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The IT Innovation Answer to Differentiating the Business Platform

Today’s CIO organizations face a complex array of challenges in managing the Business Platform (the group of applications and services that implement the Business Value Chain (BVC)).

The business expects technology innovation as a business differentiator, demands application portfolio stability, requires change requests to be handled promptly, experiences growth rates that are often unpredictable and exponential, and exerts continuous pressure to reduce product time to market.

Complicating this, these challenges are being made to IT with reduced investment support from the business. At the same time, the very business model of IT is changing—how applications, content, information, and infrastructure are delivered.

Technology alone can provide moments of competitive advantage, but they are not sustainable in isolation. The competition also has access to the latest technology and will catch up sooner or later (usually sooner). The creation of sustainable competitive advantages has long been promised by IT, though few organizations can actually claim they’ve accomplished this goal.

Sustainable Competitive Advantage

To create a sustainable competitive IT strategy requires that the IT organization be structured to provide IT services that are uniquely qualified in meeting business needs. To accomplish this, business strategy cannot be decoupled from IT optimization. In fact, the act of linking business and IT together is the very source for generating sustainable competitive advantage.

The goal of strategic differentiation is to make valuable business execution processes exceedingly difficult to replicate[1]. For each optimized process that is created and chained with other optimized processes, competitive replication becomes more difficult. Consider a competitor that duplicates each of four processes with 90% effectiveness. The competitor would only be able to replicate (.90)4 = 65.6% of the overall process, which leaves the innovator with significant protection from copy cats.

Since the primary source of competitive advantage lies with the combination of what the business is doing and how it is accomplished, the relationship between the two will have to be strengthened to take advantage of it.

Enabling the Real Time Enterprise

A Real Time Enterprise (RTE) enables the business to react to business events as they happen in real-time. Traditionally organizations have been forced to be passive or reactive to business events. Reporting on operations was traditionally executed on a weekly, monthly, and quarterly schedule. By the time management learned about events that had taken place, the opportunity to influence them had long passed. In the late 1990s, it was practical to start the practice of tapping real-time feeds of information on operations, which provided greater insight allowing the organization to react faster.

Leading firms have already accepted that technology platforms need to evolve to support RTE operations. Many are already in the process of transforming to improve the long-term competitive position of business. The ability to deliver information and processing power anytime, anywhere, as the business needs it is critical to this strategy. This logical platform to clearly define capabilities of service agility, optimize transaction IT unit costs, and dynamic execution control is needed to lead the way. This platform can be conceptually described with the following attributes.

· Coalesce cross-client experience, decision support, and just-in-time fulfilment with real-time execution and information availability.

· Deliver “service when needed, as needed” based on the business’ explicit service requirements.

· The ability to implement new, unique products or differentiated capabilities in a timely manner for purposes of competitive advantage and operational control.

· Leverage and reuse common component services (both business and infrastructure) for productivity, efficiency, and competitive advantage.

· Provide the necessary plumbing—rich user experience, dynamic execution environment, intelligent mediation platforms, real-time data frameworks, optimal system footprints, dynamic network coordination, automated orchestration, and tooling to enable autonomic management, monitoring, and reporting.

When the platform design is right, the organization will be able to clearly address the following.

· How to become more flexible and responsive to the dynamic needs of the business.

· How to simplify and reduce the complexity of the IT environment.

· How to get more value out of project and operational IT spending—both systems and people.

· How to reduce costs while delivering improved service.

· How to eliminate dedicated silos of data, systems, and infrastructure as they currently exist.

· How to reduce the time it takes to build and deploy new business services.

· How to implement and sustain predictable qualities of service.

The closer an organization can get to these ideals, the more competitive it is. Unfortunately, this potential value is overlooked in the rush to get systems operational. Reaching the goal requires a shift in thinking and planning that includes the use of dynamically shared infrastructure capable of responding to business demand in real-time. Current IT deployment practices produce unchecked organic growth that results in missed opportunities and erodes shareholder value. Fundamentally there is a lack of standards promoting a healthy business IT platform and underlying infrastructure supply. With no boundaries to keep development groups grounded, each leg of the business is left to its own devices in promoting its needs, with no attention to the health of the whole. A more holistic strategy is needed. Here are four areas to concentrate on, to begin the process of laying a more sound foundation.

· Align: Business and IT

· Decision: Business Platform Management Discipline

· Insight: Operational Management

· Control: Dynamic Resources When Needed, As Needed

Align: Business and IT

IT supply is part of an economic model where demand is driven by the business. The traditional approach to IT delivery is to organize around silos of infrastructure, such as compute, storage, and network. This leaves the business to its own devices to cobble together resources for its purposes, which creates long lead times for deployment and rigid systems that are slow in responding to business events.

To be business demand driven, an understanding of the BVC and its sub-components must be documented to determine how the business operates. Each business sub-component has unique service requirements exhibiting specific workload characteristics that must be placed into context. Once understood, it’s possible to organize the datacenter to provide optimized infrastructure, which is tailored to the workload characteristics of each business sub-component.

The IT supply must be responsive to the service requirements of the business, and therefore should be organized to deliver to those requirements in the form of tailored platforms optimized to operate on the particular types of workloads run by each line of business. Most businesses have multiple service requirements and therefore multiple workload types. Fortunately the workload types are not infinite; they are in fact discrete in number and allow for the use of repeatable design templates and configurations. This means a great deal of flexibility in IT supply, which can be characterized as a Fit-for-Purpose RTI. Fit-for-Purpose in that the infrastructure is optimized for the workload characteristics; RTI in that resources are dynamically applied and retrieved as needed, when needed.

Decision: Business Platform Management Discipline

A sound and practical approach to portfolio and product management is needed that promotes the development of a business IT platform that is fully aligned with business goals. A simple point-in-time snapshot is not sufficient, as by the time the technology catches up, the business has evolved and the platform is out of date.

The basic concepts are to learn how to adapt IT to the business environment and how to map the Business Value Chain (BVC) and align the Digital Supply Chain (DSC) with the business and revenue generation. This mapping realizes the notion that the DSC is the analog of the BVC, as it manifests most actions on the behalf of the business. This map can be used to identify new functions to automate and where redundant systems can be eliminated to create a digital ecosystem that is in balance with the business (in contrast to the current model where IT growth frequently outstrips business growth, even as functionality lags behind). This is accomplished through the idea of treating business IT platform decisions like an investment portfolio and managing this portfolio in a manner similar to how operations would treat a manufacturing plant.

Insight: Operational Management

Numerous areas of IT infrastructure operational management are often largely neglected due to the complexity of establishing a robust process in a siloed model. Because no one is responsible for the overall infrastructure, holistic opportunities are often overlooked or considered too difficult to execute because of red tape. Candidate areas for improvement include the following.

Real-Time Management: In the rush to meet deadlines most organizations go with what they already know. In doing so, they replicate existing problems. A rigid infrastructure where applications are tightly bound to the machines where they run or server instances running on specified pieces of hardware is very restrictive and generally not highly responsive to the business. Virtual Machines (VMs) provide some coarse flexibility, but there are many virtualization strategies that provide greater flexibility such as application service brokers or virtual operating environments that work in combination with VMs. Virtualization deployment without a real-time management strategy can rapidly compound datacenter challenges.

IT Physics: A common mistake is the misconception that the physical server location doesn’t affect performance within a datacenter. Over time, as systems grow organically, additional feature functionality is introduced, and disparate systems are integrated, the resulting data flow can result in spaghetti-like transactions that span the entire breadth of a datacenter, and sometimes multiple datacenters. Employing a strategy that includes datacenter physics can result in significant reductions in network contention combined and improved performance—in essence optimizing the ability of highly collaborative functions to communicate more efficiently.

Holistic Monitoring: A holistic monitoring strategy can save significant costs. By having insight into everything from the power/thermal profile of the environment, cabling, hardware, middleware, application, and transaction monitoring in a correlated end-to-end view allows engineering teams to rapidly and proactively identify problems. Most organizations perform monitoring in tiers of silos. This requires significant team coordination, brings up issues of teams hiding root causes of issues, and generally makes correlating events very difficult due to lack of integration. Once this approach is inculcated into the environment, a virtuous spiral of effective change can permeate all aspects of the datacenter, creating sustained improvement and effectiveness.

Control: Dynamic Resources When Needed, As Needed

Running IT like an on-demand Cloud utility has strong implications for the need to change the typical enterprise IT operational model. The datacenter has traditionally been treated as both an infinite resource and a black box cost sink that has little correlation to business revenue or growth. The operational model of a utility is different by definition. Utilities have defined capacity that must be managed, and users must pay for levels of service. Utilities must accommodate demand, and while there are times when this cannot be accomplished (e.g., brown outs), priorities apply based on policies.

Policy-driven dynamic management of supply to meet demand in real-time is the vision for the IT utility. This cannot happen overnight, but the technologies and practices mentioned in previous sections pave the way. Focused executive sponsorship, alignment of business and IT, delineated roles and organizational changes that include new ways to view compensation are all required to realize the utility vision.

The migration toward managing IT as a utility should be guided by the following goals.

· Responsiveness

o Become more flexible and responsive to the dynamic needs of the business.

o Reduce the time it takes to build and deploy new business services.

· Reduce Complexity

o Eliminate dedicated silos of data, systems, and infrastructure as they exist today, making it possible to meet changing business demand dynamically.

· Better Economics

o Get more value out of project and operational IT expenditures in both systems and personnel.

o Reduce costs while delivering improved service that can be measured.

o Implement and sustain predictable qualities of service that the business can rely on.

Conclusion

The Current State Alignment Map and desired Future State Design Map are the foundation to the creation of a transformation program built to evolve to the Strategy-Driven Target Architecture. Keep in mind that any change management program that looks to drive sustainable competitive advantages can’t be executed against blindly for extended periods of time. The business environment is a fluid one. The Future State direction of the business platform is a moving target and must be continually evaluated for changes in reaction to business events. Therefore a cyclical process of improving and revising the Future State Design must be undertaken to keep it relevant.

When the business IT platform is managed from the top-down in a holistic manner, it can become a true business enabler and sustainable competitive advantage. A long history of mediocre IT results has made the business skeptical of new ideas and approaches. However, correcting the situation will require a bold approach. Trust needs to be re-established to bridge the credibility gap via a process of creating small inroads with the business, proving value, and then expanding scope of the business IT platform transformation process. This incremental approach will give IT the needed credibility to effect positive change and keeping in sync with the business to support the needed changes.

[1] Michael Porter, “What is Strategy?” Harvard Business Review, Nov‐Dec 1996, p 61 (Reprint 96608).

More Stories By Tony Bishop

Blueprint4IT is authored by a longtime IT and Datacenter Technologist. Author of Next Generation Datacenters in Financial Services – Driving Extreme Efficiency and Effective Cost Savings. A former technology executive for both Morgan Stanley and Wachovia Securities.

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