Reengineering the IT Supply Chain

Better communication also means the IT supply chain is more likely to be prepared for the unexpected. For example, database managers complain when end-users or application owners demand additional IT resources for immediate delivery. For IT to be available in real time, large amounts of excess resources must be idle at all times. Better capacity planning and a better understanding of how IT resources are provisioned can improve lead times between each point in the IT supply chain.

The IT Supply Chain in Reverse

Physical supply chains often operate in reverse when they need to send faulty products, for example, back to an OEM for repair. Dell, again, is an example of a firm with a highly effective reverse logistics program. It is more difficult to conceptualize what reverse logistics might look like in an IT supply chain. Reverse logistics in IT recognizes that over time the server or storage capacity assigned to a particular process or user may become increasingly underutilized or surplus to requirements.

For example, if applications are being replaced, the IT resources assigned to them may be better assigned to higher value applications. In a server consolidation exercise, for example, it makes sense to consolidate low-value applications together to reduce costs but to still keep higher-value applications (to the extent that their loss or failure poses a higher risk to the firm) on a dedicated server. If the IT supply chain is to approximate a services or utility model, then IT resources must be capable of returning to a central pool.

If supply chains that move physical goods such as PCs, auto parts, or sneakers can be re-engineered for superior performance, so can the IT supply chain. The cost of retaining an ineffective and unresponsive IT supply chain represents a serious drag on companies’ finances. Managing the IT supply chain end-to-end, transparently and with everyone in the chain engaged with the information they need for sound decision making, is an important step towards reengineering the supply chain and delivering enhanced service levels.

Paul Tallon is an assistant professor of Information Systems at the Carroll School of Management, Boston College and a GlassHouse Technologies advisory board member.