Corporate addiction

Picture this: You walk into the office and see hundreds of shell-shocked faces, gazing expectantly into the distance; there is both an air of despair and expectancy. This is not the scene of a disaster in the normal sense of the word, but it could be your organisation... anytime. What we have here is some crucial part of your critical infrastructure not available to the workforce. Imagine what happens to your working day if you should find both your e-mail and telephone systems not working. (And this is really dealing with the simple stuff, let's not even contemplate core systems being unavailable!)

Infrastructure and the proper and effective use thereof can be earmarked as one of the last areas of untapped competitive advantage.

The reality is that organisations, both large and small, have become addicted to their infrastructures. However, this is just the tip of the iceberg. The more fundamental issue is that infrastructure and the proper and effective use thereof can be earmarked as one of the last areas of untapped competitive advantage.

Consider for example an article in USA Today dated 26 February 1999: Federal regulators voted to release an audit showing that Nelatlantic and other regional phone companies cannot account for more than $5 billion of equipment on their books, from ladders to computer switches. The report will provide ammunition for companies, such as MCI Worldcom, which contend that companies overcharge them to connect to their networks.

Imagine that: $5 billion! Sometimes an attention-grabbing story like this is what it takes to get across the extent of the problem.

Companies are quite rightly spending much of their attention and funds on addressing the systems with which they face their customers and markets. Infrastructure management highlights the importance of putting an appropriate emphasis on the inward facing systems that form the very life support system of your customer-facing systems. As always, relevance is best illustrated through market demand. Gartner predicts a $1 billion dollar market around this topic next year.

Infrastructure management is the management of anything and everything the company owns, purchases and leases or otherwise acquires through the item's entire lifecycle to the point where it is retired. We are not talking about just IT assets but all those that support the strategic business of the organisation. It is a problem with many critical dimensions, which starts with an understanding of how the infrastructure supports the business and answering enterprise questions about assets such as what they have, where it is, how well it is functioning and what it costs.

The two major business issues that we should be addressing are: (a) Managing the cost and minimising the losses associated with assets. (b) Organisational effectiveness: How well the assets actually do what they are supposed to do, and if they are available when required to fulfill their business purpose.

To give structure to the thinking, let's look at some of the questions posed above.

What assets do you have? This seems like an easy one until you consider the complexity of the question. It is simple enough to record the asset as it enters the organisation, but how about all its transformations over time? What about a simple example of a PC: At which point do you start combining the PC with all the add-on items like software, more memory and more disk? In many cases the PC may represent as little as half the cost of the total asset. Most of the add-on stuff is simply forgotten.

Additional market trends that further impact this is that of software licensing and intellectual property issues. There is also technology complexity, which will continue to grow in terms of both the numbers of suppliers and the components which make up IT assets, and furthermore the mix of internal and external suppliers who collaborate to run the enterprise.

The next difficult thing is identifying where the assets are. Given the high volatility in business, the rate at which organisations reorganise, the increase of mobile workers, the incidence of mergers and acquisitions, the reality is that a very large proportion of assets move around the organisation with very little chance of being tracked in any way whatsoever. Furthermore, the assets that move around the organisation also complicate the internal help desk support. For example, do they have any idea whatsoever regarding where the notebook computers of the organisation may be found?

The next question is: How well are the assets functioning? Firstly, this is important to keep the organisation running. Secondly, it directly addresses the topic of cost of ownership. Cost is not simply the original acquisition cost of any item, but its cost to the organisation over time. To know this you have to factor in all expenses, including maintenance and support charges, as well as the cost of lost productivity when infrastructure is not available. It is also important to maximise the effectiveness of the internal support organisation. There is an incredible amount of churn that results from inefficiencies caused from lack of information and co-ordination. This affects both the cost of the internal support function as well as the effectiveness and cost of the business community that is dependent on this service.

How well do we use the services that we pay for? Do you know which infrastructure is covered by warranties and service level agreements? More importantly, is that information available during a crisis, or does the organisation end up paying again? On which infrastructure are you still paying maintenance, support, license fees, etc? For example, a financial services company found it was paying over $100 000 for leased lines it was not using. Another investment bank in Europe found during its IT assets audit that it had 6 300 PCs, but only 4 500 employees.

So there we have it. Not as exciting as some of the other topics that management has to worry about, but its business impact is undeniable. This is not a topic just for the financial director or the infrastructure manager, but for the executive management of the company. Without infrastructure there is no business continuity and on the upside there is probably a significant financial saving in getting it right.