Monthly Archives: January 2016

Why 5 3 1 thinking may influence technology spend from now on

5 3 1

 

With the onslaught of the digital era, and the identification of business functions that need to move from their analog world into a more digital driving force, the way IT organisations’ place their financial ‘chips’ is going to change.

For many years there was a well-trodden business practice in IT circles that dictated that the cost of providing technology and support services running an organisations’ systems of record. This dictated that a percentage of overall annual revenue would be allocated to capital and operational spending on technology.

The percentage allocated would vary by company and industry, but commonly expenditure was split between Capital or Operating budgets ( CAPEX or OPEX ), and depending on the sector again, how goods and services were paid for was dependent largely on how cash was attributed and recognised.

This relatively easy to understand characteristic allowed suppliers and customers to build sustainable business engagements as they collaborated to meet IT project plans and sales targets respectively. The annual cycle of IT spending profiles would align itself with the corporate budget planning rounds, and depending on whether the organisation was either a proactive or passive consumer of technology, the allocation on capital asset acquisition versus operational services would be verified.

Business Analysts would engage with the business units to capture and articulate specific IT projects and the requisite funding needed. All of this work rolled up into the budget submission, and CIOs and their supply chain waited with baited breadth to understand their ‘spend’ opportunity for the next 12 months or so. Buckets called ‘core ‘, ‘shared ‘ and ‘department’ as the financial chart of accounts mobilised to track expenditure and ownership of assets and project governance.

It was in this period that well worn phrases like “keeping the lights on” and “running the bank” were born, as CIOs’ were directed by their boss (usually a CFO ) to reduce the operational costs of delivering IT services, and ‘free up’ cash to do something ‘innovative’.

Indeed, I recall a CFO I reported into who used to say “Paul, you can ask me about anything, so long as it doesn’t cost anything”. Harsh but consistent with the commitment to apply more command and control to the perceived out of control spending on technology. Tactics were therefore developed by CIOs’ to sharpen the proverbial pencil on IT spending, and a kit bag of standard initiatives became the motto of the CIO to their teams.

The forces of influence are many for this situation to occur. The shareholders want more share, the board in return want to see products hitting existing markets faster and they want new markets to emerge. Programmes already in flight suddenly take on more urgency with the advent of cloud, DevOps and race to the bottom cost models for the raw compute. The supply chain begins to reinvent itself with more aligned managed services that aimed to be ready for these cost cutting programmes by delivering fixed price models, scale up scale down models and more innovative service options to support the growing need for resources and just in time infrastructure.

Starting with the phrase “Do more with less” , CIOs’ would go on campaigns to reduce the operational costs of running the shop, and introduce processes that evaluated their portfolio of IT projects and determine the extent to which each one supports long-term business goal in the organisation.

A “standardise wherever possible” mantra would cut through supply chain lists and reduce the number of vendors and partners in trading relationships,  and use standard building blocks like virtualisation to create simpler IT environments that are easier and less expensive to manage.

And as the world of work changed as people became more mobile, the CIOs’ would start segmenting their users and move away from the ‘One-size-fits-all solutions” that rarely work today. CIOs’ would now use technology to provide users with the functionality that they need to do their job, but resist having too many user profiles will increase cost and support costs. Finally, CIOs’ were driven to settle for a “good enough” where possible strategy working on the principle that solutions are usuallyappropriate for 70 percent of your IT requirements.

Why is all this relevant in the digital era of technology investment?

Well it’s because the thinking behind how IT budgets are constructed in the future is changing to meet the intuitive capability that organisations’ demand from their IT colleagues. I read somewhere that Gartner believe that considerably more CIOs’ distinguish themselves alongside general managers in their ability to think intuitively, and create opportunity to build more benefit from technology and supporting services with strong dexterity and insight.

I believe therefore that conversations around IT expenditure with CIOs’ are transforming ( as we may be experiencing already ) from the classic Capex versus Opex approach to a more fluid or more accurately, evolving modus operandi that I sense has a 5 – 3 – 1 rhythm.

And in this rhythm, I see CIOs’ having more and more conversations that go like this.

  • “I can see ahead for the next 5 years what the core technology building blocks I am going to need to replace, optimise and develop necessary to deliver the business vision”.
  • ” I can see a cost model to support and build IT services over the next 3 years”
  • “I will only influence expenditure on initiatives that deliver visible bottom line return within a 12 month period – if not sooner”.

Of course this is nothing spectacularly new, and the CIO will no doubt reflect that their role has these three cyclical dynamics; as a visionary planner, a financial manager and  business coach.

This 360 reversal of the business analyst function is giving the CIO a clearer perspective on the day job, as a business coach. Keeping the lights on and ensuring those building block systems of records and core infrastructure are fit for purpose will easily fall into the Run aspect of their command, and the smart CIO will have this boxed off with a combination of strong out-tasked partner support and streamlined and heavily automated service delivery functions.

The financial management will derive from a much closer advisory relationship with fellow business leaders to combine ongoing cost reduction tactics with changes in IT service delivery through cloud models and flexible expenditure terms for Buy Not Build systems of engagement. Calculating the real cost of a technology remains a CIO specialty. The CIO will deliver a keener focus on identifying the technologies that enhance marketing efforts, including customer-facing, customer-enabling, marketingoperations, and measurement and analytics.

Yet the sharper agile advisory role that shaped the next 12 months of project portfolio management calls upon less ownership of the raw number and the end to end infrastructure, but calls behavioral traits of a business coach. The CIO will transform their role as a facilitator or orchestrator of the new digital transformation.

The CIO needs to move from technology-centric planning to one that thinks about technology-enabled business strategies, and how they will manage the organisational dynamics of spending money in the Speed One world ( traditional core IT ) and influencing money in the Speed Two world ( business driven digital initiatives). This will still see those major architecture projects continue whether it is device rollout, back end migration or infrastructure expansion, but will also see a keener sense of shorter, fatter projects that deliver value alongside the heavy lifting work.

I envisage therefore that more and more CIOs’ will change their game for these coaching engagements, leveraging suppliers to build more agile proof of concept platforms to tease out the business requirement, prior to building smaller, faster, agile portfolios. For example, the Internet of Things explosion gives a great opportunity for CIOs’ to start examining the potential to extract smarter information from existing assets – plant, buildings and even people ), and also create opportunities to test new models to use technology to build new products and therefore new markets.

Funding these PoCs may come entirely from the business unit, leveraging the CIOs’ advisory role to ensure architectural the decisions line up to existing application and management plans and that appropriate due diligence in the supply chain selection is available to avoid silo decision making and misaligned supplier interaction.

While the longstanding function was IT systems and cost management, the new direction for the CIO will be how to create platforms that enable new value chains and integrated ecosystems. The CIO will develop the technical infrastructure to enable and accelerate revenue growth. He must also educate and enable the whole business to become more ‘digital’.

Why did I write this post? Well I reflect that in the IT supply chain we all assume the role of ‘commentators’ and ‘pundits’ on how the world of technology is changing the thought processes for our customers, yet we still think that we can still use many of the ‘this is how we always do it’ approaches in the hope that the CIO we are talking to is one of the ‘old school’ types. An interesting and not necessarily wrong strategy in the short term, but one that I feel will come under the spotlight increasingly as the ‘new school’ types become the de facto norm.

If we think that the cheese has moved for our clients , why don’t we think the cheese is moving for us too.

 

Brummie.

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A laptop, and the unintended consequences of new ways of working

This post is all about the ever increasing relevance in the socialisation impact of change, and how the evolution of our digital workspace is now making planners stretch their horizons to articulate the true cost of change past the traditional Idea, Fix, Build, Deploy, Operate and Support closed loop world that has treated us well for the last 20 years or so.

At the heart of this transition in our thinking, is the view that for the first time the convergence of forces ( social, mobile, cloud, big data ) is forcing our planners to consider the extended consequential impact of our planning – both intended and unintended – on people and their ways of working.

Let me start by calling out a real world metaphor for this thread.

When one considers electricity and the anticipated and intended goal or consequence of this activity, we would probably all agree that production of electric power to support our ways of life is the core outcome.

We may agree also that the undesired but common and expected consequence of generating electricity is the heating of the ocean water near the plant. We may also concur that an undesired and improbable consequence would be a major explosion of the plant itself.

An unanticipated and desirable consequence might be the discovery of new operating procedures which would make nuclear power safer. An unforeseen and undesirable consequence might be the evolution of a new species of predator fish, in the warmed ocean water, which destroy existing desired species.

I hope this gives enough context to move ahead.

Another recent example I observed was the use of Drone technology. These amazing devices have come along leaps and bounds from the military connotation quite often see in movies and TV output as a means to assess battlefield terrain, identify rogue forces without deploying ground assets and ultimately, deliver payloads of destructive force without harming innocent civilisation. Buying your own drone is now no big deal, and more and more corporations are using drones to further enhance their service operations and customer satisfaction outcomes.

So I was astounded ( though on reflection not suprised ) to read of UK prisons reporting increasing drug traffic caused by outside influences flying in quantities of drugs ( over the wall ) using consumer drones and circumventing traditional security controls.(http://www.bbc.co.uk/news/uk-england-manchester-34764417).

What happened to files in cakes!!!

Social economists will of course understand these events as referencing either unexpected consequences ( luck serendipity or a windfall) or unexpected drawbacks ( a positive project aimed at improving an element of business creates a negative outcome elsewhere ).

For the nuclear plant and drone technology architects and planners I am sure due consideration as to the unintended consequences of their designs were given, and ever eventuality was considered. But for many, there is a limit to this thinking as the emphasis is designing and deploying the To Be design requested by the customer.

As we have seen with the smartphone camera ( good or bad depending on your personal preference ), and the unintended consequence the ‘selfie’ craze ( who hates the selfie stick? – just me? ), the instances of technological change and the impact on our daily lives ( good or bad ) are increasing.

For the business decision maker, the architect and the financial planner of such change programmes, the scale of their horizons for measuring the consequences of their actions is ever growing.

Something called the Relevance Paradox kicks in at this point, where decision makers think they know their areas of ignorance regarding
an issue, obtain the necessary information to fill that ignorance void (intended consequences) , but intentionally neglect other areas as its relevance is not obvious to them ( unintended consequences).

So now consider the humble laptop computer that we have all owned (used ) at some point in our working lives.

Days gone by, the IT department was primarily focused on procuring, building, deploying and supporting the laptop and ensuring the worker had everything they needed. It was a capital asset and needed to be controlled and managed, and the IT department were ‘all over it’.

Unintended Consequences1

The anticipated and intended consequence is the provision of technology to help workers complete their tasks to support the business plan. The undesired but common and expected consequence was the increased help-desk calls from frustrated colleagues when they came back into the office.

A undesired and improbable consequence would be the theft of a laptop that had all the company’s data on it, and we would associate the term ‘risk’ with this outcome, but not with the provision of the laptop.

I remember such days and how liberating it felt that one could just put your computer into a bag, take it home on the train and plug it at home to word process a document or work on a spreadsheet. Offline became the new news in our working vocabulary as we used the laptop to be our extension to the office and for the first time released us from the 9 to 5 shackles of having to be in the office to work. And with good IT service management disciplines and processes meant the IT department could track assets, support incidents and learn from lessons. All was good.

What about the desired consequence? People could share information across office borders and communicate more effectively. Save office costs, save travel costs and improve common access to key information held in CRM and ERP systems.

And the costs? Well because IT were in control of the Build, Deploy, Operate and Support processes, the impact of change was relatively restricted to a capital and operational number owned by the CIO and CFO. A cost of doing business put another way.

And the Socialisation impact? No one knew what this meant at this stage in our maturity, and perhaps was put down to a training course on how to use the laptop!

And the risk? Pretty much every IT department followed the same cook book, and it was difficult to really get this wrong. Risk was low and everyone was relatively happy. After all, they knew no better.

Of course the fast forward button saw us get on-line through dial up modems, broadband and now wireless through various demand and supply channels. And because of this ubiquitous access now afforded to us, our laptops became notebooks, changing in importance to our workstyles, allowing us to work from anywhere, whilst improving our travel options and our and work life balance decisions.

Unintended Consequences2

In this more flexibly shackle free world, the worker was now given a lot more choice where they could work from, and from what device. As before the anticipated and  intended consequence was the provision of technology to help workers complete their task to support the business plan in a faster way to reach more customers, service more requests and sell more products.

The undesired but common and expected consequence perhaps was the increase help-desk calls from an ever increasingly remote workforce decoupled for long periods of time from the physical mother ship office. Longer hours worked impinging on family time was also an undesired consequence, quite often creating much negative fallout across personal and career development ( or lack of ) matters. Security exposure and brand impact due to worker’s using non corporate equipment, personal software and access from unsecured public networks also became an undesired consequence.

Again, the outcome and the provision of the laptop were not necessarily associated other than best endeavours for security awareness, border controls around sensitive data and content publishing.

And the costs? Well because IT were still largely in control of the Build, Deploy, Operate and Support processes, the impact of change was relatively restricted to a capital and operational number owned by the CIO and CFO with more interaction with the HR function for working policies, and specific business functions that had particularly needs for IT to help them ( sales mainly to mobilise their troops. ) Again a  cost of doing business put another way.

And the socialisation impact? Now we saw more employment guidance for recruiters on flexible working benefits, and more HR related cases for work related stress due to unsocial working practices ( because the technology allowed me to work 24 hours ) , and the risks to workers due to tiredness and overall performance meltdown.

And the risk? Technologies now offered more choice so mistakes started to be made ( expensive ones – VM sprawl, power drain, license black holes, data theft, real-time social reputational damage and so on).

Now we consider where we are today.

The modern digital workplace for some ( and increasingly for many more ) is a long way off the days of IT controlled laptop distribution and control.

The modern working space no longer represents the classic office environment ( no desks, contemplation zones, collision points, or no offices at all! ), the collaboration platforms  ( social tools, self-service data aggregation, deeper learning algorithms  ) and the ‘lightness’ of software ( cloud, app revolution with point in time ,recipe style, and self-development apps landing on our devices at the swipe of a finger. ) All in the shadows and totally away from the unaware planners and policy makers.

No longer is the laptop a default tool for many, and the consequential impact of providing IT through other means is going to lead to a much wider range of consequential impacts never considered by IT planners and budget holders in the past.

Unintended Consequences3

Of course, today the business has a clear idea of what it wants from the ‘laptop’ which probably has become a range of devices to suit particularly persona workstyles. Workers use more than one device every day to retain their optimal productivity output, and mapping personas across different environments is where the real ‘magic sauce’ of understanding the consequences of workplace change will kick in.

The intended consequences of these ways of working initiatives sees great financial savings due to better use of office space, energy and travel costs plus more socially engaged workers, sharing ideas, knowledge and talent across borders that no longer prevented them from achieving more and more, and driving a higher output and business performance. Many organisations now see ‘co-working’ as their new office environments and are reducing corporately owned or leased building estate accordingly. (http://www.forbes.com/sites/groupthink/2015/12/21/4-reasons-why-every-office-will-be-a-coworking-office-in-5-years/ ).

The undesired but common and expected consequence  has seen stakeholders having to deal with human considerations for ‘rules of access’ and ‘information security’ that previously was totally within the IT departments domain. Whether it is because of open BYOD policies or Shadow IT data sharing via public cloud platforms, IT no longer controlled the Build, Deploy, Operate and Support processes fully.

The undesired and unintended consequence of this change is where the Relevance Paradox really does kick in.

Consider an organisation that deploys an IT asset into a modern workplace environment that just does not align well to the digital vision of the organisation. Remember organisations are on the ‘Digital Journey’ and see Socialisation a massive deal for their daily survival. A worker  ( or a group of workers ) given the wrong tool because of their working environment prevents them to exploit the new engagement protocols in place with fellow workers, suppliers or customers will very quickly create their own set of risks, and unintended consequences.

The hourly output for all of us matters more than ever. Our joy at working smarter every day is an adrenalin driven event that keeps us motivated, fresh and rich in ideas and opportunity. Conversely, our frustration at ‘being out of sync’ because of our workspace limitations drive us to seek other opportunities, or ‘cope’ with being less productive.

Reflect on your working day to decide which you are, and consider how the planner of your laptop or office space considered the true consequential impact on your job performance. Measuring  this – Plus or Minus – is going to be a huge factor in the success of ‘going digital’.

I believe the socialisation impact of  understanding the true impact of new workstyles, worker personas and use of technology is going to be exponentially larger than the traditional Build, Operate and Support cost models of yesteryear.  Ways of quantifying and measuring impact will require a wider audience of stakeholders and subject matter expertise, with a Right to Left approach to leveraging the most value from the technology asset.

And the costs? Gone will the yardsticks for Capex/Opex measurement of the IT elements. Or more accurately, these costs will be the small change compared to the overall cost of the socialisation of the intended consequences of the IT expenditure. It could be in the different of magnitudes , up or down, and the Relevance Paradox will feature more for planners who ‘choose’ to ignore the real impact of their thinking.

I envisage more and more organisations will see transformational change programmes like an office move or a technology refresh as an opportunity to review their mindset thinking approach, and widen the debate to incorporate a more cognitive way of approaching the Socialisation measurement and impact on the workplace. We already see Machine2Machine and Internet of Things infrastructure managing the smart building and city assets in a way never envisaged by planners, and this technological wave will create new platforms to drive the ‘laptop’ to achieve more and more business value for individuals, business functions and organisational success.

 

Brummie.