Making IT Complexity Work for YouBy CIOinsight | Posted 09-04-2007
Making IT Complexity Work for You
When it comes to the never-ending battle against complexity in IT organizations, there's good news and there's bad news. The bad news is that information technology is in fact becoming more complex.
The good news? It's not your fault. Despite some chief financial officers' belief that IT departments buy technology for technology's sake and spend too much time "playing" with it, the truth is that IT is becoming more complicated, and more costly to manage, as business becomes more complex. Trying to keep up with the rapidly changing demands of a global corporation, its clients, customers and partners is a convoluted and costly endeavor for the CIO.
"The world is getting inherently more complex as we globalize, expand and develop new technologies," says Erik Dorr, a senior research adviser at The Hackett Group, a management consultancy. "The operational complexity of running a business today is totally different than it was two decades ago. That means traditional methods of managing IT are no longer sufficient."
A perfect storm of globalization, regulation and mobility is driving up the operational complexity level at IT shops large and small. And the technologies that have been designed to help CIOs cope with these rapidly changing macro-economic trends--service-oriented architecture and virtualization, for example--are addressing critical issues such as application development costs and storage capacity, but are also adding layers of complexity. That's not to say there's been no progress over the past 20 years on the complexity front. IT organizations have made great strides toward standardizing and consolidating infrastructure. Also, IT governance has come a long way since its Wild West days of the early 1990s.
Of course, complexity isn't all bad. "All these forces are creating cyclones of uncertainty and doubt, but culturally you want a certain amount of complexity and churn because it creates a chemical reaction that jars creative thinking," says Colleen Young, a vice president and distinguished analyst at IT adviser Gartner. "A certain amount of fear, uncertainty and doubt is good for you. You just need to ride the bull without getting tossed off." Still, operational and technological complexity are no picnic for CIOs and their staffs.
A Mad, Mad World
A Mad, Mad World
Exhibit A in the case against complexity is globalization. Multinational businesses are dealing with multiple time zones, languages and regulations. And the worst offender is outsourcing, which, while theoretically reducing costs, complicates operations and management exponentially.
"We've got geographical complexity," says Kevin Bott, senior vice president and CIO at Ryder, the $6.5 billion transportation, logistics, and supply chain company. Ryder does business in the U.S., Canada, Asia-Pacific, Europe, and Latin America. It has data centers in five locations, and an IT staff of more that 500 supporting 100 core applications.
Bott has gotten the company's infrastructure concerns under control by consolidating servers (using virtualization) and centralizing all billing and negotiation with vendors. Now his most pressing concern is supporting Ryder's application portfolio across the world. "The application side is the next big challenge," Bott says. "We've got some older systems, some of which were made decades ago, all custom built." To reduce complexity, the company buys off the shelf whenever possible to replace an existing application.
But because of the specialized nature of the business, there's not much shrink-wrapped software that suits its needs. "We've been going offshore for some custom development, but communications is an issue." To mitigate the communications difficulties, Bott has taken to managing offshore development projects iteratively, insisting on rapid development cycles and additional checkpoints along the way.
The other major complication for CIOs has been compliance. And in no industry has the burden of regulation been more onerous than in healthcare. "Healthcare has got to be the most complex industry in our economy," says Lynn H. Vogel, vice president and CIO at MD Anderson Cancer Center, a 17,000- employee research and treatment center run by the University of Texas. "And when they say CIOs need to understand the business, what if the business is medicine, and it deals on the molecular level?"
Vogel has taken the challenges in stride, but when it comes to storing and protecting patient records in accordance with HIPPA regulations, things can get complex. "The sequencing of the human genome just made things infinitely more complicated," says Vogel, who recently doubled the center's supercomputing capacity to 1,000 processors. The center calculates radiation doses, runs treatment simulations and performs a host of other functions previously unimaginable. It's another example of IT keeping up with, and at times enabling, an increasingly complex world. "Five years ago, you never could have imagined these things being possible," Vogel says.
MD Anderson also runs the single largest CT scan imaging center in the world. It produces 700 magnetic resonance images a day and stores more than 260 million images (all replicated for disaster recovery purposes.) The center has 700 terabytes of patient data, and expects to have a petabyte by the end of next year. All that data must be saved and protected. And according to HIPPA rules, the center doesn't own the data on the disks, it just owns the disks. In attacking the costs that threaten to overwhelm an operation of this magnitude, Vogel has turned to--what else?--technology. Virtualization has helped MD Anderson limit the number of servers and storage disks it needs to save and process the massive quantities of data it collects and produces. But the new technology, while a lifesaver in some respects, also adds layers of complexity. "As marvelous as virtualization is in terms of allowing flexibility to take things in and out," Vogel says, "it creates management overhead, and it takes people to do it."
In a stark reminder that even the most advanced automation requires people to manage it, Vogel has been steadily adding staff to keep the storage environment under control; in fact, he now has three fulltime employees who do nothing but manage storage. "At the end of the day, can you really do things without people?" Vogel asks. "The bottom line is, as things grow in complexity, you need people to manage it."
Another technology that was expected to make life easier for CIOs but has done the opposite in some cases is service-oriented architecture. "SOA was supposed to make the world simple, but that is a gross misconception," says The Hackett Group's Dorr. "You are really introducing far more moving parts, you are breaking things up. SOA doesn't reduce complexity, it actually allows for a higher level of complexity." That's been the case, as least short-term, at MD Anderson. SOA has required a massive staff retraining effort. "In some ways it's making things more complicated, mostly because of the transition," Vogel says.
But he expects over time SOA will help the company comply with privacy regulations: "It allows us to expose the data, but not move it, and that is less risky" than sending data across the network, Vogel says.
If virtualization and service-oriented architecture are two of the top technological troublemakers when it comes to IT complexity, surely mobility is the third. BlackBerrys, Palms and now iPhones find their way into the enterprise through front and back doors. While these gadgets can be fantastic time savers, they will forever make the lives of IT professionals more complicated.
"Complexity has been increasing because the business always wants to move faster," says Chris Koc, CTO at The Facility Group, a $300 million design-build firm in Smyrna, Ga. "It used to be rare that a project got put on the fast track, but now it seems like everything is fast tracked. And it doesn't matter if the business is growing or slowing. There were times when we were downsizing, and IT was expected to pick up the slack. So it's always faster, faster, faster."
One way The Facility Group has been addressing its need for speed is through mobile devices. But the mobility movement is compounding complexity at the small firm. "Our CRM system has its own complexity, and Blackberrys weren't even around when it was bought, so now we're trying to make this work somehow," Koc says. The business side, ever more tech savvy, now wants all its data on mobile devices. "I want it to be secure, legal and stable," Koc says. "But they just want it quick."
There's only one way to manage complexity, Koc says: Plan for it. "The biggest thing is not letting any project start without a stakeholder who clearly understands the risks." Complexity is not a bad thing, he adds, as long as everyone involved understands the costs and risks, and it's clear who'll take responsibility if there's a cost overrun. Koc also limits the number of projects a given IT staffer works on simultaneously, to prevent burnout. And he doesn't roll out any new technology before thorough testing.
: The Upside">
Complexity: The Upside
Will IT ever be rote, like, say, accounting? Doubtful. But that's okay. The key to managing IT complexity is to accept that a certain amount of it is inevitable. Successful IT shops will confine complexity to specific areas. "It is critical for organizations to understand what is core to their business; these are areas where they need to manage more complexity," Gartner's Young says. "Then there is the context, or things that are peripheral to the core business, that can be standardized and even outsourced, and where less complexity is necessary."
To that end, CIOs have been doing a good job moving complexity "up the stack." The basic protocol issues and telecom concerns of years past have been addressed, for the most part. Servers, networking and storage are largely standardized, relatively easy to consolidate, and simple to maintain. Indeed, forecasts for the next five years show the lion's share of spending growth will be in software and services, while hardware and telecom spending will remain stable. This means complexity has gotten closer to the business side of the equation, the application portfolio. And that's where it should be, because networking equipment, storage and servers are never going to differentiate a business. Powerful, and sometimes custom-built, applications are.
"Certain issues, like connectivity, have been resolved to a sufficient level, so the complexity is moving from a technology level to a business level," Young says. "And there is a lot of experimentation going on, multiple solutions to a problem to see what sticks, all of which requires sophistication and adaptability. But these are not bad things."
To take advantage of all that IT has to offer, companies must allow for some level of complexity. Young identifies two distinct IT organization profiles: culturally moderate companies, which are rigorous about investment decisions, allow for very little uncertainty and manage their application portfolios closely; and culturally aggressive companies, which feel tech investments cost them up front but pay off long-term through innovation and growth.
No matter which camp you're in, one thing won't change: IT complexity is here to stay. "The rate of churn around IT is not going to stabilize, because this is the area that has the most invention happening," Young says. "But that doesn't mean you can't systematize IT. It's not easy, but you can have it both ways."
Simple Strategies for A
Simple Strategies for A Complex World
Reducing complexity and cost is important, but delivering quality service is equally critical. Here are five key approaches of world-class organizations:
Standardize and consolidate. World-class companies simplify, and to ensure maximum return on investment, they standardize master data definitions as they reduce the number of enterprise resource planning systems and other applications. Reducing spending through standardization and consolidation increases focused spending in areas that generate greater strategic return.
Focus on high-return opportunities. These companies do careful reward/risk analysis to identify areas in which they can reap the greatest benefits. World-class performance and maximum value can be achieved only by implementing IT in conjunction with smart practices and process redesign.
Don't minimize cost indiscriminately. Rather than focus on across-the-board cost cutting, world-class companies seek to maximize value at the lowest achievable cost, in part by reallocating spending from technology infrastructure to application management.
Maximize value of information assets. They obtain the greatest possible return on technology investments by maximizing the value of information assets to end users through data standardization, rich metadata, online information access, analytical capabilities and alignment of information architecture with business initiatives such as enterprise performance management.
Outsource selectively. They use outsourcing as a tool to improve effectiveness rather than efficiency. Many typical companies lack an effective strategy and sufficient consideration of process and infrastructure optimization to let outsourcing drive reductions in IT process costs.