As they describe it, Factory IT "encompasses the bulk of an organization's IT activities, applying lessons from the production floor-scale, standardization, and simplification-to drive efficiency, optimize delivery, and lower unit costs." Likewise, Enabling IT is "focused on helping organizations respond more effectively to changing business needs and gain a competitive advantage by spurring innovation and growth."
McKinsey research fielded in October, 2010 shows which Factory IT techniques companies are using to cut costs and improve quality. Of the 864 global executives surveyed, the following data shows how many have deployed or piloted these IT practices:
82 percent have cloud computing initiatives
75 percent are cutting complexity through improved planning
71 percent are using agile software development
64 percent are applying traditional business management techniques to IT
It is interesting to note, that slightly more than 1/3 of those surveyed are not yet applying lean IT techniques to their IT practices. These practices include things like streamlining processes, automating routine functions, eliminating redundancy, and replacing customized systems with highly standardized offerings. Measures such as these, the authors note, "often double workforce productivity by redeploying or reducing staff."
While IT is well aware of the disadvantages of IT complexity, the problem was created gradually through acquisitions and the evolution of system requirements, getting the financing to replace old systems is difficult. Some companies are using a more holistic business case model that goes beyond the more typical IT-centric version, the authors say. This model, they explain, includes "realistic, verifiable cost-benefit analysis to assess the impact of new systems on the entire organization." These cases also need a plan for how future projects might build on the investment.
As for the Enabling IT model that supports growth and innovation, the McKinsey research also showed how several practices were deployed or piloted by 864 global executives:
73 percent have new interaction models using Web 2.0 tools
61 percent use rapid experimentation to develop, refine, upgrade services and products
49 percent have IT teams tightly integrated with business partners
With information flows constantly on the rise, organizations need their best and brightest IT and business minds collaborating on how to extract value from this sea of data. It's good to see that almost half of the organizations surveyed are deploying cross-functional teams to tackle this. Of course, it also means that one-half of those companies are not doing this, even in pilots.
How well is your organization doing in deploying new approaches to keeping down costs, increasing productivity, and spurring innovation?