We all heard about the great contribution industrialization made to the corporate world during the eighteenth and nineteenth centuries through productivity gains and cost reductions. The well-known concepts such as ‘learning effect’ and ‘experience curve’ originated from the industrial economy, encouraging people to master their tasks and achieve perfection. These concepts are still practiced today, mostly in the process industries. As people perform the same task again and again in a repeated manner, they gain an ability to complete the same task in much less time, with higher precision. The benefits are particularly pronounced in the processing industries such as automobile manufacturing and food processing where the tasks are mundane and repetitive in nature. Many CIOs ask the question - Can IT processes be industrialized? If so, which tasks are prone to such benefits?
The immense pressure on CIOs to ‘do more with less’ demands them to think about IT industrialization. There are plenty of activities in the IT industry that are mundane and repetitive (e.g., Data Centre Monitoring), which result in attractive benefits in the form of cost savings through process standardization (e.g., server monitoring), standard skills and standard tools. These benefits can only arise when the key disciplines such as governance processes, infrastructure and information management processes are well defined and aligned. The following picture provides guidelines on the maturity levels in handling such a standardization, which is often referred to as ‘Shared Services’. For example, aligning staff to the demand variations will reduce wastage in staff utilization and improve productivity.
HP has thousands of clients whose IT services are managed under a ‘Leveraged Model’. Services are provided from shared premises with a standard pool of resources, which enables multiple companies to share the common investments. If you happen to visit such a facility, it gives an impression of a ‘factory’ setting. Such a ‘factory’ environment generates huge scale benefits within IT.
However, not all IT tasks can be subject to industrialization. For example, data entry at bank branches is unlikely to yield any benefits of scale, as each transaction must be tailored to the customer. Therefore, it’s important to think long and hard to decide which IT processes can be set up as ‘IT Industrialization’. While seeking the industrialization benefits, pay attention to the inherent risks, as an imperfect transaction processing can affect business continuity and lead to customer dissatisfaction.
Have you identified the IT tasks that can be set up as a ‘factory’ and realize ‘Industrialization benefits’ and more importantly, how to mitigate the risks emanating from it?