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KJR’s ITaaS series (IT as a Service, the old run-IT-as-a-business mannequin dressed up in a new suit) has been longer than a bad shaggy dog story. So it’s time, and maybe past time for the punchline. But it’s a two week punchline. Ready?

Start with the business model. I snuck the best one in (or at least, best in most situations) several weeks ago when you weren’t looking. It’s called Landlord/Tenant, and it solves many of the most egregious problems with product-focused, catalog-oriented versions of ITaaS that dominate industry discussions of the subject.

With this business model, IT takes on rights and responsibilities equivalent to a landlord (hence the name). But not just any ordinary landlord. We’re talking about a high-end landlord who provides lots of valuable services for tenants beyond just providing a roof and four walls.

Our high-end landlord provides three types of service: Core, metered, and custom.

Paying the rent buys tenants all core services — niceties like kitchen appliances, bathroom fixtures, a parking space, garbage removal, and, in this day and age, telephones (local calls), basic cable, and internet service. They’re built into the rent even for renters who don’t want one or more of them, on the grounds that most renters do and it’s cheaper and easier to provide them universally at a single fixed price than to provide them as a la carte options.

Their IT equivalents might include PCs, file and print services, email, telephones, and the never-popular time entry system.

Real landlords also take care of snow plowing, grounds keeping, and building maintenance. IT landlords run the data center and network infrastructure.

The tenants’ rent also has to cover their landlord’s costs of running the business itself. IT has parallels for these too — in particular, the cost of maintaining a coherent technical architecture. More about this later.

Our high-end landlord also provides metered services, whose cost depends on usage. HVAC is an obvious example. Long-distance calls, too.

For IT, metered services might include “How-do-I?” help desk calls and long distance charges. Maybe mobile phones, and tablets, too. Metering doesn’t just mean services consumed in fine-grained increments.

The thing about metered services is that they’re standard and available to everyone, just like core services, but unlike core services they’re optional.

The third class of service is custom services. For actual landlords these might include custom painting or wallpapering, premium lighting fixtures, or replacing the standard kitchen appliances with higher-end alternatives.

For IT-as-landlord they might include application development and enhancement … or these might be provided as metered services; there’s no right or wrong answer to this.

Package selection, configuration, and integration will probably be delivered as custom services too, but again, this depends on how the CIO wants to run the IT-as-landlord business.

Turning IT into a landlord has an interesting and useful property: While “the customer is always right,” tenants aren’t. Landlords have well-understood rights that renters aren’t allowed to violate. For example:

Tenants don’t get to install their own window air conditioners. They use the building’s central air conditioning, just as managers don’t get to install answering machines on their telephones — they use the enterprise voicemail system, like it or not.

Tenants don’t get to install their own satellite dishes. They use the building’s cable connection. That’s because, in addition to the poor aesthetics that would result from lots of individual dishes attached to the side of the building, tenants would have to drill holes through the outside wall to run a cable from the dish to their televisions. That’s called “damaging the landlord’s property” and it’s not allowed.

And so on. Landlords have responsibilities beyond giving each tenant what that tenant asks for, in the form the tenant asks for it.

IT-as-landlord is in a similar situation. It provides the capabilities each “internal customer” (shudder) needs, but that’s different from providing the exact make and model each manager prefers.

That’s as it should be, because IT is responsible for more than a catalog of services. It’s responsible for maintaining a coherent enterprise technical architecture … for the enterprise integration of these services, so they make sense as a whole and not just as independent parts.

Which also, by the way, means there’s no competition. If a business tenant wants something, whether it’s custom or metered, that tenant has to work through the IT landlord … and unlike real tenants, IT’s tenants can’t move to a different building.

Which goes to show that every analogy has its limits.

* * *

Next week: Chargebacks. Hey, everyone needs something to look forward to.

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|In: Industry Commentary|Last Updated:

ITaaS is a new name for an old idea — that CIOs should run their organizations as if they were independent businesses, selling information technology to its “customers” in the rest of the business.

The KJR Manifesto advises a different course of action: Don’t run IT as a business — run it in a businesslike way. But as with everything else in the manifesto, this is a guideline, not a law of the universe. Sometimes this is what you have to do. So continuing on the path of helping you make it work instead of just writing it off as a bad idea …

Start with a tedious but necessary conversation with the CEO. See, running IT as a business had better be a metaphor, not something to be taken literally. And all metaphors are dangerous because of the temptation to treat them as identities rather than as parallels.

The conversation, then, is where to draw the line — where to use the metaphor and where it stops. Among the topics:

  • Growth: Profitable revenue growth is a central goal of just about every business. So if a CIO is supposed to run IT like an independent enterprise that sells products and services to internal customers, it’s important to know whether growth should be one of IT’s business goals.

My guess: At least half of all CEOs would be horrified at the very idea. They distrust IT, think everyone in it wants the company to buy them technology for technology’s sake, spending every last bit of profit on toys if the company didn’t have a carefully constructed governance process to ensure all IT projects will deliver enough business value to warrant the investment.

The last thing this group of CEOs wants is for IT spending to grow.

But if pressed, many of even the most recalcitrant CEOs would acknowledge that if IT is to be run as a business, it has to be in a position to satisfy demand, and if the demand for IT services increases … if, for example, the CMO wants a more sophisticated big data analytics capability … then IT’s size will just have to expand to accommodate.

  • Sales and Marketing: True independent businesses don’t just satisfy demand. They generate it. That’s the whole point of sales and marketing. Does the CEO want IT to engage in sales and marketing?

Don’t be ridiculous. That’s pushing the metaphor way past its useful boundaries.

Or is it? Because a common complaint among CEOs is that the CIO doesn’t provide technology leadership, and doesn’t act as a strategic partner. What does that take? Identifying new technologies that can improve the company’s competitive posture and painting a picture of what they could do.

The difference between that and sales and marketing? Mostly, the difference is what you call it, not what it is.

  • Competition: Does IT continue to have a captive market? ITaaS’s proponents list competition as one of its most desirable attributes — that IT loses its monopoly and has to compete for business in the business. This supposedly will drive down costs as competition always does.

It might. Competition, especially for commodities, does drive efficiency (when you’re on the receiving end of this statement what it does is put pressure on margins).

But when competition is based on price, the result can also be a race to the bottom. And as IT’s “customers” often lack IT’s sophistication in evaluating an application’s engineering, and sometimes lack IT’s perspective regarding the importance of an IT provider’s marketplace viability, the result of competition can also be an accumulation of attractive but poorly built and unsupported junk.

  • Competition #2 — technical architecture: “Technical architecture” sounds like something IT tosses out to intimidate its less-knowledgeable business counterparts. Let’s simplify things.

The immediate question is whether IT does or doesn’t establish technology standards for the company. If it does, competition is fair, because everyone — IT and outside vendors — have to conform to the company standards. If it doesn’t, what the heck — throw out the standards, and let every project team build what it needs to build using whatever tools and techniques will let it build its product as cheaply as possible.

That’s the short-term issue. The bigger and longer-term issue is whether the company has nothing more than a technology portfolio … a pile of stuff … or a coherent, integrated computing environment.

If every business department goes shopping every time it needs something, there’s really only one possible outcome, and that’s the pile of stuff.

Read about ITaaS and you might think it’s nothing more than service catalogs and chargebacks. It’s more complicated than that.

And we aren’t done yet, but we are out of space, so stay tuned.

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