IT is dead. Long live IT! 2013 is turning into a watershed year for CIOs as the traditional CIO is not the CIO of today. Business expectations, IT leadership styles and technology solutions are all driving an evolutionary change for CIOs and the IT organizations they lead. The changes did not happen overnight as business shifts, Shadow IT and New Technology were all contributors.
Now that the industry is reaching a tipping point where the new CIO model becomes the new standard, look for a number of changes moving forward:
The CIO will lead the charge in transforming the relationship between IT and the rest of the business. In a related post I talk about the importance of the Three-Legged Race on the business, CIO and IT relationship. As such, business leaders start to view IT as providing greater business value rather than just a support organization. The new CIO works with peers toward revenue growth, not just expense containment.
Similar to changes in the CIO role, the IT function changes as well. The IT focus shifts from technology to business innovation. IT strategy directly aligns with and is driven by the overall business strategy. If an IT activity is not directly supporting the business strategy, why is IT doing it? Day-to-day operations become table stakes while innovation and revenue growth take priority. In essence, the IT organization becomes a business organization rather than a technology organization. IT’s customer is no longer the internal user, it is the business’ customer.
The CIO and his/ her lieutenants all speak a common language: business. The days of talking technology are behind us. To support this change, the CIO creates is a strong culture within IT that breeds business focus and career growth. Outside of IT, the CIO leads the charge for true business engagement with fellow executives and their organizations.
The purpose of technology changes to become an enabler, nothing more. The new model moves away from religious technology debates. With technology, CIOs shift focus on the business value for the entire company, not just the IT organization. The new model CIO embraces new and innovative technology as a differentiator rather than waiting for peers to adopt it first. Common stumbling blocks like security, while still very important, are not used as a wet blanket to smother opportunities like cloud computing.
The new IT model presents a massive opportunity for the CIO and business that looks very different from today’s CIO and IT organization. Moving from technology to business and turning data into information creates the new business currency. The new CIO presents the core differentiator between competing businesses. In essence, by leveraging the new model, the difference between businesses is influenced by the CIO and IT organization. The business looks to the CIO and IT organization for information to make core business decisions and the conversations take a decidedly business-focused turn.
These changes represent a significant shift from prior or even the current model being used by many organizations. None of these changes will be easy or quick. 2013 simply presents a tipping point for the new model. Reaching critical mass between the business, IT and technology creates the catalyst for change. The new model is strong and provides a strong opportunity for the CIO to shine. Now is the time for CIOs in the old model to turn the corner and adopt the new model.
For over 30 years, we have successfully run IT organizations. And things (generally) have worked well for IT organizations and the businesses they serve. Best practices were identified, shared and enhanced. Technology evolved and became increasingly more sophisticated. We built the backbone that business runs on today.
However, the traditional way of running IT is dead and a change is needed before we face extinction. That may seem a bit dramatic, but IT needs to make a significant change to remain relevant. There are three components that need to change: the Chief Information Officer (or IT executive), the individuals within the IT organization and the business that they serve.
Minimizing Information Technology
In 2004, Nicholas Carr created quite a dustup with his book Does IT Matter suggesting a change in the value of IT organizations. In essence, he was correct…based on the direction IT is heading today. As IT focuses more on minimizing expenses and less on value creation, the intrinsic value the IT organization brings to the business is lessened. IT becomes a fundamental support organization and little more. That balance needs to change.
Value Creation is King
At this point operations and core support are table stakes. IT needs to identify ways to create value for the organization. By value creation I mean creating revenue in ways not previously possible. In his book The Digital Edge: Exploiting Information and Technology for Business Advantage, Mark McDonald delves further into this point. Today, executive recruiters are hiring CIOs that are focused on value creation rather than just table stakes.
The CIO needs to lead the change. There is no other organization within a business that has the potential to lead this kind of change. More than just about any other group, the IT organization has both the breadth and depth across the business. IT Transformation takes place when the IT organization is aligned toward value creation while still providing operational support. IT Transformation is challenging, but not a pipe dream. Progressive CIOs from Boston Scientific, General Motors, Chevron and UPS are already heading in that direction.
Changing the way the CIO and IT organization functions are only two of the three components. The business also needs to change the way it perceives value from IT. I have heard many references to IT organizations
- “(IT is) where big projects go to die”
- “The IT police”
- “The ‘no’ organization”
- “Those nice people you call when you can’t connect to the network”
IT can be much more than this. Why isn’t that the case. Well, a history lesson of IT’s evolution over the past 30 years would be required. So, how do we make the change?
The Three-Legged Race
In order for the paradigm to change and IT Transformation to truly take hold, all three components need to work in unison. The CIO, the IT organization and the business all need to evolve for the evolution to take place. That seems like a pretty tall order. Who takes the first step to affect the change? The CIO. The others, while valuable, do not have the connections and relationships of the CIO. Challenge the status quo and evolve the paradigm. The rewards are too great to miss.
In 2013, the cloud industry endures a maturing of sorts. Cloud, as a concept, moves from the lab to the default for many. In order to transit the maturing process, a number of changes will start to take place in 2013. The changes take place in both the industry and within the IT organization itself.
- Rise of the Cloud Verticals: Today, the cloud marketplace offers a smorgasbord of general-purpose solutions. In a fledgling industry, providers needed to focus on solutions that served a wide range of client requirements. Now with critical mass for some specific verticals, expect to see industry-specific cloud-based solutions. These solutions may include a suite of services or ecosystem geared to specific industries.
- Widespread Planning of IaaS Migrations: Now that cloud has moved beyond the lab, organizations will include IaaS solutions in their roadmap planning. SaaS will continue to take a role, however, the rise of hybrid cloud solutions will drive IaaS in IT roadmaps in earnest.
- CIO’s Look to Cloud to Catapult IT Transformation: The role of the CIO and IT organization is evolving as quickly as the underlying technology methodologies. The evolutionary shift in IT’s role in the business will (in turn) cause a re-evaluation of solutions used. Expect to see IT organizations leverage cloud as one of the most significant opportunities to fuel this early transformation.
- Mobile Increases Intensity of Cloud Adoption: As the prominence of mobile use increases, look for the adoption rates of cloud to increase respectively. Traditional IT methodologies provide a cumbersome solution for many mobile requirements. The move to cloud provides an elegant solution to a rather complex problem.
- Cloud Innovation Shifts from New Solutions to Integration & Consolidation: Cloud’s shine starts to fad as focus moves to reality. Organizations are less interested in the solving a singular point problem. Look for a move to solutions that solve multiple issues and integrate with other solutions. Expect consolidation of singular cloud solutions for opportunities to provide more robust solutions.
IT outsourcing is nothing new. Or is it? There are several gotchas. But it is important to understand where we’ve come from to learn from past mistakes and take advantage of new opportunities. Read on…
Outsourcing vs. Offshoring
First, let’s differentiate between outsourcing and offshoring. Outsourcing is the act of contracting with another company to do work for you. Offshoring is a form of outsourcing that moves the work to other countries. Outsourcing (and offshoring) is very common in manufacturing companies. However, in IT, the trend really started to build steam in the 1990’s as companies tried to address a shortage of workers, a change in the type of work and competing global labor rates.
The main attraction to outsourcing came from meeting one or more objectives: economic, repetitive, expertise and time to market. In the past 10 years, the value from these objectives has changed quite a bit. In just the past 5 years, a whole new cast of “types” of outsourcing has come on the scene.
One of the lessons learned from early attempts of IT outsourcing is the fallacy that entire processes can simply be moved to the outsourcer. In many cases, a local team is still needed to translate requirements and ensure quality of work performed. It could be a seemingly duplicate effort or simply management overhead. Understanding how internal requirements will be translated and quality confirmed is one issue. Factoring that into the value equation is important for TCO calculations. Many early attempts misjudged the amount of work it would take to manage the outsourcing relationship.
A big draw to outsourcing, and specifically offshoring, was lower labor rates. Companies saw opportunities to perform work in other countries with labor rates at a fraction of competing rates in the US. Over the past decade or so, the difference in global labor rates has shrunk. While India is still able to perform outsourcing arrangements at lower costs, the value is not as great as it used to be. India is also challenged with finding enough people able to perform the work. In essence, it is becoming a sheer numbers issue. For the past 5-10 years, focus has shifted to the other BRIC countries. The BRIC countries are Brazil, Russia, India and China. Indonesia and the Philippines are two other hotbeds of technology outsourcing that are starting to make their mark.
Labor economics are one factor that draws companies to outsourcing. Another challenge is when a company does not have the expertise to perform a task or create a product. It is possible that it either may not be as cost effective for them to create internally. Or it may be a specialization that is only needed on a temporary basis. For example, if a company needs to develop a solution in a language they aren’t used to, they have three choices. One, they could hire the staff to do it internally which would be costly and take time. Second, they could try to write the application in a different language that they have internal expertise with. Or third, they can outsource for the specific project. In either case, leveraging outsourcing arrangements may be a more cost effective solution.
Time to Market
A third objective might be the time to get a product or solution to market. The ramp up time to define, justify, hire, train and engage staff might be too long. Leveraging outsourcing arrangements provides a much quicker solution to leverage the expertise of services. For many, time to market may outweigh many other economic objectives.
Technology in Outsourcing
So, how does this all apply to technology outsourcing today? Today, more than ever, companies are leveraging outsourcing. And not just to solve labor challenges. Cloud computing is just one example of outsourcing in today’s technology world. The concept of leveraging technology services from another company is nothing new either. We’ve seen that with ASP, hosting and the like. What is new is the ease in which to engage services. The ease is already creating a mass movement into this new class of services.
Organizational, Process and Technology Changes
It is easy to get lured into thinking the implementation of technology is straightforward and relatively easy. That may have been true in the past. Today, more than ever, the implementation of technology requires two other cohorts to be successful and sustainable. Those two cohorts are organizational and process changes. Without those too, technology is just that…technology. As an example, just moving to cloud computing may seem like a simple enough change. But the reality is that processes and organizations need to change. Cloud is forcing IT organizations to pickup attributes similar to that of a supply chain manager. More specific examples include operational process changes for things like monitoring of performance and operations. Application changes are needed to consider available libraries and architecture requirements. Organizations need to change to consider how they model themselves to this new way of operating. And those are just a couple of relatively straightforward changes. It’s very different than the IT organization of the past.
Where to Start
Considering they myriad of changes, where do you go from here? The first step is to ensure that you’re looking at everything with a holistic viewpoint. Consider the true business value of the actions taken. Don’t just look at the technology or IT benefit. Also consider the implications to the organization and processes. Don’t get lulled into just thinking about labor and technology opportunities on their own merit. There may be more…or less. It is also possible the value may come from an area you weren’t expecting. The bottom line is to take a fresh perspective and try to avoid the cultural constrains of how IT organizations have operated for the past 10-20 years. Outsourcing and offshoring are both viable solutions and should be wisely leveraged where possible.
Looking For Direction
The technology (specifically IT) world is becoming more complex and challenging every day. I speak with a number of Business Leaders, CIOs, IT leaders and IT staff about this very issue. The subject of IT Transformation is one that keeps coming up. Yet, it seems as illusive as it is alluring. The prospect that it could bring is enough motivation for many to try. For most IT organizations, the capacity to take on the challenge seems out of reach. Many still struggle to keep up with day-to-day operational challenges. Let those fall and nothing else matters. On the flip side, doing nothing is not an option either. Warning: This is hard work and is much easier to talk about than execute.
Choosing the Right Approach
There are several schools of thought here. Two leading directions are to either take a Leapfrog or Incremental approach. There are pros and cons to each of these. Ideally, one would intertwine the two. However, that presents a whole new set of challenges. The big upside to Leapfrog is time. Bypassing the myriad of issues may seem attractive. Heck, the business may provide enough pressure to actually make this seem feasible. The downside is in what gets missed through the process. Miss a step and it is all over. That leads to the Incremental approach. Seems like a safe bet, right? Well, the time required will far exceed the patience of those within and outside of IT. Remember that the demand and complexity is increasing. The Incremental approach does provide a more measured process. So, which one should be used? Both. Measure the risk and reward for each increment. Speed up the intervals and Leapfrog where possible.
IT Transformation is not a technology problem. Well, not exactly. It’s a problem that requires several components working in concert. Without the combination of the components, the effort is not effective. A Holistic approach takes into account Technology, Process and Organization. Some refer to this as People, Process and Technology. However, it’s important to understand the relationships of the people as a function of the organization. Arbitrarily taking a Holistic approach to include all three can be cumbersome and daunting. Hence, a more Surgical approach to the three is warranted. If there is a knob (ie: technology) to improve, what are the process and organizational changes needed to support and maintain that change? The Holistic approach is needed. But it needs to be performed surgically to avoid gridlock.
Using Cloud as an Example
The advent of Cloud Computing is a great example. I have seen organizations simply try to replace their traditional operations with cloud-based operations. This takes me back to the early days of outsourcing (offshoring) where people were replaced 1:1 or 1:3 without regard for process and organizational changes. In the case of cloud, the change didn’t work. In most cases, one cannot just go down the hall to reboot a server or install any new application. Without consideration that the processes to manage the infrastructure, operations and framework will change, a number of core assumptions are made. Some naively.
Risk of Doing Nothing
It should go without saying, but doing nothing is not an option either. The business is demanding change. IT needs to change and evolve. IT competition exists and the business knows it. However, there is a strong value proposition that the internal IT organization can deliver. The question is can they do it and will they?
Bottom Line: Get a plan in place and start executing. Partner with the business to help define and guide the process.
There is quite a bit of confusion between CoIT (Consumerization of IT) and BYOD (Bring Your Own Device). While these two subjects are related, they are not the same. To make things more confusing, the two terms are often interchanged. Yet, they have very different contexts and definitions. And the impact for IT organizations is significant. Read on…
Consumerization of IT (CoIT)
The consumerization of IT refers to a fundamental change in ‘how’ people use technology. It does not specifically refer to the devices they use, but rather how they work.
As people become more familiar with technology, they tend to use it in everyday life. The reciprocal is true too. Two common examples CoIT are Mobile and Social. In the mobile space, just about everyone has a mobile device. It could be a cell phone, tablet or laptop. Over the past 10 years alone, the number of mobile devices has increased astronomically. Today, there are over 5 billion mobile phones in the world and more than 80% of the world’s population has a mobile phone. Two factors contribute to this change: 1) The cost of the device has reached a point where many more people can afford to own them. 2) Devices are much easier to use. In the past, an IT person would need to configure the device and perform training for the user. No longer is that the case. Even a 4-year-old can operate a device today. In the social space, everyone is using Twitter, Facebook and LinkedIn. Users do not need an instruction manual to reach the site or operate the service. In fact, Facebook has over 800 million users today. It would take a large army of IT professionals to train 800 million users using the traditional model.
Bring Your Own Device (BYOD)
On the other hand, BYOD is all about the device. Everyday users are more likely to use these devices (smartphone, tablet, laptop) today. The combination of price drops and ease of use contribute to the change. Due to the familiarity with these devices, users prefer to use them in their everyday work environment. The trend to use personal devices in a corporate environment started several years ago with the mobile phone. People preferred to use their own mobile phone rather than carry one for personal and one for work. With the advent of smartphones that evolved to checking email, surfing the web and the plethora of other applications available today. Tablets and laptops followed in the wake of smartphones.
Today, some corporate entities have fully embraced the concept by providing employees a stipend for their device(s) rather than issue a company-owned device. In other cases, companies pay the bill for the smartphone voice and data plans. The expectation is that the user is checking the device more frequently than they would a company issued device.
From the CIO perspective, I wrote about BYOD in: What the CIO Needs to Know About BYOD
Changes in How We Work
There is another factor that directly affects this evolutionary change. The organizations and people that belong to them are changing. There are two fundamental drivers: 1) The new workforce and 2) Changes in the technology solutions. By new workforce, I mean the employees that are entering the workplace today. Employees entering the workplace in the past couple of years are the first ones that grew up with a computer from birth to adult. Prior generations picked up computing somewhere along their upbringing or career. That single change provides a workforce that is far more comfortable with computers and electronic devices. They are much more adept at technology change and evolutionary shifts than prior generations too. This milestone is not one to underestimate.
Changes to the IT Paradigm
The general user base is not the only group that is changing. With the changes to CoIT and BYOD, the IT Paradigm needs a significant overhaul. The days of ‘command and control’ are over. The technology paradigm has reached a point where it can no longer be ‘controlled’. But it can be managed! That is where the paradigm changes. Today’s technology world is about setting boundaries, guidelines and frameworks. It is less important to create walls and fortresses. This applies to both the culture we set within the organization and the technology solutions we put in place. One example might be how to protect data rather than the device itself. If you can’t control the device, what are you going to do? You can’t just throw your hands up and give up. There are solutions.
Interestingly, this fundamental change to the way IT operates has significant ramifications beyond just CoIT and BYOD. Yes, making the shift is hard. We have spent 30 years building the methodologies and paradigms we work within today. Change is hard and takes time. But the opportunities for those that make the change are significant.
Bottom Line: CoIT and BYOD are different, but related. Both require changes to the fundamental operations of the IT organization. Those changes, while challenging, can provide significant value moving forward.
BYOD is a relatively new acronym. No, it does not mean Bring Your Own Drink. It stands for Bring Your Own Device. By device, it means smartphone, tablet or laptop. Conceptually, it means that the user is using their own personal device rather than one issued by the company they work for.
Historically, computing resources were expensive and not widely used by consumers outside of the companies they worked for. Over the past decade, the cost for these devices has dropped. In addition, the devices have become more functional. As such, employees are upgrading from traditional cell phones to smartphones. They are also starting to use tablet devices and laptops more than desktop systems. And workers entering the workforce today started life in the computing age. Therefore, gaining a greater comfort with computing devices in everyday life compared with those of us…ah-hem…that are older.
As “smart” devices becoming more prevalent, their use for everyday things from communication with friends to buying a latte increases accordingly. Users get accustomed to using certain devices. Those devices also gained the ability to interface with corporate environments. While a company could still issue a smartphone to an employee, it would duplicate the capabilities of their existing device. And the employee is more likely to have their personal smartphone with them wherever they go than a company-issued smartphone. Similarly, the cost of tablets and laptop computers is decreasing to a point where many consumers prefer the flexibility it provides rather than a bulky desktop computer. It is another device with duplicate capabilities of that company-issued model.
Company Issued Device vs. Stipend: Where Does Responsibility Go?
Companies are increasingly looking at novel ways to embrace this change. It does take much of the responsibility off the company and moves it to the employee. One option is to replace the company-issued device with a stipend to offset the cost to the employee. This then puts the responsibility for the device in the hands of the employee. Are employees ready for this responsibility? In many cases the answer is yes. They are already managing their personal device and ensuring that they have a computer, phone or other communication device anyway. The risk is relatively low to shift this responsibility to the employee. And the benefit to shed capital costs from the company is positive too.
Prevention, Control and Support
While this seems like a significant trend, can it be stopped or prevented? The short answer is: No. At the CES 2012 conference in Las Vegas this week, manufacturers announced several new laptops, tablets and phones. Even more phone announcements are expected at Mobile World Congress in February. And each new model of device adds to the functionality and usability. The best advice for corporations is to embrace the trend and support BYOD. That does not mean venturing into BYOD with your eyes closed. There are several decisions to make around the support and management of data related to the devices. Clear lines of responsible are needed. Organizations should expect that some level of support is still required on behalf of the company. However, it pales in comparison with complete support of company-issued devices.
Security and Data Management
There is one area that is more important than device support. It has to do with security and data management. In the case of company-issued devices, the company directly controls the data contained within the device. When the employee separates from the company, the device is returned…along with the data. In the case of BYOD, the data is stored on an employee-owned device. Companies need to take precautions to segregate corporate data from personal data. And in the case of separation, provide a means to adequately destroy corporate data located on the personal system or device. Today, there are tools that assist companies in managing these devices and the data contained within.
In order to support BYOD, the company needs a clear policy around BYOD and a framework to adequately support the various platforms. Without a framework, the risks are great for the company. The framework needs to cover both device support and data management. There are responsibilities for both the company and the employee.
BYOD presents a significant cultural shift for the CIO and their organization. On one hand, it presents increased complexity to management of data. On the other hand, it improves flexibility, capital exposure and employee moral. Even with the challenges, there are tools available today to manage BYOD effectively. In addition, organizational culture changes are needed to understand and engage a BYOD model within the company. BYOD is just one of many significant shifts in the IT world today…with many more to come.
Bottom Line: Support BYOD, but create a framework to protect corporate data and provide adequate support for employees.
Many have looked into their respective crystal balls at what the coming year brings. Personally, my horizon looks not just at the coming year, but the years to come too. As I gaze into my crystal ball for 2012 and beyond, I see a changing tide in the world of technology.
The changing of the tide is nothing new. We saw these evolutionary changes with the advent of distributed computing, the Internet and most recently cloud computing. Each wave brings both uncertainty and opportunity. There are naysayers and optimists. In hindsight, each wave brought enhanced capabilities and ultimately increased value.
The current wave of cloud computing started a few years back. We are still feeling the effects and trying to understand the ultimate value.
2012 will bring further clarification to how technology brings business value. In addition, IT organizations will start the evolutionary process of IT Transformation. And the businesses we serve will start to see the opportunities that IT can bring.
Now, this is not easy to do and will take time. It will take an open mind, persistence and passion to make the change. But the opportunities are too great to pass by. While 2009-2011 were great starts to the transition, 2012 will see a significant increase in change.
And 2012 is only the start. This truly is an exciting time to be in IT.