The IT Beacon

Simplicity

It’s back to school. In the next few days my column in the FT will address the subject of IT and simplicity. There is a trend in business and life to seek out simplicity. The 80:20 rule and Parkinson’s Law, coupled with thinking by Edward de Bono all suggest that we can simplify everything whilst not losing the essence of what it is we are trying to achieve.

So I ask the question, does IT lend itself to simplification? Most would answer yes arguing that IT is too complex and therefore unmanageable. Surely emerging themes such as virtualisation and cloud computing are examples of the industry recognising that simplicity is the way forward?

In my forthcoming column I propose that looking at how to simplify IT at this stage of its evolution as an industry is simplistic. And thus attempts to improve IT value by focusing on simplification will not cut it.

Here is the link, which by 17^th September should have the link to the piece I am referring to. I look forward to getting your thoughts on this.

Hidden Costs in IT

It is interesting that organisations are willing to support treatments that keep staff in work (eg. flu jabs) but not in those that have no impact on absenteeism (eg hay fever). 

The Harvard Business School Publishing post Hay Fever and the Hidden Corporate Health Care Crisis  highlights that the costs of (what it refers to as) presenteeism are significant because of the associated poor productivity. In fact they are circa ten times the cost of absenteeism. A sobering thought.

Similarly the seemingly minor illness of technology jargon that afflicts many technologists when discussing IT issues with users is another minor ailment that is surely costing organisations inordinate sums. Investment in anti-histamine and anti-tech jargon treatments would appear to be the way forward.

The Pain of IT

Seth Godin writes that "The closer you are to the point of need, the more you can charge. Pizza at the airport costs five times more than pizza on the way to the airport..."

Interesting observation. The IT department could learn from this. Often they are located away from the users, on different floors, buildings, countries and even continents.

IT needs to get in there alongside the users. That is where the pain is. And that is where IT can deliver the most value.

The Real Silver Bullet

John Schmidt has written an interesting piece on his perspective on what will solve the IT-industry issue of poor delivery. He provides compelling evidence for this condition just in case there is any doubt. I am in full agreement with his conclusion that the industry lacks leadership; not so much on the sell side as in the IT function of end user organisations.

John proposes a silver bullet that comprises: configuration management, systems integration, program management and information architecture. Get these right and suddenly IT projects are delivered on time and IT systems deliver real business value. He points out that software engineering is not a key element because the IT industry already does that very well. In my experience software engineering peaked as a concept in the eighties and has slid downhill ever since.  So it is my view that software engineering needs tighter leadership.

John disagrees with the notion that executives become more tech savvy as a step towards better business-IT communications. He thinks this is akin to asking executives to prepare themselves to build their own systems if they really want them built correctly. This is an extreme take on executive technology education. My view is that executives do need to be tech savvy but only to the extent that enables them to govern IT in respect of maximising the return on this often expensive asset. So absolving executives from having to embrace IT is to send them down the path of poor corporate governance.

In any case silver bullets focused purely on technology action will do no more than solve technology management issues. But if one is interested in yielding greater value from one's IT investment then the silver bullet needs to embrace business strategy and processes, people and service. Until we address the 'IT problem' in its wider business context we are in danger of simply making IT more efficiently ineffective.

That said John makes a variety of interesting points and invariably when so many points are made in such a relatively short piece it is easy for the likes of me to find issue!

Coca Cola and IT - The Real Thing

One company that seems to have got the message is Coca Cola. I was directed to an Information Week magazine video where the Coca Cola CIO -- Jean-Michel Ares -- details his approach to being more business-centric. His focus is business value.

Specifically he has:

• Repositioned IT as a partner to the business in creating value from senior management right through the organisation
• Created an IT strategy that is totally business centric rather than IT-centric
• Focused on growing and developing the IT talent
• Kept the technology architecture simple
• Refined the IT processes for greater efficiency.

He warns that in a down turn, CIOs need to focus on :

• Demand management
• Productivity and efficiency.

Again simplifying the environment is mentioned as is virtualisation.

Leaders on both sides of the business-IT fence would do well to track Coca Cola and its use of IT.

EDS Review of The IT Value Stack - Part 3

Here's the last of three posts that respond to The IT Value Stack review that Charlie Bess of EDS wrote on their blog, The Next Big Thing.

Charlie said:

3. One other area that wasn't brought out in the book that I'd like to hear Ade's perspective on is: Cloud Computing. Most of the folks who are working in cloud computing can spell "cost" fairly well, but don't understand "value" and what the organizations will require to use it as an integral part of their business. We'll see how many lessons are going to be learned in that space before there are some changes in the market.

I do believe there was a great deal of useful material in the book and it should make the reader sit back and contemplate their ability to adapt and adopt the concepts, since in any shift like this the leader must ensure that there are followers.

My response:

I have only recently come across the term Cloud computing. It looks like an attempt to bundle grid, virtualisation and utility computing into business/media friendly concept.

That said, extracting better value from one's IT assets is to be applauded. Three years ago grid computing in particular was marketed by IBM but was still really a subject for comp sci academics. In the last year I have seen it turn into commercial reality, particularly amongst investment banks. But true grid computing whereby the user devices contribute to load sharing as well as the servers is some way off as the security implications and underlying architectural requirements are horrendous. But this may move forward faster than I expect because the concept at least is boardroom-friendly. I am sure the out sourcing community will put their shoulder behind it as it strengthens further their value proposition.

I have enjoyed responding to your thought provoking comments and would be happy to take the discussion forward. I have worked with EDS in the UK in respect of helping the IT recruitment function in respect of talent management.

These are interesting times!

EDS Review of The IT Value Stack - Part 2

Here's the second of three responses to the book review written by Charlie Bess, who writes for the EDS Next Big Thing Blog. (See his complete review here.)

Charlie raises this point:

2. Even though Ade talks about the business value being based on the use of IT, he keeps pounding away that IT is separate and must be "entwined". I'd have bought that argument in the mid 90s when most middle management had little understanding of computers, but that does not hold up today. When he and I exchanged a note about how the "typing pool" has disappeared, I suggest the same thing is happening with "long tail" application development, through the use of mashups and other similar techniques. He does talk about the CIO being the evangelist or enabler, but it was a bit weak for me. IT's days as a separate entity inside the corp. are numbered. Everyone needs to take a hard look at the territory they want to claim for their corporation and prepare the IT organization to make it happen. In Ade's book there is a good tactical framework to do this, and it appears to be a valid means to an end. It's just the end state that I'm afraid could have been more thoroughly explained.

My response:

I work with some of the biggest companies in the world and most middle and senior managers are clueless about what IT can do in respect of cost management, innovation and governance. So I am comfortable with the notion of a business-IT divide.

The fact that we have business/systems analysts patrolling the DMZ between the two parties attests to a serious rift. I agree that the IT department's days are numbered, I am pushing for it. In much the same way as the typing pool used to be a function now everyone does their own typing. So it will be with IT. Thus the IT department's days are numbered, but it’s a relatively big number, in my view.

My perspective on outsourcing is that many providers can do IT better than many end user IT functions. An alert-IT department has the advantage that they know their business processes much better than any outsourcer. As time marches on the technology piece will be trivial, the value will be in the business knowledge. But I accept that where an outsourcer acquires the business expertise then that is a heady combination. Some of the outsourcers have already got this message and have moved their proposition up the 'value chain' by presenting themselves as business outsourcers.

On reflection the book would appear a little harsh on outsourcers. I have no fundamental issue with it. I simply want the IT function to put up a better fight, for everyone's benefit. Your comments will certainly influence my presentations/writing and consulting activities to be more balanced on this.

EDS Review of The IT Value Stack - Part 1

Charlie Bess, who writes for the EDS Next Big Thing Blog, reviewed The IT Value Stack. Charlie raised some good points, which I'll address here and in the next three posts.

First, Charlie writes:

I was reviewing The IT Value Stack the other day and in the process exchanged a few emails with Ade McCormack the author.

Although he does a great job describing the issues of value generation within IT the way it is structured today. There were some differences of perspective that I have to bring out:

1. Ade's discussion of outsourcing appears to be fairly harsh. He does not understand the real value of outsourcing. It is not about replacing workers, but about diversifying risk and contracting for efficiency. His whole premise seems to be that an in house team is always the right answer. I'd say that is a high risk proposition. As the industry moves into a more assembly based value creation approach rather than a hand crafted one, the need to have experts (for a short duration) in high value segments should increase. Outsourcers had better be able to apply those resources seamlessly and more effectively than any in house team could ever do. The changes in the IT industry will demand this ability to tap into a more diversified resource pool.

My response to this:

I take the point about risk diversification, and agree, particularly where the in-house function has become lethargic and fails to operate as a keen supplier. The other extreme of course is that outsourcing all your IT to one organisation is perhaps the biggest risk. Again in-house is not the right answer where the IT department is beyond salvaging. My message is that they need to buck up if they are to compete with more commercially oriented suppliers like EDS, which is my view, an perhaps not good reading from an outsourcing perspective.

In my experience outsourcing as a model has gone in and out of fashion as it will continue to do so. I quite like the utility model some players are adopting, particularly for hygiene services. But in my opinion most buyers of outsourced services are looking at cost first. For many they see IT in much the same way as stationery, "where can I get it cheapest', hence India coming strongly into the frame, and hence the western outsourcers getting into India.

The big question for users of IT services, is whether IT is their core business or not. I would argue that core business for Citigroup and American Airlines IS and brand management. And if that is the case should they be handling that to a third party? Maybe yes is the answer. I agree however that slowly but surely IT is moving from craft to assembly. As that happens the likes of EDS can offer a number of things, not least economies of scale. But the slowness of the evolution of IT is making assembly line something of a romantic notion but for the most basic of applications. If that were not true then every IT project would be a success, which is far from the case.

Only Strong Survive in IT/Business Jungle - IT Business Edge Interview

Ann All of IT Business Edge recently interviewed me about The IT Value Stack. You can find the interview at the following link:
Only Strong Survive in IT/Business Jungle.

How to Tap IT's Hidden Potential

In the recent Wall Street Journal article How to Tap IT's Hidden Potential, Dr. Amit Basu and Mr. Chip Jarnagin write that:

"...Analysts estimate that hundreds of billions of dollars are blown every year on IT projects that fail to achieve the desired goals.

The reason for all this is the metaphorical glass wall that separates the IT group from the rest of the business at most companies. The wall prevents IT from being part of the discussion at the highest levels of company planning, robbing a firm of its full potential.

Success in the digital economy of the 21st century demands a strategic role for IT. And for that to happen, the glass wall between IT and the rest of a company has to be shattered..."

The authors have hit the nail on the head in respect of how most companies are not yielding full value from their IT investment and the issues that lead to that.

The IT function exists to deliver business value and as such needs to be managed by the business. My view is that IT is too important to be abdicated to the IT function so must be managed by the board. It would be a step in the right direction for the CIO to be invited onto the board.

They have highlighted why that doesn't happen. In my view that is not enough. Each senior executive needs not just to be IT-aware, but to be sufficiently IT savvy to drive the IT function to deliver both cost savings and business innovation.

The IT Value Stack addresses this issue and the solution in detail. One of the underlying assertions of my book is that ultimately the CEO and CIO should be one and the same person. That is not going to happen overnight, but given the future is IT- centric, it is only a matter of time.

(Some others blogging about this article include John Millinax, CIO-Weblog, Did Somebody Say Strategy, The Data Doghouse, Executive Advisory blog, Agile & Business, Collaboration and Content Strategies,  Useful Idiot and The Mad Admin.)