23 August 2012

IT is either a cost centre or provides business value - Binary Thinking Hex No. 6

Why has IT management become so cursed with Binary Thinking?

No. 6: IT is either a cost centre or provides business value


Binary Thinking: If the IT department is accounted for as a cost centre then stakeholders in the enterprise will be unable to appreciate what the IT team and its services can do for the enterprise and will not be able to exploit the opportunities IT provides for adding value to the business. Only by changing the accounting treatment of the IT department can its full value be realised.

Portfolio Insight: It is often convenient for a business to group some of its IT related costs in internal accounts and either write them off regularly or transfer them directly (or indirectly) to revenue earning operating units. This need have no impact on how IT services are organised or exploited. It is possible to conceive of an IT department which issues invoices to external customers and collects revenue but since this administrative change would have tax and accounting implications and would provide no tangible benefits to the organisation it is largely irrelevant and unlikely to ever be implemented.

Binary Thinking Hex No. 5

Binary Thinking Hex No. 7

Related blog post: Are you making a meal of your IT finances?

19 August 2012

Public or private cloud - Binary Thinking Hex No. 5

Why has IT management become so cursed with Binary Thinking?

No. 5: IT is either internal or provided from the public cloud


Binary Thinking: An organisation's internal IT department is never involved if an organisation uses public cloud services and this makes sense as public cloud is completely self-service, self-managing and requires no commercial commitment. CIOs should make plans to move to all IT services to the public cloud and then resign. Oh, except when there are some security issues in which case no IT services should be moved to the public cloud and everything should be kept in-house.

Portfolio Insight: The various flavours of cloud and the various providers, both internal and external, create a rich palette of options for enterprises to use. Although cloud services are built upon commodity components they are not easily substitutable commodities themselves and all have unique characteristics, strengths and weaknesses. The optimum combination of services is likely to be a carefully selected blend of the different options. CIOs should not plan any wholesale migrations to the public cloud or anything else but should instead be ready to exploit the public cloud along side other options to satisfy specific business needs.

Binary Thinking Hex No. 4

Binary Thinking Hex No. 6

9 August 2012

Obsolete or indespensable CIO? - Binary Thinking Hex No. 4

Why has IT management become so cursed with Binary Thinking?

No. 4: The CIO will soon be obsolete or indispensable


Binary Thinking: Computing and communication technologies are becoming commodities which means that specialist IT skills and all of the management structures around them will no longer be needed. General managers can satisfy their IT needs from the consumer market place in the same way they can get their home PCs and mobile phones. Unfortunately, in the not too distant future, the performance of any organisation will depend on how they use information, other sources of competitive advantage will cease to be important and only CIOs and other IT leaders will be qualified to lead enterprises.

Portfolio Insight: The behaviour of large systems (of people, investments or other components, not just IT) exhibit patterns which can bear little relation to the behaviour of their constituent elements. Just because IT components can be easily substituted commodities it does not mean that the large, integrated IT architectures which enterprises need are also commodities. Financial services, where commodity equities or consumer loans have been assembled into more complex products, have given us all a painful analogy to use. Enterprises will continue to need a leadership team who can focus on different aspects of their system (for example, money, people, technology or IT services) and work together to achieve the best results possible.

Binary Thinking Hex No. 3

Binary Thinking Hex No. 5

Related post: The future of the CIO

6 August 2012

IT is internal or outsourced - Binary Thinking Hex No. 3

Why has IT management become so cursed with Binary Thinking?

No. 3: IT is internal or outsourced


Binary Thinking: Organisations can get their IT services from an internal IT department or they can dispense with their IT department and their CIO and get all of their IT services under contract from an IT outsourcer.

Portfolio Insight: Both extreme options are illusions. Even organisations which have "fully" insourced IT employ contractors and purchase software and equipment, together with supporting services, from external parties. Organisations which have "fully" outsourced their IT still have internal staff involved in requesting, governing, specifying, procuring and supervising the outsourced services. The optimum model will be a carefully tuned combination of internally and externally provided products and activities.

Binary Thinking Hex No. 2

Binary Thinking Hex No. 4

1 August 2012

Control of IT can be centralised or distributed - Binary Thinking Hex No. 2

Why has IT management become so cursed with Binary Thinking?

No. 2: Control of IT can be centralised or distributed


Binary Thinking: CIOs need to make a fundamental decision for their organisation. Either they will control all IT staff, assets and projects across the enterprise centrally or they will delegate everything out to local managers on a geographic and/or business-line basis. Unless a CIO chooses the centralised option they should probably resign.

Portfolio Insight: Different classes of IT service experience different economies (or dis-economies) of scale. Total centralisation or total distribution are just extreme ends of a whole spectrum of options. The optimum option for any enterprise is likely to be somewhere in the middle of the scale and not either end.

Binary Thinking Hex No. 1

Binary Thinking Hex No. 3

Related post: How to organise IT on a global scale

Related post: Chris Curran on Balancing lopsided IT governance

Contact Us

Name

Email *

Message *