In many industries, IT isn’t a part of the business, it is the business – and it is a competitive differentiator.
That’s a vital point that isn’t always appreciated, according industry insiders.
“What you offer and do with IT isn’t just an enabler, it’s the business,” said Thomas Hogan, senior vice-president of software at Palo Alto-based Hewlett-Packard Co. (HP).
Failure to run an IT department like a business could result in huge lost opportunities, he suggests.
To maximize outcomes associated with IT, he said, the CIO has to be able to understand and manage the infrastructure, the network, the services and information.
This information is usually a hybrid of structured content and unstructured data such as e-mail.
Typically large organizations have several data marts, Hogan noted, but not a true enterprise data warehouse with scaleability and near real-time capabilities.
Their ability to extract and render information in real time is still primitive, the HP executive noted. The data is there, but it’s all over the place, and there are multiple versions of it.
On the infrastructure management front too there are significant challenges to overcome, suggests another HP executive.
When you look at the proportion of IT expenditure to keep the lights on versus new infrastructure, that ratio is typically around 80:20,” noted Jonathan Rende, vice-president of product marketing with HP Software.
“And it really isn’t going down.”
Add to that the problem of line-of-business managers coming to IT with another 10 initiatives they needed yesterday, and there’s a huge gap in the way IT typically responds to the demands of the business, Rende said.
The antidote, says one Canadian analyst, lies is greater collaboration between IT and business.
IT should be making its decisions on the basis of the value to the business, in terms of investment decisions, or setting of operational standards, said Andy Woyzbun, lead analyst with Info-Tech Research Group.
A question that’s often raised is whether the IT department is buying too much.
Woyzbun believes management tools should allow the IT department to establish service targets and demonstrate to the business the process of negotiating those targets.
“What’s your tolerance for an outage? Do you expect IT to have invested in the kind of infrastructure that will camouflage a hardware failure?”
If you understand there’s a price connected with a particular improvement in quality, then that means there should be a meaningful business discussion between IT and business leaders.
Investing a significant amount on a quality improvement is not something IT would decide in a vacuum, Woyzbun said.
It would involve “a reasonable tradeoff between services [expected] and investment.”
Businesses, the analyst said, are doing reasonably well in demonstrating performance relative to some sort of metric: availability, downtime, on-time delivery of projects.
They’re probably also tightly controlled in terms of aggregate budgets. The real challenge, he said, lies in the process of negotiating tradeoffs.
This is still at a very early stage and, to a large degree, the problem isn’t IT’s fault. Typically it’s the inability of the business to think about the economic benefits of certain changes.
“My sense is there isn’t a high level of discussion at the kind of level that would say, this incremental investment really makes sense and this is the expected outcome,” he said.
“That doesn’t happen anywhere near enough.”
Organizations need to get down to the nitty-gritty in terms of key changes. And these things require investment. “Why would you invest if you don’t know what your intended outcome is, or if you can’t measure or set a target for that intended outcome?” he said.
Yet another HP exec believes macro-level changes over the past decade are deeply influencing how companies view the role of technology.
Over the past 10 years we’ve seen massive social and behavioral changes, noted Jonathan Martin, chief marketing officer for information management with HP Software.
He said organizations continue to clamour for tools that would help them provide the right information to the right people at the right time and the right level of performance to end-users.
However, while products to respond to these issues – everything from archiving solutions to records management – have been around for quite a while – there’s a shift occurring.
Now organizations don’t just care about file servers, Martin said. They are also interested in the information strategy around those physical containers.
He predicted that this year, organizations would look to build a strategy around managing business records and what to do with them.
“Get your arms around SharePoint,” the HP exec said.
He said companies tried to build ECM systems and failed, because those systems were based on a small number of expert users finding content.
But he noted that wikis, blogs and SharePoint have driven business content and collaboration over the past 12 months.
Organizations will require a three- to five-year strategy to get everything all in one place, he added. Right now, they should work on capturing and classifying information to derive insight, he said, and then work toward using that information to create an information value chain.