Having spent a substantial part of my career in IT running in-house support and development teams it took me a long time to admit that there really isnt a lot of value for most companies in doing their own IT. Large organisations, one of the best examples being Tesco, clearly have sufficient resources that they can gain massive strategic advantage by making IT a core business function. Without labouring any grocery based analogies though, as we move down the business food chain it becomes rather difficult to see precisely what benefit many companies derive from running their own in-house IT.

If we look at non-technology companies of maybe up to a couple of hundred employees it is at least arguable that the internal IT function is often something of a parasite on the main body of the business. It is certainly rare that the IT team is universally well liked and seen as making a major contribution to the success of the business. It is a commonplace to hear internal IT people whinge about how undervalued they are. Well, shoot me for saying it, but maybe theyre not all that valuable.

Some time back I was IT Director of a reasonable sized firm with about 150 staff. Im embarrassed to admit now that I had a team of nine reporting to me covering support and a little rather modest database development. I had joined as IT Manager, inheriting the team, and, in the way of these things, taken about six months to sort out the over provision of equipment, misconfiguration and general mess left by my predecessor. What was I to do then? Sure, I enjoyed the international travel, decent car and general trappings but a chap needs something to get his teeth into. So, of course, I turned my attention to the politics of the organisation and devoted my energies to getting on the board. This was a trajectory I had followed several times before and, at the time, there didnt really seem to be anything else to do. From the companys point of view, and I have seen this several times in my own career and in that of colleagues, what were they to do? If you know what you are doing in IT you join a company and shine brilliantly by just doing what you do all the more brilliantly if, as is usually the case, those who went before didnt know what they were doing. So the board sees this and lo they are pleased. You continue to shine and what can they do but promote you to the board.

Now, the question arises, does IT really have a justifiable place on the board? While I was in the position I mentioned earlier I embarked, in an attempt to justify my existence, on an MBA. Module one of the course ran through the stages of growth of a business and identified the main business functions. There were four: Management setting the overall direction of the enterprise; Sales and Marketing some might separate these but essentially they involve getting people to part with cash; Finance controlling the lifeblood of the company and, finally, Operations doing whatever it is the company does. Writing the paper for that term I, of course, made the case that IT should be seen as a core business function. But even as I made the case I realised it absolutely wasnt true. Clearly IT should be seen as a service somewhere within Operations.

As a business develops these functions become sufficiently demanding as to be beyond the capacity of a single autocrat and so the board of directors is born maybe at first with just one or two of the core functions represented but all will appear over time if the business continues to grow. Clearly these functions must be represented at board level in any sort of serious enterprise. If, however, you read the IT trade press you will find endless articles pushing the idea that IT also deserves a place on the board. Well, the lady, so to speak, doth protest too much. When did you last hear an FD attempt to justify his or her place on the board they dont have to, we all know why they are there.

In many non-technical companies the person in charge of IT is likely to be one of the better educated senior people and is very often in a position to develop a certain priestly aura of secret knowledge. In other words it is not that hard to impress. Now, if we accept that we are all in business or in employment essentially for reasons of personal advancement whether that advancement be measured in terms of money, status or otherwise what is the IT guy to do with his mystique? What the hell, he might as well go for a board position. And given that IT is not a core business function, once there, there is not much to do other than get on with building the empire. And how, as an IT Director, do you build your empire? Well, you embark on new projects almost always without the necessary resources to deliver real business benefit. In other words you spend money for fairly minimal return. At least the return is minimal when compared to the same money being spent with an external company specialising in whatever it is you are trying to achieve.

So why does it happen? Well there is no doubt that IT is critical to business success or even survival. Then again so is electricity, so are telephones and so on. And yet, outside, the core business functions it is often only the IT people that worm their way onto the board. I suspect the reason is because IT is so far outside of the experience of most business people, so obviously complex and so ripe with the possibility of significant competitive advantage. Still something of a dark art, it is easy for a nave IT Manager to convince not only himself but his boss that expenditure of a few thousand or tens of thousands of pounds can deliver brand new competition beating systems. In fact it takes large teams and resources that are rarely available within medium size companies to deliver any kind of functional systems let alone ones that will leave the competition standing.

If we look at the history of medium size business IT over the twenty years or so that it actually has had a history there is a fairly clear pattern. First we had the mainframe tpeople offering Unix boxes and terminals moving down from the corporate level into the medium size business environment with huge clunky stock control and accounting systems. These were so complex that support and maintenance was entirely outsourced usually at significant expense. Then came the PC and the in-house hobbyist who knew enough about computers to produce equally complex and unwieldy systems on the new PCs. This in-house person often went on to take the newly emerged role of IT Manager and, of course, seduced by the technology, promised benefits that, with hindsight, were clearly never going to be delivered. So then came the new age of outsourcing. This time around we had PCs and Servers managed by external consultants. We are now in the nineties the golden age of cash generation for IT people so these external companies charged the earth and again delivered very little. In fact, it was often the case that businesses would develop an in-house IT department alongside the external consultants in effect they would pay twice. Sure enough, this couldnt go on and IT came back in house with the consequences I outline above.

So now outsourcing is back for the third time. I guess the essential difference this time around is that you are not finding so many outsourcing companies claiming to be able to do everything and therefore not really doing anything that well. This time we have a lot more specialist companies with some supporting infrastructure, some supporting users, some developing websites and/or databases, some looking after web hosting and search engine optimisation and so on. Above all, in todays business environment outsourcing companies have to show that they understand the key commercial drivers of the companies they are supporting. Taking this onboard IT support companies now need to provide IT as a simple service, to forget about the mystique and dark arts and recognise that business is right to see us as just another utility albeit one which if sensibly purchased really can bring competitive advantage.

I am not arguing that there are no honourable in-house IT Directors who are solely motivated to pursue and maintain their board position in order to further the interests of their (host) company. But, if we are realistic about the function of any business, i.e. to make money it really is hard to come up with a justification for an in-house IT function in a non-technology company. As I said at the outset, all of this goes by the board when we are looking at the really big players who have the resources to use IT as a strategic arm of their business. In this situation I would argue we need to have IT in-house. But there are not really that many companies in a financial position to reap the benefits of in-house IT. For all of these others outsourcing is going to deliver a far more effective return on investment real IT for the rest of us!

Born in Ireland and living in London since being lured there as a teenager by the Sex Pistols, Ciaran Kenny has been working in IT for the past twenty years. Having been a director of several large organisations including a TV production company, a global project management consultancy and a number of IT companies, he has been running his own IT Support London operation, since 2001. Ciaran is a professional member of the British Computer Society and as well as the expected range of academic and industry IT qualifications he has degrees in philosophy and international politics. Outside the world of IT he has published several articles on the esoteric subject of the institutions of the EU and is keen amateur photographer. Apart from his two kids his proudest achievement is finally getting to the point where he can string together a coherent sentence or two in Spanish.

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