"In recent years, companies have worked hard to reduce the cost of the IT infrastructure - the data centres, networks, databases and software tools that support businesses. These efforts to consolidate, standardize and streamline assets, technologies and processes have delivered major savings," their paper says. Yet even the most effective cost-cutting program eventually hits a wall, the authors point out: the complexity of the infrastructure itself.

The blame, the authors say, must go to the "build-to-order mind-set traditional in most IT organizations", where IT acts as order-taker. The good news is that finally, technological advances and a new sophistication in management approaches are enabling companies to jettison this mind-set altogether.

"A decade into the challenging transition to distributed computing, infrastructure groups are managing client/server and Web-centred architectures with growing authority," the report says. "Companies are adopting standardized application platforms and development languages. And today's high-performance processors, storage units, and networks ensure that infrastructure elements rarely need hand-tuning to meet the requirements of applications."

"In response to these changes," the report continues, "some leading companies are beginning to adopt an entirely new model of infrastructure management - more off-the-shelf than build-to-order."

The Time Is Ripe

Kaplan says it is never too soon for IT shops to start planning the move to next-generation infrastructure.

"The first observation to make is you can get busy getting better or get busy getting worse. I think there is a natural inclination to say: 'Well gee, I've got all this legacy that I will not be able to move very quickly'. This may or may not make sense but most organizations are upgrading their application portfolio and there is huge power in the ability to ensure that even the things that are new that are added to that infrastructure environment are productized and standardized."

There has never been a better time to make the effort. For one thing, Kaplan says the increase in volumes and requirements is driving a need for this kind of sophisticated infrastructure management to lower unit costs. "A lot has been done over the last couple of years with typical or classical cost structure in terms of contract renegotiation or tactical changes, but that only gets you so far," he says.

Witness the actions more sophisticated infrastructure organizations are taking: They are changing their governance processes, they are changing the equipment they buy and they are changing their approach to managing infrastructure.

In these circumstances it is small wonder some organizations are starting to emphasize off-the-shelf purchases rather than build-to-order. "Instead of specifying the hardware and the configuration needed for a business application ('I need this particular maker, model, and configuration for my network-attached storage box . . . '), developers specify a service requirement ('I need storage with high-speed scalability . . .')," the authors write in their McKinsey Quarterly article. Rather than building systems to order, infrastructure groups are creating portfolios of "productized", reusable services.

In such organizations, Kaplan says, streamlined, automated processes and technologies create a "factory" that delivers these products in ideal fashion in response to product orders. These "factories" even have "factory managers" to oversee the infrastructure for capacity planning and sourcing purposes.

Over on the demand side, the trends to outsourcing, offshoring and extended supply chains are creating pressures of their own. Kaplan suggests action on three fronts to capitalize on the new environment: segmenting user demand, developing product-like services across business units and creating shared factories to streamline the delivery of IT.

He says IT organizations must get a clear idea of current and future demand for infrastructure services, and then order demand into a small number of segments (such as uptime, throughput, and scalability) that work for business users. Then they can standardize products by developing reusable services for these segments, and make decisions at both the portfolio and the product level.

However, he says organizations should also concentrate on building products and making those products stick. That means acting like any traditional product manufacturing or product development organization.

In the past, employees of the infrastructure function were order takers. Now, they can be more entrepreneurial, choosing the mix of hardware, software and technology that optimizes the infrastructure. To keep costs low, they can phase in grids of low-end servers, cheaper storage disks and other commodity resources. Factory managers now focus on automating and "industrializing" production.