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The Role of Information Technology in Today’s Economy

The Role of Information Technology in Today’s Economy

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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:

  • Cost
  • Agility
  • 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.

Elliott

Comments
  • PingBack from http://feeds.bscopes.com/2009/03/15/blog-it-business-value/

  • for my research work gud notes

  • its mevelous discovery .society will be shaped by use of IT

  • ts a gud discovery....IT is de bst in ol

  • Really useful,

    Thanks for this wonderfull info

  • wonderful inventions in the world in my point of view

  • Thanks  for  your  help

  • Thanks  for  your  help

  • Thanks for kind documents

  • Mr. Elliott:

    I found your write-up significantly useful in bringing up areas of potential improvement and fruitful introspection on the subject of IT-business partnership. I just wanted to highlight some of the issues which come up in forging a relationship with the business partners with an eye on optimization of resources and collaboration on ideas between the two sides.  

    a. Balancing business needs, strategies and visions on the one hand and realistic availability of IT resources and priorities on the other. A sizable infrastructural upgrade--which would not matter to a business-side person--is an example where the two sides might have different priorities or look at the same matter from different perspectives. Another source of conflict occurs when business needs to keep up with customers' expectations as new products and upgrades flood the market, but at the same time the economic forces dictate a tightening IT budget. Andris Zoltners, Prabhakant Sinha, and Sally Lorimer, authors of a recently published book, "Building a Winning Sales Force", have rightly identified the conflicts between business and IT: Business wants to "maximize revenues, experiment with many hypotheses, use issue-focused thinking, and resolve current issues quickly" whereas IT strives to "minimize costs, avoid risk, use process-based methodical thinking, and look to solve the issue for the long term" (239). While one would expect that business and IT should together try to use technology for the goals of the specific industry, some authors think that these goals need not be tied to the directions technology guides us to. Paul Wiefels' book "The Chasm Companion", for instance, would argue that an industry should follow where money is and "then endeavor to devise a system whereby we move it to our own pockets" (30). Patricia Moody and Richard Morley in their book "The Technology Machine" recommend similar pragmatic thinking on using technology: "If you can understand the technology, see its application, and answer yes to all four check points: does the technology increase productivity, enable functionality, enable the user, and enable postinstallation optimization, survivability, market share, and user lock-in".  Whether we should connect the goals of the industry with technology or not, IT should find ways to realize the dreams of the business.    

    b. Starting to participate in business-side planning and strategizing early enough to impact the direction and maturity of the decisions. Decisions on the business-side are sometimes reactions to constantly new, if not abrupt, realities and needs; for the same reason, business-side planning may not always be structured and streamlined as the IT teams might wish. This kind of business-side reality might not accommodate the IT team at the right stage of the planning and decision-making to enable a partnership between the two sides. Zoltners and others point to a good example: At a national seminar the VP of a company announces hiring freeze which disappoints local managers because less work force means a

    negative impact on sales performance; the VP decides to revamp sales expectations to accommodate their concerns. This may be a smart business decision but the authors of the book point out that this is a challenge to IT to code programs to make systems respond to this decision.  

    c. IT's limited knowledge about real-time and up-to-date operational processes may not justify what is being agreed upon between the two teams but an IT team's intuitive and objective reading may challenge it. This may be a constraint in influencing business decisions.

    Thiru Balan

  • could you please make available the references

  • IT has done a great job in all ofd world

  • Good and Informative data has been posted.......really helpful

  • your info is great help for my project.

    thanks a lot.

  • itz really helpful to leave this information

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