Service Innovation: The Foundations of a New 3rd Platform IT Organization




As the use of disruptive technologies such as cloud, mobility, social media, and Big Data solutions becomes more prominent within the region's enterprise landscape, it is becoming increasingly clear that we are on the cusp of a dramatic and much-needed transformation of the traditional IT department's structure and business management processes. For years now, IT has been viewed purely as an 'overhead department', but there is a growing push underway within the region's more forward-thinking enterprises to transform this perception to one where IT is viewed instead as a 'service business'. But what is driving this shift in thinking? And what are the initial steps that organizations must take in their quest to turn it into reality? 


Combined, the four technologies outlined above are known as the '3rd Platform' of computing, and it is their emergence that is ultimately responsible for driving the organizational disruption that we are beginning to see within the traditional IT department. That is because where the internal IT department was once the sole purveyor, provider, and protector of technology across the entire enterprise, it is now required to both compete and partner with outside vendors as traditional and proprietary IT infrastructures gradually give way to hybrid 3rd Platform architectures.


Indeed, the once captive audience of IT customers and line-of-business managers are beginning to recognize that outside cloud and software-as-a-service (SaaS) providers now offer extremely attractive alternatives to traditional in-house IT solutions. And given the rapid dawning of this realization, it is only a matter of time before the traditional IT department – organized around proprietary application development and IT operations – holds its hands up to being overexposed and ill equipped to manage a complex conglomerate of internal IT and 3rd Platform providers.


In response to this challenge, CIOs must create agile new IT teams that are sharply focused on delivering constant service innovation. To my mind, four key processes must be undertaken in order to facilitate this goal, with the first revolving around the need for CIOs to develop a service management capability within their departments. IT is slowly breaking away from being a sole-source 'cost overhead' service provider and is transforming itself into a customer-focused service innovation business. To facilitate such a move, a new service management team must be developed and tasked with positioning, packaging, and promoting all relevant IT products and services as part of a comprehensive portfolio, working in tandem with the entire IT team to organize their work around these services.


The second process requires the development of enterprise architecture capabilities within the internal IT department. Indeed, enterprise architecture will be elevated to a strategic level in the organization because of the complexity of integrating services within a consistent enterprise and information context, and due to the criticality of making the traditional IT infrastructure work smoothly alongside any new 3rd Platform innovations. To this end, the new enterprise architecture team should be handed responsibility for defining the integration of 3rd Platform capabilities across the business, information, application, technology, and security ecosystem.


The next step is to embrace solid IT financial management fundamentals, as it is imperative that CIOs learn to run their departments as true service businesses. To this end, the cost, value, and consumption of IT services will need to be tracked, managed, marketed, and communicated to prove to customers that they are priced competitively and provide convincing added value. This will require the formation of a new IT financial management team that is tasked with translating IT cost structures into both a service-based cost model and a customer consumption-based cost-distribution model.


The final process that must be undertaken is the introduction of proper IT business portfolio management. As the central IT department becomes more and more commingled with 3rd Platform providers, SaaS solutions, and line-of-business independence, the CIO's role will transform into one of central broker, integrator, and manager for a portfolio of all IT services. As this transformation takes place, a dedicated IT business portfolio management team should be initiated in order to provide a consolidated 'all-in' executive view of the entire IT service portfolio that includes internal services and those provided by outside 3rd Platform partners.


All things considered, it is clear that the modern IT department must break away from the traditional mission of merely providing two major internal processes to the company — application development and IT operations — and focus its objectives around a new mission that incorporates the market forces of 3rd Platform services. This inevitably requires implementation of the business processes outlined above, as without them it will be impossible to manage IT as a true service business and deliver true service innovation to the organization as a whole. Those CIOs that foresee the transformations heading their way will ultimately weather the storm, while those who choose to drift along aimlessly into the unknown will find their relevance slowly eroded by the powerful outside forces of the 3rd Platform. 



JYOTI LALCHANDANI is group vice president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC) . He can be contacted via Twitter @JyotiIDC



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