Mark McDonald

A member of the Gartner Blog Network

Mark P. McDonald
GVP EXP
8 years at Gartner
24 years IT industry

Mark McDonald, Ph.D., is a former group vice president and head of research in Gartner Executive Programs. He is the co-author of The Social Organization with Anthony Bradley. Read Full Bio

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It is time to think small when thinking of IT

by Mark P. McDonald  |  July 13, 2012  |  5 Comments

Please enjoy this prior post on the nature of the IT organization. 

IT trends and transformations over the past decade have been driven by a common theme: reducing cost.  CIO-led initiatives for outsourcing, consolidation, shared services, applying lean manufacturing principles, have all revolved around the need to take costs out of IT.

All of this cost cutting must have worked to one degree or another as IT budgets have been essentially flat since the dot com bust about a decade ago.  However, the monotony of cost cutting has beaten the IT organization into submission.  It has driven out emerging technology, innovation, creative capacity and the capability of IT personnel.

Yet it is not finished. The drum beat of another 10 – 15% ‘take out’ in IT can still be heard. IT risks marching towards a dangerous tipping point where we can no longer do the same things at lower funding levels and expect to get the same result.  The world of “managing IT demand, with fixed IT supply”, robs an organization of one of its most dynamic capabilities: IT, just when competitive dynamics means its  needs it the most.

It is time that we change the way we think about IT.  It is time to re-imagine IT.

It is time to “Think SMALL”

The path from Large Thinking IT to Thinking Small IT.

We all started with LARGE IT.  Large in the sense that the IT organization was fully vested in in-house staffing, equipment, applications and the like.  Large IT was slow and expensive, but it was necessary as companies had to build much of the technology stack on their own.

Large IT still exits, although its increasingly rare as cost pressures, coupled with Large IT’s inability to deliver quickly, fueled demand for substitutes that the IT market vigorously responded to. In turn, these readily available substitutes created a compelling business cases for  Large IT that led to the creation of MEDIUM SIZED IT THINKING.

Medium IT is medium in the sense that the IT organization attempts to do everything it did in the large model, but at a cheaper rate.  If you have ever spoken the words “more for less” then you have participated in the super re-sizing of IT.  Medium IT is the domain of IS-LITE and LEAN IT where organizations seek to do everything that they did before only for less money.

The problem is Medium IT is no more sustainable than Large IT.  The only way to make it sustainable is to think of IT as a generic commodity that is managed by concerns of cost, scope and quality.

Just because IT costs less, it does not mean that IT is worth more.

The vast majority of IT organizations are now medium IT organizations.  If you look across your office and find a sea empty cubicles, manage a set of services relationships that took advantage of labor arbitrage, are trying to manage IT demand, then you are a medium IT organization.

A medium IT organization is not sustainable in the long run as you cannot manage demand effectively in an environment of increasing consumerization and choice.

Thinking Small IT is now on the agenda for many.

Yet CFO’s and cost cutters beware — Thinking SMALL IT has nothing to do with the size of the IT organization, its budget or cost structure.

Thinking SMALL IT is small because of how it thinks, how it manages itself, and the way it works.  Yet it is BIG in the results it delivers.

Thinking SMALL IT is a state of mind, not a staffing situation, or a budget request, or a strategy to do more with less. That is how we got into the mess that is MEDIUM IT.

Thinking SMALL IT addresses fundamental issues of productivity, cycle time and throughput across the organization, including the part of the organization now called IT.

Leaders are already showing the way to think SMALL IT.

Sure they have new answers to IT’s old questions about cost, control, security, IT’s role in the enterprise, IT value, etc.

But they have more.

They are finding new answers to new questions raised by changing technology, economic conditions and our progress.

Thinking SMALL IT hinges on new questions organizations must answer:

Thinking SMALL IT provides new answers that are focused on:

Thinking Small IT is one of the ways that leading CIOs are re-imgaining ITfor 2012.  Over the next few weeks, the blog will discuss these and other aspects of SMALL IT.  Look for the key word SMALL IT as well as links that I will try to update below.

Related Links

Thinking Small — Creating value rather than controlling costs (part 1)

Thinking Small — Thinking value (part 2)

Thinking Small means ‘dating’ the business

Thinking Small — the IT organization from monolith to mosaic

5 Comments »

Category: IT Governance Small IT     Tags:

5 responses so far ↓

  • 1 Enrique J. Garcia Casas   July 14, 2012 at 7:44 am

    Excellent. I belive than becoming a Social Org., will drive this “thinking” in IT faster and with better results.
    Enrique J.
    Madrid, Spain.
    From my iPad.

  • 2 Links for July 15 2012 - Eric D. Brown   July 15, 2012 at 11:01 am

    [...] It is time to think small when thinking of IT [...]

  • 3 Business Value Creation Through IT Led Innovation « CIO SPACE   July 16, 2012 at 2:05 am

    [...] It is time to think small when thinking of IT (blogs.gartner.com) Share this:EmailDiggLike this:LikeBe the first to like this. [...]

  • 4 Bobby Koritala   July 17, 2012 at 11:51 am

    It’s nice to read a thoughtful approach and advice to “doing more with less” over the typical “you must do more with less” order CIOs and IT personnel constantly face. My company, Infogix, works with enterprise customers to automate the monitoring and analysis of business data to drive improved operations. But beyond the technical implementation, we encourage IT to stop and get in the same room as the business operations, CFO and risk management teams – often for the first time. To add to your points about not “thinking SMALL” also refers to IT no longer working alone in its silo, but proactively demonstrating the value it brings to the entire organization. We’ve found that customers who successfully bridge the gap between IT and business – and in some instances eliminate the gap – are the ones who derive the most value from our solutions.

  • 5 Anna Cleary   July 18, 2012 at 5:42 am

    Hi Mark,
    I agree that the monolithic IT department may be history, and that this is an opportunity to engage more fully with the business functions to support the organization’s mission. In this case it’s not about the “IT plan,” but about the IT planning process, an iterative approach that gets the business where it needs to go even if the route may be shifting in real-time.

    But finance has to be part of the equation as well since it enables the IT department’s capabilities, and recent research found that most finance decision makers do not have the information they need to understand the impacts of a budget change on IT (http://www.alfabet.com/en/resources/nucleus-research-it-budgeting-perception-and-reality/).

    So while the future of IT may have benefits to collaboration and responsiveness, getting insight into the IT portfolio to understand the effects of these changes will also be paramount.