What must IT do to become a strategic enabler of the business
The Cloudy Dilemma of Creating Sustainable Advantage
My last blog dwelled on the woes of maintaining sustainable advantage. The last 7 years of technology disruption clearly demonstrates that sustainable advantage is fleeting. A quick review of the smart phone market, the ebb and flow of social networking, along with struggles that media and information giants are undergoing, represents clear challenges to all. Keeping relevant is difficult, nerve wracking, yet mandatory for a company’s survival.
Many readers might conclude that the answer lies in IT organizations moving applications to the cloud. The myriad of emerging cloud offerings and the push towards greater investment by providers would certainly indicate that this is at least part of the solution, but is it enough to enable sustainable advantage?
- To be fair, moving the right applications to the cloud has the distinct advantage of providing a utility pricing model option that enables a company to pay just for the resources it uses, much like an electric bill. Today most companies do not build their own power plant to get energy; instead they get it delivered from a provider that specializes in electricity production. Stephen Fry’s excellent and short cartoon on the true benefits of cloud computing provides an entertaining and informative overview.
- The implicit message in that cartoon is simple, aggressively invest in what represents differentiation for your company’s brand and be prudent with investments that are not essential to your brand.
The cloud is a deployment choice for an application, and that choice should be influenced by the business drivers and the technical realities of the application. Today we see too many legacy applications moved to the cloud as is (lift and shift), with all of the ills and constraints that make them brittle and therefore hard to change. The movement of applications in that type of state will do little to enhance sustainable advantage.
Sustainable Advantage is Cultural
The movement to cloud will not make a company agile. Instead it could provide false confidence and the illusion of progress. The biggest trend I hope to see in 2014 is for the IT function to arrive at the realization that Mohandas Gandhi stated: “You must be the change you want to see in the world”.
To create sustainable advantage, companies need to meet the market place, react to it and influence it. To do so they need to be considered relevant, and on a global scale that often means being agile as the world changes. The IT function is the face of most global companies, and therefore sustainable advantage must come at least in part through IT. IT executives must build a culture of sustainable advantage if IT is to become a strategic enabler of the business.
IT as a Strategic Enabler- Creating Sustainable Advantage
Sustainable advantage occurs only when a company embraces the fact that change is inevitable and accepts that Demand drives Supply. This is true even when Demand is invented. Much of Apple’s mystique since 2000 had been that they seemed to create products nobody knew they needed or wanted. They created a vision, executed on it, and entwined a powerful business model into their revitalized brand. Nonetheless, Apple has stiff competition now.
So how will sustainable advantage work in general when the products and services might be less flashy?
Sustainable advantage requires an organization to be agile at its core. That means all stakeholders on the business side need relevant and timely market facing information, they need to be able to analyze data, hypothesize outcomes and try out ideas quickly.
The IT function’s role:
- Trends in Big Data make it clear how important deep data analysis is becoming. IT needs to make it easier to access, aggregate, and create models that can be shared and visualized. The IT function must enhance the ability of employees to access this data in its various stages (raw, analyzed and historical).
- Make it possible for the business to craft their findings into actionable directives that can eventually be used to guide or configure changes in the way that IT works.
- The IT function must continue to enhance collaboration across time zones and boundaries. This is not just a matter of telecommunication, but of information and knowledge lifecycle management. Organizations are drowning in a digital morass of unstructured aging data. Outdated data can be very dangerous to an agile organization.
Business Agility occurs when processes and rules can be changed, added, and retired. Since IT is often the face of the company to the outside world, that currently means that process and rule changes need to be coded and carefully tested for very long periods of time. Radical changes might have to be parallel tested for an entire quarter.
The IT function’s role:
- Identify applications associated with key revenue and client facing responsibilities.
- Collaborate with the business to externalize rules, making them editable by the business while remaining auditable. Allow the business to create configurable process flows which can be accepted by the IT application managers.
- Revise the current requirements process to directly address business volatility
Sustainable advantage respects the fact that Demand fluctuates according to market dynamics. Sometimes those dynamics are seasonal (e.g. US retailers create product awareness that varies by season). Other times Demand is more of a gold rush experiment (e.g. ten competitors attack a market niche at once and 2 years later there are 2 survivors).
The IT function’s role:
- Provide robust, Purpose Built Infrastructure, that can be configured by defined business policy and run according to business needs.
- Enable dynamic Demand based provisioning and repurposing so that infrastructure is not wasted.
- Remove the overhead of building robust infrastructure for experimental applications.
- Encourage IT and Business alignment through the proactive creation of a portfolio management discipline.
Sustainable Advantage occurs when businesses can make intelligent decisions about when to cut their losses and where to direct their investments, based upon current and expected revenue. When a business is running blind regarding their expenditures, and potential risks, they become conservative because they have legitimate fears about harming their brand.
The IT function’s role:
- Create a forensics task force chartered with creating an active current state inventory across all data centers for all business critical applications. This task force should be highly regarded, charted with advancing the forensic discipline across the company.
- Make IT financial reporting meaningful to the business by relating IT expenditures to revenue, cost avoidance, agility, and support of new markets.
- Recast the role of IT Governance, which is currently viewed as either an obstacle or a rubber stamp (often both with equal disdain). IT Governance should enhance the IT function’s ability to be a strategic enabler through the proactive education of application teams, the active involvement of reducing complexity and waste.