It rather seems we’re spoilt for choice with IT these days, but as in other aspects of life, choice is only a good thing when the reasons for each option are clear. IT and its role – or alignment to – business had become pretty mature, as had the technology itself. Now suddenly much of these ‘certainties’ seem to be threatened, if not already actually changed. We seem to be faced with too many changes for comfort and together with new choices for how we implement and provision software, makes for too many choices with a little too much unknown risk.
Unfortunately, due to the competitive nature of business today it’s unlikely that a straightforward continuance of current practice will be enough to answer the business requirements becoming all too visible and demanding. The role technology is playing in enterprise is changing – just as the technology available is changing – but most of all, the business model is changing. The driver for IT as a competitive differentiator around internal efficiency is moving toward a much more externalised model. This model is increasingly referred to as business technology, in order to separate its use, role and technologies from those of internal back-office IT.
The details of this have been the topic of a number of posts over the last few months, as the various aspects of change have become clearer. However, as I have been reminded on many occasions, some more pressing and practical issues need to be faced, particular regarding when, how and for what either open source or cloud services should be used. A colleague came up with the basic matrix below as a starting point from which we have evolved a more formal approach to rationalising decisions.
Business technology – and associated business requirements – is about an externalised model for logical IT (or business technology) provisioning, so should follow this principle too. It suggests frequent change and flexibility is a core competency for success, as are sharing and openness. All of these are different to the core role of IT around supporting the effective and efficient centralisation of internal business administration. Instead, this articulates an extension to the traditional role of the IT services.
Grasping and understanding this point certainly helps address the security question about existing IT applications and the associated data! Business technology is all about creating value i.e. revenues and margins, by using technology for ‘business’ in terms of markets, products and customers, as opposed to costs contained by better internal administration. As a rough rule business technology is about creating differentiation in the enterprise’s go-to-market activities and leveraging advantage, rapidly, whereas information technology is increasingly based on automating standardised internal processes very effectively, to create cost savings. Looking at each requirement to determine its role through the following simple matrix starts to lay out a framework to understand the likely optimum option:
The green band represents the focus for differentiation to create value, whereas the grey area represents the contextual areas of administration of the business. Some ideas of the kind of business requirement that fits into each box have been filled in, but really this diagram is an over simplification to make the point. There are further levels of detail for the final judgements. Some of the examples are slightly counterintuitive, as is the use of open source as a differentiator. In this case, using open source code to add flexibility to a particular machine tool might well support customised production that supports the unique customer proposition from the customer application. Although it’s a key differentiator, the time and cost of fully developing all aspects of the code required for machine tool control would be unwarranted.
This illustrates two further points. The first is that the key along the differentiation line is ‘leverage’ of capabilities and not, as in conventional, IT integration of data; the second is how requirements are developed – which brings in the concept of using a remote platform such as Force.com. Using hosted development platforms is about speed and flexibility as much as it is operating costs. It can help get a key new differentiator in place faster than competitors, respond to market conditions quickly, allow the capability to immediately scale up on a wave of success, or quietly terminate a bold move that didn’t work out.
These factors also lead to the increasing emphasis on to whom, or on what device and where are these types of requirements delivered. This is not all about ‘back office’ desk based work; much of this new world is delivered by location independent workers, who use various devices and forms of connectivity and expect support on everything regardless of circumstances. Not something that many internal IT departments are able to provide.
Of course, there is not only the ‘new’ at the other end of the scale – there is also the ‘old’. These could be described as ‘mature regulatory tasks’ and therefore completely without differentiation. There has been strong growth in moving these types of IT tasks to take advantage of ‘shared services’, where the value is both the optimisation of cost by industry wide consolidation, but also that such services are maintained against legislative change automatically.
So what is the ’takeaway’ from this? First, don’t just think in terms of alternatives for the operation of the existing IT solutions, based on trading a perceived loss of control, or possible security issues, in exchange for lower costs. Start thinking about the IT department can help play a role in the enterprise to transform its capabilities in the market place. Second, look to question the real driver and the real deliverable i.e. differentiating value, or operating cost management. Ask how much of the value is derived from external factors. Third, examine the stability of the requirement and the frequency of change, together with the time taken to change. Fourth, ask where, on what and how could it best be delivered.
Lastly, start to develop a decision making framework, together with best practice use cases, and governance models to make the change a well managed and leveraged addition to the existing IT capabilities.