The issue is that, traditionally, there have been two main roles for IT with regards to business function: Primary Operations or Support Function. However, I believe a new, third role has emerged. I've dubbed this role simply Secondary Operations as I haven't yet found this idea described by any other term yet.
The two traditional roles of IT as a business function:
Primary Ops of a business are what that business does to bring home the proverbial bacon. A business could have many Primary Ops if multiple, internal business functions are equally important to its competitive sustainability and growth. Within the context of IT we may think of Microsoft, Google, Apple, or even Amazon as companies with an IT function that is a Primary Op.
Support Functions for a business are those functions a business uses, either internally or externally, to ensure the routine goings-on of its Primary Ops. We often find these functions to be things like Human Resources, Legal, Accounting, and even IT in many cases. Examples of using IT as merely a Support Function are: buying a store-bought package, outsourcing a custom software solution, hiring third-party consultants, or even staffing a small group of IT employees to react to the business' needs.
What is most notable about these two traditional roles is that they tend to be intentional choices for the business. A business with Primary IT Ops knows that, and understands the importance of its IT function as well as how to valuate and make trade-offs for it.
The emergent role of IT as a business function:
Secondary Operations differs from these traditional roles, as I believe it evolves over time, starting out as a Support Function and gradually growing in complexity, integration, and importance. It still shares some characteristics of a Support Function because it has no place in the organization without the existence of the Primary Ops. However, it also has similarities to Primary Ops in that it has grown into a significant internal business function that is part of the long-term strategy. In short, a business now needs to understand and treat an IT Secondary Op the same as any Primary Op with regards to valuation and trade-off decisions to leverage it as a competitive advantage.
How do you know when a Support Function has grown into Secondary Operations?
There is no black-and-white answer or nice, neat checklist. However, here are some signs that a business' IT function is moving towards or has reached the status of Secondary Operations:
- The IT function cannot or should not be externalized to a third party.
- The IT function is of a significant size/cost with proportion to the rest of the company.
- There is significant business risk associated with the failure of IT systems.
- Removal of the IT function completely would degrade Primary Ops significantly over time.
- Lack of an IT function would eventually result in the inability for the business to sustain a competitive advantage in the market.
The way a business treats a Primary Operation versus a Support Function is very different. The level needed for understanding business value, utilization of industry best practices, and proper management techniques is lower for a Support Function than a Primary Operation. Additionally, the long-run cost (or debt) of routinely making short-term trade offs for immediate benefit are less important and make a less significant impact on the company as a whole.
Contrast this against how a company treats its Primary Operations. Much time and effort is spent understanding the details and subtle interplays to maximize business value. Much more structure and attention is given to best practices and management techniques. This does not come as a surprise, because a company that did not do this would eventually lose its competitive edge.
So what happens when an IT function becomes a Secondary Op (which should be treated like a Primary Op) but continues to be treated like a Support Function?
Depending on many internal and external business factors the outcome could be as severe as the company eventually failing (or being taken over) or as moderate as the business never realizing its full potential within the market (limping along with a reduced value).
Luckily the solution is easy enough:
First - Non-IT companies should routinely assess the usage of their IT function, perhaps using the "5 signs" above as a guide. The pitfall here is that the company's leadership needs to be honest with itself. Sometimes it can be difficult for a company's leadership to admit that IT has evolved into something almost as important as Primary Operations, especially if they have been with the company for a while, and especially if there are non-IT/operations execs :)
Second - Once the leap has been made from Support Function to Secondary Operation, start treating your IT function a lot more like your Primary Operations. Pretend your IT function is a mini-Primary Operations IT firm whose sole customer is the rest of the company. This may mean that you have to bring in someone from the outside to help get it right. It also might mean that you may have to sacrifice a little upfront to ensure this transition goes smoothly, but that's okay because sometime that's what needs to be done for long-term strategic investments. Lastly, a organization may have to impact existing (and sometimes operational) procedures to allow for this new growth of IT. It may take some getting used to, but will eventually pay off.
A note of caution - The more unlike an IT company the non-IT company is, the harder the above two steps seem to be. There is some type of "degrees of separation" idea here, but I'm not sure what all the factors may be yet.
Here are some initial guesses:
- Class of work of Primary Ops vs. IT (blue collar vs. while collar)
- presence of unions?
- Geographic dispersion of the company's functions
- High variance of education levels among employees
- High barriers to entry to the market
- Current technology use/prevalence in the primary ops industry
- (years with IT / years without IT) ratio ?
- Amount of turn over throughout organization
- Average age of employees?
- Hierarchical leadership in Primary Ops
- Levels of trust and communication
Anyways...this has been an interesting mental exercise for me. I'd be very interested in any feedback or other opinions, especially people's experiences with this issue :)