Building Tomorrow’s Organization – without today’s IT?

Tomorrow's Organization with today's ITA few weeks ago I wrote about The diminishing role of IT and the CIO.  That post struck a nerve with quite a few readers so I wanted to expand on the topic.   I thought about a case study of some form or perhaps an interview or two but then I thought…why not do a ‘what if’ scenario and see what happens.

Sound like fun? Well…it does to me…and I plunked down more than 1800 words on it so be prepared to read :)

My “what if” scenario revolves around tomorrow’s organization…and whether it can be built without today’s IT. Here’s the premise:

What if you could build your organization from scratch.  No legacy systems.  No sacred cows.   What would the IT group look like?

Interesting question right?   While its not likely that anyone would scratch their legacy systems and start over, it still might be a fun mind game to see if IT matters or not.

The basis for this “what if” scenario is built upon the Future of IT survey report by the Executive IT Board – read more about that survey in my article titled The Future of IT & the CIO – Redux of the Dodo.

Tomorrow’s Organization

What would your organization look like if you could start over?  Would you have the same physical space and layout?  Same overhead?  Or…would you try a more radical approach and go with telecommuting, remote working and outsourcing?

Since we all have different ideas of what an organization is…let’s set some ground rules.  Let’s assume the following:

  • You have 500 employees
  • Customers are spread across North America (US & Canada)
  • Your company provides services (rather than make/sell products)
  • Due to customer demands, you need to have some employees in a different areas of the country.

So…how would you design your organization to handle the demands of the business?

Open up four offices in the four largest cities in the country?  Open offices in geographically important areas?  Let’s say you want to have a presence in New York City, Los Angeles, Chicago and Dallas.  Not bad locations…but expensive too.

Each business is different of course, but let’s say that we need to have physical presences in this four cities because customers demand it.  Fine…let’s open up some offices.

Now.  You’ve got your physical space figured out. How about your technology?

Remember…you can start from scratch.  No legacy systems to think about. But…you do need to think about whether today’s IT will work in tomorrow’s organization.

What would you do?

What I’m going to do in this post is show how tomorrow’s organization can be built with absolutely zero professional IT staff.

Building Tomorrow’s Organization

What are the basics needed for running your business?  What systems do you need?   I’ll go with these as my absolute  must haves:

Basics

  • Computers / Workstations (not servers…they will be included in Systems)
  • Printers
  • Copiers / Scanners / Fax (anyone use fax anymore??)
  • Phones

Systems

  • Email
  • Web
  • Collaboration
  • Financial
  • Sales/Pipeline Management
  • Customer Relationship Management (CRM)
  • HR / Payroll

I’m sure there are others but this covers the basics.

The basics are no-brainers. Find a reputable company / vendor and order some hardware.

But…before you take this first step, how will you organize your business?  Will you hire IT staff to implement and manage this hardware or will you outsource it?

Me?  Nothing on this basics list brings me an advantage in the marketplace.    I’d outsource the whole kit and kaboodle.  I’d find a company (or companies) that could manage the roll-out, maintenance, support and hardware/software refresh needed to support and maintain this equipment.   Of course…you’d need to make sure the company(s) that you outsource this to is credible and dependable…but that’s easy enough to do right? ;)

If you wanted to try an even more radical approach, you could let each employee manage their own computer, printer, phone combination.  Might be a support nightmare here but you could give each employee a stipend upon hiring and tell them to ‘buy their own system’.  Kraft is already trying this approach.  Looks like Citrix is trying it out as well.  You’d have to build some detailed guidelines to provide some direction on systems, software, and specifications, but I think it could be done.

Regardless of which approach you take, we’ve now found a way to get the basics for our 500 employees and we’ve not hired 1 IT employee yet.  Should we think about bringing on an IT pro?  Maybe…but do I need an IT professional?  I need someone to manage the vendors, the process and the relationship….so maybe I bring a procurement / vendor management / contract management professional with experience in the IT space. With 500 employees focused on providing services, I probably already have someone perfectly suited for this role. If not, +1 on the employee side…but we haven’t hired an IT employee yet.

We’ve got the basics down…let’s dive into the systems.

Outsource, in-house or the cloud?

Based on the necessary systems listed above, we’ve got to figure out how we’re going to handle seven different systems. Do we build out a datacenter and pack it full of servers and then start hiring employees to support these systems?  We could take that route…or….we could outsource it all to third-party vendors to manage for us. Or….we can look to the cloud for all these systems.

Let’s look at a few different options.

  • Option 1 – All systems in-house in a standard datacenter
  • Option 2- Some systems on-house staffed by employees with others outsourced (via cloud or standard datacenter)
  • Option 3 – All systems outsourced (via cloud or standard datacenter)
  • Option 4 – Some Critical Systems in-house with others outsourced (via cloud or standard datacenter)

There are many combinations to look at…but these are 4 options to consider.

Which option do we take?

Do we hire a full IT team and build out our own datacenter?  In my experience, there’s an awful lot of overhead, staffing and headaches involved in building and managing your own datacenter …way too much for very little real value.

Do we hire a partial IT team to manage in-house systems and outsource the rest?  I’m learning towards this approach. Personally, I’d suggest putting critical systems in-house and outsourcing the rest.

So..let’s figure out what our critical systems are.  Is an HR / Payroll system critical? What about email?  Financial Systems? That’s a call that each organization has to make…but here’s how I’d break them down for this particular excercise:

  • Critical: Web, Financial, Email
  • Non-Critical: Collaboration, HR/Payroll, Sales/Pipelne, CRM

Critical Systems – In-house or Outsource?

I’ve said before that email can easily be outsourced and/or moved to the cloud and I still believe that.  Email, although a critical app, can be moved to the cloud via either Google Apps, Hosted Exchange or some other form of outsourced email arrangement.   In today’s world, I wouldn’t  even think about staffing up to manage and maintain an email platform.  I’d outsource it.

What about the Web function / systems?   It sort of depends on what you want / need to do I think.  Will there be an ecommerce function?  What about the need to capture sensitive customer information?   Those questions play a key-role in the decision.

Let’s assume our website requirements are like other similar businesses…we need a website that looks good, is easy to change/update, has a client portal, can collect new lead, etc etc etc.  Do we need to build an entire group within IT to manage / maintain the web?

A good portion of what needs to be done on the web can easily be moved onto the cloud….see the write-up by Scott Brinker in his post titled The Age of Disposable Software and his Marketing in the Cloud slides for an overview of many of the cloud solutions available for web/marketing.

I’m going to go with outsourcing my web system(s).  There’s absolutely nothing I can do in-house that can’t be done by plugging several systems together using the cloud or a managed server (or servers) with a company like Peer1 or Rackspace. Why hire a staff of IT professionals to manage servers when I can offload this to professionals at another company for much less money?

That said, I do think there’s a need for someone in the organization to architect and manage the web presence…is that an IT person? Or…can a Marketing Technologist do that? For the sake of argument here, I’m going to say that I’d hire a technologist and place them in my marketing department.  This person (or persons)  can provide strategic direction for all things web and manage the vendors & technology used on the web. +1 on the employee side…but still no IT staff.

Now…how about the Financial System?  Since this business is a services business, we really don’t need anything major…we just need a financial and accounting system to run the business.  What does that entail? I have no idea to be honest…I’ve never done finance / accounting IT systems. Because I don’t understand them, I’m going to outsource the system implementation & maintenance but will require the systems be in-house. Do I hire an IT person to oversee this platform?  I don’t see why I would…my outsourced vendor would handle all technical details and I would pay them for it.  I would hire someone to oversee this critical application though…+1 on the employee side…but still no IT staff.

Non-Critical Systems

The decisions for our non-critical systems are a bit simpler than our critical systems.  These types of systems are well understood in the world of the cloud and outsourcing I’m going to look to outsourcing and the cloud for my non-critical systems. Salesforce.com for Sales/Pipeline & CRM, SocialText for collaboration and a company like Paychex for HR / Payroll / Employee adminstration.

Perhaps there’s a need to have a person (or two) to manage the relationships, contracts and procurement…but no technical staff. Perhaps a +1 or +2 for employees…but yet again, no IT staff.

Tomorrow’s Organization without Today’s IT?

Did I just design an organization without a single professional IT employee?  I sure did.

Is it realistic to do this?  Maybe…maybe not.  Is there ways to argue against everything I’ve done here? Absolutely…there are tons of holes in this new organization.  That said…I do think a company could easily outsource most of their IT infrastructure…if not all of it.

Do I really think that tomorrow’s organization will be built without IT? Not really…I think there will always be some form of IT but the status of the IT group (and the CIO) will change if we keep going down the road we’ve been traveling on for the last umpteen years.

The history of unfinished & unsuccessful projects is leading to a dead-end for most IT groups.  The mentality of process over people has lead most organizations to despise IT and everything IT stands for.  I can’t tell you how many organizations I’ve talk to where the IT group is looked at as the ‘enemy’ rather than as a friend.

Don’t get me wrong here though….I truly believe there are good IT groups and good CIO’s out there…but the majority are just average.  And today’s average isn’t good enough for tomorrow.

Don’t let tomorrow’s organization be built without having a role in building it.   IT Professionals, Leaders and Managers….what can you do today to make sure you’re delivering the value that tomorrow’s organization will need?

Here’s a hint:

Start looking at bringing humanity back to IT.  Focus on your people, their skills and the human side of IT and start focusing on what those people can do for the organization. Do this and you might have a chance in the future.  Don’t do it and you’ll find yourself stuck in yesterday.

Comments

  1. I’m with you, I think there will always need to be a CIO type person on staff, but I think there will be less IT supporters/hardware supporters in the future. In this blog you outlined a great strategy to run a company without hiring any IT staff but think about if you knew nothing of IT but were running the company, WHO would make the decision on outsourcing to Google Apps, perform the implementation, and roll it out to staff? There still needs to be someone to fill that role in the company. While the IT manager may look different now and in the future than historical CIO types, I think a central, knowledgable CIO or good releationship with a reputable vendor is a must, especially in your 500 employee situation.

    I’m on board with most of what you outlined – stipends – yes, google apps and the cloud, yes. Our organization runs all of our systems completely in the cloud. We used to have 10 servers and staff to maintain them and all the associated expense, now we are down to 2 testing environments and one file server for our developers and no other hardware.

    Great and thought provoking blog.

    Garry

    • Hi Gary – thanks for stopping by.

      I agree with you wholeheartedly…there will need to be someone (or perhaps multiple people) in the future organization to help understand how manage the technology…but that person might be a bit different than today’s CIO.

      Great comment and thanks!

  2. Eric,

    Definitely thought provoking … I’m not saying what you have proposed doesn’t have merit. But, I do think two challenge to the theme of your model exist:

    1. How do you manage extending over time the cloud applications to meet the evolving needs of your business in a cost effective manner and within the time frame of the business change?

    Example: large percentage of your company’s revenue customer requests invoices delivered in a new way or formatted a new way or something new that your existing system needs tweaking in order to accommodate. How quickly and effectively can you engage a services firm to make the changes you need within the time frame needed at a reasonable cost and level of quality with only a business “super user” guidance?

    Example: you sold/divested a piece of your business with a hard cut-off date. Can you get someone to come in, mangle your data, carve it up, extract it and pass it over to the external entity in a timely/cost-effective manner and support coexistence or some other transitional business model prior to full cut-off?

    2. If your new professional services revenue potential with your outsource partners gos flat for some time, how do you continue to hold your outsource partners accountable for delivering quality service in a timely manner?

    If your company represents a small portion of the revenue of your service provider, no matter how strong your contract and SLAs, your service provider is going to pay attention to meeting the needs of their largest revenue customers before they pay attention to you. Sure, you might be able to get rebates of monthly service charges for missing SLAs, but if your business is disrupted for an extended period of time, your monthly service fees are pennies compared to your lost revenue, good will and image in the market.

    I am not saying having some more technical, dedicated IT employees that have faux loyalty to the company (compared to faux loyalty to their services firm, ie, you are just another client to them) magically solves this problem. But, from a management perspective, with employees, you have 100% dedicated resources you can direct without contractual barriers to pull off miracles and work-arounds to keep your business limping along.

    It would be great to have a real-world case study of such a business construct to see how viable this really is.

    Really thought provoking stuff, thanks for capturing and sharing your thoughts,
    @jfbauer

    • All excellent questions and thought provoking too John. This is the type of dialog that needs to occur.

      In all the articles and commentary out there around the Future of IT (mine included), a lot is said about IT delivering value (or not delivering value)….but your statements here show exactly the type of value IT professionals can bring to an organization. The problem is that most non-IT people don’t realize this as being a true value to the company.

      These are all excellent issues that must be dealt with if the Future Organization is built without today’s IT. And…they are issues that today’s IT must find ways to communicate to the organization to ensure they/we still have a seat at the table in the coming years.

    • @jfbauer – Two excellent questions. I believe no matter how your IT is configured, with internal staff, consultants, a mix, outsourced, whatever, in times of economic challenge IT will have to be closely examined. If you had 3 IT admins and needed to make budget cuts and downstaff to 2 admins, it’s the same as having to downsource your contracts by 33%, and the organization would have to deal with reduced service in both situations.

      As for a case study, a lot of my cloud gusto comes from a company called Appirio, check out their philosophy page: http://www.appirio.com/company/philosophy.php, they practice almost exactly what Eric is talking about and are one of the big players in cloud professional services, practicing what they preach, so to speak. Very interesting stuff.

      Take care!

      Garry

      • Having been in IT for many years and recently built my business based upon Salesforce.com….I would like to weigh in on this conversation.

        Eric is spot on. What happens if your business needs to make a change and the systems need to morph to support the change? How many IT organizations can really react to the business as fast at a professional services firm? Yes management has the ability to re-direct but how many can actually do it? I haven’t seen many in all my years. My money would be on the consultants.

        Many companies that support cloud based solutions are masters at it. You need to do your homework to develop the best relationship. And you always need to have an exit strategy. But don’t you need that when you develop and support software inhouse? Problem: I have never seen a corporate IT shop have an exit strategy for a system that was developed or supported in house. Therefore, companies stay with it longer than they should….they search for a replacement once the system is barely supporting the business needs.

        I think the main problem with IT today is that IT professionals make it personal. I can do it better. I can build what they have built. I can redirect my staff when I need to. IT management needs to get over it. It isn’t personal. You and your staff cannot keep up with technology without breaking the bank. It is time to do the right thing for the company. It is time for you to evolve because if you don’t…..you are the “enemy”.

        Good article Eric!

  3. Excellent post Eric,

    I work in Local Government in the UK and i think that this is exactly the type of thought process and discussion that we need to go through to see whether we can or can not deliver a more cost effective public sector.

    True there are holes but a good proportion of what you say is practical and achievable now – the question is if we make the changes do we reduce the workforce on the back of these decisions.

    The points raised about the value of IT become the value of people in IT and whether or not the skills they ahve are reusable…

    We don’t have the luxury of starting from scratch but anyone thinking of doing so should read this post.

  4. Think About-"IT" says:

    I suppose the same can be said for any department (Marketing, Sales, Finance, Customer Service, etc). You can probably outsouce the entire organization. Start by looking at those departments with the largest budgets and outsource them first to get the most immediate bang-for-the-buck.

    (Just remember, when you have an emergency that shuts your company down, log into your support website and open a trouble ticket, then go home….that is if you can even access the Internet to open the ticket)

    • True. You can outsource almost any function.

      According to your logic, the function with the largest budget is normally IT…so we should start there? Just because a large budget exists, doesn’t mean it should be the first to be outsourced.

  5. Good article Eric. Thought provoking. I agree with just about every suggestion and point you make, however I think there’s something at a “higher” level that’s missing. What’s needed to make your vision a reality is a function to ensure all cloud solutions play well together and according to a master architectural plan. This will require a combination of extensive tech experience, an in-depth understanding of the company’s core business model/processes and the ability to support the individual needs of each Line of Business (LOB) while ensuring everything remains cohesive. Impossible you say? Nope: Enter Enterprise Architecture (EA).

    The very first thing your organization should do is hire an Enterprise Architect to lead an effort to define the company’s Enterprise Architecture plan. The top level questions you posed, “Outsource, in-house or the cloud?”, “Critical Systems – In-house or Outsource?”, and how best to establish “non-critical” systems are but a few of the company wide questions EA can answer. EA lays out the foundational building blocks for all of this (and more) before any vendor decisions are made. In this way all company solutions are designed to work together in a supportable and affordable ecosystem.

    You hint at the EA function with statements like:

    · “ I need someone to manage the vendors, the process and the relationship” – EA can and should do this in tight partnership with Procurement (The Company does have a Procurement team, right?)

    · “Do we hire a partial IT team to manage in-house systems and outsource the rest?” – EA ensures all systems work together properly and facilitates the relationship between LOB leaders and the outsourced IT provider. This should include vendor SLA design and measurement alongside Procurement.

    · “That said, I do think there’s a need for someone in the organization to architect and manage the web presence…For the sake of argument here, I’m going to say that I’d hire a technologist and place them in my marketing department.“ – I like your line of thought, but the need for (Enterprise) architecture is greater than just the Marketing Dept. Again, EA ensures the technology fits an overarching architecture plan and that the architecture capability is sufficient to meet all LOB needs. Each LOB Leader works directly with their outsourced IT provider to have their business needs met while EA assures it all works together according to the plan.

    · “Perhaps there’s a need to have a person (or two) to manage the relationships, contracts and procurement…but no technical staff. Perhaps a +1 or +2 for employees…but yet again, no IT staff.” – My recommendation: A Procurement team with someone at least partially dedicated to IT spend + a dedicated EA team to ensure all solutions play well together and adhere to the companies chosen architectural direction. Procurement and EA are NOT IT, therefore I agree with your recommendation of no IT staff.

    Two additional points that need attention for your model to work:

    1) Business Process Management (BPM). At some point the company is going to grow to where business processes must be documented to identify efficiently gains and to ensure consistency. EA is an ideal function in which to place BPM because EA is already looking across the entire company. This is a growing trend in EA today.

    2) System Integrations and Data – Whether internal, outsourced, Cloud or a mixture of any of these, solutions need to seamlessly integrate with each other and share common, semantically based data. Enterprise Information Architecture is required to ensure all solutions are properly integrated (SOA done right!). Without an EIA driven plan, system interoperability is almost an impossibility because each vendor approaches this according to their preference. Sure, vendors may offer open standards based integrations (.xml, etc.), but it’s the content of those open standards based integrations that is so tough to, well, integrate. You do not want your vendors deciding how your solutions integrate – EA (EIA) should lead that effort.

    [Full disclosure: Brian B is active in Enterprise Architecture which heavily influenced these comments. :-) ]

    • Hi Brian –

      Awesome comment…thank you.

      I agree completely…but… (there’s always a but, correct?)…do EA’s have to work for IT? :)

      Rather than build an IT department in the future organization, why not start with a good team of EA’s and let them determine how best to build out the enterprise systems & processes…that’s actually where i”m driving at with my statements in this post (although I didn’t come out and say it).

      Great stuff. thanks!

Trackbacks

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  14. RT @ericdbrown: Building Tomorrow’s Organization – without today’s IT? http://bit.ly/agNZuJ #cio PK: thoughtful & thought-provoking

  15. Perficient says:

    What if you could build your organization from scratch? What would the IT group look like?
    RT @cbcurran: RT @ericdbrown http://bit.ly/agNZuJ

  16. John Bauer says:

    RT @ericdbrown: Building Tomorrow’s Organization – without today’s IT? http://bit.ly/agNZuJ #cio >JB:indeed thought provoking, I commented

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