Can you sack your IT department?

To avoid the IT department being marginalised, the role of the CIO needs to change, according to Carl Bate, the chief technology officer at Cap Gemini.

"In 1989 the only person who could put IT in front of a person to do their job was the IT director; 20 years on people can get IT from anywhere," he said. "The low number of CIOs who are on the board of their companies suggests to me that there's something wrong with the role itself - at a time when IT and information is so important to the business."

He added: "It feels to me like the IT department is almost trying to breed a better dinosaur. Business is not compartmentalised any more and neither can IT be. IT will get decentralised into departments; that's already happening."

Many of the promised advantages of cloud computing and the full range of software, platforms and infrastructure delivered as services are still years away; analysts Burton Group call the cloud "still adolescent at best, and suitable only for some classes of use. True enterprise computing (with all its security, risk, and performance requirements) will always require an in-house footprint for certain classes, tiers, or components of applications."

Advantageous delivery

For many companies, IT delivers significant competitive advantage. Instead of using the same service as a competitor they're trying to differentiate themselves from, companies may mix and match cloud and in-house systems or shift to what Microsoft calls a Software Plus Services model, where cloud services add value to on-premise systems.

Avanade's chief technology officer (CTO) Michael Paulson points out that previous changes in business technology haven't done away with the need for in-house IT. "Many organisations still have mainframes that have been running for over fifteen years," he said.

The balance will be different for every business, but a hybrid of in-house and in-cloud systems is most likely, and for that, you certainly need your IT department.