Good segment.
Interesting comment that suggests Australia has a “resource curse” (though that expression isn’t used) not just in general but also specifically in relation to our resilience during the GFC.
Note to self:
# This weeks Q&A comes thanks to Seyran Dehbokry.
Seyran has worked as Business/Process Analyst in the variety of IT projects for over 6 years. She is currently a PHD student at the University Technology, Sydney, Australia where she is developing a cross-disciplinary Business Architecture framework applicable for Small and Medium Enterprises (SMEs). This research topic has been motivated by his industrial experience in performing Business Analysis in Enterprise Architecture projects in medium size organisations.
Here is her first question that has been raised in her recent research.
“The cloud computing technology has been considered as a technology initiative rather than a business transformation tool that solves business requirements. Not for all companies the cloud strategies and principles have become a clear perspective to configure and giving rise to cloud oriented business. The reason for this gap is that the technologies are adopted through a bottom up (technology need) approach. The main challenges for a businesses in using cloud computing technologies is architecting business services and capabilities to support cloud computing model and managing internal and external cloud capabilities. However this comes about as a realisation that architecture, from a cross-disciplinary perspective, is required to guide the definition, development and governance of business services that will be supported by the cloud technology.
Seyran’s question this week:-
Could Business Architecture facilitate migration toward the cloud in companies?”
—
# Answer
I believe that when done well business architecture is our best tool to facilitate migration towards cloud in companies. This is part of the reason I’m uncomfortable with the way enterprise architecture is often presented as an integrated stack across Business, Information, Application, and Infrastructure. Its use in these disruptive scenarios is one of the reasons why business architecture has value even when it isn’t integrated with those other layers.
I believe there are three tools that help facilitate migration towards the cloud in companies. These tools are actually also effective in facilitating other disruptive technology trends (big data, virtualisation, mobility, etc.):
1. the pre-technology business case
2. capability-based planning (i.e. business architecture)
3. the economics of the cloud
## The economics of the cloud
Starting with #3. I think you can talk about “the economics of the cloud” but you shouldn’t talk about “the business case for the cloud”. This is just a rephrasing of Seyran’s comment in the question about cloud initiates have typically been bottom-up, technology initiatives rather than business transformations.
While you shouldn’t talk about “the cloud business case” (because this is by definition a technology-driven approach) a rich understanding of how cloud changes the economics of the organisation is required whether the initiative is technology-driven or business-driven. Often this is forgotten when a business-driven approach is taken – you still need to understand the impact of the tech if not the tech itself.
The economics of the cloud – like other disruptive technologies – can be analyses through multiple dimensions: automation, service category progression, transaction costs, digital value chain, time shift, geography shift, risk shift.
a. Automation – i.e. basic automation of manual tasks. In the case of Cloud this largely occurs through the economies of scale within cloud providers themselves.
b. Service category progression – i.e. how does this raise the level of value for services that can be cost-effectively managed. Cloud already has IaaS, ASP, etc. but the ultimate might well be what I’d call “outcome-as-a-service”.
b. Transaction costs – i.e. if transaction costs are reduced by the technology how does that impact the boundaries of the firm or the ability to take market-based coordination approaches within the firm. In the case of cloud this means the ability to acquire resource coordination and collaboration technologies that bring market-based co-ordination into the firm.
c. Digital value chain (with apologies to Don Tapscott) – i.e. the ability to independently manage the value of service delivery versus the value of the information generated during service delivery. In the case of cloud this could both dis-aggregate and re-aggregate industries or business segments where previously the costs of outsourcing where too high.
d. Time shift – i.e. can the technology defer decisions or facilitate activities to more convenient times. In the case of cloud this can occur when capital investment decisions can be deferred, sometimes indefinitely. Another example might be reducing the lead time for capacity upgrades so that they directly mirror the business planning cycles rather than running separate IT planning cycles that need to predict business requirements ahead of business plans.
e. Geography shift – i.e. the economics of outsourcing and taking advantaged of differences in resource costs, etc. In the case of cloud this is a very similar economics to outsourcing in general.
f. Risk shift – i.e. how does this impact how risks are transferred or shared. In the case of cloud this can significantly shift at both b2b and b2c. A cloud service associated with a product can aggregate information on say health that can allow the risk of health issues with a consume to be transferred. (eg. if your Fitbit data was provided to your health insurance company do you get a lower premium? This is effectively enabled by cloud).
## The pre-technology business case
The “pre-technology business case” is simply a top down business case – or business case model – that defines the outcomes that would need to be achieved for a business unit or process for a given investment to have an acceptable return.
When applied in conjunction with an understanding of the economics of say cloud the impact of both the cost and benefits side of the business case can be adjusted.
With reduced budget being controlled by IT departments it won’t be up to IT departments to make a case for IT spending. However, there will always be a need to spend on information technology in order to keep up with potential competitive advantages.
The pre-technology business case does this. You might ask how this is different to a business case? In many ways it’s not. Except that it forces discussion of value prior to the involvement of the IT department.
Once the decision of value is clear any capabilities internal or external to the organisation can make effective bids to commit to that value. Given cloud is external to the organisation a mechanism to allow bids and commitments to value is vital.
## Capability-based planning
The capability-based planning governance and planning is an approach that makes the top-level governance of an organisation based on the capabilities in the business capability map – rather than functional or product-based approaches. Capability-based planning extends this governance approach to the way new initiates are planned.
This is best illustrated with my diagram here:
https://managewithoutthem.com/wp-content/uploads/2014/04/capability-based-planning-maturity.png
In short the capability-based planning approach is what allows the bidding and commitment to outcomes as discussed above.
A16z Podcast: Engineering a Revolution at Work | Andreessen Horowitz: “today’s cloud-based tools change the role of managers”
Including this:
“Theses are the things to me that are just these huge cultural shifts in how you manage an organisation. What your role of a manager is in a meeting is no longer to be reported to. Because frankly if you want to know, you should just go to the place that everybody on the team is already using to keep track of there information. When you get everybody together it shouldn’t be to argue the pros and cons of how the information was gathered, or is it the right number, or is the number pivoted the right way. We wall agree, this is the number, is it good or bad? What should we do as an organisation to change that number?”
Given the premise of this blog, and the time I’ve spend in information management, to see the idea that technology can effect what it means to manage is always pleasing.
And this:
“It’s not that you’re going to look at a 15 page status report and say ‘how can I do a 15 page status report in this tool?” or look at this giant tracking spreadsheet and say ‘how do I do this in a tablet?’. What’s happening is new tools… The tools are now five years old, or at the very least two or three years old, and all of the sudden we’re seeing this explosion in new approaches to the work products themselves and that’s what’s particularly exciting right now… There’s enough experience with the form factor to say now we don’t just have to do it the old way.”
I think it’s amazing that people would assume that somebody purposely inserted a bug into software they were building, rather than admit that developing software takes effort.
Man who introduced serious ‘Heartbleed’ security flaw denies he inserted it deliberately: “‘It’s unfortunate that it’s used by millions of people, but only very few actually contribute to it,’ he said.
‘The benefit of open source software is that anyone can review the code in the first place.
‘The more people look at it, the better, especially with a software like OpenSSL.'”
Another example of “information-enabled products”:
Internet of Things to revolutionise industry: GE – city, Internet of Things, cisco, ge, Rockwell Automation, internet of everything, Sense-T, mining – Computerworld: “‘For the most part, that install base of machines we’ve sold over the years is essentially just metal that’s out there, and for us we see this as an opportunity of enabling that technology to work completely differently,’ Sheppard said.
‘If we could optimise that equipment just by 1 per cent – so just get 1 per cent more efficiency out of that equipment that’s out there today – we could deliver $20 billion in productivity to our customer base.’”
As per linchpin project #9 (“Project 9. IT federation: shrinking corporate IT and embracing shadow IT”) we need to view our success in terms of capabilities not functions – and remove any roadblocks to maturing our capabilities.
So this is happening:
Big data: Why IT departments mustn’t be a drag on analytics | ZDNet: “‘Technology functions are still finding it difficult to keep up with business demands. Working in analytics and being responsible for analytics, I can’t let that happen,’ said RBS chief analytics officer, Customer Solutions Group, Alan Grogan.
‘I can’t turn around to my CEO or to my customers — or even just if I want to retain staff — to say ‘I’m sorry, we just don’t have the scalability, the flexibility or the control on the domain’.'”
At the same time, there are efficiencies in building a federated IT capability. When Analytics teams need to manage their own IT they aren’t evolving the IT function. And when Analytics teams manage their own IT the IT function has to evolve. There is a joint responsibility to manage this process.
This is a significant trend:
Andreessen Horowitz: “Suppose you develop a new technology that is valuable to some industry. The old approach was to sell or license your technology to the existing companies in that industry. The new approach is to build a complete, end-to-end product or service that bypasses existing companies.”
Remember the old “disintermediation” view of how the Internet would change industries? Well that absolutely happened. And it happened with exactly the impact on customer focus on which it was predicted.
But now this! Rather than disintermediation of industries you get the situation where a new entrant can create a “stacked” entry and apply an end-to-end service.
This reminds me of the first question that popped into my head at a recent Australian Information Industry Association (AIIA) financial services event on “systems of engagement”:
Is it easier to build systems of engagement on top of an organisation with good systems of record, or to build (or aquire) systems of record for an organisation with good systems of engagement?
So, does this mean this?
Most interesting presentation I’ve seen for a long time:
Partially interesting because I already agree with most of it – but still, exceptionally well presented both visually and the ideas.
You’ve already missed it – but I’m sure there will be a video or blog entry somewhere…
Now that data scientists and cloud BI are going mainstream (a nice overview of trends here: http://www.tableausoftware.com/about/blog/2013/12/top-10-trends-business-intelligence-2014-27275) we are finally seeing information management evolve into information-enabled business transformation.
This is an important evolution from my perspective. To be able to use some solid IM foundational capabilities as building blocks for true business transformation is my main interest in IM. I’ve been learning IM approaches for the last 3-4 years specifically with this in mind.
For example, see the following overview of typical information services (starting from the bottom of the stack) building into information-enabled capabilities (at the top of the stack). This was created back in 2012 as part of the process of developing the SMS Management & Technology Information and Data Management (IDM) service catalogue:
It’s a little hard to read the “knowledge books” at the top of the stack that are the information-enabled capabilities that I thought would be important at the time.
They are:
- Collaborative risk management
- Information-embedded products
- Customer touch-point information integrity
- Market-making technology
- Integrated performance reporting
- Value-added compliance
- Dynamic product configuration / pricing
- Yield management
- Budget integrity (budgeting and forecasting + prediction + event-based assumption validation)
- Extend time horizon of decision making
- Agile Innovation