I keep hearing that IT practitioners should be "connected to the business," especially as we move forward with Cloud, ITaaS, etc. (1) What does that even mean? and (2) How can the IT community accomplish that?

Does that mean get an MBA-level understanding of finance? Understand how to manage a portfolio of services? Just stop putting the "NO" in Innovation? And how do we get there? Merit badges? Devops? MBAs?

A good place to start is to replace project-based funding w/a chargeback model that accurately costs IT services. This consumption-based financing model alleviates provisioning delays caused by IT budget shortfall delays. It allows the cloud to be right-sized whenever needed without making the next service requestor bear the burden of required expansion. Effectively pricing chargeback invoices benefits the overall organization by automatically driving optimal resource utilization.

Can chargeback put IT in opposition to their business partners? This article makes the case that you can do it wrong: "Nothing encourages collaboration like arguing over the accuracy of the bills that determine which corporate pocket should hold the money." podcasts.infoworld.com

I'd argue that a services-based model is good *and* drives business understanding for individual practitioners, but like anything, if done blindly with that "old IT" mindset, it may not help. I can envision IT departments screwing this up. A chargeback model also is organizationally a top-down decision - is there anything an individual can do bottom-up to make the IT-business connection?

Excellent points, tho I completely disagree w/Infoworld. W/O chargeback, IT staffs argue w/biz units over budgets & stall VM provisioning requests. By definition, Cloud must include charge or show/back.

Accurate costing & allocation along with bottom-up contributions are all required components of the new mindset mandated by Cloud. IT now faces competition from off-premise sources. It must transition from the Department of No (IT-as-a-Bottleneck) to enablers by partnering with the businesses. The alternative is to risk irrelevance.

I think it's important for today's IT departments to have an understanding of how their business consumers derive value from the resources they require. The problem is that most of the businesss decision makers already recognize the inherent value of the applications that are generating revenue or savings and therefore have not generally cared about those metrics. Remember that it wasn't long ago we had to justify the ROI of VMware licenses and the hardware that enables virtualization.

The key in showback/chargeback is to simply provide metrics to the business/consumers so that they can verify that they are getting more value then they are costing.

I expect that there is no "one true answer" here. Each business is different. Does CEO A have the same tech understanding as CEO B? Does CTO A have the same business understanding as CTO B? The needs of each company are different, the business model is different, the IT spend, integration and so forth are all different.

To be fair, I have very limited experience in companies greater than 1000 seats, so bear all of this in mind when considering what I have to say on the topic, please.

In the SME market, I find that (in most – but not all – cases) the chargeback concept brings IT closer to business. It has two primary elements that I find useful. The first is that it forces systems administrators/CTOs and CIOs to think about it in a service sense. It makes them take a step back from the industry mantra of “always, under every circumstance use the BEST technology and the BEST configuration, where “best” is defined as “what is contained in whitepapers, and practiced by the majority of fortune 500 companies.” As I discuss here (theregister.co.uk) this is utter madness for SMEs. If your IT budget for 6 years cannot possibly be greater than $25,000, then buying $26,000 worth of Cisco switching/routing is insane.

The second element of value is that chargebacks demystify IT. No longer simply “voodoo,” IT becomes a real service with a real cost. Too often in the SME world geeks “just make things happen.” This leads to the philosophy that geeks can “do anything” if you just put enough pressure on them.

The important issue is that all parties gain a clearer picture of the true use of IT. We don’t build computer systems for their own sake; we build them because using wetware for the same task is more expensive. What we all need is a better understanding of when the use of computers to solve a problem is appropriate, and when hiring a meat sack is the better solution.

Charge backs are one method of gaining this visibility; critical in SME.

cloudsofchange.com

I don't know, man. IT exists for one reason: to lower costs. IT isn't about technical excellence. It isn't about "integrating IT with the business." Without the cost savings that an IT department brings, IT HAS NO REASON TO EXIST.

Your blog post seems to presuppose that an IT department has a valid reason for existing other than "to drive savings." I don't see it. What reason? Businesses invest in IT for one reason: it is cheaper than investing in people to do the same job.

Even if your business *is* IT; if you are a consultant like me...your own internal IT has to pass the "sniff test" cost justification. IT isn't about schmooze, nor about tech.

IT is about the same thing as anything else in business: RETURN ON INVESTMENT.

So if someone from IT (or you as a consultant) came to the business with an idea that was cost neutral, but increased Time-to-Market by 6 months, then it should just be ignored because it doesn't save money?

Considering how many business use technology as a core competitive element, the "only there to reduce costs" seems like a narrow way of thinking about it. But maybe that's the real (future) role of IT, and there should be a separate "technology to help grow the business" group in the company.

If someone from IT came up with a way to increase time to market by 6 months, it should be considered in the same fashion as if the Janitor had a similar idea. It is an idea; ideas should be given due consideration, regardless of the source.

That said, "time to market" has a fixed value, just like everything else. If the cost of implementing IT's idea is greater than the rewards of that idea, then it should be duly discarded. As a consultant – I am also an analyst – and a sysadmin, I spend over 50% of my day either doing research or talking with the CxOs of my clients. We do tactical and strategic planning including “how to use technology to grow the company." All top-level IT staff should be part of the corporate "council of elders."

The difference is that I am not focused on IT to the exclusion of everything else. My advice is valued BECAUSE I UNDERSTAND THE BUSINESS SIDE OF THE EQUATION. I understand when to use a PC and when to use a meatbag. That, right there, is where nearly all IT departments fall down.

IT is a tool, but it is ONE AMONGST MANY. It is not the be all and end all of how to get things done. For IT to integrate into business, it must understand that EVERYTHING is about money. If youc an increase time to market with IT, great. But what value does that increase have? How does it compare to the cost of the tech?

That's integration. That's bizdevops!

I have to disagree that IT exists simply to lower costs. If that's the case, IT should move everyone back to paper and pencils and dump the PCs.

When and where paper and pencils are the most cost-effective solution to a problem, IT should indeed be advocating them. Do you need a $1500 tablet if you have to take notes 2 times a year for 1/2 hr each time? What if you have to take notes 8 hrs? 16?

At what point does it become more cost effective to use a computer on site - and pay the cost of it, including maintenance and support - versus having that meatsack type their notes up? What does the meatsack make? What are the costs? What is the monetary value of the morale gained?

I am not claiming costs are simple to quantify. They aren’t. But EVERYTHING in business is about ROI.

Businesses exist to make money. They don't exist to make people happy, or to implement technologies.

I certainly agree that everything in business is about ROI :-). And to that end, it's IT's responsibility to understand the business, the objectives and the bottom line. If going to papers and pencils will enhance the business, they should advocate that. If paying $2M to implement a private cloud solution proves to be a better option - then that is what they should stress. But achieving a good ROI is very different than "lowering costs".

Now we're picking at language pedantry. IT is about LOWER THE COST OF DOING BUSINESS. The idea is that "to do the same things, it should ultimately be cheaper to do it WITH IT, than without." If it is not cheaper, then IT is non-requisite.

It isn't about constantly driving down the cost of IT. It is about constantly driving down the cost of DOING BUSINESS. Anyone working in IT needs to be focused on that like a Laser.

So I argue "IT exists to lower costs for the business." But it doesn't exist to simply lower costs over last year's budget. Same terminology, two completely different approaches to business integration.

IT is much more than about lowering the cost of business. By understanding and partnering with the business, it should be an enabler. As an example, IT may determine that a significant investment in new technology, such as a private cloud, may result in escallating revenues and customer stickiness. These benefits may make the investment well worthwhile even though the cost of doing business increases substantially.

There, we'll disagree. I don't think that IT should determine any such thing. IT may have an idea, but the determination on validity and viability must come from a multi-stakeholder review of the proposal.

In that case, the business is making a decision to enter a new market or to substantially alter its existing business model. IT’s job remains the same: execute that decision as cheaply and efficiently as possible.

IT can come up with ideas. IT should never be deciding “this is how we should do things as a business” and then going out and spending on it in a vacuum. Especially when those decisions will affect things like customer relations, sales, gross margins etc.

If a salesdroid started making promises on behalf of IT that committed IT to something without informing us, I'd have his head on a pike. Similarly, if the business unit made decisions about company direction that involved significant changes to IT in order to deliver, there would be blood in the gutters if I weren’t consulted. This is no different when it is IT wearing the Hat Of Deciding.

IT are enablers. We enable others to do something more efficiently than they would otherwise. We should be full participants in the decision-making process, but we should not be going around doing things by fiat or substantially altering share value via decisions that change the margin/market penetration balance.

I agree that IT should be a business enabler through partnership, not through mandate. But IT should do more than execute business decisions efficiently; IT should leverage its unique understanding of technology to help the businesses visualize new opportunities for revenues, margins, etc.

Within limits. That's all part of "IT needs to understand business." IT may have great ideas about how to use technology for new opportunities...but it is entirely possible that these ideas will be left on the table for other reasons.

If - and I must stress the "if" here - you have IT nerds well versed in business, they may be able to understand concepts like "a significant chunk of market share costs more than it is worth." "Pleasing all customers is not the goal" is one that IT folks have problems with.

Companies make strategic decisions that are often hard for people well versed in business to grok. The reality is that the number of IT practitioners who are even capable of understanding business on that level isn’t all that high. If you are, you’re rare. Rare and valuable. In that case, yes, you should be up there driving business direction and evolution.

For the rest of the nerds however…there’s a limit to how much they can realistically participate. We can’t be all things, know all things, etc. The primary focus of IT is not business. It is ENABLING business and driving EFFICIENCY. If your nerds can step outside that, grand. Most can’t, and that’s the harsh reality of the world.

You wouldn't expect $salesdroid to start telling IT which operating system to use, or how to test patches for bugs. You wouldn't expect the CEO to teach IT how to use a fuzzer on the latest website to look for vulnerabilities. It is equally ridiculous to expect that IT will start driving business direction and evolution excepting in exceptionally rare circumstances. Business is an art and a science, as difficult and refined as the practice of IT itself. It isn’t something that “just anyone can do” and that nerds can pick up like another programming language.

That’s where we go back to my original post “every business is different.” As much because every business has different people in it as any other reason.

No one size fits all.

Technology is becoming interwoven into every aspect of business. Consumerization is an example of user demand directly impacting IT policies and practices. The reverse must be true as well. IT can no longer be isolated to the glass house. The availability of cloud competition demands that IT partner closely with biz and work jointly to resolve problems and to discover and exploit opportunities.

Technology is more an integral part of business than accounting, sales, marketing, etc. Do we expect all people in all branches of businesses to be ubermensch? Do we expect accountants to know how to develop a website, and configure Apache? Do we expect sales to be able to do year end financials or business to be able to fix the generator?

What makes IT so “special” that suddenly you expect its practitioners to be able to simply take on the duties of another area of business? We create businesses to bring together individuals of different specialties, education and experience for the common cause of making profit.

How is it you feel that "IT" is somehow different - more important - than anything else?

I feel that IT has a better perspective on technology than anyone else, and is therefore better equipped to provide technology-based guidance. And certainly interdomain collaboration can be a huge organizational advantage. P&G has perfected this to great benefit.

Correct, it is best equipped to provide technology based guidance, but not business guidance. IT is no more important to a company than sales, utilities, marketing, accounting or any other business unit. It is one amongst many. So while it should have a seat at the table, there is nothing about IT or IT practitioners that inherently gives them a better/clearer/more important view than the leaders or coalface workers of any other business domain. That’s really my point here.

Everyone in business needs some understanding of how a business works to be optimally efficient. IT is no different. That said, IT isn’t going to be making MBA-level decisions without MBA-level understanding.

As much as we like to think we can know it all and do it all, the number of IT practitioners who do today or ever will have that level of business understanding is not large. The more generalist you become, the more you leave the specialty for which you were hired by the wayside. Balance. In all things, balance.

I'm going to rope this one back in just a little because we've had a great discussion going here.
IT no longer operates as it did a decade ago. The role of technology has dramatically changed how most companies do business. As such, most organizations have been migrating from IT as a cost center to being a business enabler. To John's question it is clearly advantageous for IT to have solid understanding of the business that they service. This is critical in order for IT to provide the services that the company really needs rather than what they 'think' it needs. This does not mean that IT folks need MBAs but they do need to have their listening ears on and ensure that they deliver accordingly.

The flip side of that of course is that IT needs to be able to hear when others are telling them "you're wrong." Statements like "delivering what the business needs, rather than what it thinks it needs" reek of arrogance. They also fit well with the traditionalist IT mentality of “everything by whitepaper, no matter the cost.” Something that certainly doesn’t fit well in many scenarios. Once more, I have to link back to my article…

theregister.co.uk

The size and scope of IT expenditures make delegating IT to a cost savings unit a bit myopic. IT organizations do need to be able to demonstrate the value of their investments to the business. The most successful IT managers and teams are those that understand how their technologies enable the business to profit. The key role of IT in this decade is to increase business agility by allowing the business leaders to have confidence that they can react quickly to shifting market/customer demands. The only way for this to work is by having those business leaders communicate with the technologists about what is required and those technologists then recognizing the impact that their tech makes.

I don't disagree, Josh. What I ask is what makes IT so special in this regard? Marketing, sales, utilities, accounting...all business units have to be working together to enable agility. IT is not special. It does not "enable agility" more than any other unit. In this day and age, "agility" isn't the ability to implement technology. THAT'S THE EASY PART. Agility is "cutting through red tape."

Humans are the bottleneck to everything. Technology isn't special. It's one more tool. When we invented the power drill, having it and having the clearance to use it were two different things. Having the technology and it making sense to buy it were also two different things.

IT is no different to businesses today.

Indeed, I'd go so far as to argue that it is IT's contention that it *IS* special that is one of the biggest barriers to proper integration within the enterprise. Humility is not a traditional IT practitioner's trait.

To John's second question. The IT community needs to take an active role in the business processes. They need to learn how the company they serve actually makes money. This means knowing how it finds customers, engages customers, support customers. How do the sales guys operate. What are the pain points or bottle necks. Then take that knowledge and whenever looking at technology figure out how their investments fit in that process. Demonstrating that the IT department is directly improving the business processes will build trust and improve communication between those two units.

100% agree on the last post! That's the ticket right there towards increasing efficiency in the implementation of IT (or anything else) in business. :)

If you don't think technology is special then you're missing how awesome it is that we're able to have this conversation in the first placce. :) Technology is now a foundational requirement for any business. Businesses can certainly function and be profitable with limited or no tech. a great example is a surveying firm. People have been surveying for thousands of years without modern tech. I worked at a firm that made technology a priority and as such they were significantly more profitable. In this case the surveyors in the field made the money for the company but IT allowed them to do more (speed and accuracy). When I helped double profits I felt pretty special but it wasn't just me. It was me working with business leaders.

Uggh, this stupid bluetooth keeps doubling characters. Apologies for any dufus spellings. This is a clear indicator of what happens when your tech isn't working properly. :)

Technology isn't awesome. It's just a tool. It will make me money, or I'll find a different tool that does. Wonder is irrelevant. Enthusiasm is irrelevant. What matters is the take home profit.

I'm glad that you - and others - have made profits by focusing on technology. Thousands more companies went bankrupt by making the same bet. Technology is not a deity, it is not a cult nor a religion. It is a tool. It can be - and often is - the wrong one for the task at hand. Bearing that in mind is critical if you as a technologist are to be valuable.

Your job is not only to evangilise technology, but to determine the proper and relevant places for its implementation. "High tech" should not be a default any more than "no tech."

Another thing that IT pros can do falls in line with Brian's post and sometthing I speak of often when talking automation. Once they learn more about how the business operates they should look at the available tech (not looking at costs initially) andd identify the largest common denominator for business impact. One of the reason sharepoint gained so much ground so fast was that it allowed businesses to improve communication everywhere. The business processes did not fundamentally change but the effectiveness of those processes were significantly impacted.

There are a number of places we can agree: e.g., Trevor's article talks about how technical people can cut through marketing BS to help make purchasing decisions. And we've all been on projects where *mis*understanding business requirements have led to bad outcomes. So to my question #2, how can IT practitioners understand business requirements better? Regarding Chargeback, for instance, I'd like to see more articles & events on how to understand IT costs, both in traditional projects & in cloud models. I see a lot of stuff on how to use chargeback *products*, and I see lots of frothy CIO-level articles on why one *should* do chargeback, but little for the practitioner. Am I seeing a real need or just not aware of what's out there?

The challenge in understanding IT costs is certainly becoming more important as organizations both seek to determine an optimal hybrid cloud strategy as well as construct a chargeback model that painlessly drives efficient resource utilization. I expect ERP-like products for IT such as VMware IT Business Management (Digital Fuel) & Aptio to gain increased traction.

One note on IT practitioners and chargeback. Implementing chargeback should be a business decision. I've seen it done in different organizations. 1. Show us a breakdown of costs. 2. Bill consumers based on usage. The key problem is how to breakdown those costs in such a way that is truly representative of usage and setting appropriate rates. I wonder how much the practitioner is really involved with chargeback. In all instances I've participated in I never looked at the numbers after assigning the initial rates. Any rate changes are then updated based on new gear that is more efficient or higher density. I never saw it provide any value to IT directly outside of budget discussions.

I'm going to bring this discussion to a close. Thanks for all the participation and insight! Part of what I wanted was to test out Branch for a discussion that would be richer than we can do on Twitter, and I think we did that in spades!