Five tips for centralizing IT

If you haven't already centralized your IT team and infrastructure, the time is nigh. Experts say a combination of factors are making this the right time to consolidate your human and technology resources.

"More than 90% of employees work away from headquarters these days, so you can't put IT staff everywhere they are," says Andreas Antonopoulos, senior vice president at Nemertes Research in New York.

This shift marks an opportunity for IT. "Centralization will reduce costs for staffing and compliance. If you centralize infrastructure such as storage, then you can run software that assists with compliance efforts, access controls, backup and recovery. If storage is split into file servers all over the place, then it's impossible to know what data is where," he says.

Consolidation also offers IT groups the ability to achieve economies of scale. "Everything is cheaper when you do it on a bigger scale such as server management and software licensing," Antonopoulos says.

Ian Finley, an analyst at AMR Research Inc. in Boston, agrees that the time for centralization is now. But he says the benefits go beyond cost reduction. "We see companies consolidating for competitive advantage and revenue growth. Today's initiatives require a more coordinated business, and you have to centralize IT to achieve that goal," he says.

He adds that organizations are looking for systems to be integrated across a broad swathe and they can't afford to have "islands of information."

"If you're integrating your supply chain end to end, you can't wait for the nightly download from your distributed data warehouse. You have to know what to buy, what to make, what to supply and what to ship every hour or every minute. You need comprehensive information in real time," he says.

Before you begin your road to consolidation, consider these tips from industry experts.

1. Align your centralization plan with a business goal.

Finley says the best practice for achieving success in centralizing your IT organization is to link it to a core business move. "If you centralize out of nowhere, you'll hear 'IT is hurting us' from your users," he says.

Instead, show that centralizing will make the company's move into China more efficient or that you'll get better end-to-end visibility of the supply chain or that you'll be able to be more agile overall against competitors.

Louis Foler, senior server-solutions architect at CDW Corp. in Vernon Hills, Ill., says attaching your centralization project to approved corporate initiatives is mission critical. "Senior management needs to see not only projected cost savings, but how the project fits into the overall corporate plan," he says.

But Jan Duffy, an analyst at IDC Canada, says to be careful not to rush into centralization. "Do a SWAT analysis of your ability to capitalize on such an investment. You have to think about the ramifications for IT and non-IT groups," she says. For instance, she says a technology company that is trying to keep its services and IT groups separate could face difficulties with consolidation. "It may be impossible to have both sides of the business function under the same kinds of rules and controls. You could potentially destroy your services business if you made it function the same as the rest of IT," she says. She advises companies to be objective about the pros and cons of imposing the uniformity that comes with centralization.

2. Communicate your centralization plan across the organization.

"You have to sell this personally," Finley says. He adds that you'll have to show buy-in from corporate executives. "The CIO needs to meet with his reports and other employees every quarter, every month or even every week so that they feel they're part of the process," he says.

Duffy recommends building a team of people across the organization that act as liaisons between IT and business. She adds that users have to be kept in the loop. "You have to let users know what's going on," she says.

"Centralizing often means taking power and control away from some employees and giving it to others. It's important to communicate the benefits as well as the impact to all departments," Foler says.

He says with centralization comes new processes and those process have to be well documented and communicated to all stake holders.

3. Budget for infrastructure improvements and network upgrades.

The biggest misnomer about centralization is that you'll see immediate cost savings. Instead, expect to spend money the first year.

There are a lot of benefits to consolidation, including the ability to manage all infrastructure from a central location. However, there are costs considerations such as increased bandwidth or network optimization tools that need to be taken into account. "Lack of bandwidth can negatively impact IT's ability to remotely manage field offices and branch locations," Foler says. In addition, if users suffer poor performance due to inadequate network resources, they will impede your project's success.

Duffy recommends testing every aspect of the network before rolling it out to the masses. "One thing you want to make sure of is that centralizing servers won't hinder productivity," she says. She adds that IT should do a lot of research about centralization and look at case studies across various industries, including investment banking companies that mostly have global teams that operate 24/7.

She concedes that you can't pilot all aspects of IT centralization, such as how well collaboration is going to work in a consolidated environment. "While centralizing technology is easy, the people and processes are a little harder," she says.

To avoid too noticeable a budget hit, Finley says you should phase in different parts of the infrastructure centralization and not try to do everything at once. "Focus on where you'll see the greatest success. The faster you can show cost savings, the better position you'll be in with your CIO," he says.

4. Create service level agreements with your users.

When you centralize, you change the whole corporate structure, Finley says. "You need procedures in place that make sure your people are working on what's most important to the business," he says.

He recommends developing a prioritization process that is open and well respected throughout the organization. "That way, when you tell someone their project will have to wait because you're working on someone else's, your authority will not be challenged," he says.

"You have to start looking at delivery of services from an end-to-end SLA perspective," Antonopoulos says. "It's not enough for you to say the server is up if the network is down, because the user can't access an application and be productive."

Base SLAs on delivery metrics for the total user experience. "This is a paradigm shift for most IT departments, which usually focus on various elements within the network, not the overall performance. Suddenly, you're being asked to take a business service management approach," he says.

5. Don't get rid of your brain trust in the rush to consolidate.

Centralization often gives IT groups a license to slash and burn their IT staffs, but the experts caution against this.

For instance, Duffy says that you might keep some staff in foreign countries to handle cultural and language differences. "If you're a multinational company, you have to recognize the differences in operating across geographies. You can't assume that that all your subsidiaries can mirror you and be smaller versions of your main office," she says. As an example, she says there might be a need for local IT staff to negotiate networking and service contracts based on regional offerings and customs.

She adds that you could centralize management of Lotus Notes, but still have a Lotus Notes specialist in the field.

Antonopoulos says IT should work closely with human resources during the move to centralization. "Just because you're centralizing IT resources doesn't mean you have to centralize all your IT administrators," he says. "Create positions for remote administrators so that highly skilled workers don't feel forced to relocate."

Centralization can be a big win for companies looking to consolidate resources and align IT with their business goals, but only if you put a lot of thought and effort into how your new organization will be structured. Duffy says the most important thing is not to reinvent the wheel and instead study case studies of companies that have done this before. "Centralization doesn't always happen naturally, but in the end you will have a core group of business-savvy IT employees," she says.

Copyright © 2006 IDG Communications, Inc.

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