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6/27/2014
12:06 PM
Sumir Karayi
Sumir Karayi
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What IT Can Learn From The Auto Industry

There's too much waste in IT. CIOs should look to the car industry for examples of efficiency and innovation.

There's an overriding problem in IT. It goes beyond project complexity, the growth of BYOD, increased workforce mobility, or dealing with legacy systems. The big problem in IT is too much waste. 

Whether you're talking about wasteful costs, network bandwidth, time spent, electricity use, or any number of other measures, ask anyone working in IT whether there is a waste problem and I guarantee they'll not only agree but agree emphatically.  

Unfortunately, there's also a general acceptance that this is just "the way things are." It seems the IT sector doesn't know what to do about this problem nor have the incentive to fix it. The recent XP end-of-life is an example of the industry doing little to improve overall efficiency. Countless companies spent years, millions of dollars, and thousands of hours migrating each of their end-points by hand, because that was seemingly the only option.

[The nature of pay-as-you-go makes the cost calculation seem easy. But it's not. Read Cloud ROI: 4 Critical Considerations.]

To see an example of an industry that's achieving success through a sharp focus on efficiency, speed, and performance, IT teams should take a look at the automotive industry. 

How IT can learn from the auto industry
For decades, the automotive industry has been advancing its design process, engineering knowledge, and technology. Today's cars are much more sophisticated than the cars of two or three years ago.

The market knows that while eco-efficiency sells, high performance counts for today's car buyers. Hybrid motor technology was once seen as eco-efficient, but dull and slow. Yet the triumph of the first hybrid car at the 80th Le Mans 24 Hours race just two years ago proved that efficiency, agility, and innovation can coexist. 

Year-on-year, automotive engineers introduce new technologies, components, and complexity, yet cars continue to perform more efficiently than before. It's now common to see new cars returning more than 80 miles per gallon, and even mainstream family cars regularly average more than 65 miles per gallon. 

However, in IT we don't behave in the same way. We don't judge our efforts based on whether we're delivering significantly more IT for the same amount of money or less. But that is the textbook definition of efficiency: that "less in" should equal "the same or more out."

Unfortunately, most businesses are spending 80 percent of their IT budgets on maintaining their hardware and software, leaving little money to invest in delivering more IT for less money. We need to expect more out of the tools we rely on, calling on them to help us decrease our expenses, whether that be by reducing software licenses or eliminating unnecessary servers. For example, we see companies distribute software without taking into account whether users need it or will continue to need it. Our own analysis of 75 companies has found that for the top 35 most commonly deployed software, there is, on average, $195 worth of savings per PC that can be realized through software reclaim. 

Why efficiency equates to sophistication
Efficiency is in essence a sophistication, and this is what is lacking in IT today. Modern cars have a way of doing everything "under the hood," while for the driver the experience feels as simple as driving any other car. Such sophistication should be running through every IT department and be central to every process.

Typically, IT today is not sophisticated, as we waste energy and resources

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Sumir Karayi founded 1E in 1997 with the goal to drive down the cost of IT for organizations of all sizes by identifying and eliminating IT waste. Sumir pioneered PC power management and established a market-leading role for his company. He has driven 1E innovations to ... View Full Bio
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Mahender
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Mahender,
User Rank: Apprentice
7/1/2014 | 2:22:47 AM
Good thought | enterprise IT transformation is needed
I avoid to be personal, Good thought and IT service sector is definitely saturated and need to go through consolidation because of challenge associated with license management and vendor management etc etc . Though industry consolidation will take time as enterprise transformation initiative generally takes 3-6 year of implementation. Moreover each enterprise has different IT service management hypothesis, which makes it challenging to transformed or optimized by any service or tool provider.mahender.
TecExec
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TecExec,
User Rank: Apprentice
6/30/2014 | 12:53:50 PM
Re: Heightened Competition?
From my personal experience I've noticed a great deal of waste in the automotive sector.  I observed a proliferation of Shadow IT and one-off applications throughout the enterprise. Obviously, there is a significant cost associated with a dysfunctional asset management model.  As a result, they are wasting millions on an annual basis.  I applaud their recent improvements in product quality and innovation.  However, there is still significant room for improvement internally.               
yalanand
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yalanand,
User Rank: Ninja
6/30/2014 | 12:08:49 PM
Re: Heightened Competition?
@Stratustician: Cutting budgets may have adverse effects. Severe budget cuts hamper the though process of engineering managers and software engineers in carrying out a project swiftly, thus reducing overall efficiency.
yalanand
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yalanand,
User Rank: Ninja
6/30/2014 | 12:07:56 PM
Re: Heightened Competition?
@RobPreston: rightly said. I suppose the competition is good, but not in all sectors. If the competition was for budgets, then that'd be an entire story altogether. Competing for proper budget and finding efficient means under the given budget would compel the IT industry giants to push their efficiency in software and products.
yalanand
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yalanand,
User Rank: Ninja
6/30/2014 | 12:07:13 PM
Re:What IT Can Learn From The Auto Industry
Automotive industry succeeds because the primary concern for them is to provide higher power output without compromising miles per gallon. That being said, the only concern for IT companies is innovation without efficiency and plans that are not passed with the Board authorities (also they want more profit with every year).
Stratustician
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Stratustician,
User Rank: Ninja
6/29/2014 | 11:00:13 AM
Re: Heightened Competition?
I think it could be that IT departments have traditionally been viewed as a cost centre, so until there is a reason for them to have to cut budgets and drive more efficiency, there isn't the same drive (no pun intended) to proactively look for ways to be more competitive the same way other departments might need to (sales and marketing for example).  Until there is an increased pressure for them to reduce their budgets and create more efficiencies through cloud services and other projects, I don't think we will see the same type of innovation or competitive response.
RobPreston
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RobPreston,
User Rank: Author
6/27/2014 | 2:14:25 PM
Heightened Competition?
Sumir, what drove the US auto makers to become more cost-efficient and technically advanced was the fact that offshore-based competitors were eating their lunch. Are you not seeing IT organizations facing heightened competition as well -- in the form of external IT providers as well as other internal departments (like marketing) that are getting their own IT budgets? I would expect that the increased external and internal competition for IT budgets would be enough to force IT organizations to get leaner and meaner. Not your experience?
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