Executive Briefings

Average IT Depart. Doesn't Know Its Own Demand, Supply Chains

In order to manage planning, production and delivery, any properly run business has to be able to balance orders for its products and services (i.e., demand) with its ability to produce them in terms of resource and scheduling constraints (i.e., supply). Otherwise it might produce too little of what is required, too much of what is not required, or deliver late, or have problems with product quality or customer satisfaction. The average IT department, though not a business from a profit and loss perspective (the exceptional IT profit-center notwithstanding), has a resource base comprising highly paid specialists, produces highly complex products and services, and has an annual budget of anywhere from two to 10 percent of annual revenue. Yet it does a very poor job of managing--when managing at all--basic supply and demand. It generally has very little understanding of its demand and supply chains, and would have a hard time being able to answer fundamental questions like, "What is currently in the pipe?" or, "What do we have to deliver over the next 6 months?" or, "What is our projected resource utilization for the next quarter?"
Source: CIO, http://cio.com

In order to manage planning, production and delivery, any properly run business has to be able to balance orders for its products and services (i.e., demand) with its ability to produce them in terms of resource and scheduling constraints (i.e., supply). Otherwise it might produce too little of what is required, too much of what is not required, or deliver late, or have problems with product quality or customer satisfaction. The average IT department, though not a business from a profit and loss perspective (the exceptional IT profit-center notwithstanding), has a resource base comprising highly paid specialists, produces highly complex products and services, and has an annual budget of anywhere from two to 10 percent of annual revenue. Yet it does a very poor job of managing--when managing at all--basic supply and demand. It generally has very little understanding of its demand and supply chains, and would have a hard time being able to answer fundamental questions like, "What is currently in the pipe?" or, "What do we have to deliver over the next 6 months?" or, "What is our projected resource utilization for the next quarter?"
Source: CIO, http://cio.com