Build for tomorrow by simplifying todayBy Robert Haas, Dan Starta and Christian HagenStrategic IT projects that enable growth or develop a better understanding of the customer often lose out to everyday IT issues. But if business and IT leaders want to position their organizations for tomorrow, they need to tackle todays technologies and processes that generate resistance to change. Among the biggest challenges businesses face today is reducing the complexity of technology.More than 65 percent of all IT projects either fail or take considerably longer to complete because of their complexity, according to the Standish Group, a research firm that tracks IT purchases. And when it comes to projects with budgets of more than US$10 million, 98 percent of projects fall short.IT architectures, processes and data have become overly complicated and fragmented, often as a result of organic growth, the IT boom and mergers and acquisitions. Maintenance and support of systems, in turn, have become extremely expensive and a barrier to business growth. The piecing together of individual, complex components can create long delays in the IT development process, eroding value as well as ITs credibility. Support costs can be significantly higher as well. Generally, IT complexity can be broken down into the following areas: Products. Just as cars and airplanes can be built more effectively by starting from common platforms, technology products can start with a core set of similar shared functions. Variations can then be added around the base. Examples include online navigation systems in automobiles and multiple variations of action video games.Information technology can help reduce complexity by taking a product-line approach. For example, a software product line would share a standard set of features to satisfy specific needs and is developed from a common core technology.By approaching product development in this fashion, companies can reduce costs, get new products to market faster, and develop more product variations. Prime targets for a product-line approach are markets that are highly complex and involve many variations (such as video games) and products that require significant customization (such as financial cash-management services).Architecture. Another area in need of complexity reduction and standardization is IT architecture. By understanding when common solutions will help reduce complexity, companies can achieve substantial savings and greater flexibility (see figure 1). A portfolio approach should be followed that allows companies to identify when common solutions are appropriate and when a customized solution is required. An organization must define which key functions and processes create strategic advantage so that it can select architecture standards to help deliver them, and manage future investments and direction. Standards make systems more compatible, increase economies of scale and decrease internal coordination costs. For example, each project need not involve a debate over which technology is usedthe defined standard should be given priority with rare exceptions.Of course, standards are not isolated within an organization. As value chains spread across multiple companies and geographic regions, standards can help link the various parties systems, information and processes. The CIO should advocate the use of these standards across the entire value chain whenever possible.One of the most promising approaches to reducing business and application complexity is a service-oriented architecture (SOA). SOAs are collections of services that communicate with each other across a companys network or via the internetthese plug and play offerings help standardize business functionality within and across the enterprise.This approach provides a consistent function and service and makes it easier to access data. Information and services are centralized and reusable, and therefore the development time is shorter and the maintenance costs lower. When a software service is needed (such as the retrieval of customer information) the user sends a request to a directory, which determines the proper service name, location and required format, and then sends back the desired output (in this case, customer information). Users dont need to know the internal workings of the service its the what thats important, not the how. And organizations dont need to own and maintain software; they just access the published business service over the internet or network.To illustrate this point we can draw upon the experiences of a banks retail unit. The unit combined the SOA approach with a common customer-data store, offering consistent and easy access to customer data across several functions and applications. The unit defined the services needed and the standards for the data. Users of the service need only know the format to send and receive the data and the name to call the service. To date, the results have been positive. The bank shares consistent customer data across several functions with greater ease, and data is more accurate. The defined services have encouraged reusea substantial cost savingand future services can be added at a reduced cost. The bank is bringing this initial model and approach to other projects and initiatives. Traditional internet providers, such as Amazon and eBay, are also using web services and SOAs to post suppliers catalogs to their sites, which benefits all parties: the site content is better, suppliers get more exposure and providers obtain new sources of revenue.For companies interested in building next-generation architecture, we recommend beginning with a pilot program to first develop the skills and processes needed to make the most of this architecture. Developing the right supporting applications and internal skills will be essential to success.Services. Finally, to effectively match IT supply with demand from the business, IT must standardize its service offerings and ensure its alignment with business, product and customer strategies. It is crucial to define what products and services the business will want and how IT will organize to meet this demand. For each service offered, there should be definitions of the process, tools, scope, applications and pieces of the architecture that it covers.Process definitions should outline the following: how each IT service should be delivered and implemented; how the service is requested and prioritized against other business priorities; and how support or development will be implemented. Ideally, companies should develop a standardized tool for managing all IT services and requests. For example, a large financial services client uses a standardized tool and financial-justification process to prioritize its IT initiatives. The company aligns each request (and its financial justification) with predefined business drivers approved by top executives. The tool then determines which requests will deliver the most benefit, as defined by overall strategies and objectives, and prioritizes requests accordingly. Using the tool, the firm can better match supply to demand for IT, making decisions free from personal biasa frequent problem in the prioritization process. Coupled with clearly stated business and product strategies, the tool has the potential to transform the demand management function and improve overall business performance.Focusing on reducing the complexities of IT architecture, services and products will not only reduce the cost of operations and improve reliability of delivery; it will position information technology as a strategic tool. The standardized capabilities developed as part of a reduced complexity environment provide a consistent set of building blocks to improve the most important strategic tool in todays portfolio reduced time to delivery. Reducing complexity is not an option; it is a strategic imperative for the IT organization to remain relevant.###Bob Haas is a vice president in A.T. Kearneys IT practice and based in New York; Dan Starta is a vice president in the firms IT practice and Christian Hagen is a principal in the practice. Both are based in Chicago.