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Balancing our two masters

2009/11/09 in Business-Technology, Mailing List | No comments

We seem to be torn between two masters. On one hand we’re driven to renew our IT estate, consolidating solutions to deliver long term efficiency and cost savings. On the other hand, the business wants us to deliver new, end user functionality (new consumer kiosks, workforce automation and operational excellence solutions …) to support tactical needs. But how do we balance these conflicting demands, when our vertically integrated solutions tightly bind user interaction to the backend business systems and their multi-year life-cycle? We need to decouple the two, breaking the strong connection between business system and user interface. This will enable us to evolve them separately, delivering long term savings while meeting short term needs.

Business software’s proud history is the story of managing the things we know. From the first tabulation systems through enterprise applications to modern SaaS solutions, the majority of our efforts have been focused data: capturing or manufacturing facts, and pumping them around the enterprise.

We’ve become so adept at delivering these IT assets into the business, that most companies’ IT estates a populated with an overabundance of solutions. Many good solutions, some no so good, and many redundant or overlapping. Gardening our IT estate has become a major preoccupation, as we work to simplify and streamline our collection of applications to deliver cost savings and operational improvements. These efforts are often significant undertakings, with numbers like “5 years” and “$50 million” not uncommon.

While we’ve become quite sophisticated at delivering modular business functionality (via methods such as SOA), our approach to supporting users is still dominated by a focus on isolated solutions. Most user interfaces are slapped on as nearly an after thought, providing stakeholders with a means to interact with the vast, data processing monsters we create. Tightly coupled to the business system (or systems) they are deployed with, these user interfaces are restricted to evolving at a similar pace.

Business has changed while we’ve been honing our application development skills. What used to take years, now takes months, if not weeks. What used to make sense now seems confusing. Business is often left waiting while we catch up, working to improve our IT estate to the point that we can support their demands for new consumer kiosks, solutions to support operational excellence, and so on.

What was one problem has now become two. We solved the first order challenge of managing the vast volumes of data an enterprise contains, only to unearth a second challenge: delivering the right information, at the right time, to users so that they can make the best possible decision. Tying user interaction to the back end business systems forces our solutions for these two problems to evolve at a similar pace. If we break this connection, we can evolve users interfaces at a more rapid pace. A pace more in line with business demand.

We’ve been chipping away at this second problem for a quite a while. Our first green screen and client-server solutions were over taken from portals, which promised to solve the problem of swivel-chair integration. However, portals seem to be have been defeated by browser tabs. While these allowed us to bring together the screens from a collection of applications, providing a productivity boost by reducing the number of interfaces a user interacted with, it didn’t break the user interfaces explicit dependancy on the back end business systems.

We need to create a modular approach to composing new, task focused user interfaces, doing to user interfaces what SOA has done for back-end business functionality. The view users see should be focused on supporting the decision they are making. Data and function sourced from multiple back-end systems, broken into reusable modules and mashed together, creating an enterprise mash-up. A mashup spanning multiple screens to fuse both data and process.

Some users will find little need an enterprise mash-up—typically users who spend the vast majority of their time working within a single application. Others, who work between applications, will see a dramatic benefit. These users typically include the knowledge rich workers who drive the majority of value in a modern enterprise. These users are the logistics exception managers, who can make the difference between a “best of breed” supply chain and a category leading one. They are the call centre operators, whose focus should be on solving the caller’s problem, and not worrying about which backend system might have the data they need. Or they could be field personnel (sales, repairs …), working between a range of systems as they engage with you customer’s or repair your infrastructure.

By reducing the number of ancillary decisions required, and thereby reducing the number of mistakes made, enterprise mash-ups make knowledge workers more effective. By reducing the need to manually synchronise applications, copying data between them, we make them more efficient.

But more importantly, enterprise mash-ups enable us to decouple development of user interfaces from the evolution of the backend systems. This enables us to evolve the two at different rates, delivering long term savings while meeting short term need, and mitigating one of the biggest risks confronting IT departments today: the risk of becoming irrelevant to the business.

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What Australia does well

2009/11/06 in Business-Technology, Posterous | No comments

Australia is a long way from anywhere, making it hard (historically) to lean on overseas skills to solve problems. This has breed a strong streak of pragmatism into the Australian DNA pool, leading us to find pragmatic solutions to real problems.

Embracing Innovation: a new methodology for feature film production in Australia

Embracing Innovation: a new methodology for feature film production in Australia

Robert Connolly published a brilliant white paper in February 2008 which is a great example of this in action. Showing a a strong sense of realism and common sense, Robert pulls apart the Australian film industry and, using clear and direct language, provides a set of good recommendations on how we might address the challenges the Australian film industry faces.

There’s a lot of good ideas in the paper for the IT services industry. To a certain extent we’re caught in a similar situation, caught between the low budget films of SaaS (software-as-a-service), and spiralling demands from our star talent (architects, project managers, …) who’s careers drive them toward block buster projects. The top four measures he proposes might even provide us with a template to create a new engagement model that incentivises the IT industry to deliver business outcomes, rather than IT assets:

  • a first dollar share for filmmakers,
  • fair returns for cast and crew,
  • more realistic budget models, and
  • simplified reporting obligations.

Robert’s recommendations provide us with valuable grist for the mill as we, in the IT industry, work our way through the current evolutionary phase our industry is going through, driven by the shift from large, on premises applications to a future increasingly dominated by cloud solutions. His approach to the problem is also an excellent model of how to engage with the wholesale transformation of an industry.

Posted via email from PEG

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The NBN wants to be free

2009/10/14 in Business-Technology, Innovation | No comments

There’s been a lot of discussion on what Austalia’s national broadband network (NBN) will cost when it’s finally delivered to consumers. How much will we need to stump up to take part in today’s knowledge economy? Most cost recovery models have ISPs charging monthly fees of over $200, which is a lot more than the $50 per month most of us are used to paying. Who’s gonna pay that? A lot of folk have been pointing out the folly of forcing through a broadband network that few of us can afford, let alone be bothered to pay for.

Is this missing the point though? What if the government’s intention is to make the NBN free (or close enough to as to make no difference)? Much like most other public infrastructure such as roads. There’s precedents for this, from the New Deal though the recent government report on supporting innovation and the fact that the government is sitting on a large pile of money that they intend to spend.

The global financial crunch has had a dramatic impact on everyone’s lives, though Australia has been in the lucky position of avoiding the worst of the down turn. Australia is even the first large, rich country to raise interest rates on the back of the world recovery. Discussion has now turned to the nature of this recovery: will it be V or W shaped? Most of the smart money (including the RBA’s) seems to be settling on W shaped, with the potential for unemployment to rise in the short to mid term. The war chest the government accumulated to fight recession is still quite full, and the government has stated that it plans to stick to the large stimulus plan announced earlier in the year.

Recessions often to bring governments to think about major infrastructure projects. The U.S. went down this route mid century, with Congress having a few attempts at chartering a “National System of Interstate Highways” before Eisenhower made it a reality. I haven’t seen a figure for the investment required, but I expect it to be scary. The impact, though, was profound on the U.S. in general, and the economy in particular. Through the years, various estimates have been made of the contribution of the interstate highway system to the economy, generally finding that the interstate highway system has more than paid for itself in improved commercial productivity, with each dollar of investment in highways producing an annual reduction in product costs of 23.4 cents. It is estimated that the interstate highway system is now producing approximately $14 billion. All this from something you can use for free.

Fast forward to the future, and we can find an interesting report, Powering Ideas, recently published by the Australian government, outlining how what Australia might do to support innovation domestically. The report is quite long but at its nub, it points to a strategy of funding the infrastructure required by innovators it make it easy (and cheap) for them to innovate. This doesn’t mean that the government is getting out of the grant business, but it is an admission that the government doesn’t have a great track record of picking winners in this space. Cheap (if not free) infrastructure helps those grant dollars go further, while at the same time helping every innovator in Australia who wasn’t lucky enough to receive a grant.

Put the two of these together and it makes you wonder: what if they Australian government makes the the NBN free? Back in the 30′s the U.S. economy was driven by interstate commerce. Reducing the cost of trucking goods across the country (reducing the transaction costs) helped drive the economy forward. Today, in Australia, knowledge and collaboration are the back bone of the commerce. Reducing the cost of sharing information and collaborating has the potential to have a similar impact .

Like free and efficient roads, very cheap broadband access would help the entrepreneurs and innovators thrive. This would provide Australian’s with powerful platform to build businesses in a today’s knowledge economy. We could capitalise on the current trend for software-as-a-service (SaaS) startups replacing business process outsources (BPO), replacing a human labour driven solution is a software driven solution, servicing the world’s needs from our home base Research driven startups would have cheap and efficient access to the massive data sets which drive modern research, having the world at their fingertips.

You would probably still need to pay for the last mile, connecting your abode to the NBN backbone, but this is similar to the current energy delivery commitment from the government: they get the power lines to the property boundary, and then you pay someone to connect it into the house. Local ISPs could provide (or organises) the connection service, along with sorting out the home network and providing support. The NBN would also probably need to expand to include the link overseas, complimenting (or replacing) the network of links funded and managed by the existing telcos and ISPs.

And finally: where do the major Australian telcos fit in this? Interesting question. One probably better left to them to answer.

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From doctrine to dogma: when did a good idea become the only idea

2009/08/17 in Business-Technology | 2 comments

When does a good method become the only method? The one true approach to solving a problem; the approach which will bind them all. The last few decades has seen radical change in our social and business environments, while the practice of business seems to have changed relatively little since the birth of the corporation. The problem of running a business, the problem we work every day to solve, has changed so much that the best practice of yesterday has become an albatross. The methods and practices that have brought us to the current level of performance are also one of the larger impediments to achieving the next level. When did the yesterday’s doctrine become today’s dogma? And what can we do about it?

Our methodologies and practices have been carefully designed to help steer our leviathan ships of industry, tuning their performance to with five and three year plans. The newspapers of today, for example, hold a marked resemblance to the news papers of 100 years ago, structured as large content factories churning out the stories with some ads slapped in the page next to them.

The best practices evident in companies today represent the culmination of generations of effort in building, running and improving our businesses. The doctrine embodied in each industry in a huge, a immensely valuable body of knowledge, tuned to solving the problem of business as we know it.

doctrine |ˈdäktrin|
noun
a belief or set of beliefs held and taught by a church, political party, or other group : the doctrine of predestination.
• a stated principle of government policy, mainly in foreign or military affairs: the Monroe Doctrine.
ORIGIN late Middle English : from Old French, from Latin doctrina ‘teaching, learning,’ from doctor ‘teacher,’ from docere ‘teach.’

OS X Dictionary, © Apple 2007

However, a number of fundamental changes have taken hold in recent years. The pace of business has increased markedly; what used to take years now takes months, or even weeks. The role of technology in business has changed as applications have become ubiquitous and commoditized. The assumptions which existing doctrine were developed under no longer hold.

Today, most (if not all) newspapers are watching their as revenue is eroded by the likes of Craigslist, who have used modern web technology to come up with a new take on the decades (if not centuries) old classified ad.

Let’s look at Craiglist. I’ve heard people estimate that they are doing close to $100mm in annual revenues at this point. Many say, “they could be doing so much more”. But the Craigslist profit equation is interesting. They apparently have less than 30 employees. That’s about $4mm/year in employee costs. Let’s assume that they spend another $6mm per year on hosting and bandwidth costs and other costs. So it’s very possible that Craigslist’s annual costs are around $10mm/year. Their value equation then is 10 x (100-10) = $900mm. That’s almost a billion dollars in value for a company with only 30 employees.

Fred Wilson, A VC

Craigslist has taken a fresh look at what it means to be in the business of classified ads, and used technology in a new way to help create business value, rather than restrict it to controlling costs and delivering process effencies; an approach Forrester have labeled Business-Technology.

The challenge is to acknowledge that the rules of business have changed, and modify our best practices to suit the new business environment because, as Albert Einstein pointed out “insanity is doing the same thing over and over again and expecting different results.” If we can’t change our best practices to suit, then our valuable doctrine has become worthless dogma.

dogma |ˈdôgmə|
noun
a principle or set of principles laid down by an authority as incontrovertibly true: the Christian dogma of the Trinity | the rejection of political dogma.
ORIGIN mid 16th cent.: via late Latin from Greek dogma ‘opinion,’ from dokein ‘seem good, think.’

OS X Dictionary, © Apple 2007

Enterprise architecture (EA) is prime example. As a doctrine, enterprise architecture has a proud history all the way back to John Zachman’s work in the 70s and the architecture framework which carries his name. EA has leveraged large, multi-year transformation programs to deliver huge operational effencies into the business. These programs have delivered a level of business performance unimaginable just a generation ago.

The pace of business has accelerated so much in recent years that the multiyear engagement model these transformations imply is no longer appropriate. What use is a five or three year plan in a world that changes every quarter? Transformation projects have been struggling recently. Some recent transformations edge across the line, at which point everyone moves onto the next project exhausted, and the promised benefits are neither identified or realized. Some transformations are simply declared a success after an appropriate effort has been applied, allowing the team to move on. A few explode, often quite publicly.

This approach made sense a decade or more ago, where IT was focused on delivering the next big IT asset into the enterprise. It’s application strategy, rather than technology strategy. However, the business and technology environment has changed radically recently since the emergence of the Internet as a public utility. The IT departments we’ve created as application factories have become an albatross for the business; making us incapable of engaging anything but a multiyear project worth tens of millions of dollars. They actively prevent the business from leveraging in innovative solutions or business opportunities. Even when there is a compelling reason to do so.

Simply put, the value created by enterprise architecture has moved, and the doctrine, or at least our approach to applying it, hasn’t kept up. For example, a common practice when establishing a new EA team seems to involve hiring architects to fill each role defined TOGAF’s IT Architecture Role and Skill Definitions to provide us with complete skills coverage. Driving this is a desire to align ourselves with best practice, and ensure we do the job properly.

Some of TOGAFs IT Architecture Role and Skill Definitions

Some of TOGAF's IT Architecture Role and Skill Definitions

Most companies don’t need, nor can they can afford, a complete toolbox of enterprise architecture skills inside the business. A strict approach to the the doctrine will result in a larger EA team than the company can sustain. A smarter approach is to balance the demands and available resources of the company against the skill requirements and possible outcomes. We can tune our approach by aligning it with new techniques, tools and capabilities, or integrating elements from other doctrines—agile or business planning techniques, for example—to create a broader pallet of tools to solve our problem with. This might involve new engagement models. We can buy some skills while renting others. Some skills might be sustainable at a lower levels. It is also possible multi-skill, playing the role of both enterprise and solution architect. Similarly, leveraging software as a service (SaaS) solutions can also force changes in our engagement model, as a methodology suitable for scoping a three year and $50 million investment in on-premises CRM might not be appropriate for a SaaS solution which only requires 10% of the effort and investment as the on-premises solution.

Treating doctrine as prescriptive converts it into dogma. As John Boyd pointed out, we should assume that all doctrine is not right—that it’s incomplete or incorrect to some extent. You need to challenge all assumptions and look outside your own doctrine for new ideas.

Our own, personal resistance to change is the strongest thing holding us back. It seems that we learn something in our early to mid twenties, and then spend the rest of our career happily doing the same thing over and over again. We define ourselves in terms of what we did yesterday. If we create an environment where we define ourselves in terms of how we will help the organization evolve, rather than in terms of the assets we manage or doctrine we apply, then we can convert change from an enemy into an opportunity.

There is light at the end of the tunnel. For all the talk of the end of newspapers, some journalists are banding together to create new business models which can hold their own in a post-Craigslist world. Some old school journalists have taken a fresh look at what it means to be a newspaper. Young but growing strong and profitable, Politico’s news room is 100 strong and they have more people in the white house bureau than any other brand.

As TechCrunch pointed out:

Journalists still matter. A lot. Especially the good ones.

The challenge is to focus on what really matters, get close to your customers and find what really drives your business, question all the common sense (which is neither common or sensible in many cases) in your industry’s doctrine, look into the doctrine of other industries to see what they are doing that you can use, and use technology to create a business which their more traditional competitors will find it impossible to compete against.

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The Scoop: Oracle swallows Sun

2009/05/29 in Media | No comments

Gavin Clarke (Editor @ The Register), Rob Janson (President @ Enterprise Java Australia) and myself are on Mark Jones’ The Scope this week.

For loyal Sun customers and industry watchers, it was almost unthinkable – Oracle buying Sun. Sun Microsystems is one of Silicon Valley’s iconic technology companies, and Oracle doesn’t do hardware. And Sun was proud to wear the underdog badge. But the proposed acquisition raises fresh questions about the long-term health of the industry’s dominant suppliers. What’s the future hold for Oracle & Sun customers?

  • Oracle license inspections – costs to rise? What about Oracle’s famed licensing complexity. Will this get any better?
  • Consolidation problems: Will customer service deteriorate and product innovation wane?
  • What of Java – what’s Oracle likely to do with this prized jewel?
  • Did Oracle buy more problems than opportunities? (Sun’s debt, poor revenues…)
  • Enterprise app consolidation leaves CIOs with fewer choices: how will they bargain with suppliers now?
  • Larry Ellison said he wouldn’t buy Sun, or a hardware company, back in 2003. What changed? Does this mean that Oracle is likely to divest itself of Sun’s hardware business once the acquisition is completed?
  • What the growth engines for Oracle now – hardware/servers appear to have little headroom for serious growth.

About The Scoop

The Scoop is an open, free-flowing conversation between industry peers. It’s about unpacking issues that affect CIOs, senior IT executives and the Australian technology industry. The conversation is moderated by Mark Jones, The Scoop’s host and producer. More information about The Scoop, including a list of previous guests, can be found here:

http://filteredmedia.com.au/about-the-scoop/

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What we’re doing today is not what we did yesterday

2009/05/22 in Business-Technology | 1 comment

Telxon

Telxon hand unit

The business of IT has changed radically in the last few years. Take Walmart for example. In the 80s Walmart laid the foundations for its future growth by fielding a supply chain data warehouse. The insight the data warehouse fueled their amazing growth to become the largest retailer in the world. However, our focus has moved on from developing applications. More recently Walmart fielded the Telxon, a barcode scanner with a wireless link to the corporate back-end. This device is the front end of a distributed solution which has let Walmart devolve buying decisions to the team walking the shop floor.

For a long time IT departments have defined themselves by their ability to deliver major applications into the enterprise. CRM, MRP, even ERP; all the three letter acronyms. For a long time this has been the right thing to do. Walmart’s data warehouse, to return to our example, was a large application which was a significant driver in the company’s outlier performance for the next couple of decades.

The world has changed a lot since that data warehouse went operational. First the market for enterprise applications grew into the mature market we see today. If you have a well defined problem—an unsupported business activity—then a range of vendors will line up to provide you with off-the-shelf solutions. Next we saw a range of non-technology options emerge, from business process outsourcing (BPO) and leveraging partnerships, through to emerging software-as-a-service (SaaS) solutions.

What used to be a big problem—fielding a large bespoke (or even off-the-shelf) application—has become a (relatively) small one. Take CRM (customer relationship management) as one example. What was a multi-year project requiring an investment of tens of millions of dollars to deploy a best-of-breed on-premises solution, has become a few million dollar and a matter of months to field SaaS solution. And the SaaS solutions seem to be pulling ahead in the feature-function war; Salesforce.com (one of the early SaaS CRM solutions) is now seen as the market leader (check with your favorite analyst).

Nor has business been standing still while technology has been marching forward. The productivity improvements provided by the last generation of enterprise applications have created the time and space for business stakeholders to solve more difficult problems. That supply chain solution Walmart deployed that was the first of many, automating most (if not all) of the mundane tasks across the supply chain. Business process methodologies such as LEAN (derived from the Toyota Production System) and Six Sigma (from GE) then rolled through the business, ripping all the fat from our supply chains as they went past. The latest focus has been category management: managing groups of product as separate businesses and, in many chases, handing responsibility for managing the category back to the supplier.

Which brings us back to the Telxon. If we’ve all been on the same journey—fielding a complete set of applications, optimizing our business processes, and deploying the latest, best practice, management techniques—then how do we differentiate? Walmart realized that, all things being equal, it was their ability to respond to supply chain exceptions that would provide them with an edge. As a retailer, this means responding to stock-outs on the shop floor. The only way to do this in a timely manner is to empower the people walking the floor to make a procurement decision when they see fit. Walmart’s solution was the Telxon.

The Telxon is an interesting device as it reveals an astonishing amounts of information: the quantity that should be on the shelf, the availability from the nearest warehouse, the retail price, and even the markup. It also empowers the employee to place an order for anything from a pallet to a truck-load.

Writer

Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.

As one journalist found:

We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn’t have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, “Which I shouldn’t have done really without asking someone,” he said with a shrug, “because I hadn’t been working at the store for long.” But the item was a huge success. His VPI was the biggest in store history—and that kind of thing doesn’t go unnoticed in Arkansas.

Charles Platt, Fly on the Wall (7th Feb 2009), New Your Post

Clearly the IT world has moved on since that first data warehouse went live in Arkansas. Enterprise applications have been transformed from generators of competitive advantage into efficient sources of commodity functionality. Technology’s ability to create value should be focused on how we effectively support knowledge workers and the differentiation they create. These solutions only have a passing resemblance to the application monoliths of the past. They’re distributed, rather than centralized, pulling information from a range of sources, including partner and public sources. They’re increasingly real time, in the Twitter sense of the term, pulling current transactional data in as needed rather than working from historical data and relying on overnight ETLs. They’re heterogeneous, integrating a range of technologies as well as changes in business processes and employee workplace agreements, all brought together for delivery of the final solution. And, most importantly, they’re not standalone n-tier applications like we built in the past.

But while the IT world has moved on, it seems that many of our IT departments haven’t. Our heritage as application factories has us focused on managing applications, rather than technology, actively preventing us from creating this new generation of solutions. This behavior is ingrained in our organizations, with a large number of architects through project managers to senior management measuring their worth by the size of the project (in terms of CAPEX and OPEX required, or head count) that they are involved in, with the counter productive behavior that this creates.

In a world where solutions are shrinking and becoming more heterogeneous (even to the extent of becoming increasingly cross discipline) our inability to change ourselves is the biggest thing holding us back

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The Value of Enterprise Architecture

2009/05/07 in Business-Technology, IT Strategy, Presentations | No comments

Note: Updated with the slides and script from 2011′s lecture.

Is Enterprise Architecture in danger of becoming irrelevant? And if so, what can we do about it?

Presented as part of RMIT’s Master of Technology (Enterprise Architecture) course.

The Value of Enterprise Architecture

The Value of Enterprise Architecture

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The Scoop: Are we facing tech wreck take 2?

2008/10/20 in Media | No comments

Stephen Tame (CIO @ JetStar), Mike Zimmerman (principle @ Technology Venture Partners) and myself are on Mark Jones’ The Scope this week. The show looks at the impact of the global economic crisis on the local and international technology industries.

The worldwide economic crisis has caused business to completely reevaluate spending priorities, and IT is no exception. What strategies must CIOs consider during the downturn? What impact will a difficult economic climate in 2009 have on enterprise technology spending?

Topics covered include:

  • What IT projects are likely to be cut immediately?
  • What IT projects will likely survive — what can’t we live without?
  • What advice do we have for CIOs evaluating IT projects. Is this the catalyst for more spending on outsourcing, SAAS, etc?
  • Other observations about the impact of worldwide downturn? eg. will this redefine how we think about sourcing IT products? What solutions should CIOs bring to the boardroom?

About The Scoop

The Scoop is an open, free-flowing conversation between industry peers. It’s about unpacking issues that affect CIOs, senior IT executives and the Australian technology industry. The conversation is moderated by Mark Jones, The Scoop’s host and producer. More information about The Scoop, including a list of previous guests, can be found here:

http://filteredmedia.com.au/about-the-scoop/

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Managing technology, not applications

2008/10/13 in Business-Technology, IT Strategy, Mailing List | No comments

We’re getting it all wrong—we focused on managing the technology delivery process rather than the technology itself. Where do business process outsourcing (BPO), software as a service (SaaS), Web 2.0 and partner organisations sit in our IT strategy? All too often we focus on the delivery of large IT assets into our enterprise, missing the opportunity to leverage leaner disruptive solutions that could provide a significantly better outcome for the business.

IT departments are, by tradition, inward looking asset management functions. Initially this was a response to the huge investment and effort required to operate early mainframe computers, while more recently it has been driven by the effort required to develop and maintain increasingly complex enterprise applications. We’ve organised our IT departments around the activities we see as key to being a successful asset manager: business analysis, software development & integration, infrastructure & facilities, and project or programme management. The result is a generation of IT departments closely aligned with the enterprise application development value-chain, as we focus on managing the delivery of large IT assets into the enterprise.

Building our IT departments as enterprise application factories has been very successful, but the maturation of applications over the last decade and recent emergence of approaches like SaaS means that it has some distinct limitations today. An IT department that defines itself in terms of managing the delivery of large technology assets tends to see a large technology asset as the solution to every problem. Want to support a new pricing strategy? Need to improve cross-sell and up-sell? Looking for ways to support the sales force while in the field? Upgrade to the latest and greatest CRM solution from your vendor of choice. The investment required is grossly out of proportion with the business benefit it will bring, making it difficult to engage with the rest of the business who view IT as a cost centre rather than an enabler.



A typical IT department value-chain

Unfortunately the structure of many of our IT departments—optimised to create large IT assets—actively prohibits any other approach. More incremental or organic approaches to meeting business needs are stopped before they even get started, killed by an organisation structure and processes that impose more overhead than they can tolerate.

Applications were rare and expensive during most of enterprise IT’s history, but today they are plentiful and (comparativly) cheap. Software as a Service (SaaS) is also emerging to provide best of breed functionality but with a utillity delivery model; leveraging an externally managed service and paying per use, rather requiring capital investment in an IT asset to provide the service internally. Our focus is increasingly turned to ensuring that business processes and activities are supported with an appropriate level of technology, leveraging solutions from traditional enterprise applications through to SaaS, outsourced solutions or even bespoke elements where we see fit. We need to be focused on managing technology enablement, rather than IT assets, and many IT departments are responding to this by reorganising their operations to explore new strategies for managing IT.

Central to this new generation of IT departments is a sound understanding of how the business needs to operate—what it wants to be famous for. The old technology centric departmental roles are being deprecated, replaced with business centric roles. One strategy is to focus on Operational Excellence, Technology Enablement and Contract Management. A number of Chief Process Officer (CPO) roles are created as part of the Operational Excellence team, each focusing on optimising one or more end-to-end processes. The role is defined and measured by the business outcomes it will deliver rather than by the technology delivery process. CPOs are also integrating themselves with organisation wide business improvement and operational excellence initiatives, taking a proactive stance with the business instead of reactively waiting for the business to identify a need.



Managing technology, not applications

The Technology Enablement team works with Operational Excellence to deliver the right level of technology required to support the business. Where Operational Excellence looks out into the business to gain a better understanding of how the business functions, Technology Enablement looks out into the technology community to understand what technologies and approaches can be leveraged to create the most suitable solution. (As opposed to traditional, inward focused IT department concerned with developing and managing IT assets.) These solutions can range from SaaS through to BPO, AM (application management), custom development or traditional on-premises applications. However, the mix of solutions used will change over time as we move from today’s application centric enterprise IT to new process driven approaches. Solutions today are dominated by enterprise applications (most likely via BPO or AM), but increasingly shifting to utility models such as SaaS as these offerings mature.

Finally a contract management team is responsible for managing the contractual & financial obligations, and service level agreements between the organisation and suppliers.

One pronounced effect of a strongly business focused IT organisation is the externalisation of many asset management activities. Rather than trying to be good at everything needed to deliver a world class IT estate, and ending up beginning good at nothing, the department focuses its energies on only those activities that will have the greatest impact on the business. Other activities are supported by a broad partner ecosystem: systems integrators to install applications, outsourcers for application management and business process outsourcing, and so on. Rather than ramping up for a once-in-four-year application renewal—an infrequent task for which the department has trouble retaining expertise—the partner ecosystem ensures that the IT department has access to organisations whose core focus is installing and running applications, and have been solving this problem every year for the last four years.

This approach allows the IT department to concentrate on what really matters for the business to succeed. Its focus and expertise is firmly on the activities that will have the greatest impact on the business, while a broad partner ecosystem provides world class support for the activities that it cannot afford to develop world class expertise in. Rather than representing a cost centre in the business, the IT department can be seen as an enabler, working with other business to leverage new ideas and capabilities and drive the enterprise forward.

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