Don't run IT as a business, run it as part of the business
"Run IT as a business". What a mantra. It is of course rubbish. You run business as a business.
"Run IT as a business". I've been guilty of using it in the dim dark past. If providing IT is your business, say you are EDS, then that is a special case where the mantra makes sense. But for most organisations, running IT as an internal business is counter-productive if not downright destructive. In most situations, IT is a team-member not a supplier.
Infoworld blogger Bob lewis concurs:
IT must be integrated into the heart of the enterprise, and everyone in IT must collaborate as a peer with those in the business who need what they do.
Nobody in IT should ever say, "You're my customer and my job is to make sure you're satisfied," or ask, "What do you want me to do?"
Instead, they should say, "My job is to help you and the company succeed," followed by "Show me how you do things now," and "Let's figure out a better way of getting this done."
I can't argue with the attitude and attitude is important. Yet, ... the funding models are: the customer pays for it or there's a funding process in which different projects compete. So if the customer pays for it, then it'd like IT to behave like a business. If on the other hand, it's "free" and it's just a matter of playing smart politics, then IT has no incentive to improve efficiencies... You can't hold a LoB executive accountable for revenue, profitability, margin, and other metrics, and then tell them this large part of their cost model is off limits.
Being the level-headed moderate that I am :p I want to take the middle ground. In a large traditional organisation, Rodrigo is right that IT services should be costed, and paid for by the customers. And I still believe it is useful to define a service catalogue for the IT department and to manage what IT delivers as services to customers.
That's not necessarily true in a small organisation or in the modern cloudy organisation. In small organisations IT is not necessarily required to run as a cost centre. They might not even have a budget. IT costs are managed as part of the overall management of the organisation.
And in the modern world, IT is becoming a thin veneer over outsourced systems. In some cases, other business units may hold the contractual and payment relationships directly with those system providers - the money won't even flow through IT any more and the services won't be chosen from an IT catalogue. (Posting on this soon)
I'd add one more point Rodrigo didn't mention: IT decisions should be made based on a business case not technical criteria or opinion. But you don't have to be a distinct business-within-a-business to build business cases. In fact any business case for an IT decision should be a case for the organisation as a whole, not for IT as a cost-centre (or worse still a profit-centre).
And costing and catalogue and business cases are only part of "running IT Like a business". Running a business means focusing on your own profitability, ensuring customer success only where it is in your own interests, disclosing only that which you wish to, cutting unprofitable customers.
Being an integral part of the same organisational team means (in theory) all working for the same goals of the overall organisation, collaborating, sharing resources, taking one for the team.
Sure petty politics and base human nature means that organisational units compete and act in their own interests, but that doesn't mean we should enshrine that behaviour in a formal structure. But that's what "running IT as a business" does.
Not only that but "running IT as a business" causes IT to replicate organisational functions. This is the cause of the confusion between organisational change and IT change - there should only be one. (IT also ends up running organisational change in many organisations because the organisation is deficient, but that is a different discussion)
Likewise why does IT have Release? - it is just project rollout. Why does IT run projects? At least THAT mistake is being corrected in many organisations at last, with Programme/Project Management Office becoming a corporate function not an IT one.
It is funny that this IT Skeptic journey started 6 years ago with Alan Mayo, at the time Chief Architect at a big retailer here in NZ, saying SLAs are divisive, destructive to teaming. I think he may be right. Certainly if we take "run IT as a business" too literally we'll dissociate ourselves from our colleagues and team-mates. By all means charge them for services, and manage closely what you deliver for them, but don't treat them like they work for somebody else.