Tuesday, February 15th, 2011 - 12:03
Tuesday, February 15, 2011 - 10:53
Unless agencies undertake a strategic approach to IT consolidation, they are likely to end up worse-off post-consolidation than pre-consolidation. This post explores some key activities that are vital to long term success of agencies’ transition to a new environment.
Most experts can rattle off compelling technical and financial reasons in favor of IT consolidation. But it’s important to remember that unless agencies undertake a strategic approach early on, they are likely to end up worse-off post-consolidation than pre-consolidation. There are some aspects that are vital to long term success of agencies’ transition to a new environment: committed strategy, governance, business case, asset discovery, chargeback planning, expertise on hand, and structured architecture.
Consolidation requires initial upfront investment and a formal governance structure, including all stakeholders. The entire organization may be on board regarding the effort but are their motivations the same? Usually not. Each stakeholder has different incentives. The CFO may be focused on ROI, CIO on overall IT cost reduction, business leader on operational efficiency, operational manager on reclaiming data center space and a junior manager on fascinating technology. Then there are downstream constituents who feel discomfort due to impending change and loss of control.
Agencies should prepare a formal IT strategic plan and business case that articulates objectives, scope, planned schedule, future service levels, assumptions, risks and quantifiable and intangible benefits. The business case is the foundation of the governance body decision making process and should be structured to yield consolidation value in 12 month phases. The business case will not only help establish consensus and convey strategic intent but also enable effective user communications to ease recognition and absorption of the impending change.
OMB initially determined there were 1100 federal data centers but a comprehensive inventory discovered 2094 data centers, a mind boggling 90% more than initially estimated. The know-it-all fallacy can be avoided by an accurate inventory of legacy assets including hardware, software, applications and resources. It’s also valuable to know the depreciation schedules, lease duration and contractual obligations. Affinity of all hardware and software components must be known to accurately determine ROI and develop migration plans with low risk. These facts help map dependencies, converge processes, potentially leverage existing assets, avoid duplicate purchases, plan critical upgrades and establish the end-state view.
A good chargeback plan solicits input from the CIO, the CFO, operation managers and other directly impacted constituents. The key elements of any such plan are simplicity, fairness, transparency, flexibility and communication. While the first three elements give a level of comfort to the constituents, flexibility allows for potential price revisions and communication ensures that constituents remain informed of changes at all times. Depending on specific needs of the agency, chargeback can range in flavors from vanilla cost allocation model to a more complex but likely more appropriate benefit allocation or usage model.
Early in the process, consider tapping into expertise and insights of major systems integrators with deep expertise and proven consolidation results. Think from long-term perspective- service that may seem expensive at the outset may, in fact, be an investment that bears fruits on schedule and without rework. Avoid the low-cost trap of less reputed companies that bid low and then PCR their way through the contract, resulting in significantly higher total contract cost. The better known companies have a reputation to protect and will likely do whatever it takes at their end to make the project a success. An additional benefit is that these integrators also provide sophisticated industry metrics for cost control and success and have proven transition methodologies to reduce risk. A Gartner study indicated that “15% of the organizations that did not use outside help wished that they had after it was over.”
Most IT consolidation efforts are essentially “backward consolidations”- an attempt to undo the IT sprawl generated over the years. Strategic planning phase should also be used to set the vision for the future by discussing “forward consolidations” that will prevent future sprawl. While future requirements are difficult to accurately predict, forward consolidation plans with elements like a well structured architecture and standardization contribute to realizing consistently high ROI.
Ravi Bansal is a project executive and a strategist at IBM Global Business Services. He is a proven business leader with experience proposing, leading and delivering multimillion-dollar business solutions. In addition, Mr. Bansal is a strategist for IBM federal’s cloud computing and smarter government initiatives. He authored 5E framework for targeted IT consolidation and the strategic framework for cloud alliances. He is passionate about cloud computing, cleantech, next generation business strategies and most importantly, helping clients articulate vision for their business.
Mr. Bansal is one of IBM Americas’ top consultants and has also been inducted in IBM’s delivery excellence circle. Over years he has been honored with numerous awards for outstanding business performance and exceptional client service. Outside of direct work responsibilities, he is involved in an eclectic collection of giveback activities. Among other things, he was an officer of the Executive Committee of Metropolitan Washington Mensa, canvasser for IBM employee charitable contributions campaign and a guest speaker at business schools. Mr. Bansal is a graduate of The Wharton School of the University of Pennsylvania with majors in Finance and Strategy.