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March 14, 2006

Finding the "Enterprise" in IT

In running the business with a strategy, strategy must increasingly factor IT into its equations, because of IT's power to affect most of the conditions to which strategies design a response.

Going along with that, the working assumption is that a business organization must have IT-based capabilities that allow it to beneficially maintain and change itself in its target environments. A standard caution is that IT can always make things different, but that "different" is not necessarily "better" -- and the definition of "better" must come from the business.

Given those points, there is a logical hierarchy of values in IT-based business solutions. To reveal it, however, requires clarity about the difference made by automation and the difference made by information.

Superficially, we always recognize that information directs decisions and automation directs labor. But decisions also commit that labor, while taking into consideration that automation can change the feasibility of the commitment for better or worse.

As a result, we see that decisions drive automation -- meaning that information drives automation, not vice-versa.

Arguably, then, the top business issue to address with IT is to govern information access.

This makes the overall affair of IT management primarily sensitive to the successful provision of information driving the decisions. But what is meant by "overall"?

I. Solving the right problem

Keeping in mind that decision-makers are placed at all levels and locations of business production, adequate visibility and control of provision is a gigantic and daunting task. Processes that govern information access are the ones that most need to be automated.

But the point of governing that access is to ensure that decision-makers are supported securely, appropriately and efficiently, so that they can pursue business objectives.

This point provokes a general model for the relative business values of IT-based solutions. The importance of having this model is to set expectations consistently and to provide the most basic logic behind changing existing investments in, and implementations of, IT.

The solutions should contribute to one or more of the following very broad objectives, which flow top-down from the main desired business capability to the supporting functions, architectures and assets:

Taken together, the four concerns add up to maximizing the quality of the IT infrastructure as a business resource.

Specifically, solving the combined concerns -- governance, rationalization and optimization -- results in a positive ratio of resource capacity to business demand, which then allows strategies to "close the loop" by exploiting #4's ability to enhance #1.

II. Optimization

In optimizing resources, businesses rightfully ask, "how capable can we afford to be?" Regarding IT, this is a general way of pointing at the problem of return on investment. It might casually be seen as a cost/benefit ratio. But the flaw in seeing things that way is that, with adequate production supervision, benefits are simply desired outputs that are more or less predictable according to their price; to generate real business value, those outputs must still be used in certain ways.

For example, buying a computer and using a computer are quite different. In the first case, an asset becomes owned; but in the second case a resource is deployed (committed). Ownership and deployment have different kinds of value. By linking assets to live functions, deployment makes IT serve the business.

With this commitment, the natural inclination is to pursue as much functional potency from the asset as possible, and discard the asset when it can no longer measure up. That potency may even result in enterprise-wide impact.

Yet more importantly, the method and opportunity for achieving that potency may not be scalable cross-functionally or enterprise-wide. So this is not the gist of the notion of optimization nor of "enterprise" IT. The enterprise-scale value proposition is not to optimize the commitment of "all X number of components" but instead the commitment of the overall IT infrastructure as a resource. By analogy, it is managing an entire portfolio instead of a collection of budget line items. It is seeing the forest first, not the trees.

At the enterprise scale, the deployed infrastructure essentially becomes an environment for business operations, and IT management accordingly must step up to an environmental perspective. From that position, optimizing the environment basically means programming its dynamics.

For example: business typically organizes its information demands with desired flows of business processes -- and business processes are highly sensitive to changes forced by competition, regulation and economies. Because of that, the related IT processes that help govern and enable information access need to be not just reliable but also adaptable (i.e., versatile and/or flexible). This involves a critical dependency on the underlying infrastructure. Thus, due to ongoing change, deployment of infrastructure is also a continuous "environmental" process, not just an event.

But the programming is not just about addressing deployment for demand. It is also about support for utilization and allocation for supply.

In coordinating all three dynamics, the key characteristics of environmental-scale management feature an extent of visibility and control that intends to establish productivity and conservation in balance with each other.

As part of the environmental programming, management establishes the generally required conditions for this balance through several means:
- policy (which protects priorities versus requests)
- standards (which protects regularity versus options)
- security (which protects integrity versus exposure)
- economy (which protects assets versus consumption

While those protections are a major deliverable of management for achieving balance, the value of that balance at any time is determined by its relevance to business goals. That is, management's other key objective is to have the balance actually promote business development.

The problem is that business development so frequently pressures management with local demands that challenge the global balance. This threatens the environment's equilibrium, which increases the uncertainty about its overall quality versus additional and future demands. Because of that, what management wants is the visibility and control to maintain the environment's equilibrium while knowingly raising its overall quality as a resource.

III. Rationalization

The strategy for having that visibility and control requires a focus on services and architecture. Services predefine the relationship of deliverables to demand; and architecture predefines the relationship of capacity to services. The predefinitions allow the organization's managers (or providers) to offer things already known to fit into economies and scales, and locations and permissions, that they can handle -- and to more readily recognize and decide about things that don't yet fit. Among those things that don't fit are not only newly-emerged requirements awaiting organized support, but also potential threats to the integrity of the established services and architecture.

Unfortunately, the growth rate of a large IT environment may often have outrun prescriptive efforts to define it -- raising the number of exceptions, silos and risks. This simply means that it now has to be retrofit within the terms and principles of architecture and services -- that is, those become the elements of rationalizing the environment. The descriptive language of services and architecture will supply a different perspective from which to identify and assess the environment. Subsequently, discoveries will be made that indicate a need to make changes that will conform the environment to business requirements.

IV. Governing with IT processes

What this really means is that the environment at minimum has to be "trained", not necessarily rebuilt, and programming the environmental dynamics begins to accomplish this. But eventually the programming might require reorganizing things in ways that reveal omissions, defects or obsolescence in the resources, whereupon rebuilding is appropriate.

The challenge is to have adequate visibility and control of any reorganizing. Critical information gains or loses availability and credibility according to how its channels are gated, groomed and connected. Knowing that infrastructure modifications will range in types -- from innovations to deployments to shoring-up defenses, and from strategic to hostile -- policy and change management take on an enormous significance. Meanwhile, the implementation of business policy and business change increasingly must be supported through IT, and this means that business policy and business change must also be translated into IT policy and IT change. That translation must not be speculative, and the outcomes must be explicit.

V. Business management

From the business point of view, the purpose of relying on IT is to bring significant assurance to the safety, competency and advantage of whatever the business tries to do. For IT to offer this kind of value, it must be manageable, and the complexity of its manageability is the main barrier to the business being successful in the driver's seat.

To the extent that complex technologies can make technology management simpler, complexity breeds value by giving the business more practical influence on IT, of the kind that it intends. (Today's automobiles are the most complex ever, yet they are easier than ever to drive.) But the success of the business is predicated on its ability to tailor responses in real-time to the particulars of each opportunity event. Any given response -- a blend of characteristics including safety, competency and advantage -- may need to be significantly different from others, yet crafted from a known available capacity.

Thus, from the business standpoint, the enterprise IT management goal is to achieve the lowest cost of predictably sustaining the necessary degree of enterprise-wide adaptability of the infrastructure. With that established, business processes and business performance can in turn be more readily managed to business targets.

Posted by Malcolm Ryder at March 14, 2006 1:20 PM

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