The Harvard Business Review article (May 2003), "IT Doesn't Matter," by Nicholas G. Carr, caught the attention of CIOs at Fortune 500 companies, academics at Ivy League universities, and executives for major computing vendors. While Carr isn't claiming that IT doesn't matter, he, on the other hand, asserts that IT has diminished as a source of strategic differentiation for an organization. Carr says that extracting value from IT requires innovations in business practices. For example, he says that organizations need to manage large portions of their IT infrastructures more rigorously to reduce capital investment requirements and operating costs.

No one knows the value of doing what Carr suggests than Kin Lee, senior vice president of IT infrastructure at Honeywell in Tempe, Arizona, and a graduate of Harvard Business School. Lee oversees the global voice network and data network infrastructures for the $20 billion diversified technology leader's four business groups: aerospace, automated control systems, specialty materials, and power systems. Last year, Lee reduced IT expenses for the infrastructure from $650 million to $510 million -- a $90 million cost savings.

"IT isn't about technology any more. It's about how do you run this organization as a business." Lee says. "If you need to provide more bandwidth to a business unit, then you have to provide an expected payback. You also have to sell your ideas, not only to corporate management, but to each business unit, which might have ideas that differ from another business unit. You have to know how to bridge these gaps so you can deploy your agenda." Lee's strong technical and strong business background have well prepared him to run his organization. He has a technical undergraduate degree, a master's degree in operations research from Northwestern University, a master's in business in finance from the University of Chicago, as well as the Harvard credential.

Lee recently took some time to discuss his organization's IT model, to describe the use of best practices such as Six Sigma, and, of course, to comment on the Harvard Business Review article. Here's what he had to say.

EL: What does the infrastructure you manage consist of?

KL: My organization oversees and owns 6,000 servers worldwide and five mainframes. Most of the servers are midrange AIX servers. The rest are either Novell or Windows servers. We also manage 1,000 engineering workstations, and 85,000 global workstations at 1,000 locations. We manage the wide area network, the local area networks, and all of the voice communications, and consumable communications devices, such as cell phones. About 120 employees, as well as employees from our two major outsourcing suppliers -- IBM and AT&T -- manage the entire IT infrastructure.

EL: Tell me why you became a shared services IT organization and how  you've driven down IT costs throughout the company?

KL: In 1999, we began to centralize our services as a result of Honeywell's merger with Allied Signal. Before that, each business unit provided its IT support and its equipment. Our distributed model evolved into a centralized model, which enabled us to become a shared services provider. We outsource our computing maintenance requirements to IBM Global Services and our voice communications networks to AT&T.

The business units have IT professionals who support business applications, not the infrastructure. We work with these folks to understand if there are any unique business reasons why they need to do something a certain way. For the shared services model, we referred to Gartner Group's technology road map, as well as called upon other industry groups.

We reduced costs by re-negotiating our two major outsourcing contracts based on adding volume, such as the integration and consolidation, as part of the baseline services, and redefining service level agreements.

EL: How have you established costs for your services?

KL: We have a very detailed cost structure for our services. For example, we offer several graduated types of support for servers. The enhanced support is for servers requiring 7 by 24 availability and redundancy. The base support is fine for servers that need 8 by 5 support. Naturally, the enhanced support will cost more than the base support. The business decides what type of support it will need for each class of servers and their applications.

EL: Every aspect of your company uses Six Sigma. However, does your organization have any experience with the international best practices for delivery of IT services, called the IT Infrastructure Library (ITIL)?

KL: We adopted many of the elements of the ITIL service delivery framework, such as the service desk and capacity planning, and combined them with the Six Sigma discipline as a way to measure what we do.

For example, many companies measure performance at a component level -- a server's uptime. This type of metric doesn't mean a lot of things to business units. They want to know if we can get the job done. A lot of components form the user's experience. So, we have to monitor the end points for business computing, and then measure critical business computing.

EL: What does the Six Sigma training consist of?

KL: Six Sigma has three levels of certification. Everyone in my organization must achieve Green Belt certification. Mastery of this expert level consists of going through the training program, forming a project team, and carrying out a specific project to demonstrate use of the appropriate tools and the ability to obtain business results.

The tools consist of a cause and effect matrix, and a lot of control charts, which we use to report results to the business units. We use many Six Sigma tools to report our performance measurements, as well as to show the variation of performance. Perhaps, we need to reduce some of this variation.

EL: What projects are you currently working on that concern the  business units?

KL: We're still integrating all of our business acquisitions through projects such as service domain integration, and data center integration. We have a major initiative to go global by locating many transactional servers in regions such as Eastern Europe or Asia Pacific. Some of these servers will be doing network monitoring. We're increasing the amount of bandwidth to those areas. To date, we moved several U.S. data centers to our headquarters, and consolidated two data centers in Europe.

EL: Can you give me an overview of how your organization manages  storage growth?

KL: Over the years, we have cut the cost of storage management by consolidating many storage devices on to highly available EMC Symmetrix systems, as well as on less expensive types of storage arrays. Identifying critical data is a key requirement for us. To this end, we work with the business units continuously to understand which applications are critical and where the allocated data resides for those applications. If the data doesn't need to be kept online, then we archive it either to an online device or a nearline device. The data is still available as far as the business units are concerned.

EL: What does your manpower requirements look like for the next  year?

KL: Our headcount will remain flat. On the other hand, we're changing the skill sets to put less emphasis on technical knowledge, and more emphasis on business management, program management, and supply chain management. They can demand a 100 uptime for some things, but can they afford to pay for it?

EL: What did you think of the Harvard Business Review article, "IT  Doesn't Matter"?

KL: Any one in IT would disagree with the article. If you use IT as a commodity, then the organization will loose its competitive edge. On the other hand, if IT does not provide the right type of metrics, IT can impede the organization from staying innovative. For example, we're creating a data portal that connects all of the different sets of data -- change management data, service-level performance, capacity, and financial -- onto a dashboard for each business unit.

EL: This is the sixth year in a row that Honeywell has received Computerworld's award for one of 100 Best Places to Work in IT. What's unique on your IT environment?

KL: Honeywell provides a supportive culture that enables IT professionals to have a very productive, collaborative relationship with the business units. IT professionals also work with peers from major organizations such as IBM and AT&T. These companies also have best practices they must follow. IT professionals can hone their business skills through disciplines such as Six Sigma. have to change the skill sets because our main function consists of managing our suppliers. We have a lot of people who have enhanced their technical undergraduate degrees with a master's in business administration.

EL: Since you service four distinct business units, how do you keep  projects straight? How do you charge for your services?

KL: That's always a challenge for this type of an organization. Each one of our business units has a different set of customers and requirements. When we sit down with a business unit, we always talk about their requirements from both an application and a financial perspective. Technology is a given.

We have a program office run by 15 individuals. They work as the liaison between IT and the business for demand planning, forecast of business growth, and specific business requirements. Once a business unit's requirements have been established, the program manager works with the engineers to create the solutions, and then communicates with the business units to make sure the solutions meet the agreed upon requirements.

EL: How is your organization measured?

KL: Our overall success gets measured based on the aggregate of how well we're doing. For example, we measure our performance by service level agreements or commitments we publish to the business units. We also have financial targets we need to meet. However, if we're meeting the service level agreements but the business units aren't happy, then we're doing something wrong. That's why were putting a lot of emphasis on managing the end-to-end user experience and expectation versus the current service level agreement.

We also rely on customer satisfaction surveys that allow business units to say what they like and don't like about the IT support. We try to target a rate of eight out of 10 in each of the categories on a customer satisfaction survey.

--

Elizabeth M.  Ferrarini is a freelance technology writer based in Boston,  Massachusetts.