Step #2: Determine Utilization and Performance Metrics of IT Products and Services  

By Sunny Gupta  |  Posted 2008-10-06 Print this article Print

Looking at cost metrics is important, but utilization and performance of your IT services is just as essential. They provide the value side of the cost-value equation. For example, utilization measurements can assess how many users use a specific application, how "full" the data center is, what percent of CPU capacity is being used on a server and how much free space is in storage. This is no different than a manufacturing organization looking at utilization of their capacity and resources.

Step #3: Develop a Demand Management Process

The concept of demand management in Lean IT is akin to supply chain management in logistics companies or pull processing in Lean manufacturing. Lean manufacturers design their operations to respond to the ever-changing requirements of customers. IT organizations that are lean and flexible can adapt to changing business demands without incurring huge expense or time. This enables the business to be more nimble as well as IT-efficient. 

Step #4: Eliminate Waste

This principle preaches the elimination of activities or services that do not add significant value to the company. Once there is a system or process in place to track service cost, utilization and performance metrics, as well as end-user demand, the next logical step is to apply resources to the highest-value, lowest-cost areas and eliminate those that are low-value, but high-cost. This enables an optimal allocation of resources and a lean organization. 

For example, waste minimization in IT can mean analyzing and comparing a complex infrastructure element like servers and, by standardizing on fewer server types (low-cost and high-utilization), you can significantly drive down unit cost--including support, provisioning, patching and administration.

Another option is to consolidate storage and eliminate old data that is no longer worth the cost to store it. If one data center is cheaper than another, then the more expensive site is a target for elimination. These are all well-known cost reduction activities being deployed around the world, but commonly implemented without the rigor, data and process of knowing where to target these efforts.

By establishing a rigorous process, and looking at cost, revenue and utilization metrics, approximately 10-15 percent of costs can be driven out due to elimination of IT services, consolidation of infrastructure, better optimization of human resources and leveraging innovative vendor management approaches.

Step #5: Improve Flexibility

Flexibility means producing a mix or diversity of products quickly, without sacrificing quality or service levels--even at low volumes of productions. This requires foresight from management and a keen sense of the market trend. For IT, this suggests the ability to change services and output based on industry offerings and the needs of the business. You can often drive down costs by altering the service levels that the business expects. It's a commonly discussed theory, but often unrealized in practice.

Sunny Gupta is co-founder, President and CEO of Apptio. Sunny's career in enterprise software spans more than 16 years, with roles in general management, strategic marketing, product management and business development. Most recently he was the Executive VP of Products at Opsware, and was responsible for all of the company's product businesses (up to its acquisition by HP for over $1.6 billion). Prior to Opsware, Sunny was the co-founder and CEO of iConclude, which pioneered the IT runbook automation market (and drove its acquisition by Opsware for $62 million in less than two years from inception). Before founding iConclude, Sunny ran the Java/.NET Performance Management Product Group for Mercury Interactive (acquired by HP for approximately $4 billion) and served as VP of Marketing and Business Development at Performant (acquired by Mercury Interactive). He also served as General Manager of Business Development at Rational Software (acquired by IBM for approximately $2 billion), while playing a role on the team that helped scale that company from $300 million to $850 million in revenue. Sunny also co-founded Vigor Technology before its acquisition by Rational, and held product management and consulting roles at Easel Corporation and IBM. Sunny earned a bachelor's degree in computer science from the University of South Carolina. He can be reached at

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