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Transforming IT: Creating a Service-Centric Model

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Helping companies reach the elusive goal of running IT like a business.

Keith Jahn, a member of HP’s office of strategy and technology, and Rebecca Lawson, who manages HP’s portfolio of service management offerings, recently published a book  that looks at the five steps companies can take to adopt a service-centric IT model. The following is a brief overview of the chapter in the book, entitled “The Elusive Goal: Running IT Like a Business.”

For at least a decade, IT leaders and technology suppliers have focused on reshaping IT organizations to be more nimble and more capable of delivering valuable business outcomes in a predictable, cost-effective manner.

So after all the time, effort and money spent on improving the way IT operates, why does this goal of “running IT like a business” still seem to be a utopian dream?

One reason is the central role IT now plays in the modern enterprise – a universal and indispensable mechanism for enabling every facet of the business. Yet among a growing stack of unfunded initiatives are the organizational improvements IT itself needs to keep up with the pace of business change. Furthermore, CIOs must constantly deal with the perception that IT is nothing more than a cost center to the business, instead of a value-based enabler helping the organization achieve its financial and performance objectives.

Unfortunately, IT spends so much time and money trying to meet existing business demands that it does not have the resources to focus on improving its internal operations or aligning itself with the business it serves. IT must reinvent itself as a sustainable, service-oriented line of business focused on delivering business value.

The service-centric model

Service-centric IT represents a state of maturity for the IT function, enabling it to operate as a service-focused entity that is deliberately structured, organized and calibrated to directly power the corporation's strategic growth and profitability objectives.

A service-centric IT organization is fully aligned with the business it serves because its structure and operating model are defined in the context of that business. Technology-enabled services, which are designed, packaged and offered to the lines of business to meet the specific needs of users, have an associated value and cost that both sides can easily understand. Users of each service are willing to pay that cost to receive that value, and everyone from the cubicle to the executive suite can see it and measure it.

Creating a new mindset

The service-centric approach begins with changing the way IT thinks about itself. Service-centric IT is a service-oriented line of business where services themselves are IT’s deliverables. With this mindset in place, IT can implement a structure and an operating model that focuses on managing supply and demand for its line of services – in other words, concentrating on service management instead of server management.

Transforming IT to a service-centric line of business addresses the cause of ineffective IT and delivers lasting benefits that include:

  • Agility – Making IT more flexible so that it can reduce time-to-market for business initiatives and facilitate change
  • Financial transparency – Improving the cost structure of IT to better extract business value from each project and/or service consumed
  • Control – Managing IT more effectively to reduce risks associated with each new project or service
  • Alignment – Linking the structure and operating model of IT with those of the business as a whole to improve operational efficiency and relationships between IT and lines of business

The journey of service-centric transformation

The specter of failure always looms over initiatives this big and complex. The good news is service-centric transformation can be done in a simple, incremental way that delivers significant and continuous short-term value. This, combined with IT’s ability to show substantial ongoing progress toward the desired end state, will serve to quiet criticism and provide growing momentum.

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