Platt Perspective on Business and Technology

Virtualizing and outsourcing infrastructure – 5: thinking through IT as a source of lean infrastructure cost-effectiveness

Posted in strategy and planning by Timothy Platt on April 22, 2011

This is my fifth installment in a series on virtualizing and outsourcing as a route to developing a leaner, more agile and cost effective business infrastructure (see Business Strategy and Operations, postings 127- 129 and 132.) I look at everything in this type of analysis and redesign – all assets, owned and rented resources and processes included, and all are important in this. But every business, no matter how product and service oriented, is in large part an information management organization, and certainly as it carries out its business.

Every purchase and expenditure coming in carries with it a flow of information that needs to be processed and stored and that will help inform strategic decision processes in making the business run, and run competitively. This can include supplies and raw materials that would go into products developed and sold, utilities expenses and other internal-use expenses, payroll and related expenses, and a vast array of other detail points. If you are a business owner or CEO and leave Finance and Accounting to others to manage day to day, ask someone in Accounting to show you how many items and expense areas they manage the numbers and data processing for. And if you have not done this recently their response may be eye opening as new and unexpected details come up that you would find value in knowing about.

Every internal process and operation involves flows of information, and both on what is being done and on who is doing it and how their contributions mesh together – plus performance benchmarking of a variety of types and to meet the needs of a range of audiences.

Production and distribution are data and information processing driven as are Marketing and every other functional area in your business or organization. Businesses are information development, processing, storage and distribution machines. Agile and lean in a business context are ultimately all about finding ways to process and manage information better – better than you do now and better then your competition. Developing a competitive edge and securing marketplace leadership, in many ways is about managing information better too. In this, a business with a better product will not win any races if it cannot get it out to the marketplace with consistent, rapid reliability but their competitors can meet customer needs when and where they see need to make that validating purchase. And this is all information driven.

• Lean and effective infrastructure has to begin with information and in how your business manages it.
• This informs every other decision area as well as explicitly information technology decisions.
• And that is why the title of this series has “virtualizing” in it as well as “outsourcing” as I discuss limiting in-house to what needs to be in-house.

Develop a lean information technology approach with an eye to how that department and functional area operates internally to itself, but look outward to consider the operational and strategic impact that your IT decisions will have throughout your organization and as your business relates with its marketplace and its supply chain partners. And understand the trade-offs this involves, which can and will change with time.

The decisions I write of in this series all involve trade-offs, and that means negotiations with stakeholders and others who would be impacted upon. The next posting in this series is going to focus on negotiating mutually acceptable, effective lean and agile. I will take an information management focus in that.

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