IT Services Co. and the law of supply and demand

From Mark Lutchen’s perspective, the IT department runs on the same economics as the rest of the business world. Lutchen, a partner and U.S. leader of the IT Business Risk Management PricewaterhouseCoopers, recently wrote Managing IT As a Business, a book that makes the case that the

laws of supply and demand apply to the services the IT department provides the rest of the enterprise.

To that end, Lutchen’s book details the value in transforming the IT department into what research shop Gartner Inc. calls as an internal services company (ISCo). In the book, Lutchen explains that this model forces users to give up “”the view that IT services are ‘free’ to users, the notion that an IT organization has unlimited capacity, the myth that the demand for these IT services can be infinite.””

In Toronto recently, he offered an example of how an enterprise could apply the ISCo model. At PwC, which has a large mobile workforce, the company switched from a policy under which laptops were purchased by individuals to one where they were leased. This was a big “”cost bucket”” for PwC, Lutchen said, and the expiry date on the leases meant employees had to keep better track of them. This improved the company’s overall IT asset management situation, but it also put more of the accountability for the assets on the user instead of the CIO. It was certainly a lot better than allowing users to buy any laptop they wanted on their own. “”A standards approach can really drive process,”” he said.

IT’s common wisdom that CIOs are supposed to broaden their skill sets beyond technology to more of a business process-oriented role, but Lutchen tries to put some flesh on this still-skeletal image. He describes an IT department with the CIO at the top and a group of executives which include IT human resource directors, IT marketing officers, IT functional/technical leaders, and so on. It’s hard to imagine any but the largest organizations restructuring this way, but Lutchen sees a more gradual approach. The CIO might approach the finance department, for example, admit a lack some expertise and request an employee be assigned to him with specific IT-related responsibilities. This is one way, to break down the walls between IT and business groups, he says.

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