| Technology should obviously make it possible to streamline processes and reduce costs. Often, it does. But during the 1990s, companies added wave after wave of novel technologies, often starting new projects before completing earlier ones, with disappointing results. By not fully changing business processes to reap the value of the new systems, these companies made processes more complex—not more streamlined—and increased costs, particularly in IT. Rapid mergers and globalization added to the complexity. Integrating and rationalizing systems after a merger can be a massive job that takes months, sometimes years, to complete. For example Bank One, the nation's fifth-largest bank, has been acquiring smaller banks over the last ten years and is continuously integrating new accounts into its systems. In the interim, companies may have to grapple with operating systems and business applications that don't mesh fully or even partially; trying to get data to flow between two recently merged companies is a straightforward aim, but may turn out to be frustratingly difficult. Meanwhile, as companies expanded into new markets around the globe, they added systems to support new supply chains, local human resources and legal requirements, new financial structures, and the flow of information in a variety of languages—all of which increased costs due to added complexity. As almost every computer user can confirm, the "hidden costs" of computing are huge. That is, after paying for the hardware and software, considerable time is required to address software installation, upgrades, maintenance, enhancements, configuration, tuning and optimization, problem detection and resolution, and security considerations. A few companies have decided that IT cost-cutting provides a great opportunity to untangle their systems and projects. Rather than taking the short-term view—"Can we live without this piece of IT now?"—these companies are looking to the longer run, transforming their business activities and IT processes in ways that will strengthen their systems and, at the same time, eliminate the deeper causes of bloated IT spending. In a sense, the companies are finishing a job they didn't have time to complete during the bubble years. IT costs soared in the 1990s as companies adopted systems and applications to support new channels and products, expansion into new markets, and tighter coordination with suppliers. The rapid pace of competition often meant that such companies implemented these systems quickly—in "Internet time"—without fully integrating them with existing systems (and retiring older ones) or making the business changes needed to exploit technology's potential for helping to automate and streamline business activities. Indeed, companies can make short-term cuts and save while, at the same time, addressing the costly longer-term roots of IT complexity, but only if senior IT and business leaders commit themselves to keeping these goals in mind. Companies are reaping big savings by rethinking the way they manage multiple channels—for example, by closing a failed Web site or keeping the Internet channel and outsourcing a call center. The same treatment is being accorded to product portfolios supported by disparate and often uncoordinated IT systems: Banks and telecommunications companies, for example, are dropping some older offerings. Companies are also consolidating their database-management systems and other infrastructure technologies and redrawing their IT architectures—the blueprint for the IT structure supporting the business. They are giving themselves the ability to take advantage of new outsourcing arrangements that will ease overall complexity. In summary, there are many advances that can be made to lessen existing IT complexity. Here are some suggestions: -
To establish the level of complexity, seek and secure senior IT management authorization to review the entire corporation's IT infrastructure, resources, applications, processes, and operating procedures. Write a report with metrics and recommendations to define priority recommendations—see the next section on Corporate Complexity Assessment. -
Establish what can be done in the short term: -
Server consolidation— Determines what can be consolidated to reduce costs and lessen complexity. -
Outsourcing— Review all applications to establish what, if any, applications can be outsourced. -
System Management— Review new automated system management software to determine if automated updating, new software releases, patches, and updates are needed. -
Application Development— Review all application development software, and consolidate where possible. The impact of complexity on IT systems thinking is fundamental. Instead of basing our strategies and actions on prediction, with the development and implementation of a plan designed to take us from "here and now" to "there and then," we need to adopt a more creative approach. This implies more frequent monitoring and reassessment, with an awareness and capacity to change targets and goals, to make use of what is working and reduce what does not. This is an approach that recognizes the constant need to learn about what is happening and to try to make sense of it as fast as possible—before the complexity increases to unmanageable proportions. |