IT as a Business
IT as a business is not a technology shift. It requires fundamental changes in how IT is managed within the corporate operating model as well as financial planning, forecasting processes and entrepreneural risktaking. The IT organization – IT Delivery - has to run as a distinct business entity providing services for other line of businesses within the enterprise like a company within the company with profit and lost responsibility.
The benefits to the enterprise sought by using the „IT as a Business“ model include the standardization and simplification of services delivered by IT improved financial transparency and more direct association of costs to consumption of the services and increased IT operational efficiency resulting from the need to compare the price of internally produced services to those available from external providers.
Most important areas of attention are IT financial management, demand management and entrepreneurial risk taking by the IT organization. In that business-success not only stems from having a great service coupled with great customer service, there also needs to be an understanding of the cost of provision, the cost drivers, and the margins involved. Instead of thinking of budgets and allocations as a means of covering IT’s costs, an entrepreneurial IT organization views it as revenues for its services.
IT as a business demands that business clients decide which products and services they will “buy,” and which are not funded. All IT products and services have a true, full cost to shareholders, and funds are limited. At its core, it is a competitive business model where an enterprise IT organization views the lines of businesses having many options for IT services – external providers like outsourcing companies and public cloud providers. It will place great emphasis on the needs and the outcomes required by the LOBs.
The transformation of an internal IT organization from operating as a cost center to an „IT as a Business“ model is also believed to produce improved levels of business agility for the enterprise as a whole.
Characteristics of IT organizations adopting „IT as a Business“ model includes:
- Principles of value creation, managing service assets and applying service structures within the context of the service strategy.
- Financial management, return on investment and demand management are critical aspects of the service portfolio management process
- Utilization of a service lifecycle framework to design, implement, operate and improve continually the services from the initial idea inception throughout final service retirement