McKinsey: run IT like a flexible 'factory'

Lean IT, agile development, and cloud are converging to create a software revolution that extends beyond industrialization, researchers say.

McKinsey & Company researchers have taken some of the current thinking around IT management, including the application of lean methodologies, cloud flexibility, and agile development, and suggest these approaches are setting IT on a path to flexible, factory-like approaches. Not a repetitive, assembly-line approach, but a more modern, post-industrial operation.

There are those within the industry that say the industrialization of IT is not a viable solution, since a lot of software work is artisan in nature, requiring specialized skills and critical thinking. That's why McKinsey sees a progression beyond strict industrialization. They are proposing a new model for managing IT that "combines factory-style productivity to keep costs down with a more nimble, innovation-focused approach to adapt to rapid change."

The study's authors, Roger Roberts, Hugo Sarrazin, and Johnson Sikes, say achieving flexible factory settings in IT occurs in three stages. A survey of 864 IT and non-IT executives finds that many companies are at least part way there:

Industrialized IT: Achieved through lean IT. "A company can typically create 20 to 30 percent or more in additional IT capacity by streamlining processes, automating routine functions, and eliminating redundancy. Forty-five percent of companies are at some stage of IT industrialization, McKinsey reports.

Flexible IT Factories: Achieved through cloud and agile software development. "Together, the cloud and agility can make the IT factory more nimble, with lower costs and faster delivery." About half the companies surveyed are at some stage of cloud or agile development, McKinsey reports.

Holistic, less complex businesses: "To manage complexity, companies are starting to employ a more holistic business case model that goes beyond the traditional, IT-centric versions. This model includes realistic, verifiable cost–benefit analysis to assess the impact of new systems on the entire organization. Critically, such plans also require a road map for how future projects might build on the investment." Roughly 60 percent of companies report they are working toward these goals.

(Illustration: Paco8191, via Wikimedia Commons.)