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26 September 2006

Customer orientation: not what you think

By Andrew Clifford

IT departments waste money by running themselves as a business within a business, selling IT to their business "customers". You can slash costs by turning this around, and seeing the IT department as customers, who buy IT on behalf of their colleagues.

Over the past three weeks I have covered three ways of looking at IT which help you reduce cost and improve value:

  • Clearly define separate systems, to make IT easier to manage.
  • Structure systems so that they support, and do not cut across, business management responsibilities.
  • Clarify how IT adds value, to remove from the IT domain business change that it can not deliver.

This week I will cover the last of the orientations, customer orientation. Unlike the others, which concern how you view IT, customer orientation concerns how you view yourself and your role. This is, for end-user organisations, the most important aspect for reducing cost.

A customer orientation is about realising that you are the customer. You are the buyer of the IT on behalf of your business. Customer orientation only applies to IT departments in end-user organisations; it is not relevant for IT supply organisations.

Most IT departments would claim, "We already do that. We focus on the needs of our customers, and work really hard to deliver what they want." But that is exactly the opposite of what I mean.

Most IT departments see their job as selling IT into the business, to encourage the take-up of IT. They fulfil those sales either through in-house work, or by passing it on to external suppliers. They see themselves as suppliers to their business "customers".

There are significant conflicts of interest with this view. Painting an extreme picture:

  • All IT spend is seen as good. The IT department measures its success by the size of its budget, where more is better.
  • The IT department feels closer to technology vendors than to their colleagues. They work with vendors to sell IT into the business.
  • If the IT department proposes expensive or risky solutions, nobody within the business is qualified to review these. They might complain about the cost, but in the end they have to accept the decisions of the IT department.

The problem is not as extreme as this. IT departments work as both supplier and buyer, and work in partnership with both their business colleagues and external vendors.

But even so, the prevailing mindset is that the IT department is a business within a business. This is the most damaging of mindsets within IT. It stops the IT department properly representing the interests of the business' shareholders and customers.

Everyone within the IT department must understand which business they are in. They are not in the business of IT supply. They are part of the broader business. They are functional experts in IT, the same way as the finance department are functional experts in accounts. They are customers of IT supply, on behalf of their colleagues. Their job is to help set requirements, not just to get sign off so that they can supply.

This is a big cultural shift for IT, but a crucial one. If we want to cut costs, we must stop being sellers. We must start being customers.

Next: Cutting costs: where to start

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