Strategic CIO // IT Strategy
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11/15/2013
08:00 AM
Imre Kabai
Imre Kabai
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Why IT Groups Shouldn't Act Like Commies

Totalitarian systems create black markets of shadow IT and silos that don't serve the greater good.

"The problem with socialism is that you eventually run out of other people's money."  -- Margaret Thatcher

Have you ever watched a busy ant colony and thought about its complex, coordinated behavior? It turns out that an individual ant is a rather dumb creature, yet the collective behavior of the ant colony is very sophisticated.

Have you ever wondered about the organ you use for wondering? A neuron is a simple thing, yet a bunch of them connected can wonder about themselves.

Google’s Omega cluster, a large distributed system of simple computers with decentralized scheduling, is also showing signs of emergent behavior.

Ants, brains, and the Omega cluster all have specialized parts, but they lack a central entity that pulls the strings.

[ Is your workplace's culture squelching IT innovation? Read Innovation Stalled? Bad Culture Defeats Good Strategy. ]

Societies, on the other hand, use both centrally managed and decentralized, market-based planning models. Most of the former, specifically the totalitarian communist regimes, have gone out of business. The reasons, according to Mises, Friedman, and other economists, are missing or distorted price signals, reduced incentives, and slower technological progress.

Most companies buy goods and services on the open market and sell their products in competition with other companies. Competition improves quality and lowers prices.

Similarly, IT departments procure hardware, software, and services from the open market and assemble them into IT solutions for their internal and external customers. IT departments can act as communist regimes by exploiting their monopoly position, or they can operate as market-driven service organizations. Depending on which option they choose, the outcomes are very different.

The chart below illustrates a communist IT system:

In communist regimes, the lack of both quality and options created thriving black markets. An IT monopoly will do the same. The business will establish shadow IT organizations to provide quality services -- either internally or in the cloud.

IT black markets can also exist within the IT organization in the form of silos. Those silos are sustained by business customers who are unhappy with overall IT performance but appreciate the personalized help of a particular silo. IT silos try to achieve self-reliance and embrace the "culture of heroism." They compete with other IT silos and hoard resources such as budgets and technical experts.

Monopolistic IT systems, like communist regimes, will eventually collapse.  

Here we have an example of a free market IT system:

Free market IT organizations provide a service catalogue with quality measures, transparent costs, and accountable service managers. In cases where the local IT organization can't compete with external service providers, it assists with brokering those services. The free market IT organization embraces the "One IT" concept and proactively manages and aligns its services with the business's needs to provide value.

So what can you do when you have an IT black market manifesting itself through silos and shadow groups? Transform the communist IT regime into a free market one! It sounds simple, but in practice this will be very difficult as it requires you to change the organizational culture, structure, and practices.

A good start is to create an IT service catalogue with high-quality services, service governance, lifecycle management processes, and an external cloud service strategy. You can transform your IT department into a service provider and cloud service broker for your company.

Concluding this article with a quote from Margaret Thatcher's American political "soulmate," the leader who "beat Communism," seems appropriate:

"How do you tell a Communist? Well, it's someone who reads Marx and Lenin. And how do you tell an anti-Communist? It's someone who understands Marx and Lenin."  -- Ronald Reagan

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ImreK331
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ImreK331,
User Rank: Apprentice
11/18/2013 | 9:58:10 AM
Re: Communists don't have a monopoly on black markets
Agree with your comment but would like to emphasize: the opposite of totalitarian systems with central planning - like communist regimes - is not capitalism but the free market economy. Capitalism itself does not exclude monopolies.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
11/18/2013 | 9:47:50 AM
Vendors love shadow IT
Not only do some business users like shadow IT, but vendors love it. In fact, we've come across a number of vendors who don't want to engage with the traditional IT orgazization at all. They go out of their way to avoid speaking with IT executives. They want to sell directly to the business user because IT slow things down.

Granted, many of the things that IT does to slowdown the process actually help the process (security, testing, and such), but some vendors and many users don't care. After all, once the sale is completed the vendor doesn't care if IT eventually has to manage the technology anyway. The vendor has already been paid.
tsdoaks
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tsdoaks,
User Rank: Apprentice
11/17/2013 | 11:18:57 AM
Re: Free Flow of Information
Agree wholeheartedly. Not only is the discussion free so is the leadership of IT. It used to be that the CIO and IT directors roles were closed and strictly held by IT professionals. Today, the growing trend for leadership is business oriented people who can run IT because they tend to discuss and lead freely. There is no longer a line drawn in the sand that separates the two worlds. The business and their budgets are tired of the totalitarian regime.
Susan_Nunziata
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Susan_Nunziata,
User Rank: Strategist
11/16/2013 | 5:13:51 PM
Re: Communists don't have a monopoly on black markets
@thomasClaburn: Well said, my thoughts exactly. "Free markets" don't automatically eliminate black and gray markets, or guarantee quality.

While I like the author's basic premise that the IT organization needs to be open, I find serious logical flaws in the basic comparisons of "communist" and free market, as well as the loose definitions that merge of communisim, socialism and marxism. 

Putting aside the fact that the author is playing fast and loose with economic and social philosophies, the basic position here is spot-on: The days of Top-down IT rule and the era of "the Department of No" are over, and we're moving toward a much more collaborative enterprise tech experience that involves the user and IT in ways that, ultimately, should be beneficial to the organization's bottom line. Shadow IT is here to stay, like it or not, "commie" or not, and today's IT organization will be better off joining this trend and making the most of it, than trying to beat it down.

 

 
Lorna Garey
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Lorna Garey,
User Rank: Author
11/15/2013 | 5:15:53 PM
Re: Free Flow of Information
I would point out, however, that the main reason the Allies won WWII is that Stalin's "Commie" ruthlessness allowed him to break Hitler's Sixth Army (ok, oversimplified, but you get the point). When one has the stomach to be a dictator, one can get a lot done.

A more recent and less grisly example: The Olympic opening ceremonies in Beijing.

Run efficiently and smartly, strong centralization and the willingness to sacrifice the individual for the good of the whole is powerful force. Just saying.
Thomas Claburn
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Thomas Claburn,
User Rank: Author
11/15/2013 | 1:49:54 PM
Communists don't have a monopoly on black markets
"In communist regimes, the lack of both quality and options created thriving black markets."

In capitalist regimes, lack of quality online content created thriving black markets like Napster, The Pirate Bay, and other file sharing services. Hollywood likes to portray this as the work of scofflaws, but it's a consequence of business models that have been slow to adapt to digital distribution.

Likewise, IT groups need to recognize that inflexibility and failure to accommodate users diminishes the control they're trying to maintain.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
11/15/2013 | 10:32:47 AM
Free Flow of Information
Fascinating comparison, Imre. The greatest threat to totalitarian regimes is the free flow of information. Tech experts once controlled or at least dominated the dialogue around IT, but consumerization has set that discussion free.
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