Why You're Not In the Business of Running Data Centers (Unless You're Google)

Jan 8, 2018

Google is in the tech business, and so is Facebook and IBM. But most companies are not.

If you’re a hospital, you are in the business of keeping patients healthy—not running data centers. If you are a hotel, you are in the business of providing great guest experiences—not managing IT infrastructure. You are in the business of managing customer outcomes, and that doesn’t mean you need to own everything that contributes to those outcomes. In a way, it’s no different than a payroll or tax management service where most organizations rely on third-party providers who can deliver better service at lower cost.

The economics of a tech company is different. If you're Google, Facebook, or IBM, you are in the business of running technology for your customers. You have the scale to be the cheapest, the most efficient, the most reliable. I would argue few companies are in that position, nor should they. Most IT departments are not going to be the most technologically advanced function in the company, so you have to pick what you're good at.

You shouldn’t strive to be a leader in developing all aspects of internal technology, not unless you are a technology company with this business model. Instead, you should focus on buying services from the marketplace where other companies such as Amazon, Microsoft, and Google have already established large footprints, economies of scale, and a specialized focus on infrastructure. And frankly, consuming services from these companies will give you a significant speed advantage.

Before, you weren't competing with any Ubers or Netflixes or Facebooks, but now you are. You’re going up against companies that someone can set up in a garage overnight—like an Airbnb—and threaten your business. And because you’re competing with these digital-native companies, you need to spend 20% of your resources running IT, and 80% driving change and innovation for the business. Not the other way around.

Question your assumptions. Set aside the politics of the organization and the decisions that you've made in the past. Just because you've always done something one way does not mean that it's the best way to do it. Be open to new ideas, be open to new ways of doing things and understand that the IT environment that you have is probably built to enable competition with the competitors of the past.

Is your IT organization optimized to deliver the most value, and are you positioned to drive business results and performance? If not, it might be time to get out of the business of running data centers.   

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