IT Services: Core and chore, part 1

As enterprises grow increasingly reliant on external service providers, CIOs have to keep asking a fundamental question: "What's core and what's chore?" If something is core, then it makes sense to keep doing it internally. If it's just chore, then it's probably best offloaded to an external provider.

The role of IT has been undergoing a fundamental transformation, from managing infrastructure to ensuring the optimized delivery of business services. Managing infrastructure isn't a source of competitive advantage. The optimized delivery of business services is. In fact, the central responsibility for today's CIO is determining the best way to deliver a business service -- whether internally, externally, or some combination thereof.

Fundamentally, this decision comes down to a determination: core or chore?

  • "Core" refers to IT services that can provide long-term competitive advantage for your organization. These core services are inherently strategic in nature and worth internal investment to maximize their business benefits. This shouldn't be confused with those services that may be critical to the business (such as reliable web hosting), but that internal IT can't do better than what is generally available in the cloud.
  • "Chore" refers to anything that's not core. However, it's important to realize that IT can never abdicate responsibility for chore services -- even if they are sourced externally. IT is still ultimately accountable for the performance and the end-user experience for these services.

I've spent a lot of time talking to CIOs who really understand and embrace IT's evolving role. They've shared some great insights into the core vs. chore decision. Following are some of the key takeaways from these conversations.

New mindset, new role

CIOs need to adopt a new mindset as they go from being managers of a commoditized infrastructure to becoming chief business technology officers.

One CIO recently explained to me that as their technology vendors started accelerating innovation, they realized they were increasingly acting as service brokers. That realization led them to develop a new decision-making approach where  they now start with business objectives and then figure out which route will get them there most effectively:  building and deploying internally, licensing and white-labeling a solution, relying on an external service provider, or some combination thereof.

Process and criteria

Many IT organizations have instituted formal processes for new technology projects whether they're being led by IT or by another area of the business. They create some kind of business technology council, comprised of IT and business leadership. This council reviews every project in a cooperative fashion to determine the right way forward. This kind of process enables the business to take an objective look at each project and come up with an optimal solution in each specific case.

Another CIO shared that a key criteria in the approval process is whether something will truly distinguish them within the market. Is this something no one else in the industry has? If so, then they may be able to achieve a sustainable advantage by keeping it internal.

Renewed importance of service management

For the IT team, they hold responsibility for meeting user expectations regardless of how services are sourced.  As a result, service management gains renewed focus for ensuring that all parts of the IT ecosystem (both core and chore) are working together efficiently, and that customers are always having the best experience. 

Veteran CIOs have noted that mature service management capabilities are critical for managing their on-premise and externally-sourced capabilities in an effective, common manner. They note that brokered services typically come with their own tools and processes, that fragmentation doesn't scale, and that IT needs a unified view of the entire services landscape.

What's most interesting is that IT organizations are increasingly looking to SaaS delivered service management solutions to solve this problem.  This demonstrates an even more granular approach to defining core vs. chore.  Specifically, IT is viewing the service itself as a chore function (i.e., consumed as a SaaS delivered service), but the management as a core function given the competitive advantage of driving the performance of their supply chain of internal and external consumed services. 

Conclusion

The core vs. chore decision is one of the most critical ones CIOs have to make, and it has to be looked at objectively.  CIOs who make the right sourcing decisions will achieve better business results and make better use of their limited resources. Those who don't will cede competitive advantage and consistently overspend.   Things just keep getting more and more interesting.

Chris O'Malley is CEO of Nimsoft.  He has devoted 25 years to innovation in the IT industry -- most recently growing businesses in cloud and IT Management as a Service solutions.

Copyright © 2011 IDG Communications, Inc.

  
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