IT in crisis

IT organizations are in crisis.  In the name of control, standards, security, and economies of scale centralized IT organizations have taken over many tasks that were previously managed in whole and in part by business units and functional departments.  As a result, IT budgets have been growing faster than corporate revenues for many years.  But that task was never doable; no single organization can support the nuance of every use-case across an entire enterprise with a toolkit of, by necessity, standardized lowest-common-denominator solutions.  And now that the financial crisis of 2008 is hitting 2009 corporate budgets, cutting deeply into IT resources, what was undoable has become unimaginable.  The massively centralized IT process has become the bottleneck that affects every project, product, operational initiative and revenue plan; freezing companies into the glacier. 

The solution is to change the mindset of IT from trying to execute every project and manage every application to performing an active role of facilitator within a decentralized IT model.  In this model, many — if not most of the applications that business units and departments need — are carried out by the business units themselves, using IT as a trusted advisor.   Business unit and departmental level applications are therefore executed by “local” (as opposed to “centralized”) staff working in the organizational units that both need an application and understand its peculiarities.  This local staff may or may not even carry IT job titles, but may be functional and departmental professionals using inside and outside IT specialists as appropriate and cost-effective.  IT then becomes a value-add resource in this process:  consulting, advising, critiquing plans, setting requirements for security, and vetting outside resources.  Some enterprise computing applications, such as financial reporting and email, will always be the responsibility of a centralized IT organization. But many enterprise computing projects can be successfully downloaded to business units and functional departments where the affected business managers can determine project priority and investment-worthiness against other needs at the business unit level.  The advantage of this approach is that projects that pass muster with the business managers can actually be carried out in a timeframe consistent with the business needs.   The status-quo alternative to this new model is an endless backlog in IT, with the resulting loss of competitive advantage and consequent business decline as other companies achieve higher levels of IT agility and responsiveness. 

We can already see early indicators of the reallocation of application responsibility back to business units and departments in the high growth rates of Software as a Service (SaaS) and custom applications that are based on open source.  IT does not have to fail in the new economic environment we find ourselves in; there is no inescapable Fate here as in a Greek tragedy.  IT can succeed — and succeed spectacularly — by embracing the new paradigm.  The IT strategies of highly effective competitors in many industries are already evolving in this direction.  In 2009, we will see the mind shift in IT organizations accelerate toward a more decentralized model as the most successful companies stretch their lead over those that cling to the old ways.