IT organisations are set to split down two different paths, with half focusing on delivering technology and the other half specialising in business processes and change, according to a Gartner analyst.
By 2010, 50 per cent of IT organisations will move their focus to brokering services and shaping business demand - up from five per cent in 2004, according to Gartner research.
"The role of IT to business is in general moving into new territory, with the automation of routine activities," analyst John Mahoney told IT PRO. "The new frontier is technology applied to non routine decision making... as that starts to happen, the boundary starts to blur." The change is also being driven by the increasing commodisation and commercialisation of IT, he said.
IT organisations must make decisions on which direction they will take, because such changes will take two years to put in place and will change the landscape of the market.
"It will change the shape of the market," he said. "It's already happening. Many IT organisations are selling services instead of equipment and licences. Many organisations are starting to sell business services instead of technology services." Mahoney added that such business services will still include IT as an indivisible part.
"I think what is clear is companies who can offer services with business outcomes instead of just technology outcomes will be areas with most growth," said Mahoney. "But it isn't to say there won't be a market for the rest."
The evolution to business outcomes will lead to changes across IT departments, new roles for services companies and increasing work for chief information officers, Mahoney said, citing five main areas of focus.
First, Mahoney said companies should look at the main focus of their IT department - and then rename it that. "Is technology the right thing to be focusing on?" he asked, predicting a shift from the "technology" to the "information" aspect. The name isn't everything, he noted, but several firms have already renamed their "information technology" department to "business transformation" or "business processes" or the old favourite, "information management". Another names of choice has been "corporate transformation" or "corporate change," he said.
"This is a period of transition for IT organisations, moving from a time of focus on delivery of technology to increasing focus on business assets such as processes, information and relationships - fused with technology," Mahoney said. "That fusion will be the focus of this new thing, whatever it's eventually called."
Second, Mahoney said IT organisations must succeed in reducing complexity - it is the enemy of effective IT management. "They have to achieve this in order to make progress in the rest, otherwise the burden of legacy systems makes it difficult to do the rest," he said.
Third, Mahoney said firms must decide if their default source of IT is outsourced or in-house. "We're not necessarily recommending that everybody should outsource everything, but they should take a look at it," he said. Making such changes can take years, so companies must take outsourcing under consideration now.
He said mission-critical infrastructure will remain in-house, but outsourcing will become even more important with non-critical and transitory IT. In particular, the outsourcing of data centres will increase from a few early adopters today to be the mainstream in 2015. Indeed, he expects three-quarters of IT infrastructure to be purchased as a use-based service by 2015.
Fourth, organisations should no longer use metrics to measure IT performance, but should track business outcomes. "Very often outsourced or internal service level agreements are cast around technology parameters," Mahoney said. "Whereas if you took it to the other extreme... you could envisage rewarding business partners upon overall improvements to your own business' cash flow."
The last area chief information officers must focus on is the most difficult, Mahoney said. "It's the most complicated of all, changing people and the capabilities people have," he said. "Most IT organisations will have too many IT people and not enough business people."
