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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