Senior Partner & Managing Director
A complex IT environment is often regarded as part and parcel of complexity in a company’s business operations. Yet while some IT complexity is indeed inevitable and can, in fact, be a major driver of business value—by contributing to the creation of a more differentiated offering, for example—much complexity is ultimately unnecessary and can translate into higher costs and reduced agility and flexibility. (See Exhibit 1.)
Reducing IT complexity that does not add value is difficult, however, as complexity typically builds gradually and stems from multiple causes. Mergers and acquisitions, weak IT governance with decentralized decisionmaking, and a lack of understanding by the business of the costs of complexity are three common drivers. Another is the historical penchant of IT organizations to say yes to the business’s requests without necessarily stepping back and taking a critical view of the longer-term, companywide ramifications of those myriad individual decisions.
But unnecessary complexity can be greatly reduced, if not eliminated, with the right approach. And the impact on IT costs and performance can be significant. Indeed, we estimate that an effective simplification effort can reduce application and infrastructure costs by up to 50 percent and total IT costs by as much as 30 percent. It can also give the IT organization far greater flexibility and agility and can improve its overall ability to support the company’s business objectives.