Is “internal” app dev strategic?

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I love my SIM (Society for Information Management) meetings every month. We always have such great discussions during dinner!

This week, we got on a particularly interesting topic, one near and dear to my heart and covered in detail in the book. We were talking about the evolution of IT organizations and whether or not an internal application development capability is strategic these days. A long time ago, companies could gain strategic advantage by custom developing software or highly customizing packaged software that supported their internal business processes. My first internship was supporting a custom developed HRIS at a huge telecomm company. Can you imagine building an HRIS today?

Of course not. That’s one of the reasons it has been trendy to say IT isn’t strategic. The basic systems you need to run a business – HRIS, ERP, CRM, etc – have been available as packaged software for years and now many companies are not even hosting or maintaining these systems in house, leaving little need for an IT group to build OR support them. It is hard to argue with this video on cloud computing.

The conclusion we came to at dinner was that the strategic IT organizations today spend very little time on these core systems. Instead, these IT organizations are focused around the edge. Most companies today use technology to integrate outside of their company, particularly with their customers, but also with suppliers and other entities. That’s where IT can be strategic. But it requires a different kind of IT organization with more of a product development strategy than an internally focused development group.

What do you think? Has the “strategic-ness” of internal application development come full circle? How does the IT organization need to evolve?