up to them to decide what to paint and how”. It sounds cute, but things often degenerate quickly into non-standardized chaos and burgeoning expenses.
The question of whether enterprises need centralized IT or not really depends on the organization and its ecosystem.
How does an organization exist without an IT department?
I think that Peppard’s proposition presumes that organizations are fully digitalized.
ITIL 4 says that – in a fully-digitalized organization – there is no difference between “the business” and IT. However, not all organizations are truly digitalized. So, how does getting rid of the IT department further this goal?
Organizations still need a certain amount of technical expertise, despite the apparent “democratization” of technology.
Just think about it – many employees struggle with basic hardware and software functionality, let alone anything more complicated.
At a higher level, decentralized IT often leads to increased costs and risk. For example, in a university hospital where “shadow IT” is prevalent, anybody who scrapes together the budget gets what they want. Potential security risks like this, along with others, need to be addressed in a coordinated and controlled way.
Potential best practice solutions – ITIL 4
ITIL 4 brings a non-prescriptive approach and with guidance that can be applied whether your IT situation is centralized or not.
For example, if an organization has a centralized IT department that is allegedly too bureaucratic and not agile enough, then ITIL 4 concepts like value streams come into play: making sure you minimize hand-offs between processes involving various teams; improving communication and removing waste in a way that delights the customer, especially when onboarding.
If the IT department is accused of being unresponsive and not in tune with the business, ITIL 4 shows how IT needs to predict business requirements through dialogue with business leadership.
In decentralized IT, the bigger issue is lack of control around risk, cost and duplication of systems. Through a service management office promoting best practice, ITIL 4 concepts including the service value system and service value chain consider the entire IT ecosystem. This can bring greater control to financing digital services but without stipulating how tightly exerted the governance should be.
In addition, ITIL 4 brings in thinking from the lean manufacturing world: identifying and removing waste that can creep in overtime with decentralized IT.
To centralize or decentralize? – that is the wrong question
I think there’s a case for selective outsourcing, some targeted distributed IT or embedding aspects of IT like product development teams throughout an organization.
The “no IT” (decentralized) model often works best in organizations with relatively few employees, have few compliance hurdles and offer relatively few products and services. But they often struggle to cobble together and manage multiple, third-party vendors who manage mission-critical enabling technologies.
Ultimately, “is it time to get rid of the IT department?” is the wrong question; instead we need to be thinking how to better integrate IT within businesses and get more value out of it.
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