IT as a Service Provider

The IT as a service provider discussion was brought back up by Joe McKendrick of ZDNet in this blog. In it, Joe made reference to a past blog of mine in which I stated my opinion that a customer/supplier relationship between IT and their end users in the business was a bad thing, and I still believe that. Joe’s post brought to light some small nuances on that opinion that need clarification.

In my original post, I stated that IT moving solely to a supplier model to the business is an invitation to be outsourced. If you’re simply an order taker, there’s no reason that someone else can’t take those orders. The value-add that an internal IT department provides is not technology expertise, but technology expertise combined with knowledge of the company. Any SaaS provider or outsourcing agency must provide services to a mass market, or at least a market with more than one customer.

Getting back to Joe’s post, the inference that could be made is that IT shouldn’t be a service provider. This is not the case however. The IT-Business relationship should be a partnership, but you can’t be a partner if you’re not providing good service. Understanding the services that you bring to the table and doing them well is critical to the relationship. The difference is that those services do not define the boundaries of the relationship. Instead, they bring structure and foundation to it, on which partnership can be built. If your foundation is weak, the relationship will crumble. Therefore, adopting principles of service management within IT is a good thing, however, don’t approach it from the standpoint of competing against outside service providers. The decision to use outside providers should be made by the business, which includes IT. IT should be the one driving the discussion to say, “some aspects of our technology are really becoming commoditized and we can achieve some significant cost benefits through an external provider” rather than being told, “you’re a commodity and we’ve outsourced you.” In this sense, IT is no different than other business support organizations. Take HR as a good example. One could certainly argue that HR could be outsourced as it provides commodity services that all companies need. Every large company I’ve been at still has an HR department, though. What is more the norm is to have HR working as part of the business to make good business decisions on what aspects of HR to outsource, and what aspects of HR should remain within the company because there is value add. Only someone within the company can really understand the corporate culture which is critical to attracting and retaining talented individuals.

Be a partner in your business, but ensure that your partnership is on a solid foundation.

3 Responses to “IT as a Service Provider”

  • You can be both a “partnerâ€? and a “supplierâ€?. In this case, “partnerâ€? refers to the sharing the same business goals and fate and “supplierâ€? refers to the deliver method.

    One of the most powerful, but often overlooked, aspects of SaaS is that it enables a well-define contract between the provider and the consumer. The consumer agrees to specific business requirements and to a minimum platform (in most cases, a standard browser). The provider agrees to meet those requirements with a minimum SLA. How they do that is up to them.

    The relationship between “business� and “IT� has historically been a rocky one. They use different vocabulary, work on different cycles, and just generally see the world differently. Its just human nature at work.

    Having a SaaS-like provider/consumer delivery model gives you well defined roles, interactions, and metrics. It doesn’t mean that they can’t also be partners in terms of goals and rewards. In fact, I think most managers would agree that clearly defined roles along with metrics-based performance analysis to judge performance makes it easier to be partners!


  • Rob Eamon:

    “Having a SaaS-like provider/consumer delivery model gives you well defined roles, interactions, and metrics. It doesn’t mean that they can’t also be partners in terms of goals and rewards.”

    IMO, yes it does. When one focuses on the SaaS metrics, the focus is on the wrong things. The focus MUST be on the impact to the *company* customers. A SaaS model creates a faux customer/supplier relationship–which is the wrong relationship.

    “…and just generally see the world differently. Its just human nature at work.”

    That’s a fundamental problem, not simply “human nature at work.” The members of the team (some have “business” responsibilities, some have IT responsibilities, etc.) need to be seeing the same world and all working toward the same goal. SaaS introduces an artificial intermediate goal which, IMO, is fundamentally flawed.

    Either outsource and create a real customer/provider relationship or work together as a full team. But don’t go half-way–that isn’t good for anyone.

  • IT and Business Relationship;The challenges they evoke (Chicken & Egg problem, Ownership Policy, Technology Trends, Employee Responsibility, etc) are all real challenges. I suggest that their paper points to a missing piece in the organizational picture: an intermediary function, or person or Department, providing the necessary interface between IT and the business. Such people know the language of the business and of IT.

    In a law firm, for example, this person might be a lawyer with a strong IT background, knowledge and interest. This allows business users to remain focused on their business and IT staff to remain committed and engaged in IT problem solving without the unfair added responsibility to tackle the whole IM Problem Space.

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