A consistent theme in thinking around I.T. strategy is that your I.T. strategy must be aligned with your organizations business strategy. The term I.T. strategy is often used broadly to mean the overall set of activates and projects in which an I.T. organization is engaged. A recent McKinsey article titled “How CIO’s Should Think About Business Value” describes I.T. as adding value to an organization at two complimentary levels. The “core asset value” of I.T. consisting of hardware and software create tangible asset value for an organization. I.T.’s “value in use” varies from organization to organization and is a measure of how well I.T. is leveraged to enable core business strategies. The term “I.T. in use” here again is defined as a holistic set of I.T. activities. The problem with such a sweeping definition is that in most medium to large sized organizations there is usually two parallel streams of strategic thought and planning occurring inside I.T. There is “application strategy” which is the long-term planning of an organizations software landscape. It is the capabilities of software that will serve to enable key business processes. As such, application strategy is often seen by business executives as being synonymous with I.T. strategy. But where will the software run? How cost effective is an organization in its execution of activates required to support software functions? Answering these questions is the goal of “infrastructure strategy”. Infrastructure strategy is the long-term planning of technology investments such as networking, storage and data center design. The infrastructure investment portfolio should be closely aligned with both an organizations business objectives and its long-term application strategy. Collectively, application strategy and infrastructure strategy should coalesce to engender value creation from I.T. Due to the different skill sets between the two I.T. domains, application strategy and infrastructure strategy are generally planned separately. It is up to the I.T. infrastructure leader to ensure that his or her investment plans are geared towards building an I.T. infrastructure that is synergistic with the application and business landscape.
Infrastructure strategy rarely gets discussed at joint planning sessions between business and I.T. leaders. Metaphors such as “The Cloud”, “The Grid” as well as analogies such as “Utility Computing” have all added to the notion that technology infrastructure is a commodity with little intrinsic value. In the McKinsey article “Where I.T. Infrastructure and Business Strategy Meet” the authors suggest that thinking of I.T. infrastructure as a commodity is a mistake. McKinsey suggests that the individual pieces of an infrastructure such as storage devices and networking components may be commodities. However, the manner in which these technologies are designed, integrated and managed combine to form a whole that is greater than the sum of the parts. It is beholden on the I.T. infrastructure leader to help his or her business leaders “see” the vision of how the infrastructure strategy will generate business value. So how can the infrastructure manager clearly represent the relationship between technology investments such as storage arrays and business objectives such as supply chain execution? A good tool for connecting the infrastructure and business dots is the use of “Strategy Maps”.
A strategy map is a tool developed by Harvard Business School professors Robert Kaplan and David Norton. Kaplan and Norton are the developers of the Balanced Scorecard approach to business management. The balanced scorecard evaluates an organizations performance by examining key performance indicators in four perspectives: financial, customer, internal, learning & growth. You can learn more about balanced scorecard here. Strategy maps can be considered a method for visually displaying the set of organizational activities to be executed in each perspective and the impact these processes will have on each other. You can find a detailed discussion of strategy maps in Kaplan and Norton’s book “Strategy Maps”. At a high level, strategy maps can provide you a one slide representation of how your I.T. infrastructure strategy ties directly to your business strategy. I will walk through an example strategy map explaining how the various pieces relate. You can download the example map here.
When Kaplan and Norton discuss the placement of I.T. assets on a strategy map they classify systems into four categories: transactional, transformational, analytical and infrastructure. In my example, I focus more on mapping infrastructure investments to business strategies rather than classifying the infrastructure investments into categories. Showing how your seemingly unrelated technology infrastructure and business strategies compliment one another is the goal. At the top of this simplified example you have a clearly stated business goal of growing U.S. market share by 10 percent by 2012. Directly under that goal are four operational initiatives that the business has defined as paramount for achieving that goal. This example shows an application level strategy focused around SAP and the SAP suite of business applications. For each business level objective, a corresponding SAP application is identified as mapping to the features necessary to achieve the goal. For example, in order to leverage a skilled sales force an organization will need a human capital management system for skill development, talent identification, training and performance appraisals. Similarly, excellence in supply chain execution will require a system such as SAP APO to streamline warehouse, production and logistic functions. The concept of mapping systems to business needs can be applied to any vendor suite as well as custom developed applications. The bottom part of the example strategy map serves to connect specific I.T. infrastructure investments to the application and business layers. In this example, certain infrastructure investments such as consolidated storage and virtualization will serve to enable features across the entire application portfolio. For example, in an SAP environment production systems are regularly copied to quality systems in order to accommodate testing of new features against up to date transactional data sets. The inter related nature of SAP e environments often necessitates what is termed a federated system copy meaning that all quality systems (HCM, APO etc..) will need to be refreshed at once. The speed and agility at which this can be done will directly impact the speed with which new development can be tested and moved to production. The time it takes to move new features to production impacts the time it takes the business to realize strategic benefit. Virtualization will have a direct impact on an organizations ability to scale its SAP based operation while maintaining a steady level of OPEX spending on servers. Large ERP landscapes such as SAP and Oracle often result in server sprawl as each landscape requires multiple systems for development, test and production. Virtualization will help provide those landscapes and the business value they create at a competitive cost. Initiatives such as strengthen business relationships and implementing a more integrated supplier network will necessitate targeted infrastructure investments such as enhanced network edge security. Mapping investments in technologies such as intrusion detection systems and firewalls to a strategic business imperative clarifies their relationship.
The decisions you make around your I.T. infrastructure strategy can either serve as a conduit for business value creation or as an impediment to it. It is important that as an I.T. infrastructure manager you help your business leaders understand how seemingly commodity technology investments relate directly to businesses strategy. The use of Strategy Maps provides a clear visual representation of the relationship between business strategy and I.T. infrastructure capabilities. This mapping should also help I.T. infrastructure managers think clearly about their own strategy development focusing on business value rather than bits and bytes.
Wednesday, May 27, 2009
Saturday, May 9, 2009
Nothing New When Evaluating Web 2.0 Technologies
I have recently finished reading "Groundswell, Winning in a world transformed by social technologies", in which Forrester researchers Charlene Li and Josh Bernoff outline the set of strategic considerations businesses face when evaluating the broad category of technologies labeled Web 2.0 tools. Groundswell provides a tangible set of adoption guidelines for businesses looking to leverage technologies such as blogs, wiki's and social networks for both customer facing applications or for use inside the organization. At the end of Chapter 2, "Jujitsu and the Technologies of the Groundswell", the authors outline what they call the Groundswell technology test. The test consists of several points to consider when evaluating the adoption of a new web 2.0 technology. Taken together the points provide litmus test designed to tease out technologies that will have staying power from those that may fail to gain significant adoption. While the authors provide this framework in the context of evaluating the new set of web 2.0 tools, the considerations are no different than what should be considered by any technology director evaluating any new technology in his or her enterprise. This post will show how Web 2.0 evaluation techniques are in many ways the same techniques that you as a technology manager should have been using all along. The technologies change, good practice and the principals of thoughtful consideration are timeless.The Groundswell Technology Test
1. Does it allow people to connect with each other in new ways?
The principal here is that if a tool allows people to interact in new ways that are interesting then it has the potential to gain wide spread adoption. As people will want to use this interesting new interaction medium, the technology will spread virally as existing users recruit new participants. This should sound familiar to any technology director who has managed any sort of large scale technology deployment in his or her enterprise. Let’s use Voice over Internet Protocol (VoIP) as an example. By allowing phone calls to be placed over the internet or over your organizations private data network, VoIP offers huge cost reduction. The key to engendering these cost savings however is user adoption and large scale participation. As you are planning to introduce VoIP to your enterprise, you have to figure out how to foster excitement over the new medium, how to introduce features that give your users new tools and communication options they will want to use. If the tools allow folks to interact in ways they could not before (e.g. video calling, instant messaging, click to dial) then it will gain adoption in the organization. Give folks something new and useful that they want to use and you are likely be successful.
2. Is it effortless to sign up for?
The principal here is that most Groundswell technologies are free and can be accessed through existing means. Folks can signup for accounts on services such as Facebook or MySpace at no cost and have the ability to access these mediums through their existing PC's or even their mobile phones. People don’t have to think much about the use of the new technology, it is intuitive and available where they already spend their time. To tie this point back to traditional enterprise technologies lets think through the implementation of Business Intelligence (BI). One of the biggest barriers to gaining acceptance of a new BI solution in your organization will be the technologies ease of use. When we say BI must be "effortless to sign up for" this means it must not require extensive training, the use of completely new tools or time spent away from traditional work activates. To ensure success, BI tools must leverage existing skill sets of users (e.g. Microsoft Excel) and it must be available where they are such as through embedded links in commonly used Microsoft Office applications. BI must be "free" in terms of the psychological impact on your end users.
3. Does it shift power from institutions to people?
The new breed of social networking technologies allow people to draw on information from the collective group, information that is not pushed downward from institutions with vested interests. It is true that information is power. Any technology that shifts information from the few to the many ultimately has the potential to weaken the perception of superiority of those at the top. This attribute, the ability to garnish information that gives oneself the appearance of being knowledgeable and informed, is a critical aspect that will drive the acceptance of any enterprise wide technology. If by adopting a new inventory control system, a middle manager is able to have direct insight into inventory numbers and appear more knowledgeable, he or she will certainly use it. BI is a great example of a technology that makes corporate information readily available, allowing folks at all organizational levels to gleam insights into the corporations true performance. Give people the ability to get their hands on information that helps them appear smarter, gives them the chance for promotion or makes them feel more important and they will take the opportunity. So when looking at that new warehouse monument system, ask yourself ,"will I give my warehouse manager information that maybe only his superior has today?" If the answer is yes, he or she will jump at the system.
4. Does the community generate enough content to sustain itself
In social networking, users have to have reason to come back. Services like Facebook and MySpace have long ago reached the tipping point of sustainable content generation. Services like Wikipedia have thousands of contributors adding new content everyday making it a vibrant and sustainable service. As the authors of Groundswell point out, services such as social networks and Wiki's often need a kick start, content needs to be infused into the service to generate an initial momentum building towards a self sustaining existence. When evaluating enterprise technologies such as VoIP, OLTP systems or any other line of business system the same question of content should be considered. If you are implementing a point solution meant to address the needs of a specific department then users will likely get value from the new technology without total enterprise adoption. Larger systems such as enterprise directory services or ERP systems will only generate their true value when a significant amount of users or business units are on board. So when evaluating new technologies for your organization ask yourself the degree to which you will need user adoption across the enterprise for the technology to become vibrant and integrated into everyone’s work routine. Systems that touch a significant number of employees during their course of normal business are likely to become self sustaining out of necessity. While systems such as ERP will survive for a certain time period out of necessity even if they provide little content back to the end users, over time satellite systems will emerge to fill the content gaps. Users will start to wonder why they are using two systems and the original ERP system's value will be questioned. If users don’t see others using your system and more importantly if decisions are not being made based on the content your system provides, users will not come back.
5. Is it an open platform that invites partnerships?
With respect to Web 2.0 technologies the authors of the Groundswell correctly point out that tools which tap into the collective creative power of the broad technology community will evolve quicker than those that don’t. Companies like Facebook who open their platform to developers will see new applications being built for their service and find users adopting their service in new and creative ways. The concept of invocation through open access should be applied when evaluating different large scale enterprise platforms be it ERP systems, VoIP systems or storage systems. Vendors that provide API's for their software and partner with Independent Software Vendors (ISV's) to allow new products to be built around their core platform will see their products flourish. You as a technology manager will benefit from having more options around supporting technologies like backup systems and system administration. Systems do not need to be totally "Open Source", meaning that anyone can modify the source code. Systems that guard the code that drives their core business functionality but who provide access to that functionality to external vendors through interfaces or web services will provide your organization with a broader range of opportunities and accommodate a more flexible business environment.
The new wave of web 2.0 technologies such as blogs, wiki's and social networks do require careful consideration prior to implementation. The considerations are not vastly different from those you should be familiar with through your experience evaluating more traditional enterprise technologies. As mentioned earlier, the technology changes but the core management principals remain the same. Understand the nuances of emerging technologies such as those discussed in the Groundswell but don’t loose site of the core principals that have served you well.
1. Does it allow people to connect with each other in new ways?
The principal here is that if a tool allows people to interact in new ways that are interesting then it has the potential to gain wide spread adoption. As people will want to use this interesting new interaction medium, the technology will spread virally as existing users recruit new participants. This should sound familiar to any technology director who has managed any sort of large scale technology deployment in his or her enterprise. Let’s use Voice over Internet Protocol (VoIP) as an example. By allowing phone calls to be placed over the internet or over your organizations private data network, VoIP offers huge cost reduction. The key to engendering these cost savings however is user adoption and large scale participation. As you are planning to introduce VoIP to your enterprise, you have to figure out how to foster excitement over the new medium, how to introduce features that give your users new tools and communication options they will want to use. If the tools allow folks to interact in ways they could not before (e.g. video calling, instant messaging, click to dial) then it will gain adoption in the organization. Give folks something new and useful that they want to use and you are likely be successful.
2. Is it effortless to sign up for?
The principal here is that most Groundswell technologies are free and can be accessed through existing means. Folks can signup for accounts on services such as Facebook or MySpace at no cost and have the ability to access these mediums through their existing PC's or even their mobile phones. People don’t have to think much about the use of the new technology, it is intuitive and available where they already spend their time. To tie this point back to traditional enterprise technologies lets think through the implementation of Business Intelligence (BI). One of the biggest barriers to gaining acceptance of a new BI solution in your organization will be the technologies ease of use. When we say BI must be "effortless to sign up for" this means it must not require extensive training, the use of completely new tools or time spent away from traditional work activates. To ensure success, BI tools must leverage existing skill sets of users (e.g. Microsoft Excel) and it must be available where they are such as through embedded links in commonly used Microsoft Office applications. BI must be "free" in terms of the psychological impact on your end users.
3. Does it shift power from institutions to people?
The new breed of social networking technologies allow people to draw on information from the collective group, information that is not pushed downward from institutions with vested interests. It is true that information is power. Any technology that shifts information from the few to the many ultimately has the potential to weaken the perception of superiority of those at the top. This attribute, the ability to garnish information that gives oneself the appearance of being knowledgeable and informed, is a critical aspect that will drive the acceptance of any enterprise wide technology. If by adopting a new inventory control system, a middle manager is able to have direct insight into inventory numbers and appear more knowledgeable, he or she will certainly use it. BI is a great example of a technology that makes corporate information readily available, allowing folks at all organizational levels to gleam insights into the corporations true performance. Give people the ability to get their hands on information that helps them appear smarter, gives them the chance for promotion or makes them feel more important and they will take the opportunity. So when looking at that new warehouse monument system, ask yourself ,"will I give my warehouse manager information that maybe only his superior has today?" If the answer is yes, he or she will jump at the system.
4. Does the community generate enough content to sustain itself
In social networking, users have to have reason to come back. Services like Facebook and MySpace have long ago reached the tipping point of sustainable content generation. Services like Wikipedia have thousands of contributors adding new content everyday making it a vibrant and sustainable service. As the authors of Groundswell point out, services such as social networks and Wiki's often need a kick start, content needs to be infused into the service to generate an initial momentum building towards a self sustaining existence. When evaluating enterprise technologies such as VoIP, OLTP systems or any other line of business system the same question of content should be considered. If you are implementing a point solution meant to address the needs of a specific department then users will likely get value from the new technology without total enterprise adoption. Larger systems such as enterprise directory services or ERP systems will only generate their true value when a significant amount of users or business units are on board. So when evaluating new technologies for your organization ask yourself the degree to which you will need user adoption across the enterprise for the technology to become vibrant and integrated into everyone’s work routine. Systems that touch a significant number of employees during their course of normal business are likely to become self sustaining out of necessity. While systems such as ERP will survive for a certain time period out of necessity even if they provide little content back to the end users, over time satellite systems will emerge to fill the content gaps. Users will start to wonder why they are using two systems and the original ERP system's value will be questioned. If users don’t see others using your system and more importantly if decisions are not being made based on the content your system provides, users will not come back.
5. Is it an open platform that invites partnerships?
With respect to Web 2.0 technologies the authors of the Groundswell correctly point out that tools which tap into the collective creative power of the broad technology community will evolve quicker than those that don’t. Companies like Facebook who open their platform to developers will see new applications being built for their service and find users adopting their service in new and creative ways. The concept of invocation through open access should be applied when evaluating different large scale enterprise platforms be it ERP systems, VoIP systems or storage systems. Vendors that provide API's for their software and partner with Independent Software Vendors (ISV's) to allow new products to be built around their core platform will see their products flourish. You as a technology manager will benefit from having more options around supporting technologies like backup systems and system administration. Systems do not need to be totally "Open Source", meaning that anyone can modify the source code. Systems that guard the code that drives their core business functionality but who provide access to that functionality to external vendors through interfaces or web services will provide your organization with a broader range of opportunities and accommodate a more flexible business environment.
The new wave of web 2.0 technologies such as blogs, wiki's and social networks do require careful consideration prior to implementation. The considerations are not vastly different from those you should be familiar with through your experience evaluating more traditional enterprise technologies. As mentioned earlier, the technology changes but the core management principals remain the same. Understand the nuances of emerging technologies such as those discussed in the Groundswell but don’t loose site of the core principals that have served you well.
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