This is the title of a new article in McKinsey Quarterly. You can download it at Here are a few of its high points:

  • A new model for managing IT combines factory-style productivity to keep costs down with a more nimble, innovation-focused approach to adapt to rapid change.
  • Although IT serves multiple roles within an organization, it has traditionally been managed in a one-dimensional way. A new, dual-model approach to IT leadership,
    governance, and management can help companies drive better back-office efficiency and front-line innovation.
  • “Factory IT” couples lean management techniques and process improvements with advances in cloud computing and software development to simplify the operating environment and improve productivity and cost performance.
  • “Enabling IT” embeds flexible IT workgroups directly into the business to support experimentation, collaboration, and data mining in order to propel
    innovation and competitive advantage.
  • There are three key components of the Factory model:
    • Industrialized IT—applying traditional business-management techniques to IT
    • Flexible IT factories—building IT that’s more responsive to changing business conditions. This, in turn, means using two key technologies / business practices:
      • Cloud Computing and
      • Agile software development
    • Holistic business cases—cutting complexity through improved planning

I’d add that both the application of traditional business management techniques to IT processes and more effective use of IT resources, including virtualization and Cloud Computing, can benefit significantly from the use of intelligent decision management processes and technologies. See my paper on Managing Decisions for IT Services for a more detailed discussion of this with examples.