In the current budget environment, major companies’ investments in IT infrastructure should be mainly focused on getting better performance out of existing resources and systems.
The priority for most major companies in 2014 will be to continue reducing costs and improve the performance of IT infrastructure and software. These are the findings set out by global management consulting firm McKinsey in a recent report entitled ‘The Enterprise IT Infrastructure Agenda for 2014, following interviews with fifty infrastructure managers at Fortune Global 500 companies. Among the advice put forward by McKinsey is the need to draw inspiration from mass market consumer-electronics and automobile manufacturers, who source billions of dollars of components each year, and to take steps towards greater standardisation. While doing so, companies will have to deal with the many risks, both technological and human, which can arise from using software or materials unsuited to their specific needs.
Accelerating the transition to next-generation infrastructure
Despite efforts at standardisation, which have already led to huge improvements in productivity, IT systems are still too inflexible, and difficult to scale up, for instance if the firm takes over another company, the McKinsey authors point out. When it comes to hosting services for software and data, McKinsey recommends that companies look at what Internet giants Facebook and Amazon have done, as these companies have developed easily scalable systems which can be adapted for an operational unit of hundreds of people or a newly established subsidiary, without any major modifications to software or infrastructure. The report underlines that overall use of the Cloud, a technology which most major firms have now mastered, increases system flexibility and can achieve reductions of 50 - 75% in hosting costs. Lastly the authors of the report stress the need to optimise the ergonomic aspects of the software the firm uses on a daily basis for end-user applications: new ways of integrating emails and calendars and enabling staff to access their workplace computers remotely on a variety of mobile devices including tablets and smartphones.
Managing levels of risk
Moving to a new generation IT system does however carry a degree of risk. It involves major financial and human resources investment, and if it is badly organised it can create widespread frustration among employees, who will often judge the new system to be a waste of time when faced with the inevitable bugs. The latest IT architecture is increasingly open, fostering rapid access to information – client databases for example – and putting an end to working in silos. Nevertheless the cost of IT security, designed to protect confidential data, has risen in line with the open approach. The report also looks at the effects natural disasters can have on business systems. Hurricane Sandy in 2012 was “a sobering moment” for many enterprise IT systems on the east coast of the United States, a few suffering severe outages and many more having “close calls”. The hurricane clearly demonstrated that it has never been more essential to run backup servers and databases. Moving to new systems and tracking their performance will of course call for major investment in people, and companies must prioritise ongoing training of staff responsible for company infrastructure, especially promoting cross-functional experience and skills, argue the McKinsey experts.