There used to be a time when "infrastructure" was a dirty word in IT circles. It seemed every independent software vendor in this sector was loath to be associated with the moniker, preferring instead to be seen as an "applications" or "solutions" provider that sat higher up the value chain. But, like most things in IT, things have now come full circle...
Once again, infrastructure is all the rage, and many vendors don't seem to mind as being branded as such. For instance, recent announcements from Ascential Software and Informatica unashamedly position both companies as pure infrastructure providers.
Nicholas Carr's (unnecessarily) controversial May 2003 Harvard Business Review article: "IT Doesn't Matter", effectively boils down to a simple argument: "If we're all using the same IT systems, where's my competitive business edge coming from?" Admittedly, Carr has a good point that relates specifically to the industry's rampant use of similar pre-packaged IT systems and applications. After all, if I'm running a business off exactly the same metrics and reports as my nearest competitor, where's the value?
But should this argument be applied to IT infrastructure?
Infrastructure is a term deeply rooted in construction. It is commonly used to define physical structures that form the foundation for further development. For instance, infrastructures such as waterworks, electric power, telecommunications, railway tracks, and oil and gas pipelines, all act as a foundation for higher-value services: swimming pools, appliances, long-distance telephony, high-speed rail services, and petrol pumps.
Things are no different in the IT world. Messaging backbones, data and application integration, storage, network communications, and so on all provide the essential physical infrastructures for the everyday functioning of businesses. But having these infrastructures in place is also a necessary prerequisite for the types of long and short-term competitive advantage that is promised by IT investment; it's the "price to play" for companies.
It is true that infrastructure in itself does not confer long-term strategic advantage. If it did, the industry would be building that infrastructure rather than buying it on the open market. Take, for example, data warehousing infrastructures that provide the plumbing to move, integrate, transform, and analyze data along from point of capture to point of use. Rarely do we see top companies attributing their business success to this infrastructure layer. Rather, what confers strategic competitive advantage is how that data is used in decision-making processes.
In other words, infrastructure alone doesn't solve unique business problems. Implementing the most unique metadata-driven integration backplane for capturing customer data will not automatically stop customer churn, nor will installing a super-fast messaging network facilitate knowledge sharing.
Foundation for added value...
However, the value of infrastructure should not be underestimated. Ultimately it provides the necessary foundation for building bigger, better, and more valuable things. The real advantage of having a robust, well-designed infrastructure in place is that it allows companies to focus on IT innovation where it really matters: at the business level, and how it can more effectively use its data at critical customer-facing junctures across the enterprise.
When a CIO says: "I have a $20m IT budget but no money", this usually means the money is being targeted at implementing new, or overhauling old, infrastructure. But once this infrastructure is in place, it frees up IT resources for more valuable revenue-generating IT initiatives. Getting the "right" infrastructure in place isn't easy and many companies are still struggling to find the right architecture and vendor. Infrastructure decisions are always important and companies are treading wearily these days. After all, how often does a company rip and replace its messaging or data integration backbone?
Clearly, infrastructure remains a big-spender market, easily outstripping enterprise software applications. About 40 per cent of the global IT budget is expected to go to pure integration infrastructure. Do the calculations and it is more than the gross domestic product of many developed European nations. Little wonder then that IT vendors are once again happy to be associated with the term.