We’ve been talking about ITaaS — IT as a Service, which doesn’t mean an IT organization that lives in the Cloud, and does mean an IT organization that runs itself as a separate business that views the rest of the enterprise as its internal customers.
Which means with ITaaS you have broader responsibilities than the head of a business division or department. Starting with the past two weeks’ topic – deciding on your business model, of which we covered about half the ones on my list. To continue … and let me emphasize, I’m not saying these are all good ideas. I’m not going to even try to connect these to anything IT might want to pursue — I’ll leave that to your imagination. But they are common business models, so what the heck:
- Size/growth. Whatever it takes to get bigger. The usual end-game is to dominate a market or distribution channel to the point that doing business with you is either unavoidable (de facto monopoly like Microsoft with desktop Windows and Office) or just a lot easier than the alternatives (Amazon).
- Do the deal. Live to sign big, interesting contracts. This is an entrepreneur’’ business model. Think Donald Trump and Ross Perot. It’s a business model for people with chutzpah. Not for the faint of heart.
- Amoeba. Try a bunch of stuff. Do more of whatever sells and less of whatever doesn’t. This is just the ticket for entrepreneurs who are too prudent to base their futures on doing big deals. Big-deal entrepreneurs will say “risk-averse” or something stronger rather than “prudent,” but they’re pretty much the same thing.
- Landlord/Tenant. Also known as the Hollywood Studio Model. You provide facilities for entrepreneurs, internal or external. They take most of the risks; your risk is that they might not succeed well enough to pay the rent.
- Return/profit. Whatever it takes to improve the bottom line. Not a good idea, because it encourages business leaders to take their eyes off the ball. Profit should be a consequence of the business model, not the model itself.
- Shareholder value. Whatever it takes to drive up the stock price. You know that eyes-off-the-ball thing? Focusing on shareholder value makes focusing on profit look like a good idea.
- Wait ’em out. Sure, your marketplace has changed. But if you batten down the hatches and hoist up the landlubbers, maybe big competitors will die first and you can inherit their customers, thereby putting off the inevitable. Think Best Buy, inheriting Circuit City’s customers, thereby looking like it was succeeding even as it was becoming little more than “Amazon’s showroom.”
- Charybdis. The business spiral of death, aka “eating the seed corn.” Revenues are declining. Rather than fix the problem, cut costs enough to maintain profit margins. The business will fail, but you’ll pocket enough bonuses to retire in comfort before the inevitable happens.
- Find a buyer. Give up. Suck in your gut, put on lipstick and makeup, and find someone with a lot of cash to take you in and give you a nice home.
There you go. If you want to head down the ITaaS path, ask yourself: Just how seriously are you going to take the idea that you’re running a separate business? If you mean it, start with the business model. If it’s just a metaphor, you’ll have to decide how far you’re going to take it.
Which gets to Mike Riddle beating me to the punch on a couple of points he made in last week’s Comments, namely: “If it is really going to be ITaaS, then it must be subject to market forces:
1) It must compete with outside vendors to keep its business, and
2) It must be free to sell to outside business. If it cannot, then the separate run as a profit making unit fails because it is not allowed to develop a full market.”
Yup. If you’re serious about running IT as an independent business, the rest of the business is going to want you to compete with outside vendors for their trade. Then there’s the other side of the coin, namely, that you’ll be dividing IT’s time between the rest of the business and other corporate customers.
Oh, and one more thing — you and your staff will have to get into the habit of responding to the various informal requests for favors you all get from your non-IT colleagues every day, “I’ll be happy to do this. Here’s what it will cost.”
They’ll love that.