A loss of control isn’t always as bad as it sounds

A CIO who focuses on yesterday’s issues — such as outsourcing and security — misses the bigger picture: That innovation is happening rapidly in non-traditional spaces of the IT world. One consequence of this mindset is that organizations are losing direct control over the configuration of computing


In a recent blog posting, Tim O’Reilly, CEO of O’Reilly Media, reported that when he asks conference audiences how many of them use Linux, just a few hands go up. He then asks if they use Google, and every hand goes up, followed, of course, by a moment of realization: Google’s 100,000 servers are Linux-based. We are all Linux users now. This is a good example of how some of the most important computing resources for your business are, or will be, out there on the ‘Net.

Not so very long ago all of a firm’s computing resources were in-house and homegrown. Today almost all the software we use is commercial off-the-shelf software (e.g., desktop software), the providers of computing services are in India and even the PC is disintegrating into a network of dispersed hardware.

Hotmail, for example, offers two gigabytes of online storage to its users, and no doubt grid computing will soon provide any amount of processing power on demand for those who need it.

Web services are already accelerating this disaggregation of computing resources. A fascinating public report notes that 40 per cent of the items listed on eBay.com are uploaded via the eBay Web services application programming interface, rather than from a browser, as companies take advantage of the eBay channel to buy and sell goods in an automated fashion. Aside from the notion of eBay as an important channel, what interests me is the way a retailer such as Sears has extended its computing platform to include the eBay platform. eBay, has, in effect, become an ASP to Sears.

In this new world where software, hardware and data essential to the firm are potentially distributed across a heterogeneous set of networks, the CIO — like it or not — no longer has direct control over all the IT resources a company uses.

Two functions will come to dominate the role. First there is the need to seek out and harness the many components that could be successfully plugged into corporate systems to return business value. Increasingly, these will not be coming from the big-guns such Oracle, but from unlikely sources such as the ISV community forming around the Amazon e-commerce hub. Another source will be user-driven adoption such as the RIM BlackBerry or blogging software. The CIO will become more like a systems integrator, not in the technical sense (that’s being taken care of quite handily by emerging plug-and-play standards), but in the sense that someone has to ensure all the components work together to support the business.

Second, even though he or she cannot directly control all the IT services used by the firm, the CIO will not evade responsibility for their quality and security. This means careful attention to contract provisions and trust relationships with suppliers, as well as new methods for managing the extended IT enterprise.

The dispersion of IT resources mirrors the general trend towards more networked corporate forms or business webs. The CIO has an opportunity to show how these can be managed most effectively.

Tim Warner is an independent strategy consultant, focusing on the intersection of IT developments and business strategy. [email protected]

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