Cloud Forces a Paradigm Shift for CIOs

Cloud computing has turned the technology world on it’s head. Some argue this is a bad thing. However, I believe it is a great thing and something we need. For some time, businesses have requested more and more from IT organizations. Several years back, cloud computing came about and provided a significant opportunity for IT organizations and the businesses they serve. However, cloud is not just a change in technology.

New Paradigm

With significant changes in innovation come changes in the way we think. Cloud is no exception. It presents a new way for delivery of services. For IT organizations, this means changing who delivers the services. It means thinking differently about how services are delivered and how relationships are maintained. Further, the fundamental nature of the relationship has changed too from transactional to value. Even within the technology realm, the focus moves from operational to integration. There are many more changes that must be considered when introducing cloud-based solutions.

Holistic Viewpoint

Traditionally, solutions often focused on their technical merits. However, cloud-based solutions require a bit more thought and planning. Change impacts not one, but three aspects: Technology, Process and Organization. When considering a cloud-based solution, it is important to take a holistic viewpoint and consider all three aspects. Not considering a holistic view for the solution spans the range from an un-sustainable or failed solution (worst case) to bringing limited value (best scenario).

Focus on Value

In order to see value, one must first set assumptions aside. A common assumption is that technology solutions must reside within my own data center. With IaaS, PaaS or SaaS, that is often not the case. Sure, there are private cloud offerings that allow creation of a cloud within your own data center. However, the cloud marketplace has started to mature and external solutions provide an interesting array of opportunity…and value.

When looking at value, consider the holistic approach. Consider the impact to the technology, processes and the organization. The value from a solution may come from surprising areas. When picking the right solution, consider the expertise and value of both the internal IT organization and the provider.

From Operations to Integration

Cloud presents the start of a shift in responsibly. The responsibility moves internal IT organizations from an operational role to an integration one. Does this mean IT does not have operational responsibility? No. It means that the day-to-day management of operations moves to the provider. IT still needs to trust-but-verify the provider’s actions. In doing so, it shifts IT’s focus to integration of infrastructure, platforms, applications and services. These are opportunities for IT and move the pendulum toward better management of data…and more importantly information.

Outsourcing v2.0

Some argue that cloud is simply outsourcing v2.0. It is not. Unlike past iterations of outsourcing, cloud presents a completely different model. That can be gauged through relationship, technology, integration, value or process…just to name a few. Applying past outsourcing models to cloud provide a number of challenges. Cloud requires a new way of thinking and operating. Changes in processes and responsibility are just two (of many) examples.

Bottom Line: When considering cloud-based solutions, don’t get caught up in technical assumptions. Take a holistic approach to focus on value opportunities.

Apple Acquisition of AuthenTec Provides Significant Opportunity

Apple’s acquisition of AuthenTec for $8 per share or about $356 million brings a value purchase of fingerprint and security technology. On the surface, the acquisition provides Apple with biometric fingerprint technology to imbed in their mobile devices. While that is significant news, there is more, much more to the story…read on…

First off, $356 million is a bargain for the potential the acquisition could bring. Between the core biometric fingerprint technology and cache of intellectual property (IP), the potential is significant enough. However, there is significantly more potential here.

Value of Mobile Biometric Scanners

Integrated fingerprint scanners in mobile devices are not new. HP was the first to introduce biometric security to a PDA in 2002 with their iPAQ 5450. IBM introduced an integrated fingerprint scanner to a laptop in 2004 with their ThinkPad T42 model. Adding biometric security addresses some of the concerns that come with management of corporate data and near field communications (NFC) for payment processing.

Impact of RIM Blackberry

There most definitely is a relationship between the current state of RIM (makers of Blackberry) and Apple. I wrote a post ‘Learning From The Blackberry Monkey Wrench’ outlining some of my thoughts. There are three core components to the Blackberry service: 1) The hardware devices, 2) The software running on the devices and servers and 3) the RIM operations that manage all Blackberry traffic. This third one is most often missed and one of significant concern. If RIM collapses and the three components go to different companies, what happens to the data center operations that secure and manage the Blackberry system? I’m certain it will create pause for many corporate entities that currently rely on Blackberry solutions.

Apple has the software and hardware solution. However, they do not rise to the level of security Blackberry affords. The acquisition of AuthenTec technology could provide just the boost they need.

Creation of Security Ecosystem

It is unclear as to the entire portfolio of IP AuthenTec brings. One thing is for certain, the potential for upstream and downstream security integration is strong. And with that integration, Apple has the potential to bring a solution to market similar to Blackberry that addresses the data security concerns coming from BYOD and CoIT.

Bottom Line: Considering the acquisition potential beyond the obvious, $356m seems like a steal. Of course, Apple still needs to execute to prove the true value.

Further Reading:

http://www.sec.gov/Archives/edgar/data/1138830/000119312512318086/d384083d8k.htm

http://www.reuters.com/finance/stocks/AAPL.O/key-developments/article/2580569

Onramps Increase Adoption of Innovation

Over the past several years, I have evaluated a number of solutions and services in the cloud computing market. As time goes in, one would hope to see a change to the maturity of a marketplace. While market maturity has happened in some aspects, there is one key aspect that is still missing for many providers of cloud services. Innovative solutions need onramps. Without them, it hinders adoption and progress.

Not a New Problem
This problem is not new. In fact, it is quite common. Coming from an IT perspective, there are two very good reasons why they do not exist. First, IT is complex. Each company and their environment pose a unique situation that is hard to string a common thread between. In essence, every company would require their own, unique onramp. The second reason is that providers are focused on the value of their solutions and less about how to get to their solutions. The same is true for moving from their solution, but I’ll get to that in a minute.

But is IT really that complex? Yes and No. Sure, different organizations choose to configure their solutions very differently. Everyone has his or her reasons for doing so. I’ve seen this happen time and time again. But is it necessary? More importantly, does it create business value? Unfortunately for many cases, the answer is no. Solutions are overly configured because 1) we can and 2) because we “think” it is useful or valuable. But it creates larger challenges down the road with upgrades and solution changes. That is not new. It has been happening for as long as I can recall.

That being said, should providers create onramps? Yes. And IT organizations should help enable those changes.

Building Onramps
Similar to a major road system, without onramps, it makes access difficult or impossible. Consequently, the value of the solution is lessened. To be clear, onramps are not simply an engagement for professional services. Onramps need to be repeatable, reusable solutions that customers can use on their own. An onramp could take the form of a tool or methodology.

Building an onramp creates a number of advantages. 1) Onramps make it easier to use the new solution. IT organizations are already overwhelmed with the number of demands coming their way. Onramps create a relatively easy way to start using the new technology or solution more quickly. It also differentiates between solutions based on their speed of adoption.

Offramps: Onramps Quiet Cousin
Just as important as an onramp, offramps are also needed. Few providers really want to talk about them. But customers do. Why? They create an easy way for customers to move from one solution to another. They prevent ‘stickiness’ of customers. Arguably, it moves the focus from preventing customer churn to providing value where they (customers) want to stay with the solution. How many times have customers said “it’s easier to deal with the pain and issues than move to another solution”. It happens quite a bit.

Of course there are legitimate reasons for change. Businesses change. So must the solutions the leverage. And the solutions change too. The relationship between a provider and customer is constantly in flux. Unfortunately, the relationships are not changing as much as they should for the business. That dynamic can change with onramps and offramps.

Bottom Line: Technology innovation is hindered by the lack of access. Creating easier access will catapult the speed of adoption. Similarly, creating bidirectional access moves the focus to value creation.

IT Outsourcing for SMEs

IT outsourcing is nothing new. Or is it? There are several gotchas. But it is important to understand where we’ve come from to learn from past mistakes and take advantage of new opportunities. Read on…

Outsourcing vs. Offshoring

First, let’s differentiate between outsourcing and offshoring. Outsourcing is the act of contracting with another company to do work for you. Offshoring is a form of outsourcing that moves the work to other countries. Outsourcing (and offshoring) is very common in manufacturing companies. However, in IT, the trend really started to build steam in the 1990’s as companies tried to address a shortage of workers, a change in the type of work and competing global labor rates.

The main attraction to outsourcing came from meeting one or more objectives: economic, repetitive, expertise and time to market. In the past 10 years, the value from these objectives has changed quite a bit. In just the past 5 years, a whole new cast of “types” of outsourcing has come on the scene.

Management Overhead

One of the lessons learned from early attempts of IT outsourcing is the fallacy that entire processes can simply be moved to the outsourcer. In many cases, a local team is still needed to translate requirements and ensure quality of work performed. It could be a seemingly duplicate effort or simply management overhead. Understanding how internal requirements will be translated and quality confirmed is one issue. Factoring that into the value equation is important for TCO calculations. Many early attempts misjudged the amount of work it would take to manage the outsourcing relationship.

Labor Rates

A big draw to outsourcing, and specifically offshoring, was lower labor rates. Companies saw opportunities to perform work in other countries with labor rates at a fraction of competing rates in the US. Over the past decade or so, the difference in global labor rates has shrunk. While India is still able to perform outsourcing arrangements at lower costs, the value is not as great as it used to be. India is also challenged with finding enough people able to perform the work. In essence, it is becoming a sheer numbers issue. For the past 5-10 years, focus has shifted to the other BRIC countries. The BRIC countries are Brazil, Russia, India and China. Indonesia and the Philippines are two other hotbeds of technology outsourcing that are starting to make their mark.

Expertise

Labor economics are one factor that draws companies to outsourcing. Another challenge is when a company does not have the expertise to perform a task or create a product. It is possible that it either may not be as cost effective for them to create internally. Or it may be a specialization that is only needed on a temporary basis. For example, if a company needs to develop a solution in a language they aren’t used to, they have three choices. One, they could hire the staff to do it internally which would be costly and take time. Second, they could try to write the application in a different language that they have internal expertise with. Or third, they can outsource for the specific project. In either case, leveraging outsourcing arrangements may be a more cost effective solution.

Time to Market

A third objective might be the time to get a product or solution to market. The ramp up time to define, justify, hire, train and engage staff might be too long. Leveraging outsourcing arrangements provides a much quicker solution to leverage the expertise of services. For many, time to market may outweigh many other economic objectives.

Technology in Outsourcing

So, how does this all apply to technology outsourcing today? Today, more than ever, companies are leveraging outsourcing. And not just to solve labor challenges. Cloud computing is just one example of outsourcing in today’s technology world. The concept of leveraging technology services from another company is nothing new either. We’ve seen that with ASP, hosting and the like. What is new is the ease in which to engage services. The ease is already creating a mass movement into this new class of services.

Organizational, Process and Technology Changes

It is easy to get lured into thinking the implementation of technology is straightforward and relatively easy. That may have been true in the past. Today, more than ever, the implementation of technology requires two other cohorts to be successful and sustainable. Those two cohorts are organizational and process changes. Without those too, technology is just that…technology. As an example, just moving to cloud computing may seem like a simple enough change. But the reality is that processes and organizations need to change. Cloud is forcing IT organizations to pickup attributes similar to that of a supply chain manager. More specific examples include operational process changes for things like monitoring of performance and operations. Application changes are needed to consider available libraries and architecture requirements. Organizations need to change to consider how they model themselves to this new way of operating. And those are just a couple of relatively straightforward changes. It’s very different than the IT organization of the past.

Where to Start

Considering they myriad of changes, where do you go from here? The first step is to ensure that you’re looking at everything with a holistic viewpoint. Consider the true business value of the actions taken. Don’t just look at the technology or IT benefit. Also consider the implications to the organization and processes. Don’t get lulled into just thinking about labor and technology opportunities on their own merit. There may be more…or less. It is also possible the value may come from an area you weren’t expecting. The bottom line is to take a fresh perspective and try to avoid the cultural constrains of how IT organizations have operated for the past 10-20 years. Outsourcing and offshoring are both viable solutions and should be wisely leveraged where possible.

Will SaaS Provide the Final VDI Knockout?

Over the past couple of years, a battle has been brewing. The battle is not about technology or devices. It is about data and usability. The contenders are Software as a Service (SaaS) and Virtual Desktop Infrastructure (VDI). There are proponents for both camps. And while they are not a direct replacement for each other, they do overlap in many ways. For many, the core value proposition for VDI comes from a specific application or data set. While VDI could be used for other activities, their value simply doesn’t reach the tipping point.

Challenges for VDI

While VDI has been around for many years, it has struggled to make significant inroads into today’s IT environment. In the interim, other solutions have filled the gap. The leading challenges to VDI are the value vs. the cost to implement and operate (as compared to the alternatives). In addition, as we move to a more mobile workforce, the underlying technology that connects clients and servers becomes more challenging for mobile devices.

The Impact of BYOD

Bring Your Own Device (BYOD) presents somewhat of a curveball for VDI. On one hand, BYOD increases the demand for VDI by moving applications and data off personally owned devices. Seems simple enough to implement VDI as a response to address the app/ data challenges with BYOD. However VDI brings a new set of challenges in a BYOD scenario that only adds to the already existing BYOD complexities. In the end, the offset is not as rosy as the surface would indicate. BYOD also creates demand that can be serviced by other means. Meaning, VDI is not the only option here.

Leapfrog to SaaS

Over the past few years, SaaS applications have matured significantly. That is in part due to the marketplace. It is also due to the maturity changes within the IT organization. There are three types of demand that could warrant bypassing VDI and going straight to SaaS. The first is off-the-shelf applications. Movement from an internally hosted software package to a SaaS offered version is one way to make the move. The second is greenfield applications. At this stage, IT organizations building new applications should be evaluating cloud-based architectures. The third are the legacy applications. Some of these will continue to require client-server based architectures. However, at the appropriate time, a change will be needed for legacy apps. It is important to understand where that tipping point is. If SaaS is an option, it presents an opportunity to leapfrog over the incremental improvements and should be considered.

Healthcare: A Case for SaaS vs. VDI

Specialized use cases demand further scrutiny over the requirements and potential solutions. Healthcare is a great example where HIPAA’s requirements around Protected Health Information (PHI) are a key consideration. Many healthcare providers are finding new ways to engage patients while working within compliance requirements. VDI seems like a good fit, right? Wrong. Yes, it could work. But the reality is that usability becomes a strong factor in consideration. Add in the movement to mobile users and SaaS (or mobile apps) start to look more appealing.

Bottom Line: As SaaS becomes commonplace for applications, the existing demand for VDI will further diminish. Unless there is a compelling use-case today, investing in VDI is probably a poor choice.

IT Transformation Requires One Step After The Other

Looking For Direction

The technology (specifically IT) world is becoming more complex and challenging every day. I speak with a number of Business Leaders, CIOs, IT leaders and IT staff about this very issue. The subject of IT Transformation is one that keeps coming up. Yet, it seems as illusive as it is alluring. The prospect that it could bring is enough motivation for many to try. For most IT organizations, the capacity to take on the challenge seems out of reach. Many still struggle to keep up with day-to-day operational challenges. Let those fall and nothing else matters. On the flip side, doing nothing is not an option either. Warning: This is hard work and is much easier to talk about than execute.

Choosing the Right Approach

There are several schools of thought here. Two leading directions are to either take a Leapfrog or Incremental approach. There are pros and cons to each of these. Ideally, one would intertwine the two. However, that presents a whole new set of challenges. The big upside to Leapfrog is time. Bypassing the myriad of issues may seem attractive. Heck, the business may provide enough pressure to actually make this seem feasible. The downside is in what gets missed through the process. Miss a step and it is all over. That leads to the Incremental approach. Seems like a safe bet, right? Well, the time required will far exceed the patience of those within and outside of IT. Remember that the demand and complexity is increasing. The Incremental approach does provide a more measured process. So, which one should be used? Both. Measure the risk and reward for each increment. Speed up the intervals and Leapfrog where possible.

Being Inclusive

IT Transformation is not a technology problem. Well, not exactly. It’s a problem that requires several components working in concert. Without the combination of the components, the effort is not effective. A Holistic approach takes into account Technology, Process and Organization. Some refer to this as People, Process and Technology. However, it’s important to understand the relationships of the people as a function of the organization. Arbitrarily taking a Holistic approach to include all three can be cumbersome and daunting. Hence, a more Surgical approach to the three is warranted. If there is a knob (ie: technology) to improve, what are the process and organizational changes needed to support and maintain that change? The Holistic approach is needed. But it needs to be performed surgically to avoid gridlock.

Using Cloud as an Example

The advent of Cloud Computing is a great example. I have seen organizations simply try to replace their traditional operations with cloud-based operations. This takes me back to the early days of outsourcing (offshoring) where people were replaced 1:1 or 1:3 without regard for process and organizational changes. In the case of cloud, the change didn’t work. In most cases, one cannot just go down the hall to reboot a server or install any new application. Without consideration that the processes to manage the infrastructure, operations and framework will change, a number of core assumptions are made. Some naively.

Risk of Doing Nothing

It should go without saying, but doing nothing is not an option either. The business is demanding change. IT needs to change and evolve. IT competition exists and the business knows it. However, there is a strong value proposition that the internal IT organization can deliver. The question is can they do it and will they?

Bottom Line: Get a plan in place and start executing. Partner with the business to help define and guide the process.