Time to Run IT Like a Business

On Friday, I wrote a post called Why Private Clouds Makes Sense for IT. The idea is that by creating an online service catalogue you can operate IT like a cost center, but that means you have to run your department like a real business complete with service agreements.

Christopher O’Malley writing on Computerworld earlier this month made the argument that most IT departments weren’t service oriented enough to even call what you provide services:

“Unfortunately, despite all this talk, corporate IT is still not very service-oriented at all.  In fact, in some ways, it is the very opposite of service-oriented.  And one of the main ways this lack of service-orientation reveals itself is in IT’s opacity,” O’Malley wrote.

It was harsh, but in many cases he’s right.

You need to start running IT like a business.

If you set up a private cloud in the fashion I wrote about last Friday with a Services Portal (there’s that services word again) you will be charging departments a price for the services they purchase. That means you will in effect be competing with outside services like Amazon Web Services. You have to provide similar services at a decent price with similar guarantees you get from the public vendor.

This isn’t that different from the way any internal cost center has always been run inside a company. Back in the 80s I worked for a small boutique consulting firm in Boston in publications production. We had an internal copy shop for which we charged projects for our services. Consultants were free to use ours or the copy shop down the street and we had to offer a level of service to justify our existence (although I doubt very much most businesses would have put up with as much as we did as employees). Still, there was a choice.

And today, we have a similar model developing with IT as you compete with outside service providers to offer similar sets of services for a cost. That means you have to display pricing, provide top notch service to support those services and offer an up-time guarantee.

That’s right, you have to be willing to refund the cost of your services if you are down for a given period of time. Are you willing to take it that far? You should be.

As I wrote on Friday, end users will start to see the value of the services you offer when you put a price on them, and when you guarantee those services with an up-time agreement, the respect will grow.

When you sit in the data center and everybody opens up the data spigot and lets it run for however long they feel like it, there’s no way anyone can see the value in that, but when you associate a cost with turning it on and guarantee it will be on, then they can’t help but see the value — and everybody wins.

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  2. OSTConference » Open Source Technology & Business Conference » IT May Need More Business Thinkers - [...] been writing a lot lately about running IT more as a business offering a set of services. If you want to …

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