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Business leaders who think strategically about IT infrastructure drive results

Thor Olavsrud | July 31, 2014
According to a new study by IBM, organisations with a strategic vision for IT infrastructure focused on driving competitive advantage and optimising revenue and profit tend to significantly outperform their peers.

Their industry peers, who did not rate themselves as excelling in any of the areas, were dubbed "Siloed Operators" in the report.

The 17 percent of companies deemed Strategic IT Connectors in the study were significantly more prepared to address infrastructure requirements than Siloed Operators, including greater preparedness in the areas of cloud (52 percent versus 10 percent), mobility (36 percent versus 28 percent) and analytics and big data (44 percent versus 39 percent).

Strategic IT Connectors were also significantly more likely to identify themselves as outperforming their industry peers in revenue growth (30 percent versus 10 percent) and profitability (45 percent versus 25 percent). They were also more likely to have a higher than average industry net profit margin compared with their industry peers (62 percent versus 26 percent).

"They took a position and point of view on IT infrastructure that was not tactical but more strategic in nature," Woods says. "They also tended to be more collaborative at the enterprise level, focused on utilizing infrastructure as a catalyst to drive business results."

Still, two-thirds of respondents to the survey said they will be increasing their spending on IT infrastructure over the next several years (though the Strategic IT Connectors were significantly more likely to increase infrastructure spending by more than 10 percent). Among all parties, Strategic IT Connector or not, reducing overall infrastructure costs was the primary driver for increasing investment in infrastructure: 33 percent of all respondents said they will spend more today to reduce future operating costs.

But after that, drivers diverge. Strategic IT Connectors rated "achieving greater competitive differentiation" at essentially the same importance as reducing infrastructure costs, whereas Siloed IT Operators rated it much lower on their list of top drivers. Siloed IT Operators rated "improved operational efficiencies" as about on par with reduced infrastructure costs, followed by dynamic pricing, new or enhanced revenue opportunities, achieving greater standardization, more effective disaster recovery and faster application development/deployment. Only after that did achieving greater competitive differentiation come into the picture.

"When you think about infrastructure, it's not one thing," Woods says. "It's many things. You have to think about optimizing all the various components to optimize your overall business value. Think about infrastructure as a strategic vehicle to improve your overall results."

When considering how IT infrastructure can deliver competitive advantage for their businesses, IBM recommends IT leaders ask themselves the following questions:

  • In what ways can your organization use IT infrastructure as a tool to achieve competitive differentiation in the marketplace? What examples show that this is already happening to some degree?
  • To what extent is your IT infrastructure equipped to handle new workloads associated with mobile, social and analytic applications?
  • To what extent are your infrastructure choices determined by line of business requirements?
  • How will you prepare your existing IT infrastructure to address emerging issues and disaster recovery scenarios?
  • What is your organization's strategy for incorporating various forms of cloud technology (for example, private, hybrid, public) into the larger, existing IT infrastructure? What challenges has this posed for the IT organization?

 

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