The trend is clear, more and more IT services are being delivered through as a service (XaaS) style offering. In a XaaS model all of the technical work is done by the XaaS provider rather than the corporate IT team. In addition most of the user support is being done by SMEs embedded within the business. These roles also often lead the product configuration on behalf of their community of users rather than having to deal with what many perceive to be a bureaucratic IT department.
As this trend grows there are a number of implications for traditional IT teams. Traditionally IT departments have spent over 70% of their budget on IT operations. The human effort was similarly biased towards system maintenance and support. As XaaS grows this operations and maintenance role for in-house IT teams diminishes. Taken to the extreme, if 100% of an organisation’s systems are delivered by XaaS there will be little if any actual technical work required. As this position is reached, what are the implications for the CIO and their inhouse IT teams? Several questions emerge:
- What is the role of the CIO and the corporate IT professional in a XaaS world? Does or should the role even exist?
- If there is a role, what skills will be needed and what skills will become obsolete for corporate IT teams?
- How will IT add value generally and in particular how can information and technology provide competitive differentiation when everything is a freely available commodity in an XaaS world?
Here are some of my thoughts on these issues.
I have been working in and around technology for a long time and I can’t remember a time when there wasn’t a debate about the real role of the CIO. Many of these debates have ended in a call for the rise of the new CIO, a CIO that can take their rightful place around the executive table and lead the organisation to superior performance by leveraging the new (or over hyped) technology of the time. I have written about this a number of times including here and the last chapter of my book High Performance IT.
Most of these calls for change come from a perspective that the CIO and the IT team they lead are what they do and traditionally what a CIO and their team does is manage technology and with what time they have left they lead or participate in the delivery of projects. From this perspective, if the work goes away (or diminishes), as it will in a XaaS world then the need for the role goes away or diminishes.
But there is another perspective. The role of the CIO should not be defined by what they and their team do, this is merely a means to an end, but by why they do what they do. The purpose of the CIO and the IT team remains the same no matter what the hot technology of the day is and that is to use technology and information to add value to the organisation. This is the CIO’s unique contribution and as long as technology remains the great enabler of our time the CIO role will remain significant in organisations of all sizes. If you accept this perspective the CIO role remains constant through technology cycles. The operational challenge however is to be able to change how they operate to ensure they remain relevant. With that in mind, what operational changes is the move to more XaaS solutions likely to cause? Here is a start to answering that question:
- Let’s start with the obvious, actual technical work will decrease. This includes ongoing operations, incident response and restore, proactive maintenance and system upgrades and improvements. In most IT shops this accounts for well over half of all work the team undertakes. In some circumstances it can be as high as 85 or 90% so the decline of actual technical work is likely to have a significant impact on IT team structures.
- While actual technical work will decrease the need to coordinate technical work will likely increase. Take for example Incident Management, in a XaaS service world the technical work will be performed by the XaaS providers. The internal IT role will be coordinating this effort and escalations as required.
- Integration is already a big deal however it is likely to become more important as the IT team will be required to knit a diverse set of SaaS systems into effective end to end solutions on behalf of the customer. This includes:
- Service integration
- Data integration
- Incident orchestration
- Monitoring and Automation
- As a result the focus of the IT team is likely to shift from system uptime and performance to end to end process orchestration across various SaaS platforms.
- As technical work decreases and orchestration and coordination increase the skill set of most IT team members will also need to change. Specifically we are likely to see soft skills being valued more highly than technical skills. A recent discussion group identified resilience, adaptability, influence, inquisitiveness and creativity as particularly important emerging skills.
- While the overall quantity of technical work will decrease the need for excellent internal architectural skills will remain and maybe will increase as we set out the principles XaaS solutions need to adhere to and to ensure XaaS solutions can be cost effectively integrated. In addition to the architecture skills organisations will need to have access to advanced expertise (either inhouse or outsourced) to provide QA services to ensure the new providers are delivering robust solutions and not “ripping us off”.
This is a start and I suspect there is a lot more that needs to be added to this list and I’d love to get your feedback on what we have here and what we don’t.
Finally, while I see the move to XaaS as inevitable and largely positive there is one area of caution that is worth noting and that is that while publicly available, cost effective XaaS solutions can help you to maintain competitive relevance (largely through efficiency) they are highly unlikely to allow you to establish and maintain any significant competitive advantage. This is a problem as all the research points to IT adding value when it is used strategically to differentiate your organisation from the competition. This differentiation is usually associated with using technology to enable your business and operating model in a way that adds unique value for your customers and the organisation. As Nicholas Carr pointed out many years ago in “Does IT Matter” uniqueness cannot be achieved from widely available commodity technology. The conclusion then is:
While XaaS will continue to grow and will dominate corporate IT solutions in time they should not be used where it is most important to your competitive advantage and unique value proposition.