Executive Advisory Program

It's the "B"

Posted by: Michael Disabato

Some of you may be wondering what I'm doing over in this blog, since I'm Service Director for Network and Telecom Strategies at Burton Group. In addition to being a wireless geek, I survived the ITIL adoption at McDonald's Corporation a few years back. I've been writing about ITIL for a while, and the thought was, since our clients seem to like that, I'd do more of it. So here I am.

Now, about that "B"....

We use Yammer internally (think: Twitter in a secure sandbox), and there was a discussion about information technology that started with a discussion of information (data) management. Things went back and forth between Lyn Robison and Jack Santos sort of like this:

Lyn: In enterprise IT, "T" people might tend to go to work for cloud vendors. It will be interesting to see if enterprises will employ "I" people to a greater or lesser degree.

Jack: At this point, most "T" people should be thinking about that as a career move.

And I popped up with: Forget the "I", forget the "T", it's all about the "B".

Yes folks, it's all about the business. I told Dave Passmore (Research Director for NTS) once that "technology is irrelevant." That started a discussion that consumed most of a 90-minute staff meeting. In the final analysis, though, the technology you employ is irrelevant if it fails to meet or support the company's business needs. It's like the iPhone: everyone wants one, but it's taking time to convert this shiny toy into a full-fledged business tool with enterprise-class features that can support business operations and meet regulatory requirements.

That's the point behind ITIL. It focuses on how to manage the "T" and provide value to the "B".

Stay tuned for more on this and drop your comments here if you want to speak up about it.

Michael

Questions

posted by: Jack Santos

Homan Farahmand, in our consulting service, shared this with us. 

We have our annual Catalyst conference coming up; at the core of the discussion at Catalyst are exactly these questions – and answers/strategies for businesses to prepare for the trends.

Awesome video. Enjoy!

IT Value - We Reap What We Sow

Posted by Mike Rollings

How does your organization define the value of IT? Many IT organizations have defined their value based on the ability to deal with complexity.  Many times we pride ourselves on how much complexity we deal with.  We may even say "you don't need to know, it is way too complex for you to understand."  Instead of complexity, the value of IT comes from being transparent about your business contribution. It does not come from being able to deal with complexity.

Today I read "Salesforce unfazed by Oracle competition in cloud computing" by Rob Barry.  In the article Cheryl O'Connor, the worldwide CRM strategy manager at signal processing company Analog Devices Inc., said she deployed Salesforce.com on her project's budget without involving IT in the mix. Still, she concedes that as time goes on and Analog Devices' use of Salesforce grows increasingly complex, IT has become more involved.

The great part of this quote is that Salesforce.com gave her the ability to do more herself without engaging technologists.  I don't know if IT at Analog Devices was involved in the initial choice of Salesforce or other steps along the way. But the sad part is the impression that IT did not have involvement with the business until the business was forced too because complexity reared its ugly head. 

As we race toward cloud computing our ability to broker solutions with respect to a business outcome becomes a primary value contribution. Much of the complexity that we pride ourselves on will be someone elses problem. Internal IT will be competing with new environments that appear much simpler. If your organization defines value based on dealing with complexity, the business will perceive that it does not need IT in this much simpler world. 

It won't matter that the post-modern IT world is much more complex than the old.  What will matter is that it is perceived simpler. And if your value comes solely from dealing with complex things, then the business will not perceive the need for IT. 

There are many other valueable reasons to engage IT.  Make your value contribution to business outcomes known!

For more information about value management and how to use metrics to demonstrate the value of IT, register for our July Catalyst Conference and attend the metrics track.  I will be deliverying the keynote - "The Essentials of IT Value Management." 

We are all SMBs

Posted by: Jack Santos

I hear an awful lot of dismissive talk whenever a new innovation comes along…whether it’s cloud, SaaS, the Apple iPhone, or  some new social networking (web 2.0) tool.  It usually ends with something like “That will work for SMBs, maybe”. 

I think there are two  motivations behind that.  One is the assumption that SMBs (Small/Medium sized Businesses) will take on more risk, can do things quicker and respond to innovations faster, and that they naturally lean toward cheaper (and not necessarily better) solutions.

The second is that as IT professionals we are tired of one-offs and silo solutions, and will naturally gravitate towards a solution that can easily work cross (f500 f100 f50) enterprise, in the hopes of consistency.  I can certainly relate to that, remembering the days of having 30 email systems in one company.

But it also seems to me that most corporations WANT to act like SMBs.  They want to fine tune accountability and P/L to give business unit heads the chance to be successful, and have a sense of ownership.  If everything is dictated in the vein of “standards” or “consistency” then innovation, and profit motive can easily be squelched.  This is particularly true for new, and innovative, solutions – even if there is a potential for overlap with existing (standard) solutions.

So the wisdom in management is to decide when something is a commodity (and force standards) and when it’s not – which may depend on the state of the technology, the state of the company, culture, strategy, risk assessment, etc etc (numerous factors – it isn't black and white).

My thesis is that most (if not all) major companies want to act like SMBs, or risk being marginalized by one (or out of business).  There is a false sense of safety in staying with the status quo but it limits innovation and transformation (read Mike Rollings’ post Release that Kung Fu Grip).

I would also contend that it is appropriate to choose areas of innovation, and a strategy that emphasizes total P/L accountability, while offering (but not requiring) a common solution.

There are other names for this topic, ones we hear a lot about and are on a lot of business leaders minds.  How to make your company innovative. How to drive transformation.

Of course either way (acting like an SMB or acting like a F100 Enterprise) has a lot of baggage.  That’s why management decision-making is not easy.

Maybe we should all act like SMBs.

Clouds and Systemic Risk

posted by: Jack Santos

The “Cloud” topic is much in vogue these days, and runs the risk of the hype cycle; I feel “clouds” are at a peak hype stage and ready for a big disillusionment phase.   That may be so, and we may be tiring from cloud-this and cloud-that.  But I believe that fundamentally, references to the cloud really occur at two levels, both of them significant.

The first level of cloud (what I would call “True Cloud”) is really virtualization gone wild.   Now that most datacenters have implemented and gotten comfortable with virtualization, many are experimenting with it in such a way to maximize capacity and expedite failover or load management.  Especially for organizations with large (>10,000 sq ft), multiple backup datacenters.  By focusing on virtualization workloads, datacenter operators now have the flexibility to truly separate applications from the physical hardware.  Amazon and Google have become masters at this and have productized their offerings.  Nick Carr (in “The Big Switch”) theorizes that this is the start of the utility computing era, much like Edison power plants sounded the death knell for private company-owned power generation.

The next level of cloud is more intangible.  It’s a notion that anything can be built, run, or used over the internet.   I’ll call this “Cloud Think”.  It may be predicated on the “True Cloud” advances (and it may not), but it certainly is a major advance in business thinking of IT: rent – don’t buy.  And just as the holy grail of home ownership has become a mantra for our American generation (and to some extent the root cause of our current economic morass), for many IT folks, locally produced and operated datacenters have been sacrosanct – until now.  The model is beginning to look more like the Euro view of buy vs. rent.  Yes, some buy, but many rent, and that’s OK.   Technological advances with “True Cloud”, and psychological advances with "Cloud Think”, now makes us realize we have that option, and that it is economically feasible.

But what worries me more is the systemic risk associated with clouds – and whether that is on anyone’s radar – in either the “True Cloud” (for raw R&D) or “Cloud Think” (for decision-making purposes) camps.  Systemic risk is on everyone’s mind, since we just pulled back from the economic abyss – and still not quite sure why or how.  Wikipedia's definition of systemic risk is what I’ll use:

• In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system.^[1] It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries".^[2] It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market.^[3] It is also sometimes erroneously referred to as "systematic risk".

What everyone now knows, when it comes to our complex financial system, is we don’t know what we don’t know.  Those that make a living in economic research (like Nobel Prize winner Paul Krugman) anticipated significant upheaval, but are still as shocked as anyone at the speed and breadth of the recent collapse. Lowell Bryan and Richard Rumelt talk about it with McKinsey, in a recent article.

And we don’t have to go too far back in history to discover the effects of systemic risk on the most over engineered and revered system on earth: our electric power grid. The northeast blackouts of 1965 and 2003 didn’t occur in a backwater country with gum, duct tape, and bailing wire distribution systems.  It did start with seemingly small innocuous events that everyone thought had been designed for, spreading wildly to affect millions for an extended period.

As a result of the recent financial collapse (or near collapse) two concepts related to systemic risk have come to the forefront: “too big to fail” , and “too interconnected to fail”.  Both of these concepts are entirely appropriate for what we in IT are defining as the cloud.  Burton Group research is very concerned with this and the topic of risk management.  Bob Blakely often writes about it (Risk Management: Concepts and Frameworks as an example).

Bob Metcalf, the inventor of Ethernet, had to eat crow when he predicted the collapse of the internet due to systemic risk issues. It never happened.  I certainly don’t want to follow in his shoes on that topic, but now that we are building the cloud on top of the internet, the systemic risk only grows greater; he may have been wrong on timing, but right on the danger of collapse.  In  the 20 years since he made that prediction, we have only become more dependent on our computing infrastructure.  Cloud – “true” and “think” – developments promise to make that dependency even stronger, and the risk factor even greater.

If all goes according to the plan of cloud pundits, cloud systemic risk will converge with financial system systemic risk…and the stakes will be as high as ever.

Globalization: Winners and Losers

 Posted by: Jack Santos

From the Globalization desk. 

I was surprised to learn last week which countries are the biggest losers and winners, based on acquisitions.  This was  data on change of ownership control, as measured by a company's purchase price.  Interesting analysis in this month's Harvard Business Review by Ken Smith at Secor Group.  By analyzing the data, he showed the resulting net (gain/loss) to a country for all of the companies based in that country that were sold or bought by companies from other countries.

Interestingly, and not so surprisingly, from 2000-2008, the US/UK/Canada and Netherlands (Yes! Netherlands!) were the biggest net losers: 220/187/158/111 billion dollars, respectively).  Apparently the bulk of the Netherlands loss was due to ABN/Amro's sale; even more surprisingly – doesn't part of that ABN sale go to Bank of Scotland?  Yet, the UK came in second with a net loss.  Had that not happened, would the UK net loss of ownership be staggering?

But even more surprisingly  were the winners.  One would expect, by way of press coverage, that it would be India, China, maybe even Indonesia.  Not even close.  Belgium, Spain, and France, the latter dwarfing everyone with a 234 billion net inflow of ownership value.

The long term implications of globalization to IT are significant – not just from a sourcing perspective, but also from a management viewpoint.

As for the conlusion: Viva la France...

MBAs and IT Sourcing

Posted by: Jack Santos

A few months ago I spoke to a class of MBA candidates at Temple University.  What impressed me was the amount of time they spent on IT issues and, even more importantly, how they came at those issues.

It wasn’t that it was an IT issue per se, but a business issue that had technology implications.  An example was the topic I was there to discuss: sourcing options.  Not cloud computing, not outsourcing/in/near/far-sourcing, not IT services, not SOA.

Sourcing. period.

The underlying theme was that the sourcing of business options continues to see enormous innovation, and that future business leaders need to be aware of those options (many listed above), how they can be used to deliver business functions, and how it it is fundamentally a purchasing decision.  A purchasing decision with strategic consequences.

All the same concerns were discussed in a forthright  and insightful manner: issues around security, liability, compliance, control, process integration.

But what was clear to me as I reflected on that class was this:  watch out world, innovative sourcing options are on the table and will be a significant factor in future business strategy.  There is no turning back.  That bodes well for strategies like “cloud”.

Phantom Posterchild - Time for Transformation

Posted by Mike Rollings

In the article "Sony Pictures CEO hates the Internet" Dave Rosenberg reports that Sony Pictures Entertainment CEO Michael Lynton stated "I'm a guy who doesn't see anything good having come from the Internet."  He concludes that instead of embracing new technologies and delivery methods, Sony chooses to stick to the old, now failing ways, as evidenced by the company's recent $1 billion loss.

As I discuss in the Burton Group Perspective document "Real Transformation: Why IT Change Is Not Enough" this is an example of a phantom in the form of an assumption: “We cannot do that because..." The brain is the master of phantoms. Once you begin looking at the world a certain way, you begin to see everything through that lens.  These are the same mechanisms that allow the brain to manufacture the feelings associated with a phantom arm. Yet the fact that the lens itself exists is never examined.

Phantoms prevent the emergence of new conversations while hindering responsiveness and progress. I wonder how long Mr. Lynton carried this notion around with him?  I wonder how many ideas were dismissed by his automatic filter called "nothing good comes from the Internet"?  What would be the result if his filter was "What can Sony reap by embracing the Internet"?

Exorcise your phantoms!  Assumptions, feelings of futility, and other phantoms reinforce status quo and are roadblocks to transformative discussions.  Stagnation - the lack of innovation and agility - happens when you become married to your phantoms.

Benchmarks and the Road to Mediocrity

Posted by Mike Rollings

As I wrote in the Burton Group Research Perspective "Measuring Enterprise Architecture Success" it is hard to avoid a simple trap -- the use of benchmark results purely to understand your organization’s progress in reference to the progress of others. Using the results in this manner encourages mediocrity.

Whatever you benchmark, it is more important to address the problems your organization is experiencing instead of getting a passing grade. Therefore, the problems must be examined with an internal perspective and not just addressed with a broad brush of a benchmark. Problems with IT delivery, decision-making, the application of standards, and other issues cannot be identified solely by comparing your score to that of others in your industry. By analogy, just because you know where you are, and others are with you, does not mean that you are not lost or that you should follow the same path.

A benchmark may be a useful data point to help an organization identify glaring differences between itself and the competition, but that is only a small part of the picture. The most valued use for a benchmark or maturity assessment is to identify what is working and what is required to improve to better address business outcomes.

Sometimes the excuse is "we need a benchmark because it is the only thing our executives understand."  This cop out is one of the disabling assumption in IT that avoids something that is critically important today -- having fact-based, real discussions.  As I wrote in the Burton Group Research Perspective "Real Transformation - Why IT Change is not Enough", we need to deal with underlying business and IT assumptions before we use the excuse of status quo to our peril.

Two phantom assumptions many IT organizations encounter are the assumptions, “we cannot do that because. . . .” and “the business will never consider. . . .” Phantoms solidify into the assumptions and constraints that perpetuate complexity and duplication while hindering new business and IT conversations and progress.  

Management executives require metrics to monitor improvements and achievement of business outcomes.  If you are avoiding the conversation because you think executives won't understand it, then maybe they don't understand it due to the lack of meaningful metrics.

Research and value

posted by: Jack Santos

I’ll take a different tack on this post, and be a little more introspective about this role I am in.  It’s been about 18 months since I took on this position at Burton Group...and it’s been a tremendous amount of fun and hard work…

A couple of recent meetings with CIO friends, and a few discussions with clients and prospects, prompted me to think about what I am doing. 

I am actually a very lucky guy. In a wonderful marriage with an exciting woman, 5 great kids, and a job that I look forward to waking up to every day – in fact, often get up early just to start it, and find myself still at it 9 PM at night. 

Unlike being on the front lines (which I have been over 30 years), I made a conscious decision when I joined Burton Group to pick a role that was in many ways less stressful (in other ways more), that had no one to delegate to, or performance reviews to do, less real management responsibility, a bit more travel, constant exposure to new faces and networking, less corporate responsibility, but more informal responsibility for the advice  I give to many – which I take very seriously.  After spending the first 30 years of my career doing, I can give back and spend the next 30 advising.

Unexpectedly, my role as CIO Executive Strategist has become a nice blend of experience, geek interests, and my wife’s vocation: psychotherapy.  More on that in another blog entry.

What has been fascinating to me are people’s perspectives on the role of an industry analyst, or the value of an analyst firm.  I certainly had a viewpoint before joining Burton Group, which alternated from viewing analysts firms (like many vendors) as a mix of anything from shysters, to business enablers, to real partners.  But the conversations I have often times start with a real challenge – or what the prospects perceives as a challenge – as to why Burton Group is necessary or provides value; or (more personally) why they should listen to me.  Here are some of the more frequent objections, and my observations/responses.

1) We can use Google– why do I need you? I can find it myself.

This presumes that everything on the Internet is accurate, easily discernible, and clearly in agreement.  What I find key to what I do now is experience, judgment, strong critical thinking skills, and detachment from the customers problem – all of which are important in coming up with insight and advice.

2) You guys are just ambulance chasers; I get the same content from <pick your industry trade journal>, the Wall Street Journal, the New York Times, or any variety of publications.

Unfortunately, modern media (Internet included) is very susceptible to the amplifier effect.  One source says it, and the same single story gets repeated, sliced, diced, and presented as fact in a million ways.  Sometimes even fundamentally changed. It’s easy to fall victim to it, and become part of this massive ponzi scheme-like effect that has only gotten worse with the advent of the Internet, and real-time Google-accessible content.  Someone, with in depth technology experience and healthy skepticism, has to sort through the media – and not be afraid to call out the emperor on his lack of clothes.  Unfortunately, the amplifier effect does cause an ambulance chasing type of culture – not just in IT (note the current swine flu coverage).  I also am a firm believer you get out what you put in (capitalist karma); or, as the cliché says: You get what you pay for – often true for both Google searches, and media freebies.

3)  I have a real network – SIM, CIO Leadership forum, CIO Executive Summit, CHIME, my local group that meets for lunch. Peer relationships are important. I just want to hear what my peers are up to. I don’t need analysts.

My personal network is critical, and it should be for every executive.  It’s an opportunity to vet what I hear, get new ideas, and, when I need to, stay with the herd.  I don’t stay with the herd all the time, and even when I do, I may make changes, and vary from the herd for the details.  That needs advice from people that are herd-flirters; they flirt from herd to herd, sometimes within industry, sometimes across industries. Innovation and creativity often times doesn’t come out of thin air, but from the application of different ways of doing things from different industries. 

4) We are a multimillion/billion/trillion dollar company. I have as much, if not more, access to our suppliers/vendors/industry shakers.  A corollary: I rely on my suppliers/vendors to provide advice and analysis of key issues and trends.

In my career, I have sat across the table (or been sitting in the next office) from many major IT industry thought leaders (Microsoft’s Gates & Ballmer, Apple’s Jobs & Allen Kaye, IBM’s Palmisano and Gertner, Sun’s Schwartz and McNealy, Google’s Schmidt).  The companies I have worked for had access, because of the enormous sums of cash we spent with a vendor. There are two rules that I’ve learned: thought leaders put their pants on one leg at a time, just like the rest of us (pants suits for the ladies ), and vendor opinions requires the most skepticism – it’s not like they don't have a conflict of interest.  With millions of dollars at stake, I always felt the extra dollars for someone’s opinion that doesn’t have a dog in the fight is worth every penny.

5)  You don’t know my business as well as I do. How can you advise me?

Fortunately, a company like Burton Group does have a fairly broad pedigree of analysts that may know your business as well as you do – and because of exposure can even apply lessons learned from other industries.  Almost every conversation I’ve had, though, doesn’t require detailed in-house vertical business expertise, especially at the executive level; it requires detachment, common sense, critical thinking, and experience.

6) I pay my team to be as good as you; I expect from them the same knowledge and analysis that you provide, and they should do it without help.

I usually hear this as a last resort.  It’s an attractive cop-out, because it displays confidence in your staff, your ability to pick people, and the amount of emphasis your organization puts on solid, well thought out, decision-making.

But the fact is your staff is there to focus on your internal clients, and lead your organization.  That takes a lot of time and effort.  They are there to not only provide you with insight and expertise, but your business users and your IT department as well.  There is no way that they can put the time into that AND into understanding industry trends, and detailed technology strategies (independent of what your company is doing)—I know because I do that full time, for multiple companies.

If you feel that you should pay top dollar and insource that – god bless and good luck; some Fortune 100s think they can, but find out that sourcing that from the outside is not only more cost effective, it’s also more idea effective. It’s a matter of putting the right people in the role that they have the most opportunity for success, and the most impact.  Your folks should be focusing on YOUR business.  People like me help them do that by focusing on everyone else's business.

Having been on both sides of this equation now, that’s how I see it.  How do you see it?

Comments welcome.