The days when the IT department did its mysterious techy business, involved in apparently endless ‘projects’ behind closed doors, are long gone. Not forgotten by the veterans, perhaps, but incomprehensible to a gadget-savvy new generation. It would have been tempting to say ‘tech-savvy’ or indeed ‘IT literate’ but really not true. At work or play, most people today are users and consumers of information and services delivered by ICT and they neither know nor care very much about how it all works. Yes indeed there is screen size envy and broadband speed bragging, reminiscent of the processor megahertz competitions of the early Nineties. But most of the public chatter about cloud computing or social networking (think politicians especially) shows all too clearly how fuzzy the grasp of technology concepts really is. In matters of cloud, on the other hand, they can certainly be forgiven because having delivered itself of possibly the worst tech metaphor to date the industry continues with obscure contortions to avoid saying ‘Internet computing’.
The general point, of course, is that for CIOs, IT directors and all in-house IT staff the job is almost entirely about service, delivering the technology services and functionality that the business or organisation needs to fulfil its objectives. The individual users have to be given easy-to-use access to those services, increasingly as AnyX (Anywhere, Anytime, Any device). That Any Device element has become BYOT (Bring Your Own Tech), a trend that is, paradoxically, being adopted freely by small businesses and managed perfectly well while large organisations continue to have issues, not all technical.
External sources
In almost all organisations the trend is inexorably towards a widening range of externally provided services to replace or complement its internal ICT resources. Managed services have matured greatly from their support and maintenance origins. Outsourcing, in the traditional heavyweight sense of whole business functions and transfer of people and assets, has also learned a great deal from experience. So while the range of possibilities is wide and growing huge, it is clear that the future of the IT Department is going to involve some kind of hybrid mix of third party and in-house services. The job of whoever heads up IT will involve managing the external service providers as well as the house team.
"That in itself is not new. Managing the IT services to the organisation is always high on the agenda and I can say it has been No. 1 in the organisations where I have worked in the past decade or more," says Conor O’Brien, chief operating officer, Capita Asset Services, a role he also held in Friends First, incorporating the chief IT responsibilities in both cases. "In that context it does not much matter whether the services are in-house or outsourced. The job is to provide excellence and ensure it is maintained. In practice your colleagues do not really distinguish once the system is up and the functionality available."
General acceptance
At board level the attitude is going to be much the same, O’Brien reckons. "They will be concerned about cost-effectiveness but outsourcing is generally accepted. One issue certainly is risk and any potential impact on corporate risk management. But in general, there is virtually nothing in corporate IT that a large outsourcing provider cannot deliver. Choices about what should be kept in-house, or what you would prefer to keep close, will mostly depend on the nature of the organisation and its culture. If I were involved in setting up a green field small business today, I would just outsource everything to the cloud. In large and established organisations cloud computing has matured enough to be a perfectly acceptable technical option in most respects, just as data centre services are mainstream. In financial services, however, there are constraints over and above the technology."
O’Brien points to business analysts and IT project management experience as skills he would, like to keep on the staff team. "You can contract out the programming, pure coding, especially when you have those skills to map the specifications properly and supervise the delivery." People who understand the kernel of the business and its culture are important for continuity, he believes. It is possible that a long term relationship with a service provider partner would substitute in part, but specific corporate business understanding is a valuable asset and only acquired over time, whoever the people are.
Responding to the suggestion that the Help Desk function might be a candidate for retention in-house because it could contribute to good relations between IT and line of business colleagues O’Brien is doubtful: "In general at that level IT only makes an impression when it’s wrong-those hygiene factors! Users have immediate issues that are unique and urgent to them and they just want things fixed. However, there are different approaches. For example in Friends First we had one person on the IT Help Desk who filtered calls, resolving lower level issues and passing on the more serious or specialist ones to the right person. That was a nice friendly system but it was possible only because of the scale of the organisation."
Irish multinational
The Ardagh Group is a quiet member of that unique club, Irish multinationals. From its origins as the Irish Glass Bottle Company in 1932, Ardagh has grown in the last decade through expansion and acquisition, notably EUR*1.7 billion for the Impress Group last year. It operates in 25 countries globally, largely in Europe to date, and employs over 14,000 people. Its 88 facilities produce over 25 billion containers annually, products that are the market leaders or in second place in all of the sectors it serves.
"We are logically centralised with two major data centres in Germany serving all of the group facilities and activities, with the exception of one or two servers on various sites for purely local IT needs," said John Hampson, group IT director. "We have over 90 people in IT, mostly in Europe with some in the USA and Australia. We work with a set of global service providers, notably for our front line service desk, our outsourced SAP-as-a-Service and international network managed services. Our group policy is to work with large global service providers and in general avoid separate regional solutions, although we have a number of standing local contracts that are working fine."
"My primary goal is to ensure consistent, fit for purpose IT services across the group that offer best value for the business," says Hampson. "The context is a dynamic and growing business, with rapidly changing needs. In our IT development and services we certainly look to ITIL and other such models to define our own service delivery models but essentially we take the concepts and apply them to our understanding of our own specific needs. In the same way we look to have pro-active managers on our own team and in the service partners. We try to work with the business and its changing needs at the earliest stage while also looking to technology trends and what should be adopted or tried as early as possible to help business development."
That in turn is all part of a culture where the IT team is a key and core part of the organisation. "My belief is that the entire IT department could not be replicated by managed service providers. It is an essential component of the corporate culture and memory, an asset not some sort of historical baggage. On the other hand, where the skill set is not specific to the organisation and can provided at comparable or lower cost, specialist and expert partners are an excellent resource."
Unique challenges
Another multinational with global service providers is Bristol Myers Squibb where information management director Martin Plant looks after the Irish and Nordic operations. "Historically, the group has had its European manufacturing here, which accounts for my geographical remit, although our IT hub is in Chester and our EMEA corporate HQ in Paris. We now have plants in Swords, Mulhuddart and Shannon and a sales and marketing operation in Leopardstown. That represents about 600 users all told plus a further 200 plus in the Nordics."
Working with global service providers brings its own challenges, Plant acknowledges, pointing out that a contract cloud be 500 pages long, or even more, and has to set out to anticipate every contingency and specify the SLAs. "But of course every local permutation can’t be anticipated and there are always grey areas. That means that in practice alto is down to the people on the ground, the account managers and client management like myself. For example, we have one very successful global contract where I deal with a UK and Ireland account manager and his counterpart in Scandinavia. There have never been any significant issues, but one takes a pragmatic ‘let’s fix that now and just watch if it recurs’ approach while the other always consults the contract SLA. If our local issue is a bit unusual or sets a potential precedent for the global contract, there is a lot of discussion and the process can be long even for simple tasks."
He stresses that he has no problem with the service but the contrast between the individual approaches reinforces his view that "It is always going to be local management, the people who work with each other, that makes the relationship valuable rather than the contract. Ideally, the solutions should be best for both partners-and squeezing the vendors for the last drop is not a very rewarding approach either."
In a sense, global service contracts work on the ground because both sides locally know it is their responsibility to make it work. "It cuts both ways. In Ireland we like our relationships to be pragmatic, friendly and relatively informal but the task are the same anywhere," Plant says. "Doing what you say you will do, when you say and always coming back quickly with a pragmatic solution is the winning formula as far as I’m concerned. When a supplier is like that I am much more inclined to trust in his advice and proposals."
Roles and architecture
Although IT services management is traditionally a fairly narrow operational remit in IT professional terms, says Deloitte consulting partner Harry Goddard, everything starts with the CIO role and the overall enterprise architecture. "There everything stems from the organisation’s mission, business strategy and the IT needed to deliver on them in a dynamic and changing environment. The new context is the maturing of ICT managed services generally and the range of options offered by customised cloud solutions. Making the strategic decisions will depend on all of the characteristics of the particular organisation, from the product or service sector to location to governance and compliance requirements. Above all, I think, and especially in Ireland, what counts is people. Providers have become more mature businesses and clearer in defining their packages and SLAs. But it is still the people in the organisations that actually do the business effectively and make the partnership aspect work."
Another important element is choosing what to outsource and what to retain internally. "By and large you can buy ICT capabilities for almost anything in today’s market," Harry Goddard says. "But in every case the CIO or IT Director has to decide on what elements to buy in-for cost savings or better performance or reduced head count or whatever-and also identify the pieces in IT that are in some way unique, important and best retained under direct control."
The views of a managed service provider are interesting, and John Purdy and his Ergo Group have been re-inventing a portfolio of managed services in this market for almost two decades. With a staff of 176 it is one of the largest indigenous IT companies. "I think the tipping point came at some stage last year and most IT organisations came to the realisation that there are different and often better ways of doing what they need to do. I do not for a moment support any notion of one size fits all in managed services, but then that could be said of in-house IT departments also. Their managements now see that they do not need, and probably cannot really afford, to deliver everything the organisation needs from their own resources."
The question then for the CIO, Purdy says, is "What is it essential for me to hold and what can I out-task?’ Costs are part of the set of drivers for outsourcing, and internal capacity and technical issues like scarcity of specific skills, but compliance and risk management are major factors in the specific decisions. "So the initial focus will be on generic and non-complex tasks and processes, then infrastructure and network services, then specific applications and even whole business activities that are detachable and not core. An example is the issuing of residents’ parking permits and dog licences by councils, both of which we now carry out for several local authorities as an online service that is self-contained and zero risk for the clients."
Another example Purdy gives is Ergo’s recent recruitment of two senior Oracle technicians that joined its team as part of an outsourcing deal with their former bank employer. "Oracle is mission critical to that client but those guys were seriously under-employed. Now we can utilise their spare capacity, develop their specialist skills and their careers as the core of our new Oracle skills team and the client has continuity of support and development."
That may sound like a simple coincidence of interest at a point in time in the market but Purdy suggests that it is also a very good example of one important principle for an organisation trying to guarantee delivery of its essential IT services through outsourcing-or ‘out-tasking’ as he prefers. "One of the key things to look for in a managed services provider is its development roadmap, where it is going and whether it will still be aligned to you needs in a few years’ time. Once you take on a partner, its business roadmap becomes part of yours. That is mutually important. After that, as always, it’s down to the people and making sure the relationship is richer than the contract."
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