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Yet more ITaaS business models

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Here’s one last bunch of business models, in case you’re serious about pursuing the ITaaS dream of running IT like a business.

By Bob Lewis | April 23, 2014
Topics: Industry Commentary, ITaaS, Organizational Design, Organizational Effectiveness, Outsourcing, Strategy and Tactics | 3 Comments »

We’ve been talking about ITaaS – IT as a Service, which doesn’t mean an IT organization that lives in the Cloud, and does mean an IT organization that runs itself as a separate business that views the rest of the enterprise as its internal customers.

Which means with ITaaS you have broader responsibilities than the head of a business division or department. Starting with the past two weeks’ topic – deciding on your business model, of which we covered about half the ones on my list. To continue … and let me emphasize, I’m not saying these are all good ideas. I’m not going to even try to connect these to anything IT might want to pursue – I’ll leave that to your imagination. But they are common business models, so what the heck:

There you go. If you want to head down the ITaaS path, ask yourself: Just how seriously are you going to take the idea that you’re running a separate business? If you mean it, start with the business model. If it’s just a metaphor, you’ll have to decide how far you’re going to take it.

Which gets to Mike Riddle beating me to the punch on a couple of points he made in last week’s Comments, namely: “If it is really going to be ITaaS, then it must be subject to market forces:

1) It must compete with outside vendors to keep its business, and

2) It must be free to sell to outside business. If it cannot, then the separate run as a profit making unit fails because it is not allowed to develop a full market.”

Yup. If you’re serious about running IT as an independent business, the rest of the business is going to want you to compete with outside vendors for their trade. Then there’s the other side of the coin, namely, that you’ll be dividing IT’s time between the rest of the business and other corporate customers.

Oh, and one more thing – you and your staff will have to get into the habit of responding to the various informal requests for favors you all get from your non-IT colleagues every day, “I’ll be happy to do this. Here’s what it will cost.”

They’ll love that.


3 comments on “Yet more ITaaS business models

  1. “I’ll be happy to do this. Here’s what it will cost.” Exactly right. And exactly why (more often than not) ITaaS will not be a success for the overall business.
    Making sure your new staff understand this is the first training item on any new outsourcer’s agenda (and in the ITaaS model, you’re now an outsourced service). In some cases they’re up front enough to give it its real name “How to say ‘no’ to your former colleagues”.

  2. mike moxcey on said:

    Allowing “your” IT department to truly become a vendor of IT services to the outside market is bad for the same reason hiring contractors is.

    1. If the IT dept can make more money from other customers, your needs get downgraded unless you’re willing to pay more. That’s a consequence of “market actions.”

    2. If it is “your” IT department, one of it’s ostensible goals is longevity of the company so they will argue against most of the good ideas of management (because most ideas are not good).

    If you want to hire an outsider to tell you if the idea is good or not, then the company make do alright. How it works in real life tho is some vp gets a “good” idea and then asks a contractor if they can implement it that price. Of course they can and of course the project fails because you didn’t hire them to answer the right question.

    And you’re just a customer now, not my liege.

  3. Sara Wasserman on said:

    An IT director at a company I used to work for definitely pursued the size/growth model using a sort of amoeba style: he would try to take over various other departments that were related to IT. I called it empire-building. It was a chain of retail stores, and the cash registers and time clocks at the stores were under a different department from the central IT at headquarters – the IT director kept trying to get them under his purview. Which I think he finally succeeded, in part because the other manager wasn’t that great, and in part because it ended up making more sense to have them together, as central computing had to talk with the cash registers daily anyway.

    So maybe not such a bad model, especially for ambitious CIO’s, and possibly for increasing coherence among the various types of technology in the company.

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my photoBob Lewis is a senior management consultant with Dell Services. He has published these columns once a week in one form or another since 1996.

Disclaimer: All opinions, statements, representations, allegations, images (if published) and anything else that appears here is the sole responsibility of the author. Dell has and had nothing to do with it, other than saying it's okay to continue publishing KJR.

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