The Disintermediation of Corporate IT

Information Technology is the department in many organizations that has, historically, taken on the challenging tasks of systems engineering, network engineering, database management, and software development – all in support of business applications that support (and, in some cases, make possible) key business processes.

In recent years, cloud computing and all of the AAS’s (software as a service, infrastructure as a service, storage as a service) have taken some pressure off of corporate IT with regards to all of the resources required to host, install, and manage key applications. IT departments have seen this as a good thing, but a longer view of this trend should be considered a bellwether of change: IT departments are going to shrink in size considerably, since those skills will no longer be needed in many organizations.

Think about it. Today, it’s possible for an organization to farm out all of its business applications to external service providers: from e-mail to intranet sites, many companies can get away with virtually no servers in its environment. Instead, all will be accessible via the Internet.

Same goes for the networks supporting so-called “desktop” environments. With a few WiFi access points, network wiring out to employees’ desks are a think of the past. In many cases, an organization’s business network can be a few WiFi access points, and one of those all-in-one boxes for Internet connectivity.

Remote access also becomes a has-been. With nothing in the corporate network to access, users access virtually all corporate resources via the Internet with no special access required.

In terms of the IT labor force, this does reflect a trend whereby corporations consuming IT services will require fewer IT workers, while IT service providers will require more. However, those service providers will require only a fraction of the personnel displaced by their services.  As a result, a typical IT department of the future may consist of a CIO, some data architects and scientists, some business analysts and project managers, and little else.

This disintermediation has been seen in IT in the past.  Decades ago, most organizations wrote custom applications for many of their key business processes, because there were few, if any, common off-the-shelf (COTS) applications available. There were large numbers of software developers and other personnel dedicated to the development and ongoing maintenance of these applications. But over time, fewer custom applications were needed since there were many good products that IT departments could purchase, install on company servers, and operate. This trend is simply continuing, where even the hosting of these applications is moving from client organizations to cloud service providers. Soon there won’t be a need for data centers, or even wiring closets, in most organizations. This should be seen as a natural progression of innovation and improving efficiencies.

Even the department name Information Technology may give way to Information Management. After all, there will be little or no visible technology, since it will be hosted by service providers. Instead, companies will be managing information located elsewhere, and hosted, stored, and processed on their behalf by other organizations.

While the outlook for talented IT personnel may be good today, I believe the trend of disintermediation will, slowly at first, reduce demand for IT talent in many organizations. The shortage of IT personnel today may be a glut in a few years.

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