Infrastructure Management: Driving Increased Business Value Through the Strategic Use of IT

The demand for increased flexibility from an organisation’s IT capability is creating new challenges for IT infrastructure management. Much of this new demand is coming from the changing nature of operating in an increasingly interconnected global market, where an organisation’s performance is influenced by events that are mostly outside its direct control. The consequence of this new business environment is that organisational success is now a factor of the speed with which it responds to market conditions; and therefore, by implication, the speed with which it can adapt to any new environment. The role of technology is adding to these challenges by creating tensions between the structures that exist with organisations today, as well as creating tensions within the IT departmental structure. These forces are demonstrating the need for IT to reconsider its role in the organisation, and just as importantly, for the organisation to consider how it wants to embrace technology, and what role technology has in its core activities. In other words is IT a strategic capability or a merely a support function? KEY FINDINGS Understanding the role of IT and its strategic significance to the organisation represents the single biggest hurdle the CIO must overcome. The explosion in end-user responsibility, and in the associated increased business use of technology, demonstrates that the role of IT is changing fast. The question of how the use of computing resources is funded and deployed across an organisation’s many different operational business units represents one highly contentious issue that using chargeback can resolve. A new Run The Business (RTB) cost model that demonstrates IT’s value contribution is needed as technology makes the concept of asset ownership obsolete. Butler Group believes that a new Responsible, Accountable, Consulted, and Informed (RACI) model for IT process and procedures is needed to ensure new technology does not create new problems for the management of any IT infrastructure. The transformational impact of virtualisation extends beyond the IT department, and requires structural and process change supported by a comprehensive infrastructure management capability. One of the main functions of an infrastructure management capability is to mitigate the risks of deploying new technologies like virtualisation. The language used by IT must be aligned and converged with the language of business. New technologies add complexity and often promise to increase business flexibility; therefore it is important to ensure that any increased IT cost is offset by a greater reduction in business cost. Holistic management capabilities are required while organisations are in transition between old and new technology stacks. Being able to manage remote operations securely is fast becoming a necessity as the separation between end users and the data centre increases. Recognising the barriers to data centre automation is the first step that many organisations must take before they can embark on an automation journey.

Additional Information

CATALYST

The demand for increased flexibility from an organisation’s IT capability is creating new challenges for IT infrastructure management. Much of this new demand is coming from the changing nature of operating in an increasingly interconnected global market, where an organisation’s performance is influenced by events that are mostly outside its direct control. The consequence of this new business environment is that organisational success is now a factor of the speed with which it responds to market conditions; and therefore, by implication, the speed with which it can adapt to any new environment. The role of technology is adding to these challenges by creating tensions between the structures that exist with organisations today, as well as creating tensions within the IT departmental structure. These forces are demonstrating the need for IT to reconsider its role in the organisation, and just as importantly, for the organisation to consider how it wants to embrace technology, and what role technology has in its core activities. In other words is IT a strategic capability or a merely a support function?

Introduction

The current economic downturn has accelerated the process of change in many organisations with the contribution that a function/department makes towards the organisational strategic intent being closely inspected, and those that are deemed to be a cost of doing business are being marginalised by a process of outsourcing or use of external service providers. The IT department has for a long time been considered as a cost centre, and this is exemplified by the IT focus on cost control. Butler Group believes that by using newer technologies, such as virtualisation, the time has come for IT to shift its focus, and hence its perception by the rest of the organisation, from cost control towards value creation.

The movement away from seeing IT as a supporting activity is challenging the view of M. E. Porter (Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985) and his description of the value chain within an organisation. Whereas the value chain is still valid in its concept, the role of technology has entered what Porter termed ‘primary activities’ and so is moving away from a clearly delineated supporting function that can be isolated and marginalised towards becoming an intrinsic part of the fabric of the organisation. However, managing this newly integrated enabler of business activity is still the remit of the CIO, but it is increasingly becoming clear that the role of the CIO, and hence the IT department, will need to change in line with this paradigm shift.

Business Issues

The role of IT within the organisation is at the ‘tipping point’ in turns of the direction it takes, and the significance it has, on strategic decisions. Some opponents of IT will see the advent of new, more personal, technology, and the democratisation of its use, as signals that IT should be marginalised or decomposed and spread out across the wider business units. However, we believe that taking this approach will fragment

IT and lead to situations where islands of technology exist within the enterprise, and these cannot be easily combined for maximum organisational value. Therefore, we believe that the role of the CIO is to ensure that IT is seen as the enabler of organisational innovation, which must be managed from a holistic perspective across all organisational business units/departments.

This democratisation of IT is being driven because the degree of separation between the user and the computational power is increasing, which is making the end user feel more isolated - powerful, yet also more vulnerable - and requires IT to adopt new approaches to service delivery and support. Butler Group believes that three key elements are driving the Infrastructure Management approach taken by organisations.

Firstly, cost remains a significant influencer on selecting any new technology to deploy, and as the cost to serve increases then many organisations will focus on technologies such as automation to address these concerns. However, increased adoption of automation technologies will require an organisation to review its approach to trust, and may in fact be the aspect of organisational culture that either has to change, or will hold back the scope of its use while the organisation adapts to these new demands at a pace it (the organisation) is comfortable with. The role of Infrastructure Management is to act as a bridge so that organisations can learn to trust the automation technologies, and obtain the financial benefit, sooner rather than later.

Secondly, the current state of the leading-edge technology market, such as virtualisation for example, is characterised by many proprietary technology stacks - or put another way, a lack of open standards that have been widely adopted by the many different vendors - that have all developed added-value solutions, but these solutions are becoming less differentiated by their capabilities and more differentiated by their ability to interoperate with other technology stacks. Butler Group considers that the management layer is now assuming the responsibility for providing this interoperability between technology solutions, while at the same time applying a business perspective. We believe that as technologies like virtualisation and Cloud Computing expand their footprints, organisations will increasingly become vulnerable to fragmentation unless all the elements can be unified and managed from a single control point.

Finally, IT must understand and develop business-focused metrics that can be used to clearly articulate the value derived from using any new technology. These metrics must be able to withstand comparisons between dissimilar markets and economic conditions. For example, the value of introducing a new technology in a rapidly expanding market when times are good may yield an apparent high return, but when compared to a market where trading conditions are more difficult and profits lower, the same technology may demonstrate a negative return. It is not to say that these conditions should not influence decisions, rather the CIO needs to be able to articulate the value in constant terms so that the technology can be deployed for the correct reasons, which may be strategic reasons instead of tactical reasons.

Technology Issues

The introduction of any new technology must serve a specific purpose, or be part of a strategic decision, to ensure it can add real business value. The separation into strategic and tactical reasons for why a technology is introduced has major implications for the impact it will have with regard to how IT can manage it. Therefore, if the current technologies, that are considered as transformational in nature, are deployed in a strategic approach then these may not necessarily be the technologies that create the biggest challenges: all too often the small technology changes that are introduced for tactical reasons, and then expand due to their ability to help the end user in their operational role, can be the most difficult to manage and integrate.

For example, Cloud Computing as an external service may not be on the radar of the IT department, which may be focusing on constructing an internal capability to provide this, but for some business units the ease and simplicity of ‘renting’ IT capability may be very appealing and something they can use without involving IT.

However, from an IT perspective this Unilateral Declaration of Independence (UDI) can create havoc with more strategic plans to automate services. If the plan is to provide internal services through a front-end Web portal, supported by virtualisation technologies and automation of service-level management, then any business unit that introduces a potentially non-compatible service from a service provider can impact the Return On Investment (ROI) of these strategic IT plans.

It is important, therefore, to ensure that all operational aspects of any technology are given due consideration before they are adopted in part or as a whole. One aspect that requires closer attention is how automation technologies and automated workflow fit in with existing people-based processes and procedures. While this may appear esoteric it is actually a very significant practical issue - any automated process should improve service levels, but at key points all processes currently must involve people, and it is at these interface points that any potential service improvement is lost due to process misalignment between the human-layer and the machine-layer process control and management.

Market Issues

The market in infrastructure management tools is a relatively mature one, which traditionally has been characterised as being of interest only to enterprise-class customers with large data centres. The requirements of this sector of the market drove the vendors to develop large framework-based solutions, which were functionally rich but aligned to the siloed departmental structures that these large customers typically used to support the infrastructure.

The market has moved on and today many vendors recognise that integration is a key capability: organisations are not going to ‘rip and replace’ one management tool set to install another. The concept of a Manager of Managers (MoM) - where domain-specific tool sets supply information and the MoM acts as the intelligence layer to provide a single pane of glass on the entire infrastructure - is becoming more widely adopted, hence the market move towards discrete domain expertise that is fully integrated within a single vendor’s suite of tools, but has an increasing ability to be integrated with thirdparty solutions.

Historically only the big four infrastructure management vendors - IBM, CA, HP, and BMC - were considered to provide the complete breadth and depth of capabilities needed to manage very large-scale data centre environments. However, the capability gap in terms of breadth and depth is being narrowed as the other major players in this market have invested heavily in either developing or acquiring many of the previously missing capabilities. Butler Group believes that those vendors that develop comprehensive solutions for virtualisation, automation, and Cloud Computing will become leaders in this market; currently, the big four are investing time and effort to ensure they do not surrender their leadership positions, but as the other contenders continue to innovate we believe that the market will become more competitive in the short to medium term.

Conclusions

Taking a holistic perspective to managing the organisation’s infrastructure requires a different approach, and one which many IT organisations are not yet equipped to adopt. The concept of business-driven demand is not new, in fact IT has evolved based on this premise, but currently IT responds to the department/business unit that either shouts loudest, or has the capital to invest in new projects. It is our contention that the landscape is moving, and Chief Executive Officers (CEOs) are increasingly looking toward the Chief Information Officer (CIO) as the guardian of business process prioritisation, which is asking the IT department to police the business units based on corporate prioritisation, and this requires IT to deploy the tools to perform these new duties, hence the growth in holistic infrastructure management.

The Butler Group Decision Matrix presents a view of the Infrastructure Management market based on three factors: Technology Assessment, User Sentiment, and Market Impact. The Decision Matrix offers a snapshot view of the market as it stands today, and indicates those Infrastructure Management vendors that, in Butler Group’s opinion, organisations should shortlist, consider, and explore. The results ofButler Group’s in-depth research are summarised in the table below. Vendors are listed in alphabetical order within each category.

This Report reveals:

• Why the roles of security and infrastructure management are converging.
• How the market in infrastructure management is becoming more competitive.
• Why the concept of a Manager-of-Managers is beginning to be more widely adopted.
• How the influence of new technologies, such as virtualisation and cloud computing, is changing the role of infrastructure management.
• Why automation requires new processes and procedures to deliver improved service levels.
• How infrastructure management is becoming a strategic business tool.
• Why the IT department will need to be re-structured to operate effectively with these new management tools and responsibilities.
• How infrastructure management can be used to mitigate the risks of introducing new technologies.
• Why the impact of environmental management will become a key capability for any infrastructure management tool.