Optimizing IT in the Enterprise

Organizations need an architectural strategy that can sustain them through the ongoing barrage of new business and operational requirements. Our IT Optimization strategy is based in a comprehensive set of architectural principles that can ensure consistency and govern future decisions that will make IT more responsive, efficient, economical, and even environmental.

 

In some circles, effective IT management is primarily focused on cost reduction and efficiency. While important, this approach misses the bigger impact that IT has on business strategy. Studies published by MIT/Sloan and Harvard Business Review, among others, demonstrate that effective enterprise architecture is necessary to the success of business strategy. In their influential paper “Investing in IT that Makes a Competitive Difference” (Harvard Business
Review 2008), authors Andrew McAfee and Erik Brynjolfsson consistently found that what separated industry leaders from the rest of the pack was the use of IT to drive business innovation that led to competitive advantages. This was true across industries, from manufacturers such as Otis Elevator, to retailers like CVS and Tesco.

It is not within the scope of this paper to analyze this work in depth. Briefly though, their analysis determined that there was a pattern for success that could be broken down into three parts:
• Standardize on a common technology platform, rather than rely on a stitched togethercollection of legacy silos.
• Innovate key processes to improve the value or drive down cost.
• Propagate these changes across the enterprise, via the common technology
platform, to convert localized improvements into strategic advantage.

By making IT into an engine that accelerates business change, these organizations were able to rapidly and effectively rollout out business strategies such as mergers and acquisitions, or new product rollouts. The study shows that, in turn, this led to market leadership.

This paper describes how to build the technology foundation that will enable this business leadership. In addition, the same foundation will also make IT more efficient by eliminating duplication and complexity. This approach is referred to as IT Optimization. It is based on several guiding principles and consists of phases that make up a logical progression. This strategy must be tailored to an organization’s current state and its strategic priorities, and includes a phased approach that minimizes risk and optimizes business benefits. The rest of this paper defines the principles and best practices that define this strategy.

Business Strategy
The goal of any IT investment must be to support/accelerate business strategy. While IT Optimization provides benefits towards most business strategies, there are some aspects that should be highlighted. When a business strategy requires increased business agility, then it will usually require some degree of IT Optimization. Such strategies include:
• Growth of market share via mergers and acquisitions
• Growth of wallet share via product innovation

Strategies to reduce costs also indicate the potential benefit of IT Optimization. Such strategies include:
• Reduce operating costs via process standardization
• Reduce IT costs via improved IT efficiency

Operating Model Alignment
The business operating model defines the degree of business process standardization across the organizational units and the degree of information sharing between processes. Processes that are standardized across organizations benefit the most from IT Optimization of the supporting technology capabilities, because the benefits are multiplied across all the organizations.

However, even processes that are not standardized benefit from the optimization of the underlying technology capabilities. Business Capabilities/Processes Alignment If a business strategy requires the agility of certain key business capabilities, then you should prioritize the technology capabilities that support these. For example, this might mean that a business strategy focused on acquisitions would require the standardization and optimization of the integration technologies in order to more rapidly onboard the finance and HR systems of newly acquired companies.

On the other hand, if the primary strategy is to reduce cost, then you may want to prioritize the technology capabilities that support common, low business value capabilities/process. Thus, you might first standardize/optimize on a virtual machine architecture to consolidate a heterogeneous collection of systems onto a pool of servers to reduce hardware costs.

IT Optimization moves the IT organization through a series of stages via the application of key architectural principles. The result is an IT organization that more effectively delivers services to the business, with higher quality and lower cost. The pace and sequencing of that process varies by organization. Lessons learned can be adopted as the process is repetitively applied across
various dimensions of the IT architecture.

Enterprise architecture provides the structure and discipline across all the phases of IT Optimization. It reduces the risk, improves the quality, and ensures the alignment between the business strategies and the IT capabilities required to achieve them.

As a result, the business units can more rapidly deliver new and enhanced products to their customers. Some of these may even be delivered to new customers via the cloud computing paradigm. All of this allows the business to expand existing markets, or enable mergers and acquisitions that open new markets. Such business agility is essential in today’s fast paced economy, and those who master it, become the industry leaders.

As a global technology leader, Atlas Global Consulting has had a decade of experience across myriad industries, helping customers realize the business and IT benefits of disciplined IT approaches. Atlas Global Consulting offers many resources, including expertise, architectural and organizational processes, and a portfolio of tools and reference architectures, to help companies of all sizes along the IT Optimization maturity curve.

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