FT : Failure To Address Complexity Is Root Cause Of IT Underperformance

Friday, March 13, 2009

The current economic environment has intensified the pressure to do more with less.  Companies must cut costs and become more efficient.  At the same time, however, they need to continue developing competitive advantages in order both to survive the economic downturn and position themselves for growth when markets improve.  When it comes to information technology, the central obstacle both to cutting costs and gaining competitive advantage is complexity. Yes, there are a variety of emerging technologies that can help stretch increasingly constrained technology budgets while also empowering IT to deliver competitive business advantages.  But IT can only take full advantage of these technologies if it can cope with the complexity that results when they are added to the layers of existing technologies.  In other words, the companies that will best be able to leverage new, disruptive ideas will be those that have the best strategies for addressing issues of technology complexity.  Consider, for example, four of today’s most promising opportunities in this domain:

  • Virtualisation : There has been a lot written lately about virtualisation.  But it isn’t new – we’ve had it on the mainframe for 40 years.  Today it is also being deployed on distributed systems and is forcing IT to develop new strategies for managing the tremendous increase in complexity it creates.  The virtualisation of servers, storage, networks, applications and desktops will only grow as companies seek to reduce costs, improve service levels and mitigate risk.  The additional layer of complexity that virtualisation creates, however, is quite daunting.  IT organisations must now manage thousands of virtual systems, running inside and outside the data centre, with new ones being created and eliminated all the time – while still providing consistent service levels, diligent governance and rigorous security.  Without a new approach to automating the IT environment, the burden of managing all this will likely outweigh any potential rewards.
  • Service oriented architecture : Every company has legacy IT systems that cannot be ripped out.  They are vital and replacement would be too costly and time-consuming.  We can, however, use SOA to extract the full potential value from our legacy systems, by incorporating them into new applications and processes that meet our latest business challenges.  The problem is that even as SOA simplifies the communication between systems, it increases complexity in the operating environment.  The constant creation of new web services – and new inter-relationships between those services – exponentially increases the number of “moving parts” that have to be managed and secured across the enterprise.  This increased management burden is especially problematic at a time when budgets for management tools and staff are so tightly constrained.
  • Social networks : A 2008 report by Forrester Research, a market research company, says Enterprise 2.0 will be a $4.6bn industry by 2013, with social networking tools taking the lion’s share.  Rich internet applications, blogs, wikis, and social networks will become intrinsic behavioural components of communications between employees, customers, partners, and other stakeholders in the extended enterprise.  These social networking tools are rich in conversation and provide for rapid, unstructured data exchange.  But they cannot operate in isolation.  To be effective in a business context, they must be used in a way that aggregates information stored in a variety of formats – including traditional and virtualised IT systems, web content, management suites, and customer relationship management systems.  The sharing of corporate information via these social networks must also be appropriately governed and secured.  This is another management-of-complexity issue that most IT organisations have yet to address.
  • Cloud computing : Cloud computing is becoming a serious business proposition.  Organisations no longer have to depend entirely on their own applications and infrastructure.  They can subscribe to and access resources that are owned and operated by someone else.  The adoption of cloud computing and related technologies, such as software-as-a-service, has risen sharply in the UK as organisations seek to reduce their capital expenditures on software and hardware.  Enterprise IT organisations, therefore, need not only to manage the growing complexity of their internal computing environments; they also need to develop ways of effectively monitoring, securing, and troubleshooting the growing range of external resources residing in “the cloud”.  These examples highlight the centrality of the complexity challenge.  IT’s ability to drive competitive advantage is as contingent upon the management of complexity as it is upon the adoption of any of the technologies mentioned above.  Its ability to control costs is also closely tied to its ability to streamline ownership of an increasingly complex, multi-layered technology environment.

CIOs must therefore focus more than ever on the effective management of their increasingly complex IT environments.  In fact, in many cases, effective management of complexity should be an even greater priority than the adoption of any new technology – regardless of the benefits it promises.  IT organisations can simply no longer afford to add layers of complexity without considering how it is going to impact operating costs and bottom-line returns on technology investments.  Without new approaches to technology ownership, IT will underperform in the delivery of value if complexity drives ownership costs up and real business benefits down.

Reference : http://www.ft.com/cms/s/0/b667babe-0d0d-11de-a555-0000779fd2ac.html

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