Today’s conversations and research around technology disruption and the causes invariably focus on cloud services, and rightly so. Be it infrastructure, software, or any other facet of technology consumption or development, cloud services have had, and will continue to have, the most disruptive impact. The disruption discussion also includes the impact of mobility, next-generation analytics, and the growing importance of software to control the enterprise.
This is leaving enterprise technology providers in a state of amazement and numbness. They are investing all their energy in responding to these disruptive trends. However, there are equally important dimensions they need to understand. Some of these include:
Where is the talent? How many conventional enterprise technology providers are the first choice of employees these days? They themselves believe, very few. The mindboggling (and questionable) valuation of companies such as Pinterest, Uber, and WhatsApp, and the flood of consumer technology start-ups/niche firms (reminders of 2000?), are pushing the technology talent toward these smaller companies. Job seekers now believe that all the action and fun are in consumer technology. Even within the enterprise technology segment, new candidates and existing talent are focusing on new and innovative firms (e.g., Alteryx, Coupa, Dropbox, Palantir, Tableau, Workday) or their own start-up more than on traditional vendors. Given that technology is as good as the people who innovate it, this is a serious threat for most enterprise technology providers.
Where is the plan? Enterprise technology providers take pride in their exhaustive business case modelling and time to market planning. These cases normally create a multiyear plan and staggered investments across the timeline. However, given that technology disruption is reducing the cycle of innovation and time to market, these time and tested strategies are increasingly becoming irrelevant. Do these technology providers have sufficient internal strength, processes, and willingness to jettison the age-old model of investment planning and be in sync with the shortening technology cycle?
Why so many competitors? The huge entry barriers incumbent technology providers created for newer players are crumbling in the face of technology disruption. Enterprise buyers, driven by internal and external factors, have become more receptive of nimbler and more innovative technology companies than in the past. Moreover, new-age technology providers now better understand the requirements of an “enterprise grade product.” More so, the enterprises’ requirements are themselves undergoing significant changes that suit these new-age technology firms, such as agility over control, and first to market rather than best to the market.
- Who is the competition? IBM is fighting retailer Amazon for dominance in cloud services, Oracle is fighting smaller MongoDB and Postgres for the database market, Teradata is fighting Cloudera for next generation analytics, and so on. While the technology world has been replete with similar David versus Goliath stories seemingly since time immemorial, their occurrence and impact have become more severe in the past couple of years.
The enterprise technology providers are responding by leveraging their tried and true methods of acquisition, (e.g., IBM/SoftLayer, VMware/AirWatch, Tibco/Jaspersoft,) and partnering with nimbler firms (e.g., SAP, Microsoft, and IBM partnering with Hortonworks and Cloudera for Hadoop, HP partnering with OpenStack for cloud services, and Oracle partnering with NetSuite for SaaS.)
The big challenge these enterprise technology providers now have is to strategize based on the type of competition. In earlier times, they knew their competitors and how they would react, and they were comfortable in their planning meetings. However, now the environment has changed. No one knows who and where the next competition is coming from (airline industry versus video conferencing, anyone?)
While there are likely numerous other dimensions shaping the technology market today, they are tough to foresee. This makes enterprises’ and technology providers’ task of planning for their technology roadmap almost impossible.
What is the best way to move ahead? Should enterprises and providers stop their technology planning cycles and become real time planners? Should they wait it out for the disruption smoke to clear? Should they continue with their existing strategies?
If you are an enterprise technology provider or a customer trying to make sense of this juggernaut, please do share your perspectives with me at firstname.lastname@example.org.
I wish I had a dollar – or a couple of aspirin – for every time I heard someone claim “20 percent productivity improvement” when all they had really done was move the work to a less expensive location. When they make these claims, they’re confusing cost takeout and productivity.
Cost takeout certainly has its uses, including:
- Moving work to a talent model with a flatter pyramid
- Getting fewer people to work faster/harder
But cost takeout is not productivity, which is precisely what enterprises need to start thinking about, as most of them have already done all of the above, and then some.
As discussed in our recently released research report, “In Search of ADM Productivity,” productivity can be about (among myriad other things):
- Optimizing shared services organizational structures
- Standardizing and automating business processes, toolsets, and technologies
- Automating infrastructure and application deployment processes
In essence, productivity is an output-input ratio. Productivity improvement has been described as “doing more with less.” I believe a better definition would be “improved output-input ratio, by virtue of being done differently.”
Think about this distinction. Technology and sourcing leaders often talk about “the need to improve productivity.” And they then promptly start flogging the dead cost takeout horse, with roughly the same return as I get (exactly nothing) from listening to the “20 percent productivity gain from outsourcing” line.
The difference between the two is worth bearing in mind because identifying and focusing on the right productivity initiatives can bear startling benefits. Our research suggests as much as 20-50 percent incremental cost savings. More importantly, the emphasis on productivity can lead to increased agility and a focus on greater functionality as opposed to “managing the mess.”
The first step is to pick the right weapon, for the right battle. Or you could always stock up on more aspirin.
Comedian George Carlin commented that men are stupid and women are crazy — and that the reason that women are crazy is that men are stupid. My observation is that it’s a strikingly similar dynamic to what’s occurring in large enterprises’ spend decisions in the global services market today.
Business stakeholders are “stupid.” They’re off doing their own thing, making snap decisions, stringing together solutions with half-tested as-a-service offerings and believing those solutions will scale up to meet enterprise production needs.
CIOs are “crazy.” They’re tearing their hair out, so to speak, in frustration over the business stakeholders’ actions. They try to engage business stakeholders in conversations, but the biz folks don’t have time for that. Furthermore, the CIOs’ funding has been taken away and given to the business stakeholders.
There is no time to plan, so CIOs must show a complete offering rather than going through a meticulous planning process. And CIOs are told they are accountable for security and compliance, yet they are not given the ability to shape the new solutions going in place. The situation is turning them into crazy people.
Why they talk past each other
CIOs and business stakeholders march to different drums, thus frustrating each other to the point of being stupid or crazy.
But in a way it makes perfect sense since both operate in their own world. And neither perspective is irrelevant. It’s just that the perspectives and operational goals differ in those two worlds, so they misunderstand each other. The business units misunderstand the CIO, and the CIO misunderstands the business units. In the words of Winston Churchill, they are two nations divided by a single language. They both talk technology, but they talk past each other because they come from completely different places.
Carlin’s opinion is that as long as men are stupid, women will be crazy. My opinion: As long as business stakeholders focus on business needs that get met in immediate gratification through SaaS and proofs of concept, the CIOs will be crazy. Look out for some very complicated discussions when it comes to funding and scaling the SaaS and proofs of concept across the enterprise.
One of the better indicators that corporate IT groups are starting to get serious about cloud is their growing interest in solutions that help them aggregate and manage multiple cloud services. Some call these solutions cloud services brokerage and management, and others term them cloud orchestration. While the market hasn’t yet converged on a common set of capabilities or definition, the broad category typically includes the following:
- Service catalogs – “App Store”- like models that provide users access to internal IaaS and PaaS services and in some cases third-party SaaS apps and infrastructure services as well
- Service provisioning – capabilities that support end-user requests, provisioning, and deployment of cloud services
- Service integration – data integration services across multiple cloud services, including “cloud-to-cloud” and “cloud-to-ground” models
- Chargeback and billing – consumption-based metering and billing of cloud services to internal users, including private services and aggregation of public cloud services spend
- Service management – monitoring and management across multiple cloud services, including performance, capacity planning, workload management, and identity management
- Sourcing – contracting and sourcing of cloud services across multiple platforms and providers
These solutions are being offered by a wide variety of players, including not only traditional enterprise systems management vendors – which in some cases are just repackaging SOA offerings – but also global systems integrators (SIs) and focused startups.
What’s important about this phenomenon?
First, corporate IT’s interest in these capabilities is, in a way, an implicit acknowledgement that:
- Cloud services will be adopted in scale across enterprises
- Multiple large scale services will need to be orchestrated and managed
- Orchestrating these services will be hard and will require external third party solutions
This is a far different conversation than corporate IT was having a year ago at this time, which was primarily around what pilot or proof of concept to launch.
Second, interest in cloud orchestration is being “pulled” by corporate IT, rather than “pushed” by the business. A premise we recently heard is that business’ role in driving adoption of cloud is no different than it was in the packaged software era. Packaged software required servers, storage, and networks, all of which required IT management and support. This provided IT with long-term job security and the opportunity to “empire build.” As a result, corporate IT aggressively supported packaged software rollouts and implementations.
The difference in the cloud era is corporate IT’s attitude. To date, it largely perceived the cloud as a threat. But now, IT is discovering it can potentially regain a measure of relevance and control by adopting a service provider mindset, and service catalogs / chargeback models combined with private and public cloud services.
Is corporate IT finally finding a path to building its empire in the cloud? Are you or your IT group considering, or embarking upon, a cloud orchestration initiative? What thoughts and experiences do you have to share with your peers?