A test question; Your IT systems have just been publically hacked via your new Digital Business? Your biggest competitor has just been publically praised for the speed of its online responses for its Digital Business including its integration to its existing internal IT systems. Can you honestly say that you know if your approach, implementation and operation are competitively good enough, or even if your overall technology approach is embracing best practice?
Probably you will reply that this is such a fast evolving time, both in the Business model, and the Technologies/products, that its impossible to know. Ask the same question about Bench Marking the performance of your IT systems and the likely answer is that yes you have some real sense of performance…. But usually in terms of the costs! That’s not surprising as IT is a back office cost, even overhead, needing strict controls and operational monitoring to ensure it really is providing the capability to make the enterprise cost competitive.
Its not too hard to find different reports showing that Technology spend on areas not considered part of the traditional IT role are growing faster than IT, yet at the same time are subject to less scrutiny and management control.
In Digital Business an enterprise is being exhorted ‘don’t plan, just to it, and if you fail try again’ and that’s okay in the sense of the Business part perhaps, but its not likely to lead to long term success in the core technology underpinning the business model. Digital Business very different role created to win more revenues, hopefully more market share, even higher margin business, all of which is enthusiastically measured. Surely it must be every bit as important to establish best practice in the (hopefully reusable) Technology aspects as well?
The answer is clearly yes; but the problem is how? The benchmarks for IT work because of the maturity of best practice resulting in established best practices, leading to comparative metrics.
If bench marking mature IT around established best practices is a critical success factor for competitive cost management of the Back Office. What can be done to help the every bit as important management of evolving Digital Business and its Technology in the Front Office?
Note that this is about the technology that supports Digital Business and not about the actual Digital Business in terms of what is sold, to whom, etc. the focus of the Management Consultants. An obvious starting point is around Cloud, Mobile and Network Operations as these form a relatively common set of core infrastructure both for IT, and now for Digital Business, so extending good practice here should be easiest. Unfortunately it seems as if IT is still struggling with these newer technologies and gaining the tools to operate them successfully. Given the time elapsed and the wide spread experience gain it seems ways to improve operational efficiency are known to CIOs but finding, or justifying the investment must be difficult!
The 2014 TeamQuest IT Management Survey just published shows some worrying facts in relationship to Clouds under the heading of Virtual Machine management. Starting with; 83% of IT managers said their organization lacks proper virtual machine management.
There were plenty of other issues that suggested high awareness of issues, together with the sad fact that the remedial steps aren’t being taken. Here are a few more bullet points from the TeamQuest report summary; ‘amongst the most common IT issues are network slowdowns or outages (42%), poor performing applications (37%), availability issues (37%), equipment failures (36%), and unanticipated change requests (34%)’. Finally, ‘63% of IT managers have experienced cloud outages and 65% of those believe it could have been prevented’.
(With thanks to TeamQuest for allowing the reproduction of these points – see TeamQuest for the full report)
Though you could make a case that much of this report is focused on using the technologies to deliver existing IT its difficult to see how you can support the new dynamic Digital Business requirements without getting the basics right in a relatively static, well understood IT environment. The report, and indeed other reports, all draw attention to the same facts; investment in managing the core technologies whose role is expanding beyond traditional IT into Digital Business is poor and this is leading to operational failures.
This is a management mindset problem that states; ‘if it’s about technology it must be about the costs of providing IT, and those costs/overheads have to be held down. Is it a coincidence that IT all to often reports to the Chief Financial Officer in their role of cost management?
Is it really right for Digital Business that is about creating revenues, margin, and market share by investing in Technology to report and be managed in the same way as IT?
Pretty clearly not, so why does it happen and what to do about it. As this is a discussion that involves the CFO perhaps we should start by pointing out that the financial management of Digital Business doesn’t work using the existing IT spreadsheets! How can it? Traditional IT is a Capital Expenditure, CapEx, based department with the resulting high overheads which are difficult to precisely allocate; whereas Digital Business is based on using Services through the Operational Expenditure, OpEx, of the using person, business group, product etc.
A transformed Business model that is based on limited unallocated overheads with almost all costs directly allocated and linked to value delivered. For more details see the previous blog Digital Business; mastering new financials controls. Usually CFOs are comfortable to allow others to drive activities if they are satisfied that those activities are adequately financially managed and in line with agreed enterprise strategy and operating budgets.
Stage one is get the new metrics and financial management in place, nobody disagrees with this, but a surprisingly number of people at the Constellation Connected Enterprise event a few weeks back did take the opportunity to point out their problem with actually managing to do this.
What exactly should be on this new spreadsheet management model? Its not too hard to get started with a few starting headings, but the real problem is what would the right benchmark metrics for these be? Interestingly amongst those struggling with this question where all the roles associated with Digital Business technology from Chief Information Officers, Chief Technology Officers, Chief Digital Officer, and a few others titles too. A fact that also suggests there is as much of big p[picture challenge in the management organizational and responsibility structure as in the Technology itself!
The question to address is no less than the definition of the core metrics to financially and operationally manage the technology that under pins the Digital Business transformation. And the only people who can do this are those actively involved in transforming enterprises and see the dangers of not doing this.
This blog is now going to do something that the author actively disapproves of! It’s going to end with a blatant commercial plea in support of something that Constellation Research is pioneering, namely The Constellation Executive Network. It is what it says, a place where those with limited time, but great responsibilities, and usually hard won experience can get to exchange information to get answers established quickly.
In my personal experience around continual interaction with a wide variety of executives, with a variety of titles and roles, everyone is facing the same very real set of challenges. Individually they are trying to create really new and innovative moves for their enterprises success in Digital Business in an absence of established ‘best practices’ to reduce risk and accelerate progress.
Different industry sectors, different enterprise business models and the very dynamics of the technology itself are making too many of the necessary operational choices feel decidedly ‘risky’ due to the lack of hard information on best practices.
We, (what ever the title your role), all need some practical assistance on getting the basic technology operating model right in every sense of the term; operational, agile, cost and performance. At the start of each previous wave of business transformation driven by the new technology of the time, (Mainframe, Mini, PC, Client-Server), experience shared through membership of a User association has proved invaluable. This time is no different in terms of the value of shared experience, but it is different in terms of the User associations.
Innovative service based Apps delivered from a Cloud, and used competitively in a collaborative environment, don’t allow for a product manufacturer to sponsor a User association in the previous manner. A User association for the technologies of the Digital Business model has to be different, reflective of the new environment and be based on its working methods.
Constellation Research with its relationships with those involved has taken the lead with the formation of the Constellation Executive Network. It seems the right and necessary thing to do. I hope join with you in sharing experiences and building a compendium of Best Practices, because if we are honest, we certainly need them!!
See the Constellation Research membership page for more details on the Constellation Executive Network by following this link.