Energize the company in the third wave.
Posted Jun 1, 2007
Sure, this may sound as though I have spent too much time in the sun, but watching surfers reminds me of business dynamics. Just as elemental forces move the ocean and create waves, so do essential forces--resources, budget, and competition--churn the business world and create waves. And I've noticed that each wave may look the same, but every one crests in a different way, with variable force. Some waves energize a surfer's ride; others engulf it.
Nowhere does this analogy fit better than corporate IT.
If IT organizations are to provide higher levels of strategic value in the coming years, they must first ensure IT infrastructure is rigorously managed. That is why infrastructure management--the disciplined handling of foundational IT assets and activities--is so critical. Few IT organizations will be able to deliver innovation, intelligence, and differentiated value if these foundations are not solidly in place.
The term infrastructure management conjures many different definitions. IT infrastructure management represents the handling and control of various activities and assets that support the operational objectives of the enterprise. Among them: network support, hosting, help desk services, messaging, security, and database administration.
It is important to distinguish the foundational, infrastructure layer from the strategic, application layer of IT management. While the infrastructure layer supports the operations of the enterprise and can be mission-critical in nature, the application layer enables and even drives competitive distinction. This is an aspect of IT that enhances business value, provides intelligence to decision-makers and the front lines, and facilitates the process of innovation. Indeed, IT has moved from the back office to the core, value-driving sources of the enterprise. But it is often starved for resources.
The challenge is to recognize that IT organizations cannot move up to the strategic, competitively differentiated, application layer of management until they have solidly built a foundational platform of infrastructure. If they attempt to rise to higher levels of business value, they will continue to be pulled down by flaws and inadequacies in the underlying infrastructure.
But they can't move up the value ladder either, if their people are deployed on high-cost, low-impact activities that don't scale. If the infrastructure cannot cost-effectively scale to meet their strategic demands, there will be no strategic opportunities to seize.
The Three Waves of Infrastructure Management Outsourcing
Companies have long recognized the challenge addressed here in some form or fashion. While they have taken steps to internally automate aspects of IT infrastructure management, they often come to the conclusion eventually that much of the infrastructure is best left to outsourcers. Over the years, there have been three essential waves of IT infrastructure outsourcing. Among them are cost-driven outsourcing, competency-driven outsourcing, and predictive and process-driven outsourcing.
The first wave was concerned primarily with cost. Going back to the 1970s and 1980s, the trend really started to pick up as companies looked to large outsourcing providers to manage their data centers, including their mainframes and other types of foundational infrastructure. This wave also covered back office operating processes such as payroll and transaction processing. Companies realized they could reduce back-office operating costs by turning to outsourcers that could leverage their own infrastructure and people across many clients.
The second wave, which hit in the early 1990s at the apex of reengineering, was concerned with maximizing core capabilities or competencies. Companies realized they needed to concentrate on the activities they did best, if they were to remain competitive. However, the outsourcing options available to them continued to require labor-intensive and relatively unproductive solutions. Negotiations around outsourcing often revolved around the number of people that would be devoted to specific tasks. While resumes were often scrutinized, little attention was put into introducing new, more productive approaches to infrastructure management.
The third wave actually began to grow in the late 1990s in certain areas and is now gathering force. We have seen a shift toward predictive and proactive infrastructure management in areas such as network support, messaging, and help desk management. The newest areas that are being targeted for this kind of approach are security and database administration. It is a shift toward infrastructure management based on discipline, agility, scalability, global support, and operational excellence. This wave is about proactive systems, methodologies, and processes as opposed to reactive, labor-intensive approaches. It recognizes that gains associated with low-cost labor in the short run cannot be sustained over time as the operational demands of enterprise IT infrastructure increase.
Whether an IT infrastructure process is kept in-house or outsourced, continual process and productivity improvement is critical--and this will depend on automated systems. The problem with many first- and second-wave outsourcers as well as the offshore outsourcing firms is that they often don't adequately address these concerns. They have very little strength in terms of process automation and systematized service delivery. That's where the third wave of infrastructure outsourcers--whether in the areas of network support, help desk, or database management--have proven most compelling.
So, the third wave can propel your company to competitive advantage or swamp it in sluggish processes and intractable costs. All depends on whether you're prepared and watching for the curl. My advice: Don your baggies and paddle out to meet the big one, dude.
About the Author
Mark Vorholt is CTO of dbaDIRECT. Contact him at firstname.lastname@example.org. Please visit www.dbadirect.com.
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