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Three tips for a better IT service model

With IT budgets moving out of the IT department, these three best practices will help put your IT organization in a better position to compete with outside IT services companies.

In my highly biased, completely unobjective opinion, there are two trends that make this the perfect time to be...

an IT leader. These two trends are:

  1. Every aspect of the organization now utilizes and depends on technology. As I reflect on the past 20 years, I cannot think of a single business model innovation that did not come from technology. Ever since the introduction of the Netscape Navigator browser in the mid-1990s, technology has been at the heart of business operations.
  2. Everything now moves at the pace of technology, and technology moves fast.
What can I possibly do to compete against … service providers and own the heart and mind of my organization?

But there is another trend that makes me nervous about my future and that of my IT service model: Pretty much every IT service the organization needs is available from someone else and it's made its way into the corporation in the form of rogue IT. Even worse, some of those service providers are the best technology companies on the face of the earth. These providers are both my direct and indirect competitors. They are my direct competitors because they might work around me and go directly to the lines of business and sell things like sales force automation, customer relationship management, digital marketing tools, document management, analytics and pretty much most of the technology I provide (or should be providing). They are my indirect competitors because they set new standards for ease of use, ease of access and a user experience that my lines of business might compare to my services and decide that my services are lacking.

As my competitors, they have some advantages: They don't have to deal with legacy applications and services; their budgets and funding models are different -- and potentially better -- than mine; because some of them are among the best technology companies in the world, they might be able to attract and retain the best talent; and they can hire sales and marketing teams that make them look good (and me look bad).

What can I possibly do to compete against these service providers and own the heart and mind of my organization? Here are a few practices that have helped me build a better IT service model:

Focus on service innovation, delivery and management. We often think more about technology than technology services. A focus on service innovation, delivery and management means that we get close to our markets, understand the needs of our markets and then provide IT services that meet market needs. To do this, I ask and answer four questions:

  • Who do we serve?
  • What do they need and want most?
  • What do we do -- better than anyone else -- to meet those needs and wants?
  • What is the best way for us to deliver our products and services?

If we honestly ask and answer these questions, we start to define services that align to our markets and define our own competitive advantage -- those things we do better than those pesky service providers. We then focus our innovation only on those things we do better than others and utilize or mimic the service providers for everything else.

Understand the engine that drives the organization. We make the biggest difference with our services when we understand -- at a deep level -- what makes our organization successful and what our organization does to win in the marketplace. A good portion of our work should be to improve and advance this engine. In order to have the resources and time to make these things better, we should standardize and simplify everything else. As an example, it is highly unlikely that our invoicing practices are the engine that drives our business, so we should find ways to standardize and simplify invoicing. This is important because we need to …

Be fast. Our world moves at the pace of technology, and so we have to be at least as fast. The biggest barrier to our speed is complexity. We should look for and remove as much system and process complexity as possible. That means we need to stop handling exceptions, stop catering to every whim and start thinking of how to streamline. Think of speed as currency. We need it in every organizational transaction we face.

When someone from a line of business acquires technology and does not include me in their decision-making process, I treat it as a loss and analyze what I have to do in order to stop losing business and start winning business. I want to be the best technology service provider my organization ever encounters.

A few years ago, I inherited an IT team that was in shambles. The company had decided that this IT team could not participate in any new projects; its job was to maintain legacy systems while someone else worked on all new systems. In this organization, shadow IT was the rule and there were more IT people outside of the IT team than on the IT team. I treated the fact that so much IT work was being done outside of IT as an indictment against the department and vowed to change the situation.

Rather than complain about rogue IT or try to control the situation through budgets or mandates, I decided to become the best provider of IT services. We moved staff from weak, low-value projects (like customizing our invoicing system) to projects that aligned to the engine that drove our business. We used Lean methods to reduce our cycle times. As we got better at delivering all types of IT services, the rogue IT melted away. Business users began to ask the question: Why have our own IT when the formal IT group is better at delivery than anyone else? Along the way, the formal IT team became the place to be and the rogue IT staff begged to join the team. This transformation did not come fast, nor did it come easy, but within about 12 months, rogue IT was a thing of the past. My goal was not to wipe out rogue IT, yet it disappeared as a collateral benefit of a stronger and more agile IT team.

Next Steps

Read up on how to create an IT chargeback model and how to develop a shared services organization. Plus, get advice for building an ITIL and ITSM framework.

This was last published in February 2015

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How are you tweaking your IT service model to compete with outside providers?
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The ability to provide innovation, delivery and proper management in IT services makes us understand the market better and hence customize our IT services to fit their niche. It is important to consider the core of our business as well as what makes us exceptional in the industry as we always work to improve and advance our core abilities. We should also be able to realize new features that come with latest technologies.
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Culture is an overlooked hindrance to IT business alignment.  Very often, IT folks are simply drones - they don't receive training, are not motivated and are in constant survival mode.

Works for me as this keeps our consulting business going.
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Hi Guy,

One way some companies are dealing with overburdened (and drone-like) IT organizations is by dividing them into two teams--one  to take care of the day-to-day and the other, led by a "digital CIO," to figure out how to use technology to help their companies compete. 

I recently did a couple of related blog posts on this topic: 

http://itknowledgeexchange.techtarget.com/total-cio/is-the-cio-job-stretched-to-the-breaking-point/

http://itknowledgeexchange.techtarget.com/total-cio/do-you-need-to-fire-your-it-organization-to-drive-it-business-transformation/

Would love to get your thoughts. 
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I believe IT services organizations should display service delivery innovation, complement the larger goals of the business, and reduce the complexity of systems and processes.
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