IT Infrastructure Managers: Third Wave Energize

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It might sound as if I’ve spent too much time on the beach in the sun, but watching surfers reminds me of business dynamics. Just as elemental forces (time and tide) move the ocean and create waves, so do essential forces (resources, budget and competition) churn the business world and create waves. And I’ve noticed each wave might look the same, but every one crests in a different way, with variable force. Some waves energize a surfer’s ride, and others engulf it.

Nowhere does this analogy fit better than corporate information technology.

If IT organizations are to provide higher levels of strategic value, they must first ensure IT infrastructure is managed rigorously. That is why infrastructure management — the disciplined handling of foundational IT assets and activities — is so critical. Few IT organizations will be able to deliver innovation, intelligence and differentiated value if these foundations are not solidly in place.

The term “infrastructure management” conjures up many different definitions today. IT infrastructure management represents the handling and control of various activities and assets that support the operational objectives of the enterprise. Among them are network support, hosting, help desk services, messaging, security and database administration.

When IT professionals are promoted to IT manager, their roles shift from techies to resource planners. It’s up to these managers to figure out how to identify and apply the right technical resources rather than fix actual problems. This is a huge mind shift for most new managers, who might be used to being the heroes for figuring out the hard problems.

It is important to distinguish the foundational, infrastructure layer from the strategic, application layer of IT management. Although the infrastructure layer supports the operations of the enterprise and can be mission-critical, the application layer enables and even drives competitive distinction. This is an aspect of IT that enhances business value, provides intelligence to decision-makers and the front lines and facilitates the process of innovation.

Indeed, IT has moved from the back office to the core, value-driving sources of the enterprise. But it is often starved for resources.

Enterprises must consistently find ways to shift IT resources, energy and attention away from the foundational layer and move them to the strategic layer. This is how organizations win in the marketplace — and how the strategic value of IT becomes increasingly clear and vivid.

Organizations, however, can’t address this objective by relying on the same labor- and resource-intensive approaches they always have used. They cannot redeploy their people to strategic activities if they are mired in low-value-added tasks that offer no competitive distinction.

The challenge is to recognize IT organizations cannot move up to the strategic, competitively differentiated, application layer of management until they have built a solid foundational platform of infrastructure. If they attempt to rise to higher levels of business value, they will continue to be pulled down by flaws and inadequacies in the underlying infrastructure.

But they can’t move up the value ladder either, if their people are deployed on high-cost, low-impact activities that don’t scale. If the infrastructure cannot cost-effectively scale to meet their strategic demands, there will be no strategic opportunities to seize.

The Three Waves of Infrastructure Management Outsourcing
Companies long have recognized the challenge addressed here in some way. While they have taken steps to internally automate aspects of IT infrastructure management, they often eventually come to the conclusion that much of the infrastructure is best left to outsourcers. Over the years, there have been three essential waves of IT infrastructure outsourcing: cost-driven outsourcing, competency-driven outsourcing, and predictive and process-driven outsourcing.

The first wave was concerned primarily with cost. Going back to the 1970s and 1980s, the trend really started to pick up, as companies looked to large outsourcing providers to manage their data centers, including their mainframes and other types of foundational infrastructure.

This wave also covered back-office operating processes such as payroll and transaction processing. Companies realized they could reduce back-office operating costs by turning to outsourcers who could leverage their own infrastructure and people across many clients.

The second wave — which hit in the early 1990s at the apex of reengineering — was concerned with maximizing core capabilities or competencies. Companies realized they needed to concentrate on the activities they did best if they were to remain competitive. The outsourcing options available to them, however, continued to require labor-intensive and relatively unproductive solutions.

Negotiations around outsourcing often revolved around the number of people who would be devoted to specific tasks. While resumes were often scrutinized, little attention was put into introducing more productive approaches to infrastructure management.

The popularity of offshore outsourcing in recent years largely represents a combination of these two earlier waves. Companies clearly are looking offshore for cost advantages — labor for certain foundational roles is much cheaper in places such as India and Eastern Europe.

But companies also justify their offshore decisions in terms of maximizing core competence. They say many highly skilled IT professionals are now found abroad, individuals who can competently take over operational tasks that represent no competitive value. The problem is offshore outsourcers often merely continue managing infrastructure in the same low-productivity, labor-intensive ways as everyone else.

The third wave actually began to grow in the late 1990s in certain areas, and it is now gathering force. There has been a shift toward predictive and proactive infrastructure management in areas such as network support, messaging and help desk management.

The newest areas being targeted for this kind of approach are security and database administration. It is a shift toward infrastructure management based on discipline, agility, scalability, global support and operational excellence. This wave is about proactive systems, methodologies and processes as opposed to reactive, labor-intensive approaches. It recognizes gains associated with low-cost labor in the short run cannot be sustained as the operational demands of enterprise IT infrastructure increase.

The big question now is whether companies will continue to try to handle these infrastructure challenges on their own, or whether they will turn to specialized outsourcers. While prior waves of outsourcing were based on asset shifting or global labor arbitrage, third-wave players base their businesses on systematized processes and IT automation.

Even though much of the challenge of process automation and improvement concerns the internal work of the IT organization, it’s clear this principle also must apply to an enterprise’s infrastructure outsourcing partners. If companies are to seek the benefits of infrastructure outsourcing, they must look to partners that not only address concerns of cost and core competency but process automation and improvement, as well.

Whether an IT infrastructure process is kept in-house or outsourced, continual process and productivity improvement is critical — and this will depend on automated systems. The problem with many first- and second-wave outsourcers, as well as the offshore outsourcing firms, is that they often don’t adequately address these concerns. They have very little strength in terms of process automation and systematized service delivery.

That’s where the third wave of infrastructure outsourcers (whether in network supp

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