The Role of Information Technology in Today’s Economy
There seems to be a steady stream of books published on the role of Information Technology within the business it supports. The role of IT is constantly evolving and has changed significantly from the days when the IT organization was often referred to as “data processing.” Today, in many industries, IT enables some businesses to differentiate themselves from their competitors. Those companies that leverage IT for competitive advantage often differ from their competitors in two ways with respect to their IT organizations: they view IT as a strategic business enabler instead of as a cost center, and they work to maximize the efficiency of their IT operations so that they can focus their resources on providing value to the business and respond to today’s environment of rapidly changing business conditions.
Microsoft has developed a model, the Infrastructure Optimization model, and an initiative, the Dynamic Systems Initiative, to assist IT organizations in becoming efficient business enablers for their companies. If you aren’t familiar with the IO model or DSI, we highly recommend you follow the above links and familiarize yourself with the information and resources provided within these two programs. In Bruce’s January 26, 2009 post, he touched upon IT being a business enabler. Bruce also discussed what we see as the four cornerstones that drive IT behavior:
- Quality of Service
- And Governance, Risk Management and Compliance (GRC).
We recently published the results of a study we did on the IT labor costs of providing core infrastructure workloads. You can learn more about our study by visiting the Spotlight on Cost content on Microsoft.com, where you can register to download a whitepaper of our findings. One surprising discovery in our research was how few companies implement best practices to improve IT efficiency. Of 51 best practices studied across six different workloads (networking, identity and access, data management, print sharing, email and collaboration), the average adoption rate was only 30% – meaning, each of the best practices was implemented on average only 30% of the time. We also found that roughly 70-75% of the companies were operating at the basic maturity level, per the Core IO model. The basic maturity level is the lowest and least optimized level per the model, so this is a very high percentage of companies with inefficient IT organizations managing core workloads in the datacenter.
So what does this mean to an IT organization in today’s economy? With budgets getting cut and organizations being asked to do more with less, the first step is to take a look at how to improve your efficiency. After all, if you can free up time by improving or automating processes, for example, that time can be spent on activities that provide strategic business value. The reduction in workload management costs were in the thousands of dollars per server for high-value workloads (e.g. email, collaboration) for mature organizations versus basic organizations. Even lower value workloads (e.g. print sharing) showed reductions in cost in the hundreds of dollars when well managed. The study showed that many organizations stand to achieve significant savings by optimizing its infrastructure. The Spotlight on Cost whitepaper will help you get started by pointing you at the best practices that you should evaluate for adoption within your organization. The key thing to note is that these practices often require no new investment in hardware or software, but only require improving systems management processes and leveraging the investments in tools that you already own.
Once you have a plan to optimize operations, you need to work with your business units to understand their business needs and align IT as an enabler in meeting these needs. The companies that, in this economic downturn, come out ahead of their competitors will be those companies that don’t just tighten their belts to control costs, but actually invest in the business to offer new or improved products and services. By optimizing IT, that enables the company to leverage the use of IT in its investments. Obviously there are some business requirements that must be addressed, such as GRC-related (Governance, Risk Management and Compliance) requirements. But there also needs to be effort and investment to improve the quality of service and agility that IT provides the business.
In summary, we feel that in today’s economy IT organizations should do the following:
- Optimize, optimize, optimize! Assess your operations to evaluate where you can implement best practices to improve efficiency and free up resources to work on more strategic activities. Talk to your Microsoft account team if you would like Microsoft’s assistance to evaluate how you can optimize your infrastructure.
- Align IT with the business units within your company. Now more than ever it is important that the business views IT as a strategic enabler for the business to distinguish itself from its competitors. Review with the business executives the challenges and opportunities they face to identify how IT can be leveraged to address these challenges and opportunities.
- Invest in IT. Those companies investing in IT during this economy are the companies that will survive the downturn and then excel as the economy improves. And by optimizing your infrastructure first, you have the opportunity to invest by shifting resources from sustaining to strategic activities.
As always, we welcome your feedback.