Innovation is dead; long live cost cutting!

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A stupid headline, if for no other reason than innovation also applies to cost cutting, but unfortunately it is the kind of statement that is around currently as we once again face a recession. I say again because the current conditions are remarkably similar to 1990, and the period up to 1996, when there was an equally severe recession. Okay the causes for the two recessions are different, and I, like everybody else, has little idea on what will happen, but the similarity lies in technology and innovation. So forgive me for a little history lesson before I draw the parallels.

In 1990 there was no such thing as IT, nor the role of CIO; it was all about ‘computing’ and the ‘computing services manager’ ruled the operations for the enterprise. On the edge of the enterprise users were starting to make some real gains in the use of PCs, and string together networks in their departments. The computing professionals rejected this activity, and indeed in many enterprises tried to stop it. We know with the benefit of history what happened; the PC and Network proved its value not as a computer, but as a way to share and manipulate valuable information, leading to the adoption of term Information Technology.

But it wasn’t only this; there was a complete rethink of business models and organisation too. Business Process Re-Engineering was the title given to the redesign of process as a flow across an enterprise rather than the previous divisive department based structures; Matrix Working replaced the strict hierarchal organisational structure; and finally the introduction of ERP started as the need for consolidation of data at an enterprise level was seen as the safe enabler of the flexibility that had been created. If you can remember this period then you can also remember just what a challenge, and cost, it was to get the mess of different PC standards and applications that had been adopted by different departments back into a single cohesive set of standards to gain the real advantages. As it was put to me back then, ‘if I had known where we would end up then I would have taken great care when we started’.

Today it’s Web based activities, Social Computing, and Mobility that is in growing use around the edge of the Enterprise, driven once again by users, and all to often with at best lukewarm enthusiasm by the IT professionals. The users are finding new, innovative value, and at costs that can be covered more through their local operating budgets than having to make capital purchase requests. So just as before innovation isn’t dead in times of recession, in fact on past form it accelerates as pressure to find solutions to the circumstances mount, but the real point is that the place where the innovation is happening tends to shift.

There are three distinctive ways that innovation can help the hard pressed business manager;

To create, or access, a new market with a new offering, which not just getting products available on line, but also adding revenue creating smart services to existing physical products.

To check the progress of rivals in existing markets, usually be providing better service, not necessarily online, as it could well be internal improvement in the quality of service through increasing speed and scope of the ability for collaboration.

To cut the costs of operation, not just in the manner of cost cutting IT administration, but in location and operation of the business model with suppliers, go to market partners etc.

However let’s not forget the enterprise level with the CIO, and the CFO, in this as the lesson to remember from 1990-96 was the degree to which enterprises lost control of their information, and fought to re-establish it, at some considerable cost as the recession ended. This time it won’t be so easy as the laws on Compliance will require control to be maintained, the challenge therefore must be to ‘enable’ the innovation on the edge. Trying to stop it is not likely to work, nor would it be in the best interests of the enterprise at this difficult time. What is needed is a code of practice to ensure standards are consistent, risks are correctly identified, and managed, and most of all, what should be integrated to the enterprise is appropriately integrated.

So you want my prediction for 2009? It will be the resurgence of SOA, used more as Services Oriented Business Architecture, does this surprise you? Well remember the history of Client Server in the 1990-96 period. Many who tried it for projects with a background of Mainframe and Mini Applications couldn’t see the value in splitting the client and server logic and abandoned it. It took a new generation of developers familiar with PCs and Networks designing a new generation of applications, like ERP, to show what its true value was. Seems awfully like what I hear today about trying and adopting SOA.

Posted by Andy Mulholland on January 5, 2009 | Digg this | Seed Newsvine

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I have already commented in Blog posts on the likely strategy in many enterprises in 2009 being built around ‘Sweating the Assets, and leveraging the People’, and indeed I have had many conversations on this topic when out meeting our... [Read More]

Comments

# on January 6, 2009 4:17 PM, Divya Mahajan said:

There is hope for SOA after all :-)
I liked your analogy to the adoption of client server. In my work, I see that switch will happen with new developers and also new tools.
1. Tools - Its point and click in most developer tools to get services off the ground in their code. Point to point EAI isn't as convenient - so new developers gravitate to the convenient method.
2. Developers must spend their learning time wisely - its easy to learn services and the "old" EAI stuff requires a lot more time to learn and master.("it seems too complicated and difficult, why would you want to do it that way").
3. So there is a gradual obsolesence of the earlier design concepts. This is similar to the process where older procedural languages lost ground to newer object oriented languages.

Divya
Solution Architect
Philips.

# on January 7, 2009 2:12 PM, andy mulholland said:

there seems to be something of a polarization around SOA at the moment with one side more or less abandoning it as over hyped and doesn't significantly make a difference and the other saying its the most fundamental issue to get right for success in 2009.

in the first camp are those who have tried it as an intergation mechanism to replace EAI, and they are correct! in the second camp are those who are working on web services for use in business or who are working towards SaaS and Cloud Services, and they are correct too!

the hype made it seem the answer to everything whereas it is of course the answer to developing certain new capabilities!

# on January 7, 2009 6:29 PM, Guillaume Leleu said:

It could also be a positive (maturity) sign from the market: companies have adopted and understood the SOA basics (technology capabilities) but struggle to extend/enhance their business processes as they are tightly coupled to their information capabilities.

These information capabilities are most of the time coming out from packaged applications which require a longer cycle to update and refine as they run business critical processes.

It leads to a side-effect: the time to change is longer than expected and does not fit with the (typical) SOA positioning (from a marketing point of view). The cost to change (effort-driven) on a large scale also reflects the complexity and is quite discouraging.

The business and information architecture have still a long way to go before to match the (new) technology architecture.

For the concern to abandon SOA, I suppose it could be a choice to do not use it explicitely nevertheless all the new solutions are powered by SOA platforms and rarely expose something else than services (in a standard format). It would be challenging to avoid to use it at the IT department level...

Guillaume Leleu
Enterprise Architect

# on January 8, 2009 5:26 PM, andy mulholland said:

Hi Guillaume

I see a number of challenges that are causing issues; the first is that unlike traditional IT applications we are now moving towards a new generation of business requirements that are based on doing business with others across the firewall using new technology and we lack enough people / knowledge to do a proper job of the business process requirement etc analysis. If we dont get that right then we will approach the whole project wrongly.

i see it happening now - the 'you dont want that, i will tell you what you want' issue from both sides.

the second is that the new world is often based on statelessness and this is difficult to comprehend how to handle this after a life time on statefull systems. add to that it is based on new external standards and expectations and it all looks way to risky.

so back to conventional attempts to handle the issue!

# on January 14, 2009 1:13 AM, Robert Stegwee said:

Just to take a historical perspective, do we have any evidence suggesting that today's CIO's are better equipped to pilot through the storm than during 1990-1996? Indeed, CIO's were around by then as well, as is evident from publications like "Understanding the CEO/CIO Relationship" in MISQ in 1992. And they usually were the senior managers with a computing technology background, even though many argued that the CIO is a business role. Compliance might be better regulated, but can we expect CIO's to have learnt a lesson from the 1990-1996 crisis as well? And what lesson would that have to be?

Robert Stegwee

# on January 14, 2009 10:16 AM, andy mulholland said:

I wish i knew is the answer!

I get to meet some really very smart CIOs who are creating/leading their enterprises transformations in some cases. these people inspire me and i think that yes the CIO is the change mechanism.

BUT i also realise that this is a self selecting group who have elected to meet as they are exploring what is happening and how they can learn to use others experience.

if i take the evidence from the market and surveys it would seem the answer is in general no, they are too locked into an organisational model working to the CFO to adminster the (current) processes for less cost.

I hope i am wrong ! Interestingly CEOs seem much mroe interested and at the major tech vendors seem to be driving the change really hard based on their experiences in companies such as Digital, Wang, even IBM back in the late eighties and early nineties. This time they seem determined to make sure that their enterprise leads the change and takes the market!

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