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Why the CIO won't go the same way as the VP of Electricity

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CIO, Dead as a… ?

Commoditisation is, without doubt, a massive and revolutionary trend in IT. In just a handful of years, a huge range of industrialised, cost-effective solutions have created rapid change, so much so that some commentators now predict the end of the corporate IT department altogether.

Info-Tech Research Group’s June 2013 article highlights a comparison made by some, between today’s CIO, and the “VP of Electricity” role apparently ubiquitous in large organisations at the turn of the last century.

As electricity supply standardised and industrialised, the argument goes, the unsuspecting VP of Electricity (and presumably their whole department) found themselves anachronistic and redundant.

It’s a very flawed comparison. There can be no doubt that consumerisation is a reality, but business IT and electricity provision are very different things.

IT Service is not a light switch

Utility electricity is what it is: we may have a choice of billing suppliers, and perhaps several different options at the point of connection (such as smart metering), but the end user sees very little difference: it’s the same product from the same wires. I flip the light switch, and the light comes on. There is very little scope to vary the service, at the point of consumption, to gain significant competitive edge.

Hence, from the end-user’s point of view, electricity is an absolute service: it’s either there, or it isn’t (and usually, it’s there: Britain’s national grid, for instance, works to – and achieves – a 99.9999% reliability target. By comparison, the granddaddy of commoditised IT infrastructure, Amazon AWS, offers 99.95% – lower by a factor of 500).

By contrast, our customers experience IT as much more than a simple on/off service. It is far more complex, multi-faceted, and variable. We could frequently change our electricity supplier, and our customers and end-users would never be aware. However, change one of the many elements of IT with which they interact, though, and we can make a significant difference to their working day.

For many end-users, in fact, the “light switch” experience seems a long way off. A Forrester study of 900 end users and 900 IT professionals, in January 2013, found, for example, that 84% of business users experienced a severe or moderate impact on their ability to be productive on a monthly basis, as a direct result of IT issues. 14% experience difficulties at least once per day. The study also revealed that there’s a large gap between how the business thinks about IT and how IT thinks about itself. The difference varies regionally, between 13 to 16 percentage points.

If it’s done well, however, IT is an immensely powerful and proven asset to the business. MITSloan’s seminal 2007 study, “Avoiding the Alignment Trap in Information Technology“, identified a best-of-breed group of organisations delivering true “IT-enabled growth”. This group, representing the top 7% of their large sample, was found to be achieving an average of 35% compound annual growth rate, while spending 15% less than the study average on IT.

Commoditised tools

In our IT Service Management functions, commoditisation is just as much a reality as in any other facet of IT. As Gartner Research Director Jeff Brooks put it, “In the ITSM space, and more specifically the use of ITSM tools for IT Service Desk, we continue to see vendors provide commoditised tools”.  Does that mean, then, all of those tools, and the functions which use them, are as good as they will ever be? Clearly not: in January 2012, Brooks’s organisation observed that the average maturity level in IT Infrastructure and Operations was 2.35 on their 1-to-5 scale: a “disheartening conclusion”. As Brooks added: “Opportunities for differentiation exist, but the vendors have yet to capitalise on those prospects”.

He’s right. Even as the service desk, or any other ITSM function, becomes ubiquitous enough to be considered by many to have become commoditised, our customers expectations evolve and change. The age of the smartphone has increased mobility, and put leading-edge, location-aware, always-on technologies into homes and pockets. New-look frontline services like Apple’s Genius Bar have created demand for new ways to get support. On-demand commodity services, though convenient, create new management challenges around costs, control, and alignment. We should never consider ourselves finished.

Growth is driven by effective alignment of technology and processes. Henry Ford did not change the car industry simply by switching to standardised services. He created differentiation by aligning great processes with great technology. Some of those technologies, such as his electricity supply, would likely have been the same commodity service consumed by all of Ford’s rivals, but he made the difference with the things he created around them.  Fundamentally, as long as technology and innovation can give one business an edge over another, the role of the technologist – including the CIO and their business unit – will be relevant.

After all, if all companies were to standardise on a single set of commoditised IT offerings today, by tomorrow some of them would have found significant advantages in breaking out of the pattern.

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3 Responses to " Why the CIO won't go the same way as the VP of Electricity "

  1. Great article! Excellent points.

    One other aspect to this crap analogy of IT to electricity or water. i can get any electricity or water. the resource flowing in IT is MY data. It is a unique precious asset not an anonymous commodity material. I can’t switch my information provider, only my information steward. i need to move my data every time.

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