Leadership

12 critical insights on the state of IT in 2012

Today's IT departments are in flux and under pressure. Here's an explanation of why, and advice on how IT can change the equation.

I regularly moderate The Great Debate over on ZDNet and it's always a fun opportunity to get a couple smart commentators together and let them cross swords over a controversial topic. However, this week the debate was especially great, as TechRepublic's Justin James and ZDNet's Dana Gardner clashed on the topic of IT Department: Cost Center or Profit Center? It ended up being about the current trajectory of the IT department and how to change it.

If you missed it, then you missed a crash course in why many IT departments are struggling today and advice on how IT can transform itself into an indispensable force. Fortunately, you can still read the entire debate online, but I've also selected and curated 12 of the most important insights from Gardner and James into the following list.

1. The problem with IT

Justin James: "Most IT departments consistently fail to deliver value! When all you've done is replace the intraoffice mail system with email and IM, and replaced the filing cabinets and accounts ledgers with databases and applications, all for a price so expensive that you wonder if it wasn't cheaper to just pay people to do it instead, then of course IT doesn't look like a profit center. And it isn't. And when folks offer suggestions on how to improve it, the IT department likes to say 'no.' Sure, they usually have a good reason for it, but it still feels like stonewalling to the business folks."

2. Losing the stranglehold

Justin James: "The IT department is losing its stranglehold on the corporate IT resources, now that individuals can BYOD and departments can source IT from the cloud. This forces IT to work harder and smarter within the organization, when in the past they could adopt an attitude of, this is what were giving you, and you had better like it!"

3. A new class of IT

Dana Gardner: "Rather than remove IT in favor of cloud or SaaS -- businesses must embrace a larger role of IT as services broker... Already a new class of strategic IT organization is emerging, one that uses cloud, mobile, mixed-sourcing, strategic souring, ecommerce as core components. By delivering business services better than competitors -– even partners -- the modern value chain flows to them. Via innovation, they take more share, more margin, more opportunity."

4. The Amazon revenue model

Dana Gardner: "Before Amazon Web Services, a.k.a. Amazon's public cloud, IT there was a cost center, enabling their online retail and business functions. Now, IT is a profit center, adding entirely new revenues to Amazon in the form of paid cloud services. I'm seeing companies now following that model, taking their IT capabilities and making them the product, of combining their digital services and market insights to forge whole new services, and bringing in whole new revenues. So the discussion has changed. It's not how will IT support the old business, it's how is IT able to create new lines of business."

5. The Apple innovation model

Justin James: "Most companies view the accounting department as a cost center, a necessary evil. Then you get a company like Apple, who puts a lot of really smart accountants and lawyers to work, and they come up with revolutionary new ways of exploiting loopholes in tax laws, and all of a sudden, the accounting department is adding BILLIONS OF DOLLARS to the bottom line. They transformed the 'cost center' accounting department into a 'profit center.' How many IT departments are doing the same kind of thing? Not many."

6. The SMB model of IT

Justin James: "A lot of IT departments are struggling to define their mission, struggling to be relevant to the business, and struggling to deliver real, provable value and ROI... and I think that in the next few years, we're going to see the small business model of IT - cloud services bolstered by a small cadre of on-site techs and a handful of part-time experts or consultants for the big stuff - start to move up the food chain."

7. Measure and report

Dana Gardner: "Measure whatever you can on how IT impacts business. Make the causal connections between a new application that improves a process and the results of the process. Use social tools inside the enterprise to do polls, to ask users to tell the good and bad about what IT is doing. Like with app dev, do scrums in the ops side to determine performance and then share that back to the developers and forwards to the users. A lifecycle approach where there is visibility from IT ... will help improve perceptions."

8. The organizational dilemma

Justin James: "Which departments have the foresight and willingness and open-mindedness to work hand-in-hand with IT? Which employees are willing to make the decisions to go ahead, knowing full well that the process is going to possibly cost a lot of people their jobs? That's probably one of the biggest issues: folks know in the back of their heads that a push to modernize can cost jobs."

9. Find a hero project

Dana Gardner: "IT must pick its first battles very carefully. It's essential to show benefits early on to get buy-in later, and make those perceptions shift to the goodness of IT. So find a pain point for the leadership: Perhaps it's visibility into some business process, or ability to use data better and faster. Business leaders love a good chart. Make them see that IT is making data, analytics and dashboards a priority. Or find a problem that impacts those tasked with business development and fix it or offer suggestions. IT needs to proactively court those that are building the new business winners and engage with them. It has to be more than repaving cow paths and replacing older servers... It's a culture thing, as much as anything. And people change culture."

10. The technical CEO

Dana Gardner: "I expect to see offices of the CEO comprised of a COO-CIO duo. When business operations, market strategy and IT knowledge are combined, big things can happen. The fact that CEOs have one come from sales and founders may need to give way to more technology savvy people at the top. Selling is important, of course, but making the strategy align with what the technology allows is more important nowadays. You need to have something to sell, and the products and services themselves are increasingly about technology. So let's get more techies in the corner office for more kinds of companies."

11. The three factors you must have

Justin James: "You need to have ... a proactive IT department and a visionary leadership team (not merely the CEO), AND open-minded employees who won't drag their heels and sabotage the process. That's a rare combination, and it's one of the big reasons why we don't see organizations transforming their IT as much as we see new organizations coming up that use IT to drive profits from day 1."

12. Dominance of the technically-capable

Dana Gardner: Let's face it, a lot of companies are not going to make IT a profit center, and they will be in trouble, and then more trouble. It will be very hard to transform a company that is dysfunctional in IT. On the other hand, companies that do IT well, that integrate the technically possible with the business necessary will be able to change and adapt. And they will hire that best minds that can build on the successes and go dominant in a big way. It's not just survival of the fittest, it's dominance by the most technology capable.

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

37 comments
timsimmons30
timsimmons30

I find this article quite an interesting read. It is funny how organizations are struggling to embrace IT when it is IT that helps them function (no email, database, security, etc you will have to go back to manually processing orders, payroll, etc.). For those of us who have seen the wars (pre-oracle, SAP, ERP, EMC, DSS, etc) we kind of laugh knowing that all that is happening is folks are coming out with the same old initiatives and calling it the next wave of innovation. Yes, I agree that there is a lot of waste in IT, especially when companies put in these multi-million dollar projects that support 1% of the business. I also laugh when we spend millions on replacing older technology that has not been more than 20% utilized. In fact, I frown when we spend 100 million dollars on projects that are supposed to turn off older equipment, however there is this one person in the business that has one monthly report that he may or may not look at. I also, frown when I see companies spend tons of dollars on bringing in consultants to review their business processes only to find out that their process were bad from the time that they were created. We (the royal WE) promise to uphold the business mission statement that mentions reducing waste and streamlining the business to maximize profits, however we turn around and reduce IT when your process models should be tweaked. If you want to help reduce your IT foot print, please look at your business waste as well. A little training can go a long way to cleanse your entire business model and raise your profit margins. I do have one key question with BYOD, IaaS, PaaS, SaaS and any other new wave of so called IT reduction strategies. When you are in the mist of a major deal and your service provider goes down, fails to secure your data, loses you transaction or is not there when you really need them, what are your going to do? What if your business can't afford to lose this one customer, what will you do? I am not taking the IT side, I am just trying to get folks to understand that you need to look at your entire business (department by department) and make the right adjustments, not just the easiest (get rid of IT). Just food for thought.

riverasanchez
riverasanchez

As an IT Network engineer, I have experienced the flaws of a slow and inflexible IT department. This is most of the reasons we find a lot of the corporate IT staff shaking in their boots! The Cloud has offered an alternative to Management, but they are having a hard time understanding the Pro's & Con's to migrating services. Is a simple decision, get on the cloud and cut the excess fat of useless IT personnel and outdated equipment. There are some IT guys who will not feel secure without a steady paycheck... but in fact is just the opposite for the professional IT mind, this can be simply an opportunity to thrive if you are truly an asset in knowledge and experience. If you are in IT, and you are worried about your job. Is only a matter of time before your worry becomes a reality. Instead, stop worrying and start moonlighting and you will find there is a lot of demand and opportunity if you have a value to offer. If you don't... switch to management.

elmramir
elmramir

Cloud+BYOD = get around IT Cloud is a way for business people to get around IT because we have failed them, we are too slow, too expensive, and too inflexible. BYOD is a way for business to use the equipment they want instead of Windows PCs or laptops and Blackberries. BYOD also makes business people mobile, so they can get out of their cubes and offices, so they can see their operations in person.

Chilidog67
Chilidog67

Every business has costs to operate and IT departments will always be some part of that. Where IT can be part of the discussion is in helping mitigate costs. Part of the fallacy of IT offshoring and hiring too many IT consultants is that you wind up with a lot of support staff who may understand their own jobs but they don't understand the business. When IT is a valued part of the team and used appropriately they are a excellent resource for any company.

premiertechnologist
premiertechnologist

If I read some of the comments correctly, IT simply must survive -- to provide incompetent management a place to blame all their problems. So, no, IT is not going away. Just the respect and honor.

csudholz
csudholz

IT to often fails to deliver 'solutions to problems', which really is what Information Systems of all kinds are ultimately for. IT people tend to argue their solution is great, but fail to recognize that the solution the provide is targeted at the wrong problem, or a problem that is not the users problem. For example a CMS that provides great reports for managers who wish understand customer relations, but really make life difficult for employees who's work is to build those relationships.

rsherrell
rsherrell

No matter how much I.T. changes, people want to beat up on it. No matter how many businesses fail because of poor planning or management from the top, they want to blame I.T. When the cost or complexity of technology goes up, they want to blame I.T. When marketing campaigns fail, they want to blame I.T. When projects are poorly planned and end badly, they want to blame I.T. When there is a virus on someone's computer, they want to blame I.T. No one in the entire company has to take any blame at all since everyone can blame I.T. The whipping boy's in I.T. are there to take the blame, not the credit. This looping blame game is all getting old, folks. Justin, you are stuck in the late 80's. You should not be claiming to be such an expert on I.T. since every single talking point you have is all around the blame game. Everything you say can be cut and pasted from thousands of articles written by other "experts" that continue to churn out the same old mush. I don't want to hear it anymore. This entire discussion is not a learning experience for anyone. It is just another I.T. in a blender blame game that is not even current anymore. Sad, very sad.

deisenbarth
deisenbarth

I'm sorry but I didn't find too much insightful or earth shattering about the points. Additionally, I find them premised on a particular type of business model. Maybe it was one of those things you had to see ...

Computer Dave
Computer Dave

What are 2 things that don't belong in the same sentence?

tavent
tavent

I guess you didn't see that part about getting accounting to also re-examine how money silos are organized. as long as accounting is in the "father knows best" days, you will be right. but the issue of the money-silos, which are endemic to my company, change, there isn't much motivation for accounting to re-evaluate its own models, nor for IT to behave like a wealth generator, nor for individual functional business units to think out of the box. At lot needs to change. Quite a lot IS CHANGING and the companies who figure that out, will survive. Right now my company does not really practice what it preaches, but I also have to admit that you start out by talking the talk and gradually change yourself by walking the walk.

premiertechnologist
premiertechnologist

Though many of you [i]may[/i] be skeptical, there was a time (yes, I know it doesn't seem possible) that businesses were actually [b][i]proud[/b][/i] of producing a superior product and / or service. Companies like AT&T had their Bell Labs which delved into pure science and advanced not just science as a whole, but technology products for sale. Without the concept of "let's let these guys do research and let's see what we can make out of it", we would not have had LASER (well, maybe, if the military were interested in it). We now have Blu-Ray, networking and PCs as a result of this and many other innovations, spawned by businesses which encouraged innovation. Anybody who goes off on their own on company time to do such things today will be fired because it's all about obvious ways to make a profit. As an IT professional, I did my own research to come up with innovative solutions early on in my career within the same framework. As a result, I was able to come up with real solutions long before anyone else could do it. For example, I developed the sectioning system for selecting classes for students based on their preferences, back when we were still using punched cards. Over two decades ago, I developed the Integrated Voice Response System for the County Permit System for contractors and mom and pop folks who needed to check the status of their building permits and schedule inspections on the telephone (contractors just love me!). It saved tens of thousands of dollars a year and made the lives of people a whole lot easier. But times change and management has become crazy: Faced with budget cuts and living close to the line with costs cut to the bone, no one can afford such "luxuries" as giving people freedom to develop technology for the good of the order. Management has become terribly short sighted. It does not pay to develop solutions for problems or opportunities which absolutely will develop 8 months to a year from now. There's also another endemic epidemic problem: Managers and technologists require different skills -- and managers don't understand technologists at all -- they just don't get it. If I may be so bold as to quote Dr. Stanley Schmidt from his editorial, "VIPs" in July/August 2012 edition of [b]Analog Science Fiction and Fact[/b] out of context: [quote]We're sometimes told that people tend to be either leaders or followers, and in my experience man do tend to learn more toward one or the other--though in the complex hierarchies of our present societies, many people play both roles in different subroups. And I don't buy the idea that everybody has a natural preference for one or the other. Personally, I don't like to do any more of either than necessary. I prefer to work as independently as possible as much of the time as possible, and it's how I usually work best.[/quote] As a manager at Weyerhauser, I had occasion to have lunch with an engineer / scientist one day, as he was being told with his other colleagues that they all had to work as a high performance work group team. "I just don't know how this is going to work," he said as he registered his discomfort in the change to smarmy social interactions to get his work done: He was used to doing his most excellent work alone -- not in a kind of gestalt group. I never found out how it worked for him, since the entire business was sold off and it is likely he lost his job. And that's just it: Managers think that technologists should think and act like they do. They think that engineers and developers will do their best work sitting around in a bull pen brainstorming (rolls eyes). No, see, you don't have ten people sitting at a workstation writing a single line of code. You have one person writing. Sure, the group can get together and toss the ideas around, but at some point one person has to do the specific work. Management also seems to think that like they do, skilled technologists are interchageable, like plug and play. A tech should be able to write Java code today (Java, what's that, coffee?) and be on the help desk tomorrow. Or this afternoon. Whatever the need, any one tech can do the job of any other tech. After all, that's how it works in management. Thus, outsourcing looks easy and even if you don't outsource, HR should be able to find an IBM Systems Programmer to maintain your legacy system for 8 months as your people rewrite the application for LINUX (what's LINUX?) servers, right? The problem here is ignorance. Willing, blind ignorance. Narcissistic, willing, blind idiotic ignorance. Plus the fact that these nim nuls, who shouldn't be in charge of a dog pound, with all the conscience of an alley cat, see the world as being all about them, without even a whisper of empathy for the abused worker who keeps getting more and more responsibility to work longer and longer hours because anyone anywhere can do anything, except, of course, the manager who has to find some way to cut costs and make everything happen faster. Is there anyone out there who still doesn't understand why businesses fail and go bankrupt or are sold off. Well, except, companies like Apple who can hire Foxconn for their supply chain setup. Management should work in concert with their IT folks to develop superior products and / or services. The technolgists need a little time. If management keeps the dialog alive, they will be rewarded for their trust. It's scarey, I know: Trust people you can't even begin to understand because you are so inferior in the skills necessary to do the job? Develop a bridge to communicate with those who speak an entirely foreign language? Have the patience to actually wait while technologists make a point so you can see how it will develop the bottom line? Unthinkable. Dust up your resumes guys, the techs aren't buying your management bull and the business is about to be sold.

IntegrITNetwork
IntegrITNetwork

This is great stuff. I'm going to use some of these talking-points when talking to business owners in our community.

speesd
speesd

I'm sure it's different in the non-profit world. Especially, if your business is IT. However, I've found that in the non-profit sector IT's value perception is directly related to the role IT plays in the overall strategy of the organization. When IT has a seat at the strategy table it's possible to include the use of technology as a means to help achieve the broader mission. When IT is buried in another department such as Finance, it forces the IT leaders to try and push initiative and innovation from the bottom up, which rarely works. IT shouldn't be viewed as a profit center or a cost center. Use it when it makes strategic sense and avoid it when it doesn't. If it's a cost center, efforts to reduce costs might result in missed opportunities to bring value to various business functions. If it's a profit center we may risk the establishment of self perpetuating processes that over time become divorced from business utility.

zMarcel
zMarcel

Is your receptionist considered a cost center? Or your secretary? Look at succesfull companies and see how they empower people like that and you will understand the difference between a successful company and "others". Any Cxx person who fails to see the strategic importance of a solid and well performing IT department (weather in-house or outsourced) has not spent enough time looking what IT can do for him/her.

bmintel
bmintel

Not all companies are cheap and won't invest in technology. It takes a smart mix of the CEO and CIO to make smart decisions. The days that the "IT Manager" reports to the CFO are over. IT is a very neccessary evil for any company that wants to be successful these days. If you have leadership that can see past the fluff then you will be successful. While I respect all of the opinions that I have read, I think that if you are unhappy with "your company" then you can quit and go somewhere that you can be happy. There are good companies out there that don't just see IT as a burden. I would not want to work for a company that did not value what I do as an IT person. Lucky for me, every company that I have worked for have let me manage all of the IT processes/expenses and have been very liberal with resources. I will say this.....If it were not for IT then almost every company in existence would not opperate. Thanks Brian Nashville, TN

mike_patburgess
mike_patburgess

No matter what anyone tells you, the cloud is the datacenter of the future. Yep, we're back except now, we have a whole new bunch of problems. If you think that you are spending too much on your IT right now you just wait until you move your stuff into the cloud and you will then have to pay for your compute cycles, storage, network throughput etc... The list is endless. Going to the cloud is the, "foot in the door", approach. Once the salesperson is in your house, it is hard to get rid of them. Yes, you have some issues with your IT department, and getting things done is a challenge but, you carry the big stick; "..get it done or start looking for another job". When you are just one of many businesses stuck in a cloud environment, and there is another business that pays more for their service than you do; do you actually think that you are going to get the same level of service??? Remember, in this business and any business; money talks. So what if you get poor service? You've turned over your IT keys to someone else and you've no recourse except to go to some other provider or set up your internal IT department again. Oh wait, you already have a department that might need fine tuning or some sort of internal SLA but you control i; no-one else. Here is another more pressing issue, "where is your data being held"? You have to think about this and try and get an answer from your provider.. Oh wait, the provider you selected is a broker that provides a service to the actual provider so you really don't know who has your data or where it is. I agree with some of the statements made concerning a professional staff etc.. The one concept that most C-level individuals cannot understand is that the employess are critical to the success or failure of the business. Unfortunatley, they are too far removed from the rank and file to ensure that their most valuable resourse are happy. Yep, they need to be aware of the P&L of their company but they also need to be aware of all aspects of their company which affect the P&L. No, managers and directors are not good enough because they sanitize information sent to any CEO. Sorry, the cloud or co-locating IT is sometimes the answer but, for the most part, it is not. We are seeing a turn around of some business away from the "cloud", back to their internal data center. The reason, given the right technology set and professional people, it is cheaper in the long run to run your own data center.

ltoribio0
ltoribio0

In the decades that I spent working in IT for various companies, solving problems for those companies, I produced several industry leading innovations, and each time I went to the head of the IT department and proposed that the company should consider marketing my product to add to the company's revenue. And each time the idea was flatly rejected on the basis that "We're not in that business." But within a year or two, new companies specializing in IT solutions would appear on the scene offering products remarkably similar to those I had produced. Indeed, I could have started one or more companies to market those products, but did not do so because I regarded such action as a conlict of interest. Of course not all companies are so narrow minded. I have often wondered what might have been different if I had worked for 3M Corp, for example. Leo Toribio Pittsburgh, PA

asimil8
asimil8

If you take away the technology most ppl will be lost - if you dont agree turn off your systems or witness a critical failure to see what happens - user will sit there not knowing what to do...i've seen it and cant believe how much ppl rely on the simplicities of life like a telephone or computer.... without it they dont know what to do.... but when it comes to IT there seems to be a lable where "if it doesn't work - its your fault" !! i have found from my 15yrs + exp in IT that 80% is user fault, 5% management not accepting the problem and not willing to fix, 5% third party faults like telephony companies cutting their own cables or not knowing what port to plug that plug into.. 5% is hardware 5% actual IT fault. Justin has lost the plot in regards to IT value - its obvious that there is a major lack of experience or corporation exposure to conclude what has been stated. In regards to 'the cloud' this is a new technology and most high end manager dont even know what it is - "cloud - yeah sounds great - here's $$$" yeah right... lucky to get them to fund a new switch or server to take the load off the ever lasting SAN that has been sittin there... Without IT your the company will not be able survive or function as a company.

NunyaBZ
NunyaBZ

That is making me want to get out of IT. I'm part of the lowly 'support staff' that seems to be so often maligned. I'm constantly hearing about how I provide no 'real value' because I don't bring in any profit. I'd have more respect if I was the janitorial staff dumping trash cans and vacuuming the floor. I fix the crap that the morons constantly break, and yet have to consistently hear about the 'black hole' for money that the support area is, and how wonderful it will be when it's all in the 'cloud' and I'm on the street with no job. Seriously kids, don't do drugs and don't get a job in IT. You will end up bitter and frustrated like me.

Imprecator
Imprecator

Back in the mid 80s, when PCs were new, shiny and "supposedly" so easy to use that you didn't need an expensive "Data Processing Department", the "MiniComputer" (read: Vaxen, IBM S/3X-AS400, etc) and Mainframe staff where at the position most IT departments are now. Back in the late 90s, when WIndows NT was new, shiny and "supposedly" going to kill all Unix Systems, because it was so easy to manage that you didn't need an expensive Unix Guru. Unix Sysadmins where in the position most IT departments are now. Now that the Cloud and BYOD are new and shiny and "going to kill" all IT departments which will be outsourced to Outer Mongolia, guess what? does it sound familar? The main difference is that the "Steven Covey" rethoric gets thicker with each iteration. This business has become as vapid as the fashion industry.

catchacold
catchacold

A few years ago I proposed to my client to spend 30k on a "blue print" machine (Kip 5000). This was only after I saw them outsourcing this printing. This machine has truly turned IT into a profit center now. Business is business to all owners. Plus, this investment has made it a whole lot easier to get that new server, or new software that we been wanting.

HypnoToad72
HypnoToad72

Take away all the computers, databases, servers, support staff, and see how quickly value truly gets lost in this day and age. Especially support staff, since their demeanor during rough times can help keep users' spirits up when the users have to use the systems that management (blindly or otherwise) believes will be better (when it may or may not be). Or is all the psychobabble about happy employees being more productive ones a load of bunk as well? Value is a two-way street... As for Apple, you pointed so much more out when mentioning accounting staff and lawyers... but not the slappers working for 50 cents per hour under conditions the accountants and lawyers won't think will ever happen to them (but anyone even remotely lazy with the news will see their jobs will be offshored as well...) But I wonder when the race to the bottom will end...

Imprecator
Imprecator

In all the organizations I have worked in, IT is as good (or bad) as Management wants it to be

sissy sue
sissy sue

I've heard of upper management locked away in a meeting all day in order to come up with a mission statement. Even during their breaks, they were arguing about it. By and large, this is a waste of time and a waste of big money. Everyone is for quality, customer service, innovation, blah, blah, blah. Upper management gets paid for coming up with a few sentences to make the company look as if it is different from every other company dreaming up the same mission statement with the same high and lofty ideals, but just using a few different words and throwing in this week's favorite buzzword to prove that their businesses are up on the current business fad. If IT operated as upper management does, no real work would be done.

tech
tech

Both are cost centers, (As a department), just like IT. The difference is for most "Cxx" it is easier to understand what value they add or fail to add. Few truly understand IT. The company I work for I wear about 5 hats. My boss (partner at a law firm) routinely gives me large bonuses, and tells me "I have no idea what you do, or what your challenges are, but I know you bust you @$$ saving me money, and you keep the rest of us functioning". He see's what most do not see.

nwallette
nwallette

You're absolutely right. Let's try an experiment to see how much value IT has. The next time your ISP goes down, or the power is out, take some pictures or video. Everyone sitting at their desks, saying things like "well the computers are down, I may as well go home for the day." I wonder exactly how many folks would be affected if there was a two-hour "HR outage"? The fact is, IT is a necessary business support department. It wasn't forty years ago. If the power went out, you could still file next to a window, or write a memo, or have a meeting. Not today. But, there are a lot of people still in the workforce that grew up parallel to technology. We all just accept that a business needs a legal team, an accountant, and HR. Sometimes that stuff gets outsourced, but not en masse quite so often as is looming for IT right now. Someone told the chiefs that there's a magic pill to save money. Externalize IT and it just gets cheaper. It's a siren song, sold by sales teams. IT is relatively new. Corporate culture hasn't been through the outsourcing swings and learned the potential pitfalls like with other departments. If you have a complicated business, do you want to consult a law firm every time you have a contract or an employee incident? No, the in-house lawyer knows your business model and can be much more effective than when you need your key executives in a room with a consultant for hours, paying an exorbitant amount of money, explaining the finer points of your operations to someone that will never have the level of intuition that a staff member would. That same principle applies to IT, it just hasn't been learned the hard way yet. IT is on its best behavior right now. Our department offers reporting out the wazoo, has amazing uptime, rarely asks for (and even more rarely, gets) maintenance windows, we're running a skeleton crew, we haven't spent money on barely anything in the last year, and unlike *any* *other* *internal* *service* *department*, we have a responsive helpdesk reachable by IM, phone, email, and a web portal. We still feel obligated to kiss ass in return for our jobs. Frankly, service has just gotten so good, it's taken for granted. A few years ago, an email outage at our company was not a panic event. Now, fire would rain down from the heavens if we kicked an Exchange front-end VM during business hours. We get constant whining and stomping of feet at telecom bills because the only time service is down is when a facility loses power. If we traded those T1s, metro-Ethernet links, and other business-class circuits for cable modems and DSL, the admin staff here would spend hours on hold with local telecoms and the executives would have to do without YouTube for a few hours. No one thinks of the work required when it's just there, and just works. I say go ahead -- outsource IT. Put your services into the cloud. Then who's going to come and fix the president's daughter's iPad? He'll just have to stand in line at the Apple Store like everyone else. Then we'll see who's the cost center.

tech
tech

Just because you work in a cost center does not mean you don't bring value, aren't needed. It just means that on the accounting sheet you cost a company rather than make them money. Nothing wrong with that. If a company didn't need cost centers everyone would be out of a job. IT, HR, Accounting, Building Maintenance..... As lowly support staff you may not be outwardly appreciated where you work, that is a culture issue.Frankly a lot of it has to do with your attitude. You have to be happy helping people. You have to be able to help people without making them feel stupid. To your bosses, you must appear to be able to solve problems faster and more accurately... No matter what your job is, it is what you make out of it. You sound like you are letting your job dictate your destiny.

JohnMcGrew
JohnMcGrew

Does anyone remember a time when [i]Today???s IT departments[/i] were not [i]in flux and under pressure[/i]?

tech
tech

Profit Center: "A profit center is a section of a company treated as a separate business. Thus profits or losses for a profit center are calculated separately" Cost Center: "In business, a cost center is a division that adds to the cost of an organization, but only indirectly adds to its profit." So unless you are selling your IT Services, IT is a Cost Center by definition. That doesn't mean IT doesn't add value, or indirectly add to the bottom line. To be a profit center you have to sell services, Then it becomes a sales less costs = profit business. As you say support staff are important to not only keep things working, and staff productive, but to help keep moral up. The right software and hardware too are critical to the success of a business, but IT is still a Cost Center for the vast majority any way you look at it. Apple is no different than hundreds, no thousands of companies that do the exact same thing. Ten years ago people were railing about the kids making shoes in Asia. Before that it was garments. You have to understand the COL (Cost of Living) in those parts of the world is not what it is here. Their COL may be $5 a month while where you live it is probably closer to $1,000 a month. This is what happens when you create a "World Economy" A World Economy helps the businesses find cost savings, and it helps raise up the have nots by providing jobs (even if it is for .50/Hr). For the 1st world economies, you get what you see now in the US and Europe. Higher unemployment, lower wages... Why, because now the workers in a country where the COL is $1,000/Month have to compete with countries where the COL is $5/Month. Some will tell you that is not a problem, and for years the US has been moving away from manufacturing and moving to the info economy. The problem is it is all fluff. In the end everyone needs real products, food, clothing, etc. In the end, for the first world countries (and thus for the world) it will all come crashing down. We are seeing the rumblings of that now. As bankers and other business with no REAL products take more and more they create a two class society. Those with money and those without. Again, just look at Europe and even the US. We have moved beyond being the Industrialized Nation and now we have less REAL products to offer. Sure companies love to know all the little tidbits about everyone, what web pages you look at, what your internet searches are... But if we can't sell it overseas it doesn't matter. You need to look no further than the trade deficit We import FAR more than we export. This means OUR money is going overseas and it is not supporting Americans. We wonder why unemployment is high, we wonder why wages are low. The answer has been there for years, we don't make much of value anymore. It is all made overseas and we just buy it up. It is not enough to buy items "Made in America". Items must be "Made in America", with materials from America, Assembled in America, and by an American Company. If we can not turn the trade deficit around we are doomed. For how long can you spend more than you make? (Ask anyone who has declared bankruptcy for the answer) For how long can a government spend more than it makes? (See Greece for the answer) These really aren't hard concepts to grasp. Just strip away all the fancy accounting and keep a simple ledger. It always shows the bottom line. It may not be pretty to look at and you may not like what you see, but it is where you are. If you make $250,000/Yr and you spend $400,000/Yr. Or if you make $12,000/Yr and spend $15,000/Yr the answer ends up the same your broke. America has been printing money for four years now. Sooner or later the inflation will kick in and it will make 2008 seem like a walk in the park. Think of America printing money like you using your Credit Card. Sooner or later you need to pay the bill, or go bankrupt. Greece Anyone?

Imprecator
Imprecator

So, you better drink the Kool-Aid or you will get sent to re-education...... remember to take your Daniel Goleman action figure.....

sboverie
sboverie

In a nutshell, the US has become more of a consumer nation than a producer nation. Ironically, we got there by being so successful at being really good at producing. What people fail to understand is that what keeps an economy up is confidence in that economy. The economy is more psychological than fiscal; this means that when things have been booming along for a long time and there is a small downturn, that if the confidence in the economy is strong then the downturn is short but if the confidence in the economy is weak then the downturn lasts longer and gets deeper. This is why the question "Are you better off today than 5 years ago" is so powerful during election years. Another thing that people sort of know but get confused is that nearly all currencies float in value, dollars vs Yen vs Euro and so on change constantly. If the currencies were tied to gold then the currencies will still flutuate against each other. This works just like the market, supply and demand where prices go up if the supply can not keep up with demand or prices go down because there is not enough demand. The Federal Reserve has a mixed record. It was created to reduce bank runs and panics. The decades before the Fed was created were years of booms with more intense recessions (a lot like what we sort of came out of) that caused runs on banks and made the economy sputter. If the US can avoid a double dip recession then it would be because the Fed was able to stablize the economy in a way that the Euro central banks could not do. My problem with the Fed is that it is as prone to mistakes as any other human institution and sometimes those mistakes hurt more than they help. I also think that economies are a lot like the old bi winged aircraft. In the early days of flight, pilots would occasionally find themselves in a tail spin that they could not control and were forced to bail out. Sometimes the plane would straighten up and fly until it ran out of fuel. The observation was that the plane is designed to fly and sometimes the pilots would do things that caused the plane's flight to become unstable and that the best response was to let the plane fly itself. Economies have had booms and busts since trade began, governments can do things to shorten the busts or ease the pain of recession but it may be that the economy will correct itself without government interferance. It is also possible that government interferance will make the economy more unstable leading to a deeper and more painful recession. Again, the economy is more psychological than logical and the actions of the government may build confidence and that improves the economy.

Charles Bundy
Charles Bundy

How come Human Resources, Accounting, Facilities, Executive staff, et-al are never derided as 'Cost Centers' in these types of articles?

Imprecator
Imprecator

IT in Business has been around longer than a generation. (50 years at the very least). The thing is that changes (the real ones that is, not the marketing hoopla) are common and often radical. Not as common as marketing would have you believe though. I am pretty sure that (for example) during the dot com boom of the late 90s some inescrupulous individuals used the confusion and chaos that boom created to play their power card. Well, I and most people I know never did and if "the business" pretends to paint all of IT with the same brush, they better remember this: If they regard a good piece of work the same as a mediocre job they'll end up with ONLY mediocre jobs. And no "cloud" is going to save them from that. However the "marketing hoopla" tells "the business" on "each iteration of change" that the new version will be so easy and reliable that no IT specialists will be required to understand it, deploy it and operate it. And yes I AM extremely bitter about it. This business (despite the inherent unstability of it) used to be akin to engineering. And it basically keeps degenerating into something less than badly run, dishonest marketing ploy.

nwallette
nwallette

I don't go to work with a chip on my shoulder. It's just that IT, as a business unit, is young and unstable. A few years back, the IT guys had businesses over a barrel, and they took advantage of that. Now, the pendulum is swinging the other direction. This too shall pass, until we find ourselves in an equilibrium, like the more mature departments. Everyone knows what to expect when you outsource payroll. That experience hasn't been worked out yet with IT. It seems like a commodity, and to an extent it is. Most companies could put their services in The Cloud and be fine for quite a while. Eventually, though, someone would want something that isn't in the service offering. They'll get tired of being told "we don't offer that", and won't like to hear that they're stuck on a platform with no migration path. (Vendor lock-in is a real bear.) There's a romantic notion of all the capital costs and labor going away, but having the same amenities they're used to. I don't think that's reality. Anyway, I don't resent HR, Accounting, Legal, etc., for their established places. I do see that we (IT) have more of a focus on customer service -- and that's because we have to. As an industry, we've got our PR face on. We played our power card, and now we're on probation. For the record, if you're thinking I'm whining about handling an exec's personal matters, I really don't mind. It's their company, and they're the reason I get a paycheck. Heck, from time to time, we do that for users, too. My point there was that there's a level of personal service when you have your own in-house department that you won't get when you outsource. And I think that will be missed.

Charles Bundy
Charles Bundy

Making this specific to TechRepublic anymore than your defining cost versus profit centers is specific wrt technology. I do read more than tech blogs and no where else do I find this [i]derisive[/i] use of the term [b]cost center[/b] in conjunction with those divisions that are regarded as not being profit centers. You make a good point though in that as this is a forum specific to technology, why are contributors writing such articles with such tone. You won't find marketing or hr trying to kneecap themselves in this way.

tech
tech

because this is a tech blog?