There’s long been a tug of war over the control of computing assets in big companies. IT departments want centralized control, while business units push for decentralization. The time’s come to end the battle. The technological advances driving the shift to utility computing – virtualization and web services, among others – offer the potential to gain the scale economies of centralization while also providing businesses with the flexibility they need. Fulfilling that potential will require companies to adopt a new approach to buying and managing their IT assets, with three thrusts: consolidate, standardize and prune. (I write about this in a brief column in the current issue of eWeek.) That, in turn, will require IT departments to gain the trust of the business units – a big challenge that now looms larger than ever.
Right on the money. The same thought process I teach in our CSAM and CITAM IT Asset Manager certification classes. Great article and extremely insightful.
It seems that there are two great obstacles to this adoption (working for a good sized global company and having been involved in trying to deal with this):
1) Political/managerial accounting
IT often pays for the assets that the business demands. Need a huge ERP system – that is what the humongous IT budget is for right? This is like asking for HR to pay for all of the salaries since people are ‘humans’. (And then get shafted for not being able to control payroll costs when departments force HR to hire more people.) Business units hate having to pay for what they use their budgets show much better performance without all of that IT overhead.
2) Regulations
It might be very nice to give each employee a minimal budget for PCs and then let them buy whatever they want that could be used for work and personal (imbue them with more personal responsibility) but we would still be legally responsible for their systems… They have some illegal fonts on ‘their’ PC? The BSA would come after the company. All sorts of liability… I guess it is the rule of the deep pockets.
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IT writers’ blogs, the future of IT and a little Cisco smackdown.
Nicolas. Love your blog (only blog I’ve ever read) and by the way, have been referencing the book and this site to all colleagues and customers since…keep it up – your mom isn’t the only one reading. lol This particular blog brings so many different concepts together I thought I would take time to explanin how we are using some of the concepts you explore. I work for a leading global communications applications manufacturer (picking the words to just describe my company took me about 3 minutes because even though we are a fortune 500 and provide call center and general telephony products to 90%+ of the fortune 500 – I’m not sure what we are anymore). We have been advocating a successful model within the call center customer base for 18 months now that we are calling FCE- “flatten, consolidate, and extend”. It marries to your methodology of Consolidate, Standardize, and prune. The idea is to use the environmental changes occuring to drive cost efficiencies in our customer base while still maintaining our platform as the “core”. Flatten: The carriers (AT&T, MCI, etc) charge extraodinary amounts for advanced carrier features (take back and transfer, % allocation, etc) – So, if you were a major PC manufacturer and had sales and support offices spread throughout the US, and a consumer called called 1-800-PCsales for example- AT&T would take the call send you to the Phoenix call center as part of a formula – 20% of calls to Phoenix, 50% to Dallas, etc… Well, they did this at 2 cents/call for example. At a million+ calls/year that became very expensive. However, buried within 12-15 cents/minute costs 3-4 years ago, the advanced carrier features went unrecognized. Now that the rate our major customers are getting from carriers sub-1 cent/min rates (any wonder the carriers are bankrupt?) the advanced carrier features they were charging all of a sudden get recognition. So, what do you do? – you let the intelligence of the software in your switch (Automatic call distributor – ACD) make those determinations (which is 20+ years in development since continental airlines in 86′ built the first one) and your push the call over your WAN. In other words, centralize the 1-800#s into one location (further commoditizing the carrier), let the intelligence you’ve already purchased make the advanced routing decision, and push the call over WAN links you already are paying for via data connectivity – saves you millions/year in carrier costs. Consolidate: Due to Moore’s Law, we double the capacity (busy hour call completions) of our product about every 18 months). However, we, as do many other IT manufacturers have very old versions of our products out in the marketplace… so, using WAN as described above, consolidate all the switches into 1 preferrably 2 centers for disaster recovery/business continuity sake – with the consolidation of switches you get to consolidate all the adjuncts supporting these switches as well – recording solutions, reporting, work force mgmt, voice response systems, etc… A recent example was a customer that had 219 ACDs spread globally and via math could take them down to 11…that’s millions of dollars in support costs (HR), upgrade costs, maintenance costs on the servers, etc… and finally extend: Due to Voice over IP, carrier long distance fees going in the toilet (3 years ago was $27K for a pipe to India – now its $9K), increased scalability of platforms, and global penchant for the US dollar – we have a true “death of distance” concept. I can contract a call center agent anywhere in the world. 2.5M call center agents in the US and we haven’t grown or depleted that number in 4 years. We are flat out of HR resource in this country that are able AND willing to do that job. So, all the growth in the customer interaction space is occuring offshore – but the concept is, wherever I need an agent whether its lancaster, PA, an agents home in Salt Lake City, Utah, or in a 2000 seat call center in Bangalore, India – I can deliver a call to them with all of the customer data “popping” the screen within seconds. That is extremely powerful to a Fortune 500 customer base that frankly gives lip service to customer service. As they should, it’s not proving to be a differentiator in a commoditized product portfolio – PCs, TVs, broadband service, etc.. As for my product – we’re simply trying to rob other IT pieces of the budget pie (carriers, database, servers, SAP, ERP, CRM, etc) as we are a baby step above commodity as well – as the way of the large, proprietary, differentiating, electrical generator!