Forrester: Why This Economy is Good for IT Operations
Current economic conditions are testing everyone, including those in IT. But opportunities for innovation lie in "doing more with less."
Thu, March 05, 2009
Network World — In these brutal economic conditions "doing more with less" is a necessity. But therein lies opportunity.
Companies that invest intelligently in tools, processes and themselves will prevail. It is Darwin's natural selection, applied in textbook fashion to the business world.
When faced with adversity, the strong will grow stronger and the weak will cease to exist. It is a story that Jim Collins highlights in his landmark book Good to Great. He talks about Bethlehem Steel, which was once a mighty symbol of postwar reconstruction but is now gone forever. Bethlehem Steel was strong in good times, but weak in bad times.
Nucor Steel emerged victorious from the same economic conditions that accelerated the demise of Bethlehem Steel. Nucor adapted and Bethlehem insisted the status quo was the right plan. History speaks for itself.
In IT, companies are responding to the turbulent times by investing in anything that improves operational discipline. Operations are a huge chunk of the IT budget -- roughly 75%, give or take. However, much of that is wasted. My informal research suggests that 30% to 50% of the energy we expend in operations is wasted through various inefficient processes and poor decisions.
While those that waste 50% of their operations budget are likely doomed, even those that waste the least are still washing more than 20% of their total IT budget down the drain. The inefficiencies are costing companies big money, and in times like these that kind of waste is unacceptable.
On the bright side, every problem is also an opportunity. In this case, the inefficiencies present an opportunity to demonstrate value by eliminating as much waste as possible. Here's the true impetus behind efforts such as ITIL, automation and management tool improvements. These opportunities are being funded because they promise real fiscal benefits. If you can prove a US$1M investment can eliminate $3M of waste in your operation, your CFO is bound to approve it. But, the operative word is "prove," so more emphasis is being placed upon ROI -- crunch the numbers properly and you will succeed.
Here is a simple example. Mean time to resolution (MTTR) is a common metric to gauge organizational performance. When service interruptions happen, most resolutions are woefully slow. Most businesses can calculate the cost per minute of service outages. (In financial services, these figures are understood extremely well and are extremely high. This explains why this industry invests so heavily in IT efficiency.)
The main issue with MTTR is locating the root cause. Sixty-five percent to 80% of MTTR is spent here, in a phase that I often refer to as "all the king's horses and all the king's men" to reflect the chaos that ensues in high-impact service incidents. We form tiger teams and hold the multi-party conference calls to understand what is happening. Once we know the root cause, we usually have wonderful technical staff who can then rapidly restore service. The "king's horses" phase is the problem and it is one especially well suited to process and automation improvements.
