The McKinsey Quarterly
The McKinsey Quarterly Chart Focus Newsletter
April 2006 | Member Edition


More productive IT

Companies can simplify their approach to building IT infrastructures—and boost IT's productivity by as much as 30 percent.


 
In recent years, companies have worked hard to reduce the cost of IT infrastructure elements such as data centers, networks, and software. Yet even the most effective cost-cutting program eventually hits a wall: the complexity of the infrastructure itself. The root cause of this complexity is a build-to-order mind-set whose consequences include incompatible assets, limited flexibility, and slowed times to market.

 
There is a better way. Rather than custom-craft the infrastructure, some leading companies are adopting an off-the-shelf model: they assess the needs of their users, and their IT infrastructure groups create portfolios of reusable services. Developers can then fill their IT requirements much as you might shop through a catalog. Automated processes and technologies, somewhat along the lines of a factory, ensure that orders are filled in the most effective way. Although this approach requires major organizational changes, the business benefits are significant: reducing complexity, eliminating redundant activity, and boosting the utilization of assets can make an IT infrastructure 20 to 30 percent more productive, generating far greater output and enhancing flexibility.

To learn how to make the transition, read "Managing next-generation IT infrastructure."


Also of interest
"CIO spending in 2006" (Web exclusive, February 2006) reports on a survey of US IT executives that reveals that they plan significantly larger investments in areas such as upgrading hardware, optimizing systems that serve specific industries, and improving security and reliability.

"When IT's customers are external" (Web exclusive, January 2006) argues that by adopting the market-oriented approach of software product companies, internal IT organizations that serve clients can strike a balance between satisfying them and controlling costs.
"Next-generation CIOs" (Web exclusive, July 2004) explains that to maximize returns on IT investments, CIOs must involve leaders of business units and concentrate on the big picture.

"What IT leaders do" (Web exclusive, August 2005) contends that a single strong leader can produce better results than IT governance structures or processes.
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