Companies, divisions and departments alike have created a boom in cloud-based Software as a Service (SaaS) applications provisioned through providers such as Salesforce.com, Workday, Marketo and many others.

The attraction of SaaS vs. the traditional on-premise model of provisioning applications is compelling for almost any size organization or team that wants to deploy new business capabilities faster. It’s easy, quick and inexpensive for small business groups to implement new IT-enabled capabilities with minimal involvement from their IT organization. That sounds great on its surface, but it also can create a problem for CIOs.

Many CIOs, particularly those who covet their role as a technologist, might see this as a threat to the stability, reliability, efficiency and security of their IT ecosystem. But is this really a threat or an opportunity?

Where Is My IT?

To answer this question, let’s take a journey back to 2003. It was during the dot.com meltdown and subsequent recovery that Nicholas Carr wrote a controversial article entitled “IT Doesn’t Matter” (Harvard Business Review—May 1, 2003). In the article, Carr postulated that IT would eventually become a utility (similar to electricity, natural gas and water), where computing would be delivered as a ubiquitous resource, available as a commodity and priced accordingly.

Carr went on to state that corporate IT organizations would no longer need to build large datacenters to host business applications on-premise. At the time, many CIOs scoffed at the notion that IT would become a utility.

Would the skills and expertise required to successfully deliver and support IT-enabled solutions be relegated to the status of a 120VAC wall outlet or kitchen faucet?

Essentially, the question boils down to what exactly is our value proposition, as leaders and as an IT organization?

Fast Forward to the Present

Although it’s hard for many CIOs to admit it, Carr’s prediction is well on its way to becoming a reality. The success stories are compelling.

But along the way, CIOs adopting utility computing through cloud-based SaaS applications and IaaS (Infrastructure as a Service) are faced with many organizational questions above and beyond the technical issues. Here are some of the most common and significant ones:

• As CIOs, do we complain about the changing nature of the domain in which we are so intellectually and emotionally invested? Or, do we “go with the flow,” adapting to the “new normal” of utility computing while seeking innovative ways to leverage information technology in our businesses?
• Is information technology an organization, a function or a vocation? (More on that in my next blog, SaaS: The Changing Roles of IT.
• Should our efforts be more focused on the appropriate application of information technology (as strategists) or the management of it (as caretakers)?

Answering these questions will certainly require us to move outside of our comfort zone, but what is the alternative—becoming irrelevant in the eyes of our business colleagues?

Essentially, the question boils down to “what exactly is our value proposition, as leaders and as an IT organization?”

Choose Your Value Proposition: Strategist or Caretaker

By provisioning more and more elements of the IT computing environment in the cloud, CIOs are transferring the burden of directly managing the computing infrastructure. This frees them to focus a lot more on the business and a little less on the technology. That doesn’t mean that CIOs can forgo all understanding of the information technology domain. It’s just a matter of degree relative to the breadth and depth of technical skills that CIOs are required to master.

There will continue to be a role for some CIOs to operate as technologists (see the graphic below), where they will oversee the technical infrastructure of their companies’ computing environments. This will be particularly true where a company’s product or service offerings are heavily influenced or enabled by information technology.

However, many CIOs will be forced to move counter-clockwise on the “competency arc” and transition into more of a “solution architect,” “business partner,” or even “business leader” role.

The solution architect role ensures that the combination of on-premise and SaaS solutions work effectively together. It will require expertise in areas such as master data management, application integration, testing, single sign-on and business intelligence.

The business partner role will require CIOs to work with business leaders to evaluate, select and implement IT-enabled solutions. This role necessitates a strong understanding of business strategy and related challenges and opportunities. It also requires CIOs to possess a deep knowledge of industry solutions that address these challenges and opportunities.

Finally, the business leader role describes CIOs assuming responsibility for a business unit with P&L, one that likely uses a lot of information technology. As an example, this can take on the form of CIO as the Digital Business or e-Commerce leader.

Staring Opportunity in the Face

Some might say cloud computing and “Everything as a Service” created the environment where Nicholas Carr’s 2003 prediction, “IT Doesn’t Matter,” would eventually become a reality. Others would say it is a result of natural evolutionary cycles, similar to the agricultural and industrial ages that played out over several generations and gave way to the current information age.

Whatever the cause, we are in the middle of a transformation. The cloud and SaaS are just two players driving the transformation. There will certainly be other game-changing innovations that have yet to be developed—quantum computing for one.

It’s hard to see that we are at the cusp of the next generation of computing within the information age. It won’t become obvious until we have the advantage of perspective that only comes with time.

It is certainly true that all change, at least early on, is perceived as a threat. This is a normal human reaction. But, once we begin to accept the change, we will find opportunities for innovation and growth.