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The CIO’s new role: service broker

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the CIOs new role.jpg

 

By Keith Macbeath

 

Imagine you’re a business process owner who needs an IT service. You now have to choose between SaaS and a traditional provider—whether internal or outsourced. If you do choose SaaS, your traditional infrastructure team is out of the picture. Now, there is literally a marketplace where the application team who serves you has to compete with external SaaS providers. The CIO faces a key decision: When to step into that service broker role and how to do it in such a way that department heads trust that it’s the right decision, regardless of whether it adds budget or headcount.  

 

CIOs as mini-CEOs

 

CIOs will only be trusted if they’re clearly giving full credit to the SaaS option. And, if they decide against a SaaS solution, it’s for reasons that everybody has bought into—not that they’re simply trying to defend their turf. If it becomes apparent that the CIO is focused on right-sizing the IT department, not maximizing it, then in effect the CIO will have become a mini-CEO. After all, CEOs in most organizations are focused on which capabilities they need to keep in house and which are better sourced externally. It’s a classic business maxim that management bandwidth is the scarcest resource, so CEOs  focus their attention on things that differentiate their company from the competition, and move other capabilities to service providers, cost and risk permitting. CIOs want to do the same thing. If they don’t, it’s going to be done to them by somebody else.

 

There’s obviously some organizational inertia that CIOs must combat in taking on this new role. The historical tendency was “I want a bigger kingdom” rather than “I want to right-size my kingdom.” Becoming a service broker is a big shift, but it’s a shift that started with the advent of outsourcing. And, it’s important to note that outsourcing isn’t always the right answer. The CEO of JPMorgan Chase, Jamie Dimon, is usually against outsourcing because he is of the view that IT is a differentiator in banking and a company like his can hire the best IT people and therefore do things cheaper in-house.

 

Hard choices

 

But not every organization is JPMorgan Chase.  Many organizations feel they can’t hire the best IT people. They’re not big enough.  They may not be in the right location.  They can’t offer a career path that would attract top talent.  And if a certain aspect of their IT is non-differentiating, they’re going to want to give it to the supplier who can make it easiest to consume, and that’s almost certainly a cloud provider.

 

On the other hand, you have companies that decided to develop services in-house, and those services were so robust that they offered them externally at a profit. Amazon Web Services is a good example. Amazon invested tremendously in its infrastructure to support its own business and then realized there was huge market demand for those same computing resources.

 

Another important point is that the CIO is already in charge of his or her team, and now has this new role as a service broker. Companies need to decide whether they want one person in both roles, or whether it’s better to have two different people. You wouldn’t say your head of manufacturing is your head of sales, right?  Two different roles.  Why would it not be so in IT? Currently, the title of business relationship manager often applies to the de facto service broker at a company, but this role is not usually high enough in the hierarchy given its vital importance to the business. The issue going to become a defining issue for IT, and even more urgent as SaaS saturates the enterprise. Register to read: The New IT: Managing and Delivering Services in a Multi-Vendor Environment.

 

 

Keith Macbeath.jpgWithin HP Software Professional Services, Keith is responsible for IT Performance Management solutions. These solutions help instill a performance-based culture in IT that focuses on business outcomes: tracking IT performance against measures that the business lives and breathes.

 

Related links:

 

Blog post: Overcoming real-world barriers to maximizing the private cloud

Blog post: An apples-to-apple comparison of traditional provisioning vs. cloud

Blog post: How do you transform IT to be service-centric?

Blog post: IT leaders: Do you really have your stakeholders aligned?

 

Ebook: Deliver business value with the New Style of IT

Interactive brochure: Simplify the Cloud

HP Software Professional Services

  • IT Strategy and Leadership
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