A New Role for the IT Department

I'm preparing to teach an IT management course for our MBA program next term and I want to begin the course by showing what the modern IT organization looks like. When I was reviewing articles on IT organizations I came across a great article explaining how some IT organizations are becoming sources of revenue for the firm. This is quite different than the typical cost center role the IT department played in the past.

Thanks to the Internet and the emergence of cloud computing as a viable option for enterprise applications, distribution of centralized software and hardware services has never been easier. IT departments are now able to partition their data to sell extra capacity and their proprietary software to other firms. This means that an IT department in a small insurance firm is now able to create new sources of revenue for the organization by selling access to in-house developed software. In some cases, organizations are able to sell access to purchased software as well.

Over the past few decades, in-house developed applications have taken a backseat to purchased "off the shelf" applications from software vendors. Perhaps, as more entrepreneurial IT departments continue to find profit in selling their own software, we will see more organizations move to developing their own software again. This will result in more software options and software more closely integrated with specific industries.

It will be exciting to see the trend of renting out in-house developed applications and services continue. However, I have concerns over these organizations' ability to provide adequate support and the willingness to offer ongoing enhancements or customizations.