Saturday, April 20, 2024

From Cost Center To Profit Center: The IT Evolution

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IT is evolving into a new beast, forcing CIOs and administrators to do a 180 in the way they think about and tackle their jobs.

”IT is going to become really, really relevant to the business and the product in the next five years,” says Tim Sinclair, general manager of, the fourth-largest Web site in the U.S. ”IT used to be seen as a necessary evil to run the business… Now it’s going to be relevant to the product. The value customers are receiving comes from IT.”

Sinclair, in an exclusive interview with Datamation, said the IT department will change the way companies take care of their customers and grow their business. A changing economy, a push toward business partnerships and new technologies add up to mean that successful businesses will be the ones that ingrain information technology into the business’ mission, customer service and production.

Sinclair, who oversees Microsoft’s Web site that offers to approximately 7 million customers a day patches, updates and technical information, was a keynote speaker at the International IT Service Management Summit in Boston Wednesday morning. Sinclair, echoed by corporate users, points out that IT will no longer be about maintaining a server or updating a data center. IT will be about making information, products or services available to customers.

It signals a shift in the way information technology managers and business managers think about the IT department.

”The customer is all that matters,” says Sinclair. ”Without the customer, it’s a useless exercise… IT has to start thinking like a marketing team.”

Paulo Soto, a systems manager at Cincinnati-based Procter & Gamble, says they have been working on IT services management practices for the past three and a half years, focusing their efforts on better serving in-house users — or their own people. And the results are measurable, he says, reporting big changes in availability, performance, and response and resolution to outages.

”We’re working on linking IT with business,” says Soto of the $40 billion global consumer products company with 5 billion customers and hundreds of help desks and 10,000 applications. ”It helps turn your IT organization from a cost center to a profit center. It can truly enable the business to meet its objectives.”

But Dan Kusnetzky, vice president of system software research at International Data Corp., says he’s dismayed that both IT and business managers see this as a major shift in thinking and practice. He says it’s simply an evolution of IT — one that has been in the works for the past 40 years. Strong businesses with a good grasp of IT’s potential have long been supporting products and services with technology.

The fact that so many people see this as a shift in concept means there has been a lot of bad thinking — tunnel vision that pigeon-holed CIOs into the role of keeping email servers running instead of taking a wider focus on communications.

”One of the basic concepts behind IT service management is to create a reliable environment that allows companies to do more than without it,” says Kusnetzky, who says CIOs and IT administrators have slowly but surely been evolving into business-oriented decision makers over the years.

”In the past, it was fairly clear that the technical person with the technical title bought the technology based on features and functions and cost… without any consideration of fitting it into an overall architecture or business plan. Today, they have to decide if the technology will fit a business goal. Will it help us lower our costs? Will it help us make money?”

The recent downturn in the economy and the resounding pop of the Internet bubble only backs up these ideas.

Analysts point out that when high-tech companies and dot-coms were hot in the late ’90s, system and network administrators were largely scooping up the latest and greatest technologies — regardless of whether or not their business really needed them. More speed. More power. Cool new features. That’s all it took to sell software or hardware.

But those times are gone. Budgets are tight and IT pockets barely have enough in them to cover necessary purchases. The latest and greatest is often left sitting on the shelves these days.

What CIOs are looking for is technology that will help them meet their customers’ needs, which will keep them from taking their precious business elsewhere and keep the company running in the black.

Seamless efficiency. That’s what customers are looking for, according to Microsoft’s Sinclair.

”The reason they come to is not availability,” points out Sinclair. ”They may want a patch, or a white paper or information about this conference. They don’t care about the stuff in the middle. They want the information they need.”

And the good stuff in the middle consists of strong, informative, factual content, availability, recoverability and Web integration. All of those parts need to be seen as a whole — a whole that serves the product and the customer.

”We’re delivering information that helps people do their jobs,” adds Sinclair. ”You need the content and the availability and the performance to do that.”

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