THE BLOG
11/24/2014 04:35 pm ET Updated Dec 06, 2017

Do Companies Still Need a CIO? Introducing the IT Services Supermarket

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Some pundits argue that companies will soon be able to get rid of their CIOs and even their entire IT departments. But even with the rise of powerful IT services on the cloud, this notion is folly. In fact a whole new model of IT management is emerging. Let me explain.

Twenty years ago the IT Function headed by the CIO was in the business of developing applications for the business. User departments made requests and then got in the queue -- that was sometimes years long. IT managers also worked on developing infrastructure.

The IT Function has been under duress for many years. Prior to the introduction of the personal computer, the IT department controlled all technology use. With the PC and then later the early days of the web, many business departments, such as marketing, R&D, and supply chain management, increasingly went outside of IT to procure and meet their technology needs. This trend has accelerated with the rise of mobile apps and the availability of services on the cloud. This has caused some analysts, including industry behemoth Gartner Group to conclude that the days of the CIO are over.

The business units have a point. Every business is becoming a digital business and it's positive that managers everywhere in the enterprise are interested in IT and taking responsibility for it. They are tired of a multi-year backlog of application development, especially when they can fund publicly available services that meet many of their needs, often for a few dollars a month on the cloud. Further the new paradigm in technology threatens many companies' legacy infrastructure and IT know-how. Tony Scott, former CIO at both Microsoft and Disney and now the CIO at IT services company VMware in Silicon Valley, views this trend as a good thing overall. "In the old days you had to go to a travel agent because they were the only people who understood the industry. Today you can do that yourself using a rich selection of services," he says. "Today the same things are possible with the consumerization of IT. Everyone in the enterprise can do their own shopping for IT services."

But Scott and many other CIOs I work with note that there is also a problem with all this enthusiasm and self-organizing activity throughout the organization. IT challenges are enterprise challenges. Companies need to have an integrated, enterprise architecture to have a single version of the truth and to harness the power of big data. They need to have security standards and systems to protect them from bad actors. They need back up capabilities to ensure business continuity. They need an enterprise strategy for collaboration tools and systems to cut across business silos. They need to have elite IT talent to deal with the many complexities of becoming a digital business.

There is a solution to this dilemma. A new model of the IT function is emerging, and one that makes the CIO more important than ever. Call it the IT Services Supermarket. Here's how it works: The CIO anticipates business needs and provisions a rich supply of services, from standards for mobile devices to architecture compliant applications and cloud services -- all in the "shelves" of a supermarket. The business customer goes to the supermarket -- a self-service portal or catalogue and pulls up the available IT. They choose the services, and the level of service required and combines them to meet their technology needs.

Scott is implementing this concept at VMware. "Just like there is an amazon store or an eBay store where people can get what they need, companies can set up a store where their internal customers can select the best and most appropriate services," he said. "This is really the future -- the digitization of IT services. Curated the right way, the supermarket will create the same kinds of feedback loops we see in the consumer space today. There is a rich feedback loop that comes from the consumption of these services, that makes them continually improve," he said.

Because these services are running in the cloud, they are delivered in a location-agnostic manner. Where the application is running no longer matters whether its running in the (private, public, or hybrid cloud) on a virtualized machine on virtualized storage, over a virtualized network. Decisions like that are determined by cost and regulatory decisions. The Supermarket has costs associated with various technologies and service-level agreements that for response time and other variables. Given the large economy of scale achieved by centralized purchasing, the costs are lower, affected by the needs for response time, governance, security, redundancy isolation, and other operational drivers. The fixed costs will end up being shared across a broader base, lowering them making them variable. Given the advances in technology, services orientation and the cloud, there can be more focus on how to assemble capability like Lego blocks rather than custom building the from scratch.

Says Bob Tapscott, who has been working with me to develop this concept (yes, that's my brother Bob, former CIO): "With this vision the CIO becomes a true business partner is working on anticipating the future as opposed to satisfying the dated requirements of the past."

But the CIO needs to change. The CIO's role must evolve for the progressive enlightened enterprise to something else -- perhaps Chief Innovation Officer, Chief Integration Officer or, like a supermarket manager, a Chief Inventory Officer. Says Hunter Muller, who, as the founder of HMG Strategies, has built a community of CIOs in 30 cities, "The new CIO must be connected to the C-suite as a peer to drive market facing, revenue generating initiatives." Muller emphasizes the new corporate culture for the digital enterprise where the CIO must be aligned with corporate culture and market needs. "If there is culture or role incongruence, CIOs need to work with the C-Suite to redefine the position and role potential."

In this new model the CIO needs to lead through influence and persuasion rather than authority. This is only achievable through being a business Janus -- looking forward and back, with a telescope and microscope, and being both a visionary and a detailed oriented executor of platforms, and solutions for the IT supermarket.

This piece is based on The Digital Economy, 20th Anniversary Edition by Don Tapscott, released October 2014. This piece originally appeared on LinkedIn.

Don Tapscott is the author of 15 books and rated by Thinkers50 as one of the top five living business thinkers in the world. He also plays keyboards in the band Men in Suits. On Twitter @dtapscott

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