Information technology infrastructure is defined as a set of information technology components that are the foundation of an IT service; typically physical components (computer and networking hardware and facilities), but also various software and network components. Many infrastructure deployments span an organization and are major initiatives usually carried out by a project team of specialized resources. Infrastructure projects are not just about developing new infrastructure, but also maintaining current infrastructure, deciding when to replace infrastructure, and even about moving to the cloud. This life cycle of Build-Maintain-Upgrade-Replace-Reimplement requires different types of infrastructure projects: 1) Initial Infrastructure Implementation, 2) Infrastructure Maintenance & Upgrade, 3) Infrastructure Reimplementation, and 4) Infrastructure Technology Migration.
Many organizations don’t fully understand their infrastructure requirements, and fail to consider the risks and costs for different types of infrastructure projects:
1. Initial Infrastructure Implementation
Risk: New technology acceptance.
Cost: Maintaining prior infrastructure.
2. Infrastructure Maintenance & Upgrade
Risk: Impact of upcoming technology shift.
Cost: Cost changes with maintenance frequency. Maintenance costs vs. replacement costs.
3. Infrastructure Reimplementation
Risk: Impact on related infrastructure and systems.
Cost: Cost to resolve impact on related infrastructure and systems.
4. Infrastructure Technology Migration
Risk: New technology acceptance.
Cost: Phased cost model. Migration costs.
An infrastructure project under review must be compared to other projects, either within or outside of the organization. Alternatives likely also exist, such as procuring equipment from different vendors or moving to the cloud. The option of doing nothing also has benefits, risks, and costs and should be evaluated with other alternatives. This evaluation should compare all the factors discussed, from general capabilities to benefits to risks and costs. The following criteria, while not exhaustive, can be used in such a comparison:
• General Infrastructure: Primary purpose of the infrastructure | Type of infrastructure | Specific capabilities
• Value/Benefits: Primary beneficiaries; how they benefit | Ancillary beneficiaries; how they benefit | Reduction of complexity or dependencies | Impact on Business | Impact on Operations | Impact on Administration
• Risk Analysis: Benefits not achieved | Reputation risk | Compliance (legal) risk | Schedule slippage (time risk) | Cost overruns | Unintended consequences | Increased complexity or dependencies
• Cost Analysis: One-time costs of planning and implementation: external, including external personnel (range of cost) | One-time costs of planning and implementation: internal, including internal personnel, amortization, non-budgeted costs (range of cost) | Cost of conversion/overlap: external (range of cost) | Cost of conversion/overlap: internal (range of cost) | Annual (ongoing) costs: external, including external personnel (range of cost) | Annual (ongoing) costs: internal, including internal personnel, amortization, non-budgeted costs (range of cost) | User costs (range of cost) | User savings (range of cost)
Many IT leaders believe that it is difficult to make a case for spending money on infrastructure systems, certainly much more difficult than making a case for spending money on application systems. The value proposition for infrastructure spending is undoubtedly complex, involving both financial and non-financial factors. A framework is required to analyze and present the value proposition, thus helping IT practitioners justify the need for individual infrastructure projects. It provides the mechanism to enhance understanding of the various types of infrastructure projects, present capabilities, analyze benefits and risks, develop a cost model, and, by comparing alternatives, develop the value proposition for presentation to decision makers. With this presentation, decision makers will be in a better position to appreciate the value of IT infrastructure and approve necessary projects.
IT Architects provides a service to evaluate your infrastructure maturity and develop an IT Infrastructure Strategy for future infrastructure requirements. IT Architects provides an IT Infrastructure Framework which provides a health check of your existing IT infrastructure. A pragmatic approach is taken to justify infrastructure maintenance or replacement, and why this needs to be done now. While a leaking roof is a sure sign of the need for building maintenance (although not necessarily for roof replacement), the need for maintenance on other types of infrastructure may not be so obvious. The building trades and other engineering professions have established many types of metrics and standards to guide such decisions. IT hasn’t achieved that level of standardization, however, IT Architects has developed an approach to assessing infrastructure systems by measuring their usefulness, reliability, and technological obsolescence. Once the assessment has been completed, IT Architects provides an overall rating or “health check score” for the infrastructure system or components depending on the decisions to be made:
• Maintenance level of effort: an indication of the level of effort (low, medium, high) needed to bring the infrastructure up to some established level of performance.
• Maintenance time frame: when significant maintenance will likely be necessary.
• Useful life time frame: when the infrastructure is likely to fall below the acceptable threshold for usefulness, reliability, or technological obsolescence.
In preparing for an annual budget review, one company performed a basic health check on its infrastructure systems based on four criteria (meeting known needs, outage frequency, how up-to-date the technology was, and cost to maintain it). IT Architects helped the company apply its knowledge of the technology environment and expectations of user needs to rate each infrastructure component on whether it would require significant maintenance or upgrade over specified time frames (i.e. 1–2 years, 3–5 years, or greater than 5 years). The Manager of IT Infrastructure advised our team, “This made a powerful presentation going into the governance committees, particularly when we could show a system’s past end-of-life or using completely outdated technology”. The health check was updated for subsequent annual budget reviews.
Return on Investment as a Scorecard
IT Architects uses an ROI Scorecard to calculate the value of an infrastructure project. In practice, many risks and benefits can only be translated into financial terms by making gross assumptions on financial value that would be nearly impossible to verify. Thus, a financial return-on-investment (ROI) analysis may be useful in some cases. For example, maintenance or reimplementation projects are often cost-savings projects, in which case ROI may be the only justification needed. ROI might only rarely be a key decision metric, but when it is, it is an important part of the analytical process.
So how do you create the value proposition for infrastructure where a single financial ROI is not readily calculable? This is where you need to create an ROI scorecard for the project. Although some benefits cannot be presented in quantifiable terms, all benefits and costs should enter into the decision-making process and describe who benefits. ROI is all the different types of returns — positive and negative, financial and nonfinancial — that accrue from implementing a project. If ROI is presented as a scorecard rather than a single number, then all types of benefits and costs can be evaluated.
Finally, it is important to know your audience. Who are the decision makers who will evaluate your analysis? What measures will resonate with them? If it is a department, then the most important aspects might be how the infrastructure will support their operations. If your audience is the CFO, then an argument with at least some discussion of financial return will be useful. IT Architects will help you determine your audience and their value proposition.