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Managingnext-generationITinfrastructure

Thedaysofbuildingtoorderareover.Thetimeisripeforanindustrialrevolution.

JamesM.Kaplan,MarkusL?ffler,andRogerP.Roberts

TheMcKinseyQuarterly,Webexclusive,February2005

Inrecentyears,companieshaveworkedhardtoreducethecostoftheITinfrastructure—thedatacenters,networks,databases,andsoftwaretoolsthatsupportbusinesses.Theseeffortstoconsolidate,standardize,andstreamlineassets,technologies,andprocesseshavedeliveredmajorsavings.Yeteventhemosteffectivecost-cuttingprogrameventuallyhitsawall:thecomplexityoftheinfrastructureitself.

Therootcauseofthiscomplexityisthebuild-to-ordermind-settraditionalinmostITorganizations.Thetypicalinfrastructuremayseemtobehightechbutactuallyresemblesanold-fashionedautomobile:handmadebyanexpertcraftspersonandcustomizedtothespecificationsofanindividualcustomer.Todayanapplicationdevelopertypicallyspecifiestheexactserverconfigurationforeachapplicationandtheinfrastructuregroupfulfillsthatrequest.Theresult:thousandsofapplicationsilos,eachwithitsowncustom-configuredhardware,andajumbleofoftenincompatibleassetsthatgreatlylimitacompany'sflexibilityandtimetomarket.Sinceeachservermaybeconfiguredtomeetanapplication'speakdemand,whichisrarelyattained,vastamountsofexpensivecapacitysitunusedacrosstheinfrastructureatanygiventime.Moreover,applicationsaretightlylinkedtoindividualserversandstoragedevices,sotheexcesscapacitycan'tbeshared.

Now,however,technologicaladvances—combinedwithnewskillsandmanagementpractices—allowcompaniestoshedthisbuild-to-orderapproach.Adecadeintothechallengingtransitiontodistributedcomputing,infrastructuregroupsaremanagingclient-serverandWeb-centeredarchitectureswithgrowingauthority.Companiesareadoptingstandardizedapplicationplatformsanddevelopmentlanguages.Andtoday'shigh-performanceprocessors,storageunits,andnetworksensurethatinfrastructureelementsrarelyneedhand-tuningtomeettherequirementsofapplications.

Inresponsetothesechanges,someleadingcompaniesarebeginningtoadoptanentirelynewmodelofinfrastructuremanagement—moreoff-the-shelfthanbuild-to-order.Insteadofspecifyingthehardwareandtheconfigurationneededforabusinessapplication("Ineedthisparticularmaker,model,andconfigurationformynetwork-attachedstoragebox..."),developersspecifyaservicerequirement("Ineedstoragewithhigh-speedscalability...");ratherthanbuildingsystemstoorder,infrastructuregroupscreateportfoliosof"productized,"reusableservices.Streamlined,automatedprocessesandtechnologiescreatea"factory"thatdeliverstheseproductsinoptimalfashion(Exhibit1).Asproductordersrollin,afactorymanagermonitorstheinfrastructureforcapacity-planningandsourcingpurposes.

Withthismodel,fillinganITrequirementisratherlikeshoppingbycatalog.Adeveloperwhoneedsastorageproduct,forinstance,choosesfromaportfolioofoptions,eachdescribedbyservicelevel(suchasspeed,capacity,oravailability)andpricedaccordingtotheinfrastructureassetsconsumed(say,$7amonthforagigabyteofmanagedstorage).Thesystem'stransparencyhelpsbusinessusersunderstandhowdemanddrivestheconsumptionandcostofresources.

Companiesthatmakethetransitiongainbigbusinessbenefits.Byreducingcomplexity,eliminatingredundantactivity,andboostingtheutilizationofassets,theycanmaketheirinfrastructure20to30percentmoreproductive—ontopofthebenefitfrompreviousefficiencyefforts—therebyprovidingfargreateroutputandflexibility.Evenlargersavingscanbeachievedbyusinglow-cost,commodityassetswhenpossible.Developersnolongermustspecifyanapplication'stechnicalunderpinningsandcanthereforefocusonworkthatdeliversgreaterbusinessvalue;thenewmodelimprovestimestomarketfornewapplications.

Nevertheless,makingthistransitioncallsformajororganizationalchanges.Applicationdevelopersmustbecomeadeptatforecastingandmanagingdemandsothat,inturn,infrastructuregroupscanmanagecapacitymoretightly.Infrastructuregroupsmustdevelopnewcapabilitiesinproductmanagementandpricingaswellasintroducenewtechnologiessuchasgridcomputingandvirtualization.1AsforCIOs,theymustputinplaceanewmodelofgovernancetomanagethenewinfrastructureorganization.

Theroadforward

DeutscheTelekomknowsfirsthandthechallengesinvolved:over18months,hopingtobalanceITsupplyanddemand,itimplementedthisnewinfrastructure-managementmodelattwodivisions(seesidebar,"Next-generationinfrastructureatDeutscheTelekom").Intheolddays,thecompany'sITinfrastructure,likemost,wasalandscapeofapplicationsilos.Todayaccurateforecastsofuserdemandarecritical,sonewlymintedproductmanagersmusttakeahorizontalview,acrossapplications,toassessthetotalneedsofthebusinessandcreatetherightproducts.Theymustthenworkcloselywithinfrastructureteamstoalignsupply—infrastructureassetssuchashardware,software,andstorage—withdemand.

Inthepast,employeesoftheinfrastructurefunctionwereordertakers.Now,theycanbemoreentrepreneurial,choosingthemixofhardware,software,andtechnologythatoptimizestheinfrastructure.Tokeepcostslow,theycanphaseingridsoflow-endservers,cheaperstoragedisks,andothercommodityresources.Factorymanagersnowfocusonautomatingand"industrializing"production.AlthoughDeutscheTelekom'stwodivisionsdidn'tradicallychangetheirorganizationalorreportingstructures,ITgovernancenowseekstoensurethatproductandservicelevelsareconsistentacrossbusinessunitsinordertominimizecostsandtoimprovetheinfrastructure'soverallperformance.

Whatwe'veseenatDeutscheTelekomandothercompaniessuggeststhatcreatinganext-generationinfrastructureinvolvesactiononthreefronts:segmentinguserdemand,developingproductlikeservicesacrossbusinessunits,andcreatingsharedfactoriestostreamlinethedeliveryofIT.

Segmentinguserdemand

LargeITorganizationssupportthousandsofapplications,hundredsofphysicalsites,andtensofthousandsofendusers.Allthreeoftheseelementsarecriticaldriversofinfrastructuredemand:applicationsrequireserversandstorage,sitesneednetworkconnectivity,anduserswantaccesstodesktops,laptops,PDAs,andsoforth.Tostandardizethesesegments,anITorganizationmustfirstdevelopadeepunderstandingoftheshapeofcurrentdemandforinfrastructureservicesandhowthatdemandwillmostlikelyevolve.Thenitneedstocategorizedemandintosegments(suchasuptime,throughput,andscalability)thataremeaningfultobusinessusers.

Whengroupedinthisway,mostapplicationsfallintoarelativelysmallnumberofclusters.Apharmaceuticalmanufacturer,forinstance,foundthatmostofabusinessunit'sexistingandplannedapplicationsfellintooneoffivecategories,includingsalesforceapplicationsthatneedaround-the-clocksupportandoff-lineavailabilityandenterpriseapplicationsthatmustscaleuptothousandsofusersandhandlebatchtransactionsefficiently.

Incontrast,atypicalwholesalebank'sapplicationportfoliohasmoresegments,withawiderrangeofneeds.Someapplications—suchasderivatives,pricing,andrisk-managementtools—mustexecutecomputation-intensiveanalysesinminutesratherthanhours.Funds-transferapplicationsallowforlittleornodowntime;program-tradingapplicationsmustexecutetransactionsinmillisecondsorriskcompromisingtradingstrategies.

Althoughsimplebycomparison,theneedsofphysicalsitesandusergroupscanbecategorizedinasimilarway.Onemarketing-servicescompanythatevaluateditsnetworkarchitecture,forexample,segmenteditssitesintoofficeswithmorethan100seats,thosewith25to100,andremotebrancheswithfewerthan25.Acablesystemsoperatordivideditsusersintoseniorexecutiveswith"concierge-support"needs,professionalemployees,call-centeragents,andfieldtechnicians.

Mostcompaniesfindthatdefiningthespecificinfrastructureneedsofapplications,sites,andusersisthekeychallengeofsegmentingdemand.Majorissuesincludethetimeandfrequencyofneed,thenumberofusers,theamountofdowntimethatisacceptable,andtheimportanceofspeed,scalability,andmobility.

Standardizingproducts

Oncetheinfrastructuregrouphasassessedcurrentandfuturedemand,itcandevelopasetofproductlike,reusableservicesforthreesegments:managementandstorageproductsforapplications,accessproductssuchasdesktopsandlaptopsforendusers,andnetwork-accessproductsforvarioussites.Foreachofthesethreeproductlines,thegroupmustthenmakeaseriesofdecisionsatboththeportfolioandtheproductlevel.

Attheportfoliolevel,ithastomakedecisionsaboutthescope,depth,andbreadthofproductofferings,withaneyetowardoptimizingresourcesandminimizingcosts.Exceptionsmustbedetailedupfront.Thegroupmaydecide,forexample,againstofferingproductstosupportapplicationswithstringentrequirements,suchasvery-low-latencyprocessing;theseapplicationsmaybebetterbuilt"byhand"and"fromthegroundup."Otherapplications,suchaslegacyones,maybebetterleftoutsidethenewmodelifthey'rerunningwellandcan'teasilybeportedtonewhardware.Thegroupshouldalsodecidehowtointroducenewtechnologiesandtomigrateexistingapplicationsthatareeasiertomove.

Attheproductlevel,thegroupmustdefinethefeatures,servicelevels,andpriceofeachproduct.Foreachapplicationsupportproduct,togiveoneexample,itwillbenecessarytospecifyaprogramminglanguage,anacceptablelevelofdowntime,andapriceforinfrastructureusage.Thatprice,inturn,dependsonhowthegroupdecidestochargeforcomputing,storage,processor,andnetworkusage.Thegrouphastoconsiderwhetheritspricingmodelshouldofferdiscountsforaccuratedemandforecastsordriveuserstospecificproductsthroughstrategicpricing.

Lookingforward,companiesmayfindthatwell-definedproductsandproductportfoliosarethesinglemostimportantdeterminantoftheinfrastructurefunction'ssuccess.Developersandusersmayrebelifaportfolioofferstoofewchoices,forinstance,butaportfoliowithtoomanywon'treapthebenefitsofscaleandreuse.Goodinitialresearchintouserneedsiscritical,asitisforanyconsumerproductscompany.

Thesupplyside:Creatingsharedfactories

Thetraditionalbuild-to-ordermodellimitstheinfrastructurefunction'sabilitytooptimizeservicedelivery.Deliveryhasthreecomponents:operationalprocessesfordeploying,running,andsupportingapplicationsandtechnologies;softwaretoolsforautomatingtheseoperationalprocesses;andfacilitiesforhousingpeopleandassets.

Atmostcompanies,variationsinarchitectureandtechnologymakeitimpossibletouserepeatableprocessesappliedacrosssystems.Thisproblemhindersefficiencyandautomationandrestrictstheamountofworkthatcanbeperformedremotelyinlow-costlocations,thuslimitingthescopeforadditionalcostsavings.

Inthenext-generationinfrastructuremodel,however,applicationdevelopersspecifyaserviceneedbuthavenoinputintotheunderlyingtechnologiesorprocesseschosentomeetit.Theapplicationmay,forinstance,requirehigh-speednetworkedstorage,butthedeveloperneitherknowsnorcareswhichvendorprovidesthestoragemedia.Thisconceptisn'tnew—consumerswhohavecallwaitingontheirhometelephonelinesdon'tknowwhetherthelocalcarrierhasaLucentTechnologyorNortelNetworksswitchatitsclosestcentraloffice.

Becausetheinfrastructurefunctioncannowchoosewhichsoftwaretechnologies,hardware,andprocessestouse,itcanrethinkandredesignitsdeliverymodelforoptimalefficiency.Usingstandardizedanddocumentedprocesses,itcanstartdevelopinganintegratedsetofsoftwaretoolstoautomateitsoperations.Next,byleveragingitsprocessesandautomationtools,itcandevelopanintegratedlocationstrategythatminimizestheneedfordatacenters,sothatmorefunctionscanoperateremotelyinlow-cost—evenoffshore—locations.

Buildinganeworganization

WhatchangesmustCIOsmaketocapitalizeonthesenewopportunities?Thenext-generationinfrastructurehasmajorimplicationsfortheroles,responsibilities,andgovernanceoftheinfrastructureorganization.

Themostcriticalnewrolesarethoseoftheproductmanager,whodefinesproductsandproductportfolios,andofthefactoryarchitect,whodesignsthesharedprocessestodeploy,operate,andsupportthem(Exhibit2).Productmanagersmustfocusonserviceofferingsandbeaccountableforreachingproductivitytargets.Theirotherkeyresponsibilitiesincludebuildingrelationshipswithbusinessusersandapplicationdevelopers,understandingandsegmentingdemand,definingproductportfolios,andpersuadingdevelopersandbusinessuserstoaccepttheirdecisions.

Factoryarchitectsare,inequalparts,technologystrategistsandindustrialengineers,codifyingthearchitectures,processes,andtoolsthatsupporttheproductportfolio.Theirotherkeyresponsibilitiesincludeconfirmingthatproductcommitmentscanbemet,choosingtechnologies,definingprocesses,developingprocess-automationplans,andselectingtools.AlthoughthiswasanestablishedroleatDeutscheTelekom,factoryarchitectsarenowmorefocusedonautomatingandindustrializingproduction.

Organizationalstructuresmustchangeaswell.Specializedsiloswithadministratorsfocusedonspecifictechnologyplatforms—mainframes,midrangecomputing,distributedservers,storage,andvoiceanddatanetworks—shouldgivewaytomultidisciplinaryteamsthatmanagetheperformanceoftheinfrastructureandthedeliveryofservices.

CIOsmustalsoputinplacenovelgovernancemechanismstodealwithcapacityplanning,thelaunchofnewservices,andinvestment-financingissues.AlthoughDeutscheTelekomoptedtokeepitsexistinggovernancestructure,manycompaniescreateanenterprise-levelinfrastructurecounciltoensuretheconsistencyofproductsandservicelevelsacrossbusinessunits.Suchconsistencyiscriticalforkeepingcostslowandoptimizingperformance.

Tomakesurethenewinfrastructureisrunningefficientlyandtosustainperformanceimprovements,ITleadersshouldfocusonfivekeyareas:

1.Demandforecastingandcapacityplanning.Akeygoalofthenewinfrastructuremodelistomatchsupplyanddemandmoreclosely,therebyminimizingthewasteofresources.Toachievethisobjective,theITgroupmustworkcloselywithbusinessunitsinordertoforecastdemandandthusimprovecapacityplanning.ForecastsaremoreaccuratewhencompaniesfollowDeutscheTelekom'sexampleandaggregatedemandacrossproductsinsteadofapplications.

2.Fundingandbudgeting.Productdemanddrivesbudgets.Sincethenewmodelusesrealdemandforecasts,budgetingiseasier.Moreover,withpricingtransparencycomesknowledge.BusinessunitswillnowknowwhattheirITchoicesaregoingtocost;theinfrastructuregroupwillunderstandthebudgetimplicationsofuserrequestsandbeabletocreateamoreaccuratecapitalplan.

3.Product-portfoliomanagement.Companiescanexpecttospendsixmonthsdevelopingnew-productportfolios.Theinfrastructureteamshouldreexaminethemtwoorthreetimesduringthefirstyeartoensurethattheyareappropriategivenprojectedworkloadsandemergingend-userneeds.Thereafter,ayearlyreviewusuallysuffices.Teamsshouldmonitorallphasesoftheproductlifecycle,fromplanningandsourcingnewproductstoretiringoldservicesandredeployingresources.

4.Releasemanagement.Toensurethatnewtechnologiesorupgradesareintegratedeffectivelyandthatchangecauseslessupheavalandlostproductivity,leadingcompaniescarefullymanagethereleaseofbothinfrastructureproductsandapplicationsinparallel.Moreover,toplanahead,applicationdevelopersneedtoknowaboutanyimpendingchangeintheinfrastructurecatalog.

5.Supplyandvendormanagement.ITleadersmustensurethatcomputingresourcesareavailabletomeetthecontractedservicelevelsofproductportfolios.Infrastructuremanagersshouldrevisittheirsourcingstrategyannually,seekingopportunitiestolowercostsandimproveproductivity.

Evenwiththerestructuringandthenewrolesandprocessesinplace,changingthebuild-to-ordermind-setandculturemayremainthebiggestchallengeofall.DeutscheTelekomadjusteditsincentives,hirednewpeople,developedtrainingworkshops,andappointed"changeagents"tospreadthewordandbuildenthusiasm.Theseorganizationalandculturalchangesarecentraltorealizingthepotentialofthenext-generationinfrastructuremodel.Investingthetimeandattentionneededtogettherightresultsisjustascriticalasrefreshingthetechnicalarchitecture.

Reference:

Next-generationinfrastructureatDeutscheTelekom

OttoZeppenfeld'scheerfuldemeanormaybesurprisinggivenhisjob.AsheadofIToperationsforT-Com,DeutscheTelekom'sfixed-networkdivision,he'sresponsibleforensuringthatallapplicationsrunsmoothly,evenduringtimesofpeakdemand.

T-Com,whichoutsourcesalmostallofitsIToperationstoitssistercompanyT-Systems,providesvoiceanddataservicestoabout40millionconsumersandverysmallbusinesses.ItgenerateshigherrevenuesthananyotherdivisionofDeutscheTelekom.Thecompany'sITinfrastructureismassive:1.3petabytesofstoragecapacity,25,000MIPSofcomputingpower,approximately3,000serversand100,000workstations,andhundredsofapplications.

ManyofT-Com'sITinfrastructureassets,likethoseofmostcompanies,oncesatidlewaitingforpeakloads.Toaddresstheproblem,T-ComandT-Systemsbeganimplementingthekeyelementsofanext-generationinfrastructuremodel:productlikeservices,transparentpricing,strictdemandforecasting,andcapacitymanagement.

Managingsupplyanddemandacrossapplications

Foreachinfrastructureproductcategory—storage,hosting,andsoforth—T-ComappointedaproductmanagertoassessdemandacrossallapplicationsinthatcategoryandtoworkwithT-Systemsondefiningtherightproductsandservicelevelsandnegotiatingprices.T-Com'sprocessforforecastingdemandaggregatesitacrossallcategoriesandthenforwardsthatinformationtoT-Systemsforuseincapacityplanningandmanagement.

T-SystemssuppliesT-Com'sproductsandmanagestheunderlyinghardware,software,andnetworks.LikeT-Com,ittakesabird's-eyeview,lookingacrossapplicationsattotalstorageandcomputingneeds.Thetwounitsnowworkintandemtobalancesupplyanddemand—aradicaldeparturefromthetraditionalapplication-silomentality.

Thesuccessofthismodeldependsontwokeyfactors:T-Commustlearntopredicthowmuchcomputingpoweritwillneedandwhen;T-Systemsmustlearnhowtouseexcesscapacityinotherareas."T-Systemsmusttakeonalotmoreresponsibility,"notesMichaelAuerbach,theT-SystemsmanagerforallT-ComIToperations."Attheendoftheday,it'sourjobtoleveragetheidlecapacityelsewhere."

Payingonlyforusage

SincethenewmodelrequiresT-Systems—ratherthanT-Com—topickupthetabforunusedcapacity,T-Systemsisunderpressuretothinkandoperateinnewways.Formerly,whenZeppenfeldneededanewbusinessapplicationforT-Com,T-Systems'Auerbachsuppliedtheappropriatehardware,software,andservicesandthentalliedupthecost.Itwasusuallythesubjectofintensedebatebecausethevalueofcomplexcomputersystemsishardtodetermine,andsoisthecostoftheassociatedinstallation,operations,andmaintenance.

Now,Zeppenfeldpaysonlyforthecomputingresourcesheuseseverymonth;thehardware,software,andstorageneededtopowerT-Com'sapplicationsareAuerbach'sproblem.Thismodel,however,givesTSystemsthefreedomtomakedecisionsthatoptimizetheinfrastructureasawholeratherthanspecificapplications.Whereverpossible,T-Systemsusescheapercommodityresourcessuchasgridsoflow-endservers,storagedisks,andIntelprocessorsinsteadofUnixsystems.Inessence,itnowactsmoreasanentrepreneurthanasanordertaker.

Transparencyofcostsisamajorbenefitofthismodel:T-CommerelyreadsoffthebytesitconsumedandpaysapredeterminedpricethatfactorsinT-Systems'engineeringsupport.T-Com'sinvoiceincludesahandfulofservicecategories(suchasstorage,backup,computing,theoperationofapplications,andthehelpdesk)andquantifiesusageindetail.Eachserviceunithasafixedprice,soT-Comknowsexactlywhatitwillpayforagigabyteofstorage,anhouroftelephonesupport,orabackupcopyofadatabase.Moreover,theseservicescanbebenchmarkedindividually,soTComhastheabilitytocheckthatpricesarereasonable.ZeppenfeldandAuerbachagreethattransparencyhelpscreateanatmosphereoftrust.

Gaininggreaterflexibility

T-Comalsogainsflexibility:itscontractletsitincreaseordecreaseitscomputingcapacityifitgivesthreemonths'notice.Drastic,across-the-boardchangesinusageareunlikelyformostcompanies,butthisaddedflexibilityinindividualareasisstillawelcomebenefit.Marketing,forinstance,hasfluctuatingneeds.Takeane-mailcampaigngeneratingseveralmillionresponses.Previously,asix-monthleadtimewasneededtopurchasenewhardwareandsoftware.Thenewmodelforcesmarketingtoproducemoreaccurateforecastsbutcutstheleadtimeinhalf.Now,T-ComletsTSystemsknowaboutthemarketinggroup'splansandrequirementsthreemonthsbeforesuchacampaign;theearlieritalertsT-Systems,thelowerth

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