The End of the IT Department?

The need for IT solutions in all areas is increasing, but what does this mean for IT departments in companies? Are they also becoming more and more important or is it time to say goodbye to them?

"It's Time to Get Rid of the IT Department"?

Will there be IT departments in the future? The answer may seem obvious in a world where we increasingly rely on IT solution in all aspects of our daily life, but some argue that the corporate IT department will soon be history. 

This controversial point-of-view did perhaps first gain a wider audience through the widely debated and criticized article "It’s Time to get Rid of the IT Department", published in the Wall Street Journal in 2021. In his article, Joe Peppard points to several technological innovations, such as cloud computing and low-code/no-code software, as arguments for the diminishing need for maintaining an in-house team of highly paid IT experts with hard-to-find competencies. Furthermore, he argues that organizing cross-functional teams around missions, such as business areas or functions, will give employees an increased sense of ownership and motivation and at the same time eliminate bottlenecks in the organization. The latter situation is the reality for most companies today, even the ones lucky enough to have sizable IT departments: IT competency and staff are a scarce resource and any work they perform are subject to strict prioritisation by senior leadership, leaving some business units or teams effectively without support for purchasing, developing or maintaining IT systems.  

Swedish analytics firm Radar echoes Peppard’s sentiment. In their keynote “The third wave of IT-industrialization” on Radar Summit 2022, they claim that the relevance of IT departments will erode over time until they disappear entirely. Instead, they predict, IT will become a knowledge domain spread across the entire organization. Radar argues that the ubiquitous digital transformation is driving the trend that an increasing part of IT-related purchases are done from within business units rather than IT departments. Since digital transformation is about changing business models and business processes, the effects and the benefits of it is also to be found in the impacted business units. Therefore, they argue, business units should also be responsible for the business case and the final decision on what systems to buy or develop. 

Finding the Best Strategy

Considering the predictions above, some CIOs may be wondering whether decentralization of the IT department is the best strategy for their company or not. The question is perhaps not whether it is the right thing to do, but whether it is already happening regardless of the chosen strategy or not. Management consultant Peter Drucker is famously quoted saying „culture eats strategy for breakfast“ and it may indeed be culture that is driving decentralization of IT departments in most companies, albeit without intention. Anyone who has worked with IT governance in an organization will be familiar with “shadow IT”, the somewhat derogatory term used to describe systems acquired outside of the existing governance process. They would also know that most shadow IT comes into existence, either when a business units’ patience with the delivery process of the IT department, or indeed the IT governance process itself, is exhausted.  

CIOs and Heads of IT would be wise to deepen collaboration with their counter parts in the rest of the organization and to put representatives from the business at the helm of the decision-making process when it comes to IT projects – whether it is to gain long-term supporters for their department or to get to know their future teammates in the business units.