IT department headed for extinction?

As business conditions change, IT departments must adapt to maintain their status within the company, says Danny Bradbury. The alternative is irrelevance - and extinction.

As the world's environment changes, scientists are becoming increasingly worried that large numbers of species will become extinct. Could this also happen in the corporate environment? As business conditions change and trends like outsourcing continue to grow, the signs are that in-house technical expertise could become less useful to companies over time. Could the IT department find itself on the fast track to oblivion?

IT departments may have a tough time of it in the coming years but don't expect to see them completely disappear, says Bill Grubbs, COO for IT recruitment giant the Spring Group. "I've been in the industry for 22 years," he says. "When fourth-generation languages (4GLs) first came out, they said that the end users would be programming their own applications and the development departments would go away. Of course, that never happened."

Nevertheless, there are parallels with the manufacturing sector, where lower skilled jobs are being outsourced to other countries, he says, adding that the IT department will follow the same trend. "But we are some way from that happening wholesale," he says.

The consensus is that the IT department will not disappear but is likely to change dramatically. John Roguszczak, a director at outsourcing planning consultancy Orbys, argues that while the IT department is not in immediate danger, individuals could be unless they change their skill sets. "The future role of the IT department is one that learns how to engage with the business more and is prepared to be outward looking, rather than focused internally on day-to-day operations," he warns. Consequently, the people that produce the software solutions such as Java and C++ programmers are more likely to end up working for third-party service providers, he says.

So, what does that leave in-house? Tim Murfet, head of technical consulting at Accenture, says that IT departments will draw a line between development and more tactical or strategic elements such as defining business specifications, change control, programme management and acceptance testing.

"Some people are still keeping that raw development and coding at the bottom of the stack but because they have drawn the line, they can choose to do some in-house and some offshore," he says. "The management of the in-house project is exactly the same as the management of the external project." The caveat is that projects with clearly defined boundaries are often easier to outsource.

But the people at the top of the stack, dealing with project management and long-term planning, are the safest in the IT department, because it goes against most people's principles to outsource their expertise. Such people will be necessary to manage the relationships with outsourced providers and to plan long-term IT direction while talking closely with business departments to understand their needs, explains Orbys' Roguszczak.

But this idea of bringing the IT department and the business departments closer together has been a recurrent discussion for decades. Surely businesses have solved this problem already?

Not according to Phil Partington, director of business development at IT services company ServiceTec. Keeping IT as a centralised function puts a barrier between technologists and business managers, he explains, meaning they end up talking a different language. "You might find that in the future the IT department doesn't exist in its current form, but maybe as pockets within the business units, to ensure that there are IT savvy, knowledgeable members within each business department," he says.

Will the IT department dissolve into the business, leaving only a skeleton crew at the centre? Tim Davis, senior vice president for distribution and ecommerce at Hilton International, is already doing this. Davis used an outsourcing company to help build a reservation system for the hotel chain. While much of the coding was done by third-party, offshore staff, the management was all done in-house.

"In our head office IT function we have 11 people in total and we have a £4.5bn turnover with 75,000 employees," he says. In the late 1990s, the IT department had built up to a substantial size, partly because of the year 2000 challenge. As business conditions changed, Davis devolved his IT department into the business functions because it enabled him to tie the money spent on IT more closely to business needs.

For those companies not willing to take such a drastic measure, there are other ways to help make the IT department more useful to the business in the rush to emphasise strategy and project management over low-level coding. Firstly, employ good managers and communicators with a clear sense of the company's business model, says Davis. "I want those people internally because I want to retain my intellectual property and continuity."

Secondly, promote a level of structure within your existing processes, possibly through certification. "If in-house organisations want a chance at competing with outsourced service providers, then they must adopt methodologies like ITIL and formal processes and they must use them in a pragmatic way," Orbys' Roguszczak warns. "Then they can start to manage change and prioritise projects in the pipeline."

IT departments that are not already embracing change management methodologies while keeping one eye on the future direction of the business could find themselves losing their foothold in the company. As Charles Darwin would confirm, the best way to avoid extinction is by evolving.