Forrester has just reported that 52% of CIOs recently surveyed stated that they plan to make ‘transformational’ changes to the way their department functions within the next three years. The reasons, after the obvious one of ‘economic necessity’, were rather interesting as it’s difficult to tell whether it’s the business driving the change in response to how technology has altered the market, or it is new technology enabling them to bring change to the business.
The question of whether they are pushing, or being pulled, is important in so far as defining what will lead these transformations, and that’s the tough question. The single most common factor was that the businesses now wanted flexibility to track and follow economic conditions, and as part of this were keen to shift at least some elements of their operations to ‘pay as you go’ services models. The term ‘operational effectiveness’ as opposed to ‘operational efficiency’ was used to define this, and the reason was that stable business models around investment and return predictions were seen as less appropriate. The ‘read and react’ enterprise optimising its opportunities seems to have finally arrived.
A long and excellent analysis of this very real change in attitude by Business Managers can be found at CIO.com under the title of ‘Why the new normal could kill IT’ www.cio.com/article/print/575563. There are the usual quotes on how IT and, in particular ERP, is killing the capabilities to survive and thrive in the changing conditions of the economic downturn and recovering markets, and that IT is simply taking too much money from the limited investment pool available. But as the article points out, it’s not that easy to abandon the IT model as it’s a fundamental part of managing the operations of any business today. In short there has to be a way to deliver IT operating efficiency and compliance capability, as well as providing operating effectiveness in certain areas and activities of the enterprise.
The answer is clearly in segmentation of the requirements, and the way the requirements are delivered, however the 52% of CIOs polled were somewhat at a loss to pinpoint the solution. There was no consistency in their view of what their new transitional state would be, they simply knew that their current state was unsustainable and therefore they must change.
This challenge comes up again and again as I meet clients, and I have two basic approaches that I share. The first attempts to show what ‘good’ could look like under ideal conditions, or possibly what ‘normal’ may look like as we meet a more mature stage of the business and technology transformation that web services and clouds are enabling. In the diagram the top two layers show the flexibility for operational excellence in terms of allowing business managers to create and deploy new offerings to the market and to use the expertise of their people in support through collaboration and social networking. This will be a Software as a Service, SaaS, environment to take advantage of ‘pay as you go’ and ensure cost allocations are automatically attached to the activity. In the bottom layer are traditional IT functions to support the enterprise’s ability to commercially function and, increasingly through various forms of virtualisation and shared services, includes using Infrastructure as a Service, IaaS, to provide computational resources.
The key to enterprise success lies in being able to leverage its core competencies. These are activities and expertise that truly make up its value as a company. Here are the core processes by which it ‘makes’ the basic value of its products, and upon which the individual customisations for differentiation sit. Change in these core processes are slow, must be carefully implemented, and feature strong integration to ‘tie’ the enterprise together. The question is how best to achieve this. Should this be the continuation of strong vertical applications with traditional close coupled integration, or should this move towards being assembled in ‘services’?
The answer is going to be both and this is where the real transformation comes into play. The gap between the SaaS delivered business differentiation and the IaaS delivered traditional IT has to be filled with a PaaS, Platform as a Service. The role of the PaaS is to provide simple suitable APIs towards the ever-changing differentiated SaaS environment that can provide stable connectivity with policy management towards the IT applications. The success of the ‘new’ transformed role of the IT department will depend a lot on the mastery of building and operating an enterprise PaaS that will allow the flexibility of local differentiation with the overall leverage of the enterprise resources backed by the successful management of the existing IT compliance and reporting services.
My second diagram? Well that is about the basic question for enterprise business management; what are you trying to achieve? This may sound simple but in a large enterprise it’s probably several different things at once, in different areas of the business. So it’s important to try to get a consensus for alignment as to what to align with! It’s pretty self explanatory if you read the boxes, but in practice seems to produce answers in more than one box. That said, then at least you know how to segment support for the factors and managers driving the change agenda!