What really matters in IT today

This is the stuff that counts, that drives the IT industry and keeps us all going

The last 10 years have been rough on IT. After the industry run up during irrational exuberance, the great collapse took with it corporate confidence in technology, led to layoffs and made everyone question technoloy as a viable career track. But IT matters – the network matters, as does security, and new technologies such as SOA and wireless.

Let's face the facts. IT isn't what it once was. The pall cast by the dot-com collapse at the beginning of the decade eroded corporate confidence in IT, took the shine off IT as a desirable career path and even made us question our self-worth.

It didn't help to have pundits such as Nicholas Carr publishing articles in academic journals proclaiming that IT no longer mattered. (Read a review of Carr's latest book.)

But where are we today? What matters? What turns the gears? What are the core developments powering change in our change-happy world?

Well, for one, despite Carr's prediction four years ago (see "IT doesn’t matter"), IT matters. In fact, IT spending in North America grew a healthy 5% in 2007 and is forecast to repeat that feat in 2008, according to Computer Economics' latest IT spending and staffing survey. And while companies are buying more, as a percentage of corporate revenue IT spending is down: 1.8% in 2007 compared with 2% in 2006.

What matters

That's a good sign, says George Westerman, research scientist at the Massachusetts Institute of Technology's Sloan School's Center for Information Systems Research (CISR). "If you have a scalable platform, you’d expect the cost of that platform to go up more slowly than the revenue you get from it," says Westerman, who is co-author of IT Risk: Turning Business Threats into Competitive Advantage.

The upshot: Leading organizations are getting real value out of their IT spending, and the advantages often revolve around business agility, Westerman says. "Agile firms have significantly higher growth and have better gross margins than competitors." Solid IT infrastructure is a key building block for agility, he adds.

Done right, IT increases efficiencies and reliability, but the increase in agility is the key benefit because business environments are becoming less predictable. Cycles are shorter, quicker refreshes are required and companies have to contend with the pressures of globalization, thinning margins, rampant merger and acquisition activity, and tighter regulations. 

Agile companies navigate these choppy waters better than less agile firms, growing revenue and profits faster. 

Paradoxically, the most agile companies are those that have standardized the bulk of their core business processes and platforms. Companies once believed the more rules and standards that IT put in place the less agile the business would be overall. "The thinking was, if we do the kinds of things that will get us to cleaner infrastructure and applications architecture, all the rules that helped us get there would restrict the flexibility we need to be agile," Westerman says. "But that's just not true."

Enterprises with well-managed IT "become more agile because now it's easier to handle major changes, whether it be business expansion or launching new services," he says. "By putting the rules in place to make sure we run our architecture and infrastructure effectively, our businesses actually become more agile — and successful."

Signs that IT is more critical than ever to business are plentiful. In a recent Harvard Business School/MIT CISR survey of 175 CIOs, 80% of respondents said they are members of the executive leadership team. This compares with the 86% of CIOs who were just wishing for such recognition in 2006. 

"Senior management increasingly recognizes technology as central to innovation and competitive advantage," the study says. "As a result, more and more CIOs are gaining a prominent seat at the table in their executive teams and playing an active role in strategic business decisions."

That’s when IT becomes a real differentiator. "A seat at the table is great because not only can you be there to help suggest great possible uses of the technology you already have, but you can also be part of the discussion so IT can anticipate where the business is going," Westerman says. "The idea is to have the technology ready when the business needs it, rather than finding out after the business needs it and spending six or nine months figuring out how to get the technology there."

In the most agile, successful companies, IT becomes a co-creator of strategic business initiatives along with the business leaders. "That happens here," says Josh Hinkle, manager of network management and security at the American Heart Association in Camp Hill, Pa. "A lot of initiatives at the company level originate with guys like me coming up with ideas, making suggestions and then selling it."

Yes, IT does matter.

Networking matters

However, all the great ideas in the world won't add up to any advantage if you don’t have the proper underpinnings to build on. "A well-managed, reliable infrastructure is the foundation for good risk management, good business performance and good agility," Westerman says. "And the network is at the center of that infrastructure."

So, networks really matter. And they become more critical with time according to Metcalfe's Law, the rule coined by Ethernet inventor Robert Metcalfe that says the more people and services that access and rely on a network the more useful it becomes. That effect is even more profound in today’s world of anytime, anywhere, any way access.

"We're funding research that doesn’t come from researchers in our town," Hinkle says, noting that his Web-based infrastructure makes heavy use of WAN acceleration, traffic shaping and application performance monitoring.(Learn more about Application Acceleration and WAN Traffic Optimization products from our Application Acceleration and WAN Traffic Optimization Buyer's Guide.) "The only way to reach them is to provide them with information in real-time anywhere in the world. Our business is set up to provide that information in digital format when people want it and how people want it, whether it’s during the business day or at 11 at night, here or halfway across the world."

The American Heart Association has already seen the benefits of such ubiquitous access. "A lot of the people we serve aren't even in the U.S.; they're researchers from Europe, Japan and Canada requesting grants. Because of the efficiency of our network and Web applications, the base is widening and we're seeing more diverse people requesting grants, and doing research."

Boston's Northeastern University also is using the network to remove the obstacles of space and time.

The school's Northeastern On-Demand initiative is an attempt to virtualize the university experience so the nearly 6,000 students who participate in its cooperative education program would still feel a strong connection to the school. The co-op program sends students out to work in real-world enterprises as part of their course requirements. At any one time, students can be working in as many as 35 different states and 33 foreign countries.

Northeastern On-Demand consists of a Xythos Web-based document repository integrated with desktop virtualization wares that enable the school to provide students and faculty with secure access to not just documents, but also their desktop applications from home, a work site or even from a local Starbucks.(Learn more about Collaboration products from our Collaboration Buyer's Guide.)

"With Northeastern On-Demand, no matter where you are or whatever device you're on, you can continue to work as if you were at your desk here at the university," says Richard Mickool, executive director and CTO of Information Services. "That's the reality of our environment. Research, collaboration and learning doesn't just happen between 8 a.m. and 4 p.m. on this campus. It's a 7 by 24 thing, and the network facilitates that."

Richard Mickool, executive director and CTO of IS, Northeastern University

That provides the school with an edge. "Are people coming to Northeastern because we've got the pull of this new environment? Doubtful," Mickool says. "But I think people come to Northeastern because of the educational experience, which if you start to peel away the onion includes some of the technology environment and the information access they have. They can still have a rich, learning, collaborative, productive environment no matter where they are, and that's what's important."

Security matters

Networks matter so much, in fact, that a corollary to Metcalfe's Law is in order: As reach increases the value of networks, security exposures grow exponentially because disruption of any one node can potentially disrupt all the others.

And the costs of getting it wrong are staggering. On average, every customer record lost or stolen costs $150, according to experts. So when the loss involves millions of records — 94 million in the case of TJX, the most prominent recent victim — the math is pretty straightforward. But real costs are industry-dependent, and in the financial sector the cost might be closer to $1,000 per customer record breached.

Every company should know, therefore, that security really matters. But many still don’t get it. Consider the fact that few companies encrypt data on laptops, even though on average companies lose 4% to 5% of their laptops each year.

"A lot of them say it's too hard, they don't know how to manage the keys and they aren't willing to encrypt until they have the absolute perfect solution," says Joel Snyder, senior partner at consultancy OpusOne. But that's a recipe for disaster, as TJX and Visa discovered. (Although Visa knew TJX had security problems as early as 2005, it gave TJX until the end of 2008 to get into compliance.)

Good security needs to be proactive, experts say. "When I talk about securing networks, one thing I tell people is, don't let yourself be BlackBerried,” Snyder says, noting that many enterprises were surprised by the infiltration of wireless BlackBerries and then had to quickly cobble together ways to support them. "The IT guys were not out ahead of the curve, trying to ready these services for their executives before the executives asked for them. IT security guys need to get ahead of the parade, not rush to catch up to it."

The American Heart Association’s Hinkle says people resist including security in the beginning of a project because they think it will slow down the process, when the reverse is true. "At the end is when the feet-dragging on security happens, and there's not any buy-in. People need to integrate security to network design upfront."

Tech advances matter

Security is a moving target. But fortunately, new security tools are emerging as fast as new threats. It is one sector where keeping up with tech advances is critical, but not the only sector. While most companies don't want to be on the bleeding edge, they can't afford to lag too far behind because technology advances can change the game. Technology advances matter.

Consider the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). One of the first things ATF agents do when they reach a crime scene is set up a field office with links to headquarters in Washington, D.C., says William (Larry) Bell, deputy assistant director and deputy CIO. But it would always take the phone company 24 hours-plus to install the connections, Bell says, noting that many agents would resort to satellite phones in the interim. "Satellite phones are fine for voice, but we also wanted to push data, pictures and video, so we really needed broadband."

The ATF turned to a wireless service from iPass. ATF field agents are given wireless access cards for their laptops that when activated, search the area for available wireless networks, including Wi-Fi hot spots and a range of wireless WAN services.

"It automatically finds potential connections and automatically connects to the strongest one, and the agent doesn't have to do anything," Bell says. Now instead of waiting for 24 hours, agents in the field can set up broadband collaborative links immediately, anytime, anywhere. 

The success stories surrounding innovative use of new technologies abound, companies realizing business gains using everything from RFID to services-oriented architectures and CRM.

But, to be sure, there are nearly equal the number of horror stories about technology projects that went wrong, or simply never lived up to expectations.

"With new technologies, we have to make sure we're integrating them into the way we manage IT already," Westerman says. "If the technology becomes a bolt-on that takes us in the direction of more complexity, then it's going to hurt us. Does the technology take us to the point where we actually have better structured IT assets? To the extent that something like [service-oriented architecture] can do that, that's great. To the extent that SOA becomes something we do separately in addition to everything else we've been doing, then it's not."

Hinkle says the key is that adoption of new technology must first be spurred by the business, not the other way around. "It's not me saying we need to do WAN acceleration; it's the business saying they need these Web applications to work better, or they want to stream audio and video. And then I look at what it takes, be it WAN optimization, data prioritization, acceleration," he says. "The business makes the objectives, and together we find the solutions to do what they want."

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