IT consumerization, the cloud, and the alleged death of the CIO

As with just about any area, IT is a discipline subject to fads and memes, “received truths” that seem to arise in the press or the blogosphere and then ricochet around the echo chamber until they sound plausible even to skeptics. A number of these roll across my Twitter stream every day. But one such meme rises so high to the top that it has to be the sole focus here. And that is the much-repeated “death of the CIO” meme, coupled as it is currently with dreamy visions of the world brought to us by the consumerization of IT and the cloud. They’re all linked, at least in many pundit eyes.

Here’s the gist of their argument: users can go out and get their own technology now; they don’t need IT to do it for them. End-users are now IT-savvy, and can fend for themselves.They’ll bring their own devices (BYOD); they don’t need or want IT to provide devices for them. They’ll procure the services they need and want from the various SaaS offerings in the cloud or from outsourced vendors, and they’ll handle it all themselves.

All this ultimately gets not only expressed as the question of who needs a CIO anymore, it goes even further: who needs an IT department at all anymore? Says one article, “If IT does not provide the end user with the infrastructure they need, the latter can rent it, by the hour or month from companies like Rackspace or Amazon… All you need is a credit card and no approval from IT.”  Other CIO “thought leader” articles feature astonishing blanket statements like, “With the consumerization of IT, consumers can create value for themselves and the enterprise, using technology that costs the enterprise nothing.” And people even take this so far as arguing that the CIO at this point should just leave technology up to the VARs.

Let me be clear once again: this frequent linking of cloud and IT consumerization to the looming demise of the CIO and IT is not just misguided, but actually gets it completely backwards. In fact, I argue that IT consumerization and the cloud will actually elevate the importance of IT within a company, as both a service and a strategic focus.

Let’s list and then discuss some of the ways that combining these memes (IT consumerization, cloud, and the ensuing heralded death of the CIO) falls down when measured against common sense and reality:

  • It fails to understand the full range of what a CIO (or IT) actually provides for modern-day companies
  • It fails to recognize the profound pitfalls of a decentralized and fragmented approach for company systems and technologies
  • It erroneously equates IT consumerization with the BYOD trend, missing the larger important picture that underscores the strategic need for IT
  • It misunderstands the interplay of commoditization and competitive strategic advantage

What IT provides

People who see the CIO’s role diminishing or IT even vanishing altogether don’t seem to understand the full range of the CIO’s responsibilities, and the importance of more, not less, technology stewardship as system access broadens. They somehow seem to view the CIO and IT predominantly as the folks who keep the servers running. If we have no in-house servers etc., they reason, why do we need IT? But, as someone recently and eloquently said, that’s like viewing the job of the parent as being the one who drops the kid off at school every day.

Face it: it’s not technology alone, the bits and bytes and systems and wires, that’s the hard part when it comes to leveraging technology itself to provide value to an enterprise. Rather, firms desperately need someone, at a suitably high level in the organization, to actively shepherd the business prioritization, integration, implementation, outsourcing, and articulation of value when it comes to complex, technology-based undertakings: that’s the hard part. That part won’t go away. That part will never go away.

What it means for IT to be a service organization

Yes, IT needs to be a service organization to the rest of the company. But, pundits complain, often it isn’t a very good one, or it’s too expensive, or often it focuses so much on being a service organization that it doesn’t get perceived anymore as adding much value beyond that service. And as those services become readily and cheaply available elsewhere, and users more sophisticated in technology, it’s easy to jump to the conclusion that IT is no longer necessary, and many do just that. But that leap reflects a kind of tunnel vision about IT’s role.

Many IT pundits can’t seem to recognize two simultaneous truths: IT needs to be a strategic value-add; and it needs to be a key service to the company when it comes to getting things done, reliably. When things don’t work: people need help. It doesn’t matter if we have cloud or BYOD or the upcoming Apple IT telepathy product; users will still need help. But realize that the day-to-day work of helping users is actually not the major role of IT in any non-trivial modern-day firm: even before the days of BYOD, administering desktops and laptops, while important, was one of the relatively minor services provided by IT. Even if that aspect of the work disappears entirely in this brave new cloud-driven world, we’re left with everything else: the hard part of making things work together, support business changes, and so on. And tackling the hard part is actually the key IT service to the organization.

Because sure, maybe people can now administer their own devices and procure their own systems in the cloud. But then, often without having planned or anticipated it, it turns out they need those systems to talk to one another. Then they need to worry about changes and versions and backups and downtime. All the simple stuff about cloud and BYOD works just great, but only while it’s still simple. As Marc J. Schiller puts it, tech-savvy business users “don’t have the time or the inclination to work through all of the nitty-gritty details that are required to ensure that the systems they are putting in place do, in fact, collect and integrate data with other corporate resources. They don’t have the time or the expertise to evaluate the information integration and interface requirements a particular system may create. And they certainly don’t want to be on the hook for all of the data security and regulatory compliance issues that are growing by the day.” In other words, we’re left with the hard part, the messy part, the part that someone needs to figure out holistic, long-term answers to.

That won’t go away. That will never go away.

The pitfalls of IT fragmentation

Stop for a moment and realize that the argument that the “cloud and IT consumerization will lead to the death of the CIO” pundits are making amounts to this: that in an IT world that is becoming staggeringly more complex, with ever more options and an accelerating rate of change, we somehow no longer need skilled IT management to manage that transition carefully. How can that make sense to anyone?  As MIT’s noted IT researcher Jeanne Ross pointed out recently, companies already tend, in terms of their systems, to “let everybody decide what’s most important for their part of the business. The usual result is a tangled mess of IT system architecture.”

The answer to this dilemma can’t be dispensing altogether with IT-specific leadership and hoping for the best. Dell CIO Robin Johnson wrote a piece last fall that described the pitfall of balkanized decision-making amid burgeoning complexity: Dell wanted to add a new payment type to its web site, but had different systems in every region, ten separate customer databases, etc. The estimate simply to add this one new type came in, staggeringly, at a year. Picture, then, pushing for a world where every line of business has made its own technology decisions, not just with no unifying presence of leadership, but with the avowed philosophy that IT leadership is actually no longer necessary at all. Scream with me, now.

Why the IT consumerization trend increases the need for skilled IT leadership

And the scale of such problems is increasing. Rather than IT consumerization consisting mostly of the identified BYOD dilemmas (which are important, of course), Bernard Golden points out, “Consumerization of IT isn’t about employees using consumer devices; it’s about consumers becoming the primary users of internal IT applications.” The ensuing greater volume and variety of application access, as consumers tap into what used to be internal IT systems from every conceivable device and geography and time zone, has huge implications for companies, their organization, their architectures. As we face this very real trend, and the resulting even greater requirements for system cohesiveness and robustness, it is hardly the time to opine that IT leaders are now extraneous.

Finally, let’s talk a bit about IT becoming a commodity. That’s nothing new. A company that had a great custom financial system used to (perhaps) have a competitive advantage, until such systems were commoditized by the advent of ERP. Commoditization of a technology means that it can no longer provide much of a competitive advantage, other than through superior execution. But every time something gets commoditized, we are able to “move up the stack” in abstraction: we can now focus on reaping value from other, higher-order things that can’t (yet) be commoditized. If you’re using technology that’s available to everyone, off the rack, you have no differentiator, and no competitive advantage.

Pundits argue that since some key technologies are now a commodity, we no longer need a CIO to handle them. But I’d turn that argument around: that’s precisely when you do need a CIO, to rise above the commodity level and figure out how to leverage technology for competitive advantage and business value. And the way to do that means using something other than the kind of technology that’s available to everyone, just off the rack. You want a differentiator.

So, get rid of the CIO because some technologies have now become commodities? You might as well posit that since we now have drugstores, there’s really no need for doctors anymore.

Or with a different spin, there’s an old joke about a small child who observed brightly, “We don’t need the farmers anymore; we just go to the grocery store instead!” That’s a true-but-false statement if there ever was one. Ponder those two analogies, and consider how IT represents both the farmers and the doctors. And that the need won’t go away.

Lagniappe:

Comments

  1. Incredible post Peter. Now we just have to figure out how to get every CEO, CFO, and CIO to read it. I’m going to start by adding a link to this post to just about every one of my presentations. Great post.

  2. Excellent post and totally agree with it. A MUST read for all C-levels.

  3. Excellent post. You completely turn conventional wisdom on its head. At the end of the day, IT is responsible for delivering business value through technology. A decade or so ago, the raw components were in-house servers and software. More and more, the raw materials are cloud services, SaaS apps, etc. But IT’s job remains the same: put the components together in a way that solves business problems.

    I agree with you, Peter: as the components become more and more sophisticated, it provides more opportunity for IT leadership to build value “up the stack”. Exciting times, indeed! Great post.

  4. Brian,
    Excellent way of putting it: the raw components change, but the basic mission stays the same. It’s fascinating how many (both inside and outside IT itself) can confuse the “care and feeding” of those raw components as representing the real work — which is what leads to misguided suppositions about the CIO or IT going away when the raw components themselves change and/or need less feeding.

    Thanks for commenting!

  5. Really great post! Along the lines of what I have been writing about for some time…

    I’m currently in the process of building a “roadmap” for the strategic CIO and have been preaching the idea that senior IT leaders MUST become more focused on sales, revenue, marketing, and corporate innovation of products / services. And that IT is the change lever to make this happen…

    My most recent post provides a high level roadmap for moving from the internal focus, to enterprise focus, and then finally to the strategic area. Although I write in the context of SAP (ERP) implementations and organizations the information can easily be generalized to any major IT initiative. A lot of what I am dealing with now is the topic of change management WITHIN the IT organization:

    How To Steps in the SAP Business Transformation Journey
    http://www.r3now.com/how-to-steps-in-the-sap-business-transformation-journey/

  6. Fred Hackett says:

    This article supports what I’ve been telling people (tongue-in-cheek) all along. IT is easy, until it’s not.

  7. Great article, Peter. Lots of very salient insight well-articulated. I agree that the commoditization of IT is a good thing because it allows technology leaders to focus on the things that truly create a competitive advantage for the enterprise. It’s never been more critical for IT leaders to hand off commodity services to capable third parties and focus their teams on the things that can really differentiate their business. Just because certain services are provider elsewhere, however, that doesn’t mean the IT leadership role goes away. Indeed, just as you very eloquently point out, the IT role becomes even more critical.

    I work with many companies on strategies to move commoditized IT infrastructure services to third party providers. This allows the company to focus their precious time and focus on more differentiated services higher in the stack like capacity management and solutions architecture – the things that the business needs and demands. A common misperception, however, is that when these services are provided externally, IT no longer plays any role with regards to that service. In fact, IT’s role changes from delivering the service hands on to one of ensuring the service is delivered effectively, at the right cost, in a manner that integrates properly with other technologies and in way that will continue to meet the business needs in the future. It’s actually a much more difficult role in many ways.

    Here’s a highly simplified example. Company A provides the service of email internally via Microsoft Exchange. Email is a critical service but is now highly commoditized – all companies have it with little if any differentiation. So, the company makes the choice to source it externally (Office 365, Hosted Exchanged via Terre Mark or Rack Space, etc.). This way the company doesn’t have to deal with the day to day administration of it or support labor intensive events like version upgrades. The company has an Exchange Administrator that is responsible for the day to day management of email who is obviously impacted by this sourcing change. Once the service is moved to a third party provider, the company no longer needs an Exchange administrator. But, does that mean no one at Company A will ever think about email or work with it again? Certainly the answer is no. The Exchange administration role is no longer needed but a new role of email service delivery oversight emerges. This role involves many things; SLA creation and oversight with the vendor for uptime and performance, vendor contract management, ensuring integration with other messaging services, etc. This new role is crucial to ensuring long term success with email. Just because the nuts and bolts work of delivering the service has moved elsewhere doesn’t mean you wash your hands of it completely. Too many companies learn this the hard way after making an outsourcing decision. I think this is a great example of how the IT role evolves and becomes more critical even for commoditized services.

  8. Thanks for commenting, Mike. (And, for the benefit of my readers: Mike is a co-author of a really fine book on IT Operations, Achieving IT Service Quality: The Opposite of Luck. Highly recommended.)

    Your point is right-on. In fact, a key role of the CTO/CIO is to help educate, sideways and upwards, about these matters. I’ve come into numerous situations where a company has outsourced a commodity system, thinking it then had waved its hands and waived its involvement, where just the opposite is true. The role changes, sometimes entailing reduced involvement, but often necessitating simply different forms of involvement. The worst situation, of course, is when the CIO himself or herself doesn’t truly understand this basic reality, and thus doesn’t communicate it throughout the management chain.

Trackbacks

  1. [...] Technology blogger Peter Kretzman wrote an excellent post last week: “IT consumerization, the cloud, and the alleged death of the CIO” [...]

  2. [...] Kretzman “IT Consumerization, the Cloud and the Alleged Death of the CIO”: a contrarian view on the long-term prospects of the CIO in the Cloud [...]

  3. [...] CIO / CTO Perspectives from Peter Kretzman Pundits argue that since some key technologies are now a commodity, we no longer need a CIO to handle them. But I’d turn that argument around: that’s precisely when you do need a CIO, to rise above the commodity level and figure out how to leverage technology for competitive advantage and business value. And the way to do that means using something other than technology that’s available to everyone, just off the rack. You want a differentiator. [...]

  4. [...] Peter Kretzman has successfully argued that the reported demise of the CIO has it backwards: IT consumerization, the cloud, and the alleged death of the CIO. [...]

  5. [...] to hear Luddy scoff, in his presentation, at the odd trend that so often serves as fodder for my own blog posts: the raft of pundits declaring that IT is now a mere commodity. He dismissed the trend with a [...]

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