Internal IT Departments are (almost) Dead - Long Live the Service Provider

Working in an internal IT department has its benefits. If a company has one at all, it is an indication of its revenue, after all IT staff aren\'t cheap. One could take this a step further and make the assumption that the package is likely to be competitive, relative to the market, and include such things as car allowance, interest free loans and medical cover for you and the family. Sounds pretty good doesn\'t it(?). What I think is missing though is the client to service provider relationship.

The IT department is part of the furniture of the organisation, it has a monopoly on IT services within the company. Let\'s explore this a little. Having an internal monopoly is bad for all parties. Think of the employee, almost without realising it he/she has limited their exposure to technology and the application of it. Of course they have, they are only going to be implementing within this single company which, presumably, only works within a particular market sector, offering particular products. Now I\'m not saying that this means people will have experience so narrow that it\'s worthless, but it will be narrow. What about the business itself then. They can only go to one source for advice and implementation. No option to use the RFI, RFP approach, conduct supplier interviews or perform commercial negotiations. There are no negotiations here, you have a fixed internal rate and that\'s the end of it.

When you work for the supplier (particularly a small one), chargeable utilisation is paramount and measured constantly. Apply this with rates and you know exactly what\'s going on in the bank account. Senior staff don\'t all have their own PA\'s, fixed overheads are minimised down to flowers in reception and coffee beans for the techies. If utilisation or rate decreases, there is cash burn. Eventually heads need to roll, literally out of the door, so that the company can survive.

If that isn\'t motivation for folk to deliver projects on time, to budget I don\'t know what is.

Furthermore, this is fairly good motivation to establish a good working relationship with your clients so that [a] there is repeat business and [b] you\'ve got references and the potential for case studies. So where does all of this sit when you\'re an internal IT department? It doesn\'t. So what, I hear you say - none of this affects me in my cosy cubicle in my centralised office for my Big Brand company. Well, be careful...you might be wrong.

Think of this, your company can afford you and you\'re not cheap. You want a car, a bonus, a travel allowance, medical benefits, 30 days holiday, 2 weeks a year training, you want to get paid even when you\'re not working because you\'re \"sick\" - you are expensive.

Stating the obvious now, this means that your employer ahs money, money to spend on IT. The question is, do you now what this means...? OK, I\'ll let you in on a secret. It means that other people would like that money. They would like to earn the money that currently gets paid to you. The rest is simple. You see what happens is that someone forms a company to provide IT services. These services include your exact job, the exact job description. But there\'s are some differences, ones that are pretty hard for you to compete with;

1. They\'ll be cheaper

Your skills are generic IT skills, they are not location specific. So, let\'s go somewhere in the world where labour is cheaper and source your skills.

2. They will only charge for work that they do You cost money every day, regardless of whether you actually do anything productive or not.

3. They will offer guarantees. No delivery, no pay - simple as that You don\'t offer any. If is doesn\'t work, you\'ll carry on clocking up time until it does.

4. They will offer fixed price projects. You specify, they deliver, you pay. You won\'t do this, many can\'t do this. It\'s too much pressure for many.

So there\'s just four reasons why your job is on the line. I know you\'re probably thinking that your IT department is so huge, it couldn\'t possibly undergo such a massive transformation. Be careful jumping to conclusions. For many companies what you are thinking is true - at the moment. But it only takes one early adopter to be the first domino and the rest will either fall into line or fall out of business.

Consider this. A retail bank, millions of customers, hundreds working in IT. If a proportion, let\'s say only half, where replaced by a service provider millions could be saved. If the bank passed on these savings to the customers by way of an interest rate rise, what\'s going to happen? Exactly, customers are going to flock over to the bank. What happens next? Well the customers haven\'t just been magic\'d from thin air, they are someone else\'s ex-customers so now they need to react. Here\'s where they decide whether to fall in line or fall over.

So now that you know all of this you need to decide whether you are doing the right thing now to secure your future. What makes you different to the many thousands of other people around the globe that hold the same job title as you? Still feeling cosy?

My final thoughts on this are that there is going to be a complete reversal in the way the experience on our resumes is judged. In the past, and to a degree in the present, you can \"get a foot in the door\" of Bank A if you\'ve worked in Bank B. But remember, IT departments are dying so when you step out of Bank A you\'ll need to go over to the \"light side\", the services side. All of a sudden you are in a far more commercial environment. Over on this side, people take risks, people make guarantees, people lose their jobs. So when you say, with an air of confidence, \"I have X years experience as the manager of this that and the other for Bank A\", expect to be hear in response, \"I\'m sorry to hear that, what part of this experience makes you think you\'re suitable working in our commercial organisation\"?

Good luck out there. Take the initiative now, the light side beckons. A moment paused is a moment wasted. Look to your creative side, find people to collaborate with, seek clients globally and build your company. If you don\'t like this idea, find some who has already done this and work for them!

My background and experience is mainly project management within diverse environments such as large corporate financial institutions, medium-sized technology consultancies and smaller start-ups. Having held positions including Operations Director (COO) and Head of Process Management, I have now left corporate life, as an employee, for goodthe entrepreneurial side of my character is prevailing.

My focus is on becoming an Un-natural Entrepreneur. I want to work with people and companies that have vision. I can offer key values and skills to help bring your ideas to fruition. If you are a starter, then I am your finisher. My approach to a challenge is to clarify, understand, problem-solve, develop and deliver.

To take an idea or concept through from its inception to its execution requires a consultative approach - a partnership. I am a rational and pragmatic thinker and can work within an existing management structure, or create a new management team through my extensive network.

http://www.stuart-oliver.com/blog

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