What does it mean to run "IT-as-a-Business?"
In a sentence, "Government employees become customers." Whatever Department, Agency, or Office you work for, be it federal, state, or a local municipality; the non-IT employees in your organization are your customers. Specifically, employees within the Lines of Business (LoB) supporting the mission and goals of the organization. To me, this definition is profound and radical to government IT because it leads to four conclusions:
- You (government IT) must have a "contract" with your "customers." You offer services with well-defined costs. You provide expected levels of performance for each service. There are penalties and rewards based upon performance... and yes this can and has been done in government.
- You have the ability to provide your customers fair and accurate billing (showback/chargeback) based upon actual IT service usage.
- You are competing for business. Government IT is competing with external IT providers including public clouds and outsourced/managed IT. Increasingly, I hear my customers discuss "Business Led IT," which can be code for putting IT budgets back in the hands of the business (LoBs), away from centralized IT. The good news, you're not a back-office cost center anymore. The bad news, you're one of many partners expected to provide ongoing business value. Start acting like it!
- You are focused on innovating. In order to stay competitive and provide continued value to your customers, you must free up resources from daily operations and maintenance. You need to focus on new programs, projects, and services to meet mission needs. Innovation is a daunting proposition if you're spending 70 to 80% of the annual IT budget towards O&M.
What does Government IT-as-Business look like?
- IT provides a formal service catalog with pricing (actual costs) and Service Level Agreements (SLAs) for each service offered. Ideally, many services are provisioned, managed, and retired through self-service mechanisms. Services may be source internally through your Software-Defined Data Center or through public providers such as VMware's vCloud Hybrid Service. Either way, your customer is happily insulated from these details.
- IT transparently shows the cost and value of IT services through detailed billing (chargeback) and reports. IT demonstrates fair allocation of IT services to all LoBs using agreed upon cost models.
- IT becomes an IT broker to LoBs. Instead of "competing" with external providers and offerings, government IT compares, contrasts, and ultimately negotiates the cost for best matching solution to customer needs. This is made possible by government IT's knowledge of the business coupled with an intimate understanding of, and relationship with, external providers. Perhaps the biggest problem with government IT today is not IT, it's procurements. Help your customer navigate around out-dated and bureaucratic procurement environments!
Transitioning to IT-as-a-Business: Faster, with Less Risk
I dislike being prescriptive with approaches to most IT issues and opportunities. However, I've been helping several VMware public sector clients with the transition to IT-as-a-Business and I'm seeing a strong playbook emerge:
- Reassess and reevaluate your current IT governance framework. Virtualization,Cloud, IT-as-a-Service, Mobile, and Software-Defined "everything" requires a reexamination of your current IT governance framework. How do you make IT decisions including the alignment of IT to business needs? What are the financial implications? What value will/does the service or solution provide? In a nutshell, you and your customers must gain confidence, again, in what and how IT decisions are made, their costs, risks, and implications.
- Put a strategy in place to transition and "upgrade" your people and processes. New roles and skills will be required, some roles will need to be retired. You'll find many processes are now archaic, and many that can be automated. Take the time to put your people and processes ahead of the technology.
- Define, manage, and automate IT cost drivers and cost allocations. Being a "strategy nerd," I don't believe in leading with technology. Instead, progress starts with the problems and opportunities facing your customers, within the context of their environment. However, I've worked for a federal shared service center and I can say, without question or qualification, that accurately tracking IT spend, and providing fair and transparent cost allocations to customers is near impossible without a tool such as VMware's ITBM. Why? There's too much labor effort involved, too many truths leading to a lack of trust, and too much delayed reporting. If it's too hard, you won't do it! So in this case, I say procure the tool first (with due diligence) and the solution will follow.
- Transition legacy IT assets and services into a true service offering. Provide a catalog of well-defined IT services, which includes costing and performance details. Automate the entire service life-cycle and offer self-service provision where possible. VMware's vCAC is the perfect platform for achieving IT service offering excellence.
Considerations
Based upon my experience working with customers, I offer these considerations:
Bootstrap?
Some of my customers are attempting to "bootstrap" these efforts by proposing a self-funding model. I think it's super challenging to attempt to transition to IT-as-a-Business using a self-funding model: there's too much upfront work to be done to expect payback in the same fiscal year. No, I think you must reconcile yourself to the idea that payback occurs in operational efficiencies and savings in the out years. Better yet, "pay-foward" occurs in the extended value you provide back to the business by shifting the percentage of IT spend from O&M to new & ever-improving IT services.
How do you eat an elephant?
Don't "boil the ocean!" There is so much to do, on so many fronts. The process should be iterative and incremental, think agile with proof and validation points established within a road-map. This is a journey folks, not a destination. Customers get really excited when I talk about IT-as-a-Business and they want to hit the ground running. But oftentimes, they haven't yet charted the direction in which to run. Cloud hasn't changed how IT is lead and managed: You still need a strategy, a road-map, and plans! You especially need change management plans, communication plans, and plans to evolve your workforce - it's sad to say but sometimes the enemy is within. Buy-in, from your customer and IT employees is critical.
Step one, admit you have a problem.
Get help! Much of risks can be addressed with help from experts. For example, VMware's Accelerate Advisory Services provides expert-level help in the areas of IT Governance, IT-as-a-Service, and IT Financial and Business Management. An experienced, outside perspective can bring you best practices and can help you avoid common pitfalls. The cost of outside expertise is well worth the value and peace of mind you will receive.
If you're a government IT leader, I'd appreciate hearing your thoughts and experience with the transition to IT-as-a-Business. Ping me @ mstockwell@vmware.com, or twitter @mstockwell, or comment on this blog. Thanks and best of luck with your transition to IT-as-a-Business.