IT Transformation

An article that appeared in the February 2005 edition of The McKinsey Quarterly, entitled "Managing next-generation IT infrastructure", explains how IT can replace a traditional build-to-order application silo mind-set with an off-the-shelf product standards-oriented approach:

'Instead of specifying the hardware and the configuration needed for a business application ("I need this particular maker, model, and configuration for my network-attached storage box . . ."), developers specify a service requirement ("I need storage with high-speed scalability . . ."); rather than building systems to order, infrastructure groups create portfolios of "productized," reusable services. Streamlined, automated processes and technologies create a "factory" that delivers these products in optimal fashion. As product orders roll in, a factory manager monitors the infrastructure for capacity-planning and sourcing purposes.'

According to this article, enterprises that adopt the 3-layer model presented above will achieve significant savings by:

• reducing complexity
• eliminating redundant activity
• boosting the utilization of assets

IT transformation begins by defining Demand Patterns. Applications require servers and storage. Sites need network connectivity. Users want access to desktops, laptops, PDAs, and so forth. The IT organization's challenge is to categorize demand into segments (such as uptime, throughput, and scalability) that are meaningful to business users. When grouped in this way, most applications, locations, and user groups fall into a relatively small number of clusters.

The key issues when segmenting demand include the time and frequency of need, the number of users, the amount of downtime that is acceptable, and the importance of speed, scalability, and mobility.

The middle layer in the above illustration, the one labeled Product Portfolios, deals chiefly with specifying and communicating internal corporate IT standards. At the portfolio level, IT has to make decisions about the scope, depth, and breadth of product offerings, with an eye toward optimizing resources and minimizing costs. Acceptable exceptions to standards must be clearly detailed and explained. At the product level, choices will define the features, service levels, and prices of each product.

When it comes to defining standards, according to the McKinsey article:

'companies may find that well-defined products and product portfolios are the single most important determinant of the infrastructure function's success. Developers and users may rebel if a portfolio offers too few choices, for instance, but a portfolio with too many won't reap the benefits of scale and reuse.'

Finally, the bottom row in the above model, the one labeled Factory, requires the creation of automated, repeatable processes that can be applied across systems. Since, according to this new transformational approach, application developers specify a service need but have no input into the underlying technologies or processes chosen to meet it, and IT has the freedom to choose which software technologies, hardware, and processes to use, then the net benefit -- bottom line -- is that IT is free to rethink and redesign its delivery model for optimal efficiency. Using standardized and documented processes, it can start developing an integrated set of software tools to automate its operations. It can even leverage its processes and automation tools to develop an integrated location strategy that could minimize the need for data centers, so that more functions can operate remotely in low-cost locations