IT as a Business

By Ken Phelan
Posted in Support
On February 24, 2012

The idea that internal IT departments should run like a business, treating the internal IT users like customers, is not new. People have been saying it for years, but rarely doing it. Today’s initiatives around consumerization and cloud computing are the latest push for this improvement on the IT-user relationship. Given that this improvement in the alignment of IT and its constituency is something we’ve been trying to get for years, I think it’s worth trying to get past the hype for a minute and looking at the relationship issues here. What’s been missing in our attempts to align IT with business interests, and how can we get it right this time around?

First, a little background—I come from a long line of small business owners. Many of my family members have owned delis, pet stores, and other small owner-operated establishments. As a kid, I spent summers working in these stores. So, when someone says something like “run IT as a business,” it implies something specific to me. It implies, run IT like a business owner.

What’s the alternative? Let’s say you’re running IT like a McDonalds. You don’t own McDonalds, you operate a McDonalds. You run their program. You don’t control the menu. If some customer wants pizza, you politely explain that they’re in the wrong place. Even the process for creating the food is dictated. You just need to get some warm bodies and run them through the training program. This is the endpoint of the IT-as-a-utility model of the 90s.

But, what if you run IT like you own a deli, not like you’re a manager in a McDonalds? You connect with your customers and make sure they love your stuff. You understand why they come to you. You work hard to give a good value in each transaction. If a customer wants ketchup on his hero and you have ketchup, you put it on. If your customers want panini, you check it out, decide it makes sense, and buy the machine. But maybe another customer wants espresso in the morning. You check into that, but only a few people want it, so it’s not worth the counter space. You dump the idea.

Here are some key differences between how owners and operators might run IT.

Owners Operators
Cost Owners know what everything costs. They know what ketchup costs and what the panini machine costs. It helps them set prices. Operators want to make a profit, but they get costs in big lump sums and just try to net out the bottom line.
Value Owners stay on top of customers to see what’s important to them. They need to know why a customer is coming to them instead of competitors. Operators bank on the value of the offering. In IT, if you’re the only game in town for buying PCs and servers, you can count on your businesses coming to you when they need PCs and servers.
Flexibility Because they understand cost and value, owners can be agile in meeting customers’ needs. Operators are not flexible. They may occasionally change the menu, but it’s a big collaborative process involving customers and upstream vendors, so it takes a long time.
Brand Owners are their own brand. Customers come because they trust the owners and buy products based on the quality and value represented by the owner. Operators rely on the upstream brand. Do your IT users ask you for services (I need a new department setup), or do they ask for products (I need three servers and 12 PCs)?

I know that many of you run large complicated IT infrastructures that feel like they’re always going to be more like a McDonalds than like a deli. The question of owner vs. operator isn’t a function of scale. You can run an organization of any size and still represent your brand, know costs, etc.

Bottom line: I’m all for consumerization and cloud computing, but unless you think like an owner, you’re still out of alignment with your customers.

Ken Phelan

Ken Phelan

Ken is one of Gotham’s founders and its Chief Technology Officer, responsible for all internal and external technology and consulting operations for the firm. A recognized authority on technology and operations, Ken has been widely quoted in the technical press, and is a frequent presenter at various technology conferences. Ken is the Chairman of the Wall Street Thin Client Advisory Council.