IT Complexity
Goal is to reduce complexity and variety of technologies within the company.
Why companies add a new type of application?
- Sometimes a vendor pushes the adaption of a new type of software.
- Business managers like a new type of application and decide to buy that using their own budget.
- A battle inside IT department over the main type of software, hardware etc.
Result of IT complexity
- Changing an IT system will be hard because it relies on a lot of other systems.
- Difficult to support real-time, responsive operations.
- Increase risk of IT availability, IT access, IT accuracy, and IT agility.
Solution to IT complexity
Standardization
Standardization enforcement approach
Use less systems.
Standardization approaches
- Voluntary compliance
- Strict enforcement
- Gradual migration
IT standardization
The activity of establishing and recording a limited set of IT solutions to actual or potential matching problems.
IT Principles
- Prefer open-source solutions.
- Log all main operations.
- Use scalable storage
- Backup all permanent data
- Use middleware for integration
- Avoid binary integration protocols
- Host in the cloud
- Dedicated server for each system
- Place public systems in DMZ
- Secure by default
How IT helps with innovation
- Potential absorptive capacity
- Realized absorptive capacity
- Ideated innovation
- Commercialize the innovation
Absorptive capacity
Firm’s abilities to manage knowledge.
Potential absorptive capacity
Knowledge acquisition and assimilation capabilities.
Realized absorptive capacity
Knowledge transformation and exploitation capabilities.
Ideated innovation
Knowledge that is created through firms’ innovation efforts.
Commercialize the innovation
Market available ideas.
Operating model
The necessary level of business process integration and standardization for delivering goods and services to customers. Combination of business integration and business standardization.
Operating model: Business integration
- Business process integration
- Share data between related processes to enable end-to-end processing
- Share data across unrelated processes to enable a single fact to the customer
- Requires a common definitions and format of data
Operating model: Business standardization
- Business process standardization
- Creates efficiencies and predictability across business units.
- Limits opportunities to customize services.
- Limits local innovation
- Requires perfectly good local processes be replaced with standard ones.
Coordination
High integration, low standardization
Unification
High integration, high standardization
Diversification
Low integration, low standardization
Replication
Low integration, high standardization
