By Ruby Gates

It’s 3pm on a Wednesday afternoon and orders for machine parts have been coming in at an accelerated rate. The manager of the warehouse is frustrated, as only four orders per hour are processed and over 21 job tickets are submitted per hour. Moreover, the company runs the risk of losing business to its competitors if it doesn’t fill the orders in a timely fashion. With such an aggressive demand for parts, it’s clear that the company’s infrastructure cannot handle the volume within an appropriate timeframe. The year is 1982.

But this is an old story, one of which doesn’t necessarily bear repeating. However, it illustrates a fine point in that today that same warehouse processes 72 orders an hour with a 99% accuracy rate. A clear example of how infrastructure can dictate a company’s productivity rate.

It's obvious that businesses have made the leap into absorbing technology and that business processes and that gritty bottom line have seen a surge in improvements. The speed of email has transformed communication. Automated software has streamlined everything from financials to call centers. Corporations have devoted millions of dollars to their technological infrastructure and have experienced greater ROI as a result of it.

But now what?

IT has reached a level of maturity that the mere idea of any company in any industry not wired is unthinkable. Yet, IT has had the challenge in recent years of providing the same level of services with an ever-decreasing budget. What has spawned is a revolution of sorts toward managing IT departments.

"Effective IT Service Management requires a different level of discipline than IT has traditionally embraced,” says Ken Wendle, HP OpenView Certified Consultant. “In most cases, the cowboy mentality just won't fit.” Wendle’s point is well taken. For IT departments to survive and provide timely and enterprise-wide services, shared knowledge wins big here, and the ego swinging mentality loses.

Which means this new era of IT has created a revolution of changes within companies across multiple industries. New methodologies designed to pinpoint costs, manage service levels and streamline processes are all guided by the principles of business strategy. Back in 1982, the machine plant could only process orders at a cumbersome pace as the infrastructure was not in parallel with the overall business objectives of the company. The evolution of technology made what was unthinkable, possible – yet without business alignment, it may be all for naught.

Trimming the Fat

Revolution is all about change; stripping away the processes that don’t serve the greater good. Outsourcing, in this sense, has grown in necessity and is now included in the business strategies of many corporations. The criticality of identifying what services are necessary to the absolute survival of the company holds court above all else. Anything not critical is outsourced. Creating a lean and efficient IT department allows for flexibility, stronger service levels and satisfied customers. All else is taken off the IT plate and outsourced, where rendering services excels over previous internal attempts.

This trimming of the fat has extreme benefits. For example, IT departments find breadth to confront compliancy issues like Sarbanes-Oxley and other industry specific regulatory issues. If overlooked, these compliancy issues can result in stiff fines. Moreover, IT departments that operate lean report a higher success rate in services.

Simple Fi

Faithfulness in executing services has also created an insurgence in new methodologies and best practices. Many IT organizations realize that re-inventing the wheel has proven too costly. The interest in best practices, otherwise known as the Information Technology Infrastructure Library, is beginning to pique interest in US IT communities. A collection of best practices, ITIL is now being recognized as a way to simplify and hone service management with a high level of success.

Six Sigma, a methodology usually reserved for manufacturing, has also found its place in IT. Although Six Sigma takes several years to implement, its benefits of decreasing defects by identifying critical to quality issues within the enterprise line up well with long term business objectives.

Corporate Governance, arriving on the heels of the Enron and Worldcom debacle, also pulls IT into the loop. Boards are under tight scrutiny and the pressure for financial transparency and effective reporting really falls into the lap of IT. IT departments are now implementing controls that align with compliancy requirements and are expected to achieve this without an increase in budget. At the same time, risk assessment of the IT organization must be completed and vulnerabilities to the system identified and corrected.

Assets of the Revolution

In fact, overall, the biggest revolution that has taken place within the IT space is the inclusion of IT in strategy sessions. Enterprises strongly acknowledge the role IT places in successful business growth. CIOs are now articulating IT value and influencing IT-related decisions at the top level of the enterprise. Strategists are now wrapping IT into their short and long-term goals. Where IT was overlooked as just a mere service center, it is now heralded for the critical role it plays in successful growth and profits.

With that value comes the realization that IT managers, directors and lead decision makers are the assets of value, not the servers and desk-tops they run. Operating an IT department has evolved into a science that requires extensive knowledge and training. Before, IT departments were an ad hoc team of varying skills. Now IT teams are critically trained individuals, often certified in more than one methodology, and executing practices that generate ROI and profit.

IT has entered a new era in the business space. The challenges and struggles of the past few years have yielded unprecedented change and creativity in IT operations. The evolution of change carries with it a great momentum, that to ignore it can ruin any business, no matter the size. Hail the revolution! For when the smoke clears, pulling parts off a shelf to fill an order every fifteen minutes will be right up there with vinyl records.

First published at BetterManagement.com.

About the Author:
Ruby Gates is a producer and editor for BetterManagement.com and focuses on business issues surrounding IT Management at the enterprise level. BetterManagement is a thought-leadership portal that has established partnerships with many premier organizations including Harvard, Wharton, McKinsey, Boston Consulting Group, KPMG Consulting, and more. To read more of Ruby's commentaries, go to http://www.bettermanagement.com/businessTopicHome.aspx?FilterID=486.

Read this newsletter at: http://www.itmanagementnews.com/2003/0728.html

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