The IT Deregulation Act

Inspired by the Airline Deregulation Act the IT Deregulation Act (or IDA) is a CEO directive whose main purpose is to remove obligatory usage of corp IT services by the business units and expose IT users to market forces.

Of course, there is no such thing as the IT Deregulation Act, but when you think about it; it could make a lot of sense.

In my numerous SaaS discussions with enterprise architects and CIOs of large (very large) companies, I increasingly end up discussing (asked by them) how they could embrace "public" service infrastructures for part of their IT capabilities, for example email (Hotmail) or instant messaging (MSN Messenger). The first time I heard that question (about a year ago) I put it in the "interesting but a bit wild idea" bucket; today I have little doubts left that this trend, sometime also called consumerization of IT (as echoed here and here among others) is becoming very real. Note that they are not necessarily interested in booting all enterprise software out, but rather implementing hybrid architectures where some aspects of IT are managed internally and some others are sourced from the cloud and/or where a subset of their user population has access to a less-featured version of a service (e.g. Hotmail) whereas another set of the population has access to a more-featured version of that service (e.g. Microsoft Exchange). A key motivation of this "one size does not fit all" model is to match the cost of sourcing that service with the value of that service for each individual user.

My premise here is that if you want to follow that path why stop there... why not going all the way and fully deregulate your IT i.e. make all your IT division-offered services compete with external market offerings. In this scenario central IT becomes only one of the many service providers, you (business unit / empowered ex-central-IT-constrained customer) can choose from.

We have all experienced the benefits of the deregulation of government protected monopolies such as the airlines, telcos, utilities (energy) why not push that model to corporate IT?

Of course, this is easier said (or blogged) than done and a lot of pain will be experienced before getting to a better place. But I would argue that it is no different (actually most likely easier) than the pains that national flag carriers, national telecom companies etc... have gone through. The main question is whether we believe that free market dynamics can be applied here, if they can, then deregulating IT will result in higher quality of service and fairer pricing for the end user; which ultimately translates to a lower total cost for a higher total value for the company. Not a bad proposition.

Note that it does not mean that central IT will loose 100% of its "business". If you look at electricity/gas companies or telcos (a part from less than a handful well publicized failures or bankruptcies) the vast majority of previously protected monopolies still have the lion share of the market and are financially healthy. Please, do not misinterpret this as me saying that corp ITs take their internal customers for granted, most don't. I am simply saying that by introducing a healthy dose of competition in the mix, will force the IT department to think very hard about where to compete, where to extend, where to disengage. In other words, think hard about the role that IT will play in the company. By the way, this model would also allow IT to start selling to other companies which could create potential revenue stream into a historically considered cost center.

I am quite convinced that implemented properly, the CEO/COO/CFO and probably most of the business unit VPs will welcome this "deregulation", the role that will get most "heat" (again?!) will be the CIO. But if I were the CIO, I would see that as a tremendous opportunity to turn upside-down the entire IT division and make it a true participant of value creation in the company. It is maybe a bit harsh to say, but if the main role of the CIO is to "just" keep the lights on, the CIO role will be relegated further and further down in the corporate organization where cost reduction will be the only KPI. This would be truly sad, as it doesn't have to be that way.

From an architecture perspective, which is (as usual :)) where the magic needs to happen for this to work, the impact will be significant. Simply put, it will require taking the core concepts of SOA and extending them to cross boundaries, cross services, cross location, cross everything. Governance, Identity, Entitlement, Integration and Composition will be the core pillars of this model. With the notions of Federation, Standards and Metadata as key supporting elements.

As you can most likely deduct from this post, the concept of deregulated IT is still very raw in my mind, but what do you think? Would a Deregulated IT Architecture Best Practices white paper make sense? Feel free to jump in and start a discussion, I think this is a very prolific ground for innovation.