Organizations have made huge investments in IT infrastructure and are continuously
spending on maintenance, upgrades and related administration and management.
Lean IT Transformation is an approach for creating new cost-effective, agile
and flexible IT service models by switching from company-owned IT hardware,
software and services to per-use based models. It leverages the latest trends
in cloud computing technology and next-generation SaaS business models. This
approach will help organizations to significantly reduce total cost of ownership,
help achieve desired business agility and guarantee quality-of-service through
new IT service models. We will illustrate the cost-benefit analysis of lean
IT transformation approach in Enterprise Collaboration scenario.
The traditional IT has multiple fixed and variable cost components involved.
Organizations have invested a large fixed amount for initial infrastructure
setup and continue to spend variably for management, monitoring, support for
these IT systems to sustain day-to-day business operations.
Figure 1: Traditional IT Cost Dimensions
We all have experienced that despite heavy investments by organizations in
IT, there is always a huge gap between what businesses expects from IT and what
IT can deliver-back to the business. The issue becomes severe when it comes
to reducing the time-to-market new products & services or facilitating quick
changes in critical business functions related to partners, suppliers or customers.
On the other hand, IT has justified limitations in terms of complexity and
heterogeneity of existing IT environment, inflexible legacy though business
critical IT systems, software, hardware & vendor lock-in and so on.
The following summarizes the key business expectations, key challenges faced
by IT and how the business gets impacted in terms of growth, operations efficiency,
customer satisfaction and competitive edge:
Lean IT Transformation
Lean IT Transformation is an attempt to resolve the above problem cost-effectively
by creating new IT service models and switching from company-owned IT hardware,
software and services to per-use based models. It focuses on reducing the IT
infrastructure and related liabilities to reduce total cost of ownership. It
focuses on changes in IT services and payment models to achieve desired business
agility and flexibility without any software, hardware and vendor lock-in. It
also focuses on achieving guaranteed quality-of-services from various service
providers. All these themes are realized by leveraging latest trends in cloud
computing technology and next generation SaaS IT service models.
The lean IT transformation approach leverages the following key strategies
that results in significant business benefits:
In the next section, we will illustrate the cost-benefit analysis to of adopting
lean IT transformation in Enterprise Collaboration scenario.
Enterprise Collaboration Scenario: Lean IT Transformation
We understand that collaboration is a very wide concept and it goes much beyond
emails, messengers and collaboration portals. However, for the purpose of this
article, we would limit the definition of enterprise collaboration platform
to the following components, which are most widely used in organizations of
Messenger or Communicator
Office Applications like Word, Excel, PowerPoint, etc.
Other tools like whiteboards, live meeting, voice conferencing, etc.
For the purpose of cost-benefit analysis, we would limit our analysis to an
Email solution in this scenario. The following is derived from the latest report
published by Forrester:
# cost per user per month
We learned that Google-hosted email service offers cost of approx $8 per user
per month for organizations of any size. It makes the on-premise Email solution
completely uneconomical for the organizations with less than 15,000 people.
We also noted that the Googleehosted solution has only web interface and does
not have offline mail client software, which might be required by most organizations.
We also found that Microsoft Hosted Exchange solution provided significantly
lower costs of approx $20 per user per month for the organizations with less
than 30,000 people. In brief, the MS Online offers hosted Exchange, hosted SharePoint
and Communicator services on Microsoft cloud platform.
We suggest readers refer to the online cost calculators provided by MS Online
and Google Apps offering to develop a complete business case for the complete
enterprise collaboration scenario. We also suggest deriving the y-o-y savings
and related cost-benefit analysis for final decision making.
The business benefits for the above scenario sound attractive, but there are
multiple challenges in real-life implementation of such solutions. For e.g.:
maturity of existing cloud platforms
maturity of SaaS business models
maturity of service providers
level of customization available with software packages
data security and ownership challenges
back-end enterprise integration challenges and so on
We identified the key criteria that can help organizations to prioritize the
transformation of existing IT infrastructure and applications on to the cloud-based
platform. These criteria include business value of the application, size and
complexity of the application, equivalent cloud based offering availability,
integration constraints in application migration, data security and ownership
constraints, overall usability experience and so on.
Figure 2: Lean IT Transformation Roadmap
We suggest organizations who are considering cloud-based solutions as their
next-generation IT to undertake lean IT transformation in an iterative manner,
by moving the simple and non-business critical applications first to the cloud
followed by more complex and business-critical applications with a careful,
systematic and detailed evaluation of all service providers and their service
Lean IT Transformation is a high level approach for next generation IT services
suitable for organizations of any size. It promises significant cost savings,
desired business agility and guarantees quality-of-service. The current IT trends
and various leading analyst reports are showing that organizations have started
thinking about moving towards lean IT in-parts. There are multiple challenges
to realize all the benefits of it and also manage seamless and smooth transition;
however for several mature scenarios it is worth taking the risk.
About the Author
Bhavin Raichura and Vijay Rao are associated with Infosys Technologies Ltd (NASDAQ:INFY) in Manufacturing vertical. Infosys is a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. Raichura and Rao are closely working with clients, for conceptualization, definition & business-case preparation for technology-oriented business-focused solutions; aligned with latest industry trends.
Infosys Technologies Ltd. (NASDAQ: INFY) provides consulting and IT services to clients globally — as partners to conceptualize and realize technology driven business transformation initiatives. With over 25,000 employees worldwide, we use a low-risk Global Delivery Model (GDM) to accelerate schedules with a high degree of time and cost predictability.
We provide solutions for a dynamic environment where business and technology strategies converge. Our approach focuses on new ways of business combining IT innovation and adoption while also leveraging an organization's current IT assets. We work with large global corporations and new generation technology companies - to build new products or services and to implement prudent business and technology strategies in today's dynamic digital environment.