- Enterprise IT As-A-Service™
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- Business Transformation
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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.
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.
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?