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Transformation is a journey that, done correctly, requires a significant amount of change in an organization to achieve success.
IT transformation is the overhaul of an organization’s IT operations, where the goal is more than just cost savings. Instead, IT transformation is about increased capacity to use technology to drive new competitive advantages. IT transformation is about unlocking value through improved business agility, faster speed to market and using big data to inform smarter decisions that can lead to improved margins, sales growth and happier customers.
Transformation is always disruptive on some level. It requires changes in people, skill sets, training, headcount, career management and more.
“Big T” transformation demands that an organization attack both technology and process changes simultaneously, two variables that can add enough complexity and risk to sabotage the effort before it gets beyond the planning stage.
“Big T” transformation demands that an organization’s senior leadership be ready to make it a strategic priority, assign champions and hold people accountable for specific metrics along agreed-upon timeframes. Time must be invested to create a clear vision for what success looks like at the end of the transformation process. That includes a clear articulation of the business value desired, one that your bankers and shareholders would easily understand.
In Assessing the Cloud’s Clout to Disrupt the Outsourcing World, Peter Bendor-Samuel suggests that cloud-based IT services will be highly disruptive to the IT infrastructure space. I agree – and assert that the impact will occur faster and be more game-changing than we might imagine at this time when its $10-20 billion of projected annual revenue seems quite modest compared to estimates of “traditional” IT services of $200+ billion.
To support my point, I would encourage you to consider an analogous industry-changer – the “invention” of the low-cost airline by Freddy Laker in the late 1970s. Laker Airlines pioneered low-cost airfares, offering pricing at one-third to one-half of the cost of traditional carriers flying across the Atlantic. With only a handful or two of long-range aircraft, Laker broke the industry’s rules, securing permission to compete head-to-head with the likes of British Caledonian, TWA, and Pan Am, among others. Applying innovative operating practices, implementing sacrilegious pricing models, adopting unique sales, and marketing techniques, Laker opened new markets and changed customer buying habits forever. While the early 1980s recession across the U.S. and Europe forced Laker into bankruptcy, the airline industry was changed forever.
The parallels in today’s IT services market to Laker’s world are quite striking:
Some will challenge whether the Laker analogy is a fair comparison, but can today’s large IT services firms afford to risk not taking heed of lessons from Freddy Laker?
Under new CEO Mike Lawrie, CSC’s well-publicized turnaround is showing increased momentum. He put CSC on a new path, and that strategic shift shows modest improvement in margins. But they still have a big wrinkle to iron out — despite increased profits, CSC’s revenue has been flat to down. The question is: Will the market continue to support an increasing stock price without seeing increased revenue?
Lawrie took some big — and critical — steps to reshape CSC’s market position. He brought in new leaders, divested non-core portions of the business and invested those funds in a set of cloud offerings for CSC’s core infrastructure business.
He also revitalized the dispirited and somewhat lost CSC sales engine. Since Lawrie stepped on board, CSC consistently goes to market with an interesting and powerful story focused on next generation IT. And unlike some of its provider brethren, CSC is quite willing to sponsor disruptive cloud and other disruptive next generation technologies — even if they cannibalize CSC’s own client portfolio while attacking competitor offerings. We increasingly observe customer organizations reacting favorably.
The hard truth
Nevertheless, I think it will be difficult for CSC to increase revenue — ironically partly due to the fact that it clearly demonstrates willingness to cannibalize its portfolio of work. I think we’ll inevitably find that CSC is replacing existing captured work at 50 cents on the dollar.
To increase revenue, CSC must capture new logos and new opportunities very aggressively, and I think that will be a significant challenge. But I give them full credit for facing reality and taking a cannibalistic approach.
While talking about a new year’s next cool thing or development is a thoroughly enjoyable ritual, discussing what will not change provides valuable lessons for technology adoption strategy and investment planning, and highlights potential future disruptions.
So what are the five things that will remain more or less the same in 2014 for big data analytics?
Hadoop will NOT REPLACE ETL: The nine-year old platform has achieved great traction, and its mindshare has significantly increased. Well-known analytics providers such as Cloudera, Hortonworks, and MapR have supported it for a couple of years, and even the big boys such as IBM and Pivotal have embraced it. However, Hadoop’s proponents are positioning it as a panacea for all the ills of big data. The antagonists are equally up to the task, denouncing it as one of the important, yet small, pieces of the puzzle. Most Hadoop proponents confuse ETL as an “activity,” rather than a “process.” The way in which ETL is performed in a Hadoop framework set-up may differ, but it does not make ETL redundant or replaceable.
Analytics will still be UNDEMOCRATIC: Innovative data analysis and visualization technology players such as Tableau, QlikView, Alteryx, and Tibco (Spotfire) have gained traction as “end user” friendly products. And mega providers such as SAP have increased their efforts in this direction (e.g., rebranding SAP Visual Intelligence as SAP Lumira). However, despite significant efforts to “consumerize” big data analysis and move the power out of the ivory towers of data scientists, 2014 will witness only incremental changes in this regard.
Big Data will still be a PROJECT: Organizations always pilot a new technology before they put it into mainstream production. However, this attitude defeats the purpose of big data analytics. To gain real advantage from the deluge of data, companies must engrain a big data mindset into their DNA, rather than treating it as a silo “project.” Will 2014 see organizations jettisoning their age-old habits to wholeheartedly adopt big data analytics? Not according to my market conversations.
Real talent will be TOUGH to find: Every technology transformation comes with “talent imposters,” and organizations desperate for talent will hire some of these and then repent later. Unfortunately, most of the existing data warehousing and business intelligence analysts masquerade themselves as “big data talent.” And the mushrooming of big data certifications and aggressive resume fabrication will not make organizations’ hiring task any easier in 2014.
With cloud-based data management, modeling, and analytics disrupting the landscape, coupled with the rise of in-memory computing, the big data market will continue to surprise: we’ll see technology providers entering “unknown” domains, competing with their partners, and even cannibalizing existing offerings.
What are your takes on big data analytics in 2014 and beyond?
The lack of innovation from service providers is a constant and mournful refrain echoing around the industry. This plaintive and mournful dirge reminds me of Sisyphus, who was cursed to endlessly roll a boulder up a hill, only to watch it tumble back down, never achieving satisfaction. Likewise, the unending efforts of service providers to provide innovation to their customers seem similarly futile, resulting in the same frustrating lack of satisfaction for either provider or customer.
Why are these efforts doomed?
Service providers and their customers have different goals. Providers invest in initiatives that drive growth or improve profitability for the provider. Customers want lower cost, increased productivity and more functionality. These goals seldom align and the parties often work at cross purposes.
What do we do about it?
The answer is that the customer must take the responsibility for defining the innovation agenda. The customer must outline what will be impactful and make a difference in its business and then share that agenda with the service provider. Whatever the issue is — reducing receivables, stock-outs in retail, more productivity, faster time to market — the customer must illuminate and define the target for the provider.
What if the provider is reluctant to pursue the innovation agenda?
Our experience is that providers often are willing to fund innovation and work across the customer’s agenda when it’s clear that it will make a difference to the customer. In these situations, the exercises in innovation lead to higher customer satisfaction and also lead to an extended contract or changing the relationship in mutually beneficial ways for both parties.
But a provider may be reluctant to pursue some aspects on an innovation agenda. An example is driving increased productivity in the provider’s organization. In a world of (P) Price x (Q) Quantity = Revenue, the provider wants to keep Q as high as possible, and productivity issues bring quality down.
From the provider’s perspective, there are two categories of innovation:
To avoid continuously pushing your innovation boulder uphill, keep the provider’s perspective in mind. If your innovation agenda focuses on category #1, you can expect a rewarding discussion around the areas where you and the provider are aligned. But you will need to take a much more active role in driving the category #2 initiatives that are not aligned with the provider’s interests.
Photo credit: Kristina Alexanderson