Become a World-Class Service Provider to the Business
Step No. 1: Become a world-class service provider to the business
The first step in maximizing value and creating processes is to understand how IT technology maps to IT services. Such services can be broken down into user services (e-mail, desktops, telecom), business services (revenue-producing services such as trading application, CRM, etc.) and shared infrastructure services (data centers, compute capacity, storage, disaster recovery, etc.).
Second, IT should calculate the fully loaded cost of IT services including hardware, software, labor (project and maintenance), facilities and overhead. Companies should have a system to track costs over time, enabling teams across IT to understand how their domains contribute to the cost of IT services.
Third, IT should understand the individual unit costs for IT (that is, "What is my cost per gigabyte of Tier 1 storage? What is my cost per virtual machine? What is my monthly cost to support this application or that server?"). This single step is possibly the most powerful in eliminating waste. Most IT managers would like to eliminate costs and make better decisions but they have very little insight into the true costs of IT. For example, the CIO of a large, nonprofit healthcare system performed a deep cost analysis and found that, by moving a portion of the organization's non-mission-critical storage to Tier 2, the company could reduce storage costs by 66 percent.
Next, IT leaders should also overlay consumption or utilization of IT services with cost. IT organizations can only start to understand where there are opportunities to move towards lean IT by looking at cost and utilization metrics side by side. IT organizations should leverage automation to help them compare utilization and cost information.
By aligning around IT services, putting systems in place to measure cost of delivery, and enabling processes for tighter communication and transparency, IT moves from a cost center to a true service provider. While this is interwoven in everything we've discussed, it is fundamental to achieving lean IT. You can't understand the cost and value of a service unless you understand the TCO of that service. The better IT can understand the costs per service, the better it can eliminate waste, become leaner and provide higher value.