Tag: enterprise

Digital Transformation: The Rise of New CEO, the Chief Everything Officer | Sherpas in Blue Shirts

There’s a mind-numbing alphabet soup of C-level titles in today’s enterprises. Beyond the standards, there’s also Chief Digital Officer, Chief Robotics Officer, Chief Automation Officer, Chief Cognitive Officer, Chief Customer Officer, Chief Experience Officer, and so on.

The Chief Executive Officer (CEO), of course, is the one on whom the organization most depends, as “the buck stops there.” Historically, the CEO typically engaged with the Chief Finance Officer, Chief Strategy Officer, and Chief Operating Officer. The CEO set the long term strategy, and the organization executed it. And the CEO was considered great if he or she could be the face of the organization to drive broader strategy, business development, and market leadership.

Digital transformation and disruption is evolving the role of CEO

But digital disruption is driving massive transformation in the shape and flavor of the CEO’s role. While expected outcomes continue to be largely the same, today’s CEO must be technologically savvy, and must possess a techno-centric business view, not only to be the champion of digital transformation but also to take along the other C-level executives.

As digital transformation shrinks “front-to-back” processes, the CEO needs to understand the newer, shorter value chain, and how it makes the enterprise more competitive and relevant. Understanding this new world will also assist the CEO to be the best judge of digital transformation in the organization, rather than completely relying on business consultants.

Unfortunately, a lot of businesses are doing the opposite of what is needed. They are creating layers between the business and CEO by creating titles that serve as the “channel” to the CEO or the ear of the CEO. While this worked before digital disruption started creating havoc, innovation can now come from any part of the organization, and the CEO needs to be connected to that part.

Indeed, the CEO should ideally be the driver of digital transformation. Therefore, if the CEO does not understand Twitter, he/she can’t proactively suggest that as a channel to the HR team. If the CEO does not understand mobility, he/she can never outthink disruption or reimagine the business model. Of course, the CEO would have business leaders driving such change, (e.g., the HR head or CTO), but without the CEO’s proactive involvement and understanding of these fundamentally disruptive models, the enterprise won’t be able to derive business value.

The new kind of CEO needed in the age of digital transformation

What enterprises really need is a new CEO – a Chief Everything Officer. This is a C-level executive who understands everything in the digital landscape…the market, competition, customer, and, of course, technology. This CEO directly understands how digital disruption can impact different parts of the organization in order to create a vision for the enterprise that cannot be obtained from reliance on other C-level executives. Sure, the CEO would have a lot more bandwidth if other C-level executives were driving digital adoption. But that bandwidth would be valueless as the organization would be set up to fail. The reality is that digital transformation is not a project, but rather a business in and of itself. And the CEO must drive it in order to create meaningful value.

Is your company’s CEO the “Everything” he or she needs to be to enable the enterprise to compete and thrive in the midst of digital disruption?

Nearly Half of All Sourcing Investments Leave Enterprises Unsatisfied | Press Release

But in performance rankings, TCS, Cognizant, HCL, Accenture and L&T Infotech are honored for creating best ‘overall experience’ for clients

Despite large-scale investments by service providers, 48 percent of enterprises surveyed by Everest Group are not satisfied with their service provider’s performance. In particular, service providers are performing poorly as “strategic partners” for enterprises and score an average rating of five on a scale of one to ten.

There are also significant gaps in enterprises’ expectations and service providers’ performance with respect to innovation, creative engagement models and day-to-day project management.

“Most service providers are perceived to be technically competent, but technical expertise and domain expertise are considered ‘table stakes’ by enterprises across industries,” said Chirajeet Sengupta, partner at Everest Group.  “Enterprises now expect their service providers to move beyond day-to-day delivery and focus on larger strategic business issues. Unfortunately, service providers still have a long way to go to meaningfully engage clients and become strategic partners, and that is a significant concern for the industry. This research signals the wake-up call and offers service providers guidance on how to strategize their engagement approach and prioritize investments to meet mounting customer expectations.”

In general, enterprises believe that mid- and small-sized service providers bring considerably more innovation and engagement flexibility than their larger counterparts. In fact, enterprises believe some large service providers have become lethargic and complacent and are indifferent to client requirements.

In contrast to these sentiments, five predominantly large service providers received the honor of creating the best “overall experience” for clients, based on client commentary and weighted aggregate ratings given by interviewed enterprises on key assessment dimensions.

  • Accenture: Accenture is perceived to bring market-leading domain expertise to solve complex problems and drive business outcomes.
  • Cognizant: Clients appreciate Cognizant’s approach to becoming their strategic partner as well as its flexibility in commercial constructs.
  • HCL: HCL is perceived to be extremely flexible in commercial models and strong in retaining key talent in its client accounts.
  • L&T Infotech: L&T Infotech is perceived to provide strong commercial flexibility as well as domain competence in the specific industries it operates in.
  • Tata Consultancy Services: Enterprises appreciate TCS’s technical capabilities and initiatives to drive strategic partnership with clients.

These results and other findings are explored in a recently published Everest Group report: “Customer (Dis)Satisfaction: Why Are Enterprises Unhappy with Their Service Providers?” The research summarizes over 130 interviews conducted with enterprises across the globe regarding the capabilities of their service providers with respect to applications, digital, cloud and infrastructure services. The report also details the technology investment priorities of enterprises and opportunity areas for service providers.

***Download Complimentary High-Resolution Graphics***

Key takeaways from the research findings are summarized in a set of high-resolution graphics available for complimentary download here. The graphics may be included in news coverage, with attribution to Everest Group.

The graphics include:

  • (I Can’t Get No) Satisfaction: Nearly half of all enterprises are dissatisfied with their IT service providers
  • Enterprises’ technology investment priorities largely focused on innovation
  • IT service delivery: performance versus value
  • Size matters in selecting an IT services provider
  • The top 5 IT services providers

Lacking a Clear Path to Digital Nirvana? You’re Not Alone | Sherpas in Blue Shirts

While enterprises that correctly embrace digital stand to gain great rewards – not the least of which is survival – Everest Group research shows that the road to success is not a straight shot.

As an organization begins its digital journey, its initial investments are focused on streamlining the existing IT landscape to prepare for future digital initiatives. During this phase, enterprise IT generally focuses attention on traditional internal-to-IT success measures (cost, control, and compliance), and there is little need for redesign, nor much involvement from the broader organization. As a result, perceived barriers to adoption are few, and enterprises feel confident about the outcome of their technology investments – the journey looks clear and easy.

But just as the enterprise thinks it is on a clear path to digital nirvana, it hits a speedbump that threatens to wreck its transmission and send it spinning off the road. Once the initial streamlining work is done, the next phase requires the IT and business functions to work together to achieve digital goals, which requires significant change.

Suddenly, what seemed easy becomes much more complicated, requiring the enterprise face challenges such as:

  • Effectively measuring and demonstrating the beneficial outcomes of digital investments
  • Overcoming the inertia of redesigning long-standing business processes and changing end-user behavior
  • Addressing legacy technology challenges, a significant talent crunch, and behavioral change management

And lest you think you can find an alternative path to avoid this barrier, beware: our research indicates that nearly half – 43 percent – of North American enterprises are caught in this murky area we call the “Digital Trough.”

 

What should you do when you’ve hit the Digital Trough?

Just as failure to address problems with your car’s undercarriage can lead to erosion of your transmission, failure to address problems in the Digital Trough can lead to erosion of executive support for your digital transformation.

Here are a few strategies you can use to continue your digital adoption journey and reap the longer-term rewards of digital transformation:

  • Design a set of metrics that measure digital investments on a clear set of efficiency or growth objectives
  • Shift from a technology bolt-on view to a business process-centric view, with rigorous processes for evaluating new technologies against business efficiency or growth metrics
  • Leverage digital technologies for larger end-to-end processes to capture scope and scale benefits across the organization

The last point addresses the necessity for a pervasive approach to digital adoption (see our So You Think You’re Digital blog) as the benefits of a converged, end-to-end digital strategy significantly outweigh those of an isolated, piecemeal approach.

Once past the Digital Trough, our research suggests that the path to digital success is smoother…and well worth the trip.

To learn more about digital adoption patterns in North America, check out our just released research report, North American Digital Adoption Survey – How pervasive is your digital strategy.

Our readers are also very interested in hearing about your experiences with digital adoption. Are you suffering the impacts of the Digital Trough? Feel free to share your thoughts and comments.


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Will Corporate Venture Funding Lead to the Death of VCs as We Know Them? | Sherpas in Blue Shirts

For some time now, large companies have shied away from corporate venturing, unsure of returns and/or efficiency of capital usage. Enterprises have seen their venture initiatives fail, and many give up hope quickly after initial enthusiasm. Even corporates that have managed to run successful funds have struggled to monetize their leveraged investments as they scale up. Given these challenges, it’s not surprising that enterprises with large, under-utilized cash piles chose to maintain the status quo, rather than invest in an emerging startup economy.

However, we’re starting to see a significant change in the funding landscape. This week, Google announced plans for a new operating structure that effectively makes the eponymous search engine giant a subsidiary of a new holding company, Alphabet. One of the main driving rationales for this decision was to delink Google from other ventures in which the parent organization is involved, and give it more room to experiment with new ideas. After all, Google has diversified into areas including life sciences, drone delivery, space research, and home automation.

Last month, Workday, the enterprise SaaS poster boy, announced Workday Ventures, the company’s first strategic fund focused on identifying, investing, and partnering with early to growth stage companies that place data science and machine learning at the core of their approach to enterprise technology. In June 2015, Intel Capital led a US$40 million Series D investment in Onefinestay, best described as a luxury Airbnb competitor. And other corporate venture funding efforts have figured prominently in the recent hyper-competitive boom in the deals landscape.

Corporate VCs don a new avatar

Corporate venture funding has taken a new lease on life, and aroused widespread interest, notably in The Economist and Harvard Business Review. This is not without reason. AMD, Dell, and Google are technology giants with early venture funds, and firms such as Microsoft and Salesforce made similar moves later. A CB Insights study on corporate venture investment trend found that corporate venture capital activity witnessed a significant uptick in 2014, with deals by corporate venture arms jumping 25 percent YoY and funding rising 76 percent. The most active corporate venture investors in 2014 among technology companies were Cisco, Comcast, Google, Intel, Salesforce, Qualcomm, and Samsung, underscoring the attention being paid to this route.

In terms of exits by corporate venture investors, technology players again emerged on top, led by Google Ventures (OnDeck Capital, Hubspot, and Nest Labs), Intel Capital (Yodlee, [x+1], and Prolexic Technologies), and Samsung Ventures (Fixmo, Cloudant, and Engrade), and Qualcomm (Divide, MoboTap, and Location Labs). The marquee corporate venture deals in 2014 were Cloudera (US$900 million, led by Intel Capital), Tango (US$280 million, led Alibaba), and Uber (US$1.2 billion, led by Google Ventures). The chief areas of investment include Internet of Things, analytics, security, and platform technologies.

Differences between corporate venture funding and conventional VCs
  • While VCs tend to focus on growing portfolio companies and time their exit from a ROI standpoint, corporate venture funds take a strategic view of investments, and look to use their expertise to guide start-ups
  • Acquisition of portfolio companies is not uncommon for corporate venture funds (e.g., Google Ventures – Nest Labs). Funding a startup and acquiring it later, rather than building one organically, makes for a stronger business case. Traditional VCs frequently work with the intention of taking investments public
  • Corporate venture funds are less risk-averse than conventional VCs, given their deep pockets and long-term position. This is also reflected in their higher involvement in seed funding rounds
  • Typical VCs tend to lag corporate venture funds in terms of average deal size or term, also due to corporates’ deep pockets and long-term holdings
  • Corporate venture funded start-ups tend to go public more often than their VC portfolio peers

 

Strategic technology investment or desperate spend?

Given improved macroeconomic confidence, there is a lot of “easy money” floating around the technology continuum. And this is beginning to result in a “perpetual investment bubble.” While this isn’t to say that doomsday is just round the corner, with everything and anything getting funded (does anyone remember Yo?), utility, monetization models, and future relevance seem to be the last things on investors’ agenda. More often than not, there is a fine line between a blunder and a brilliant bet. Everyone and anyone in this easy dollar-fueled utopia tend to be under the messianic illusion that the next multi-billion dollar bet is around the corner and will change the world. Most players tend to add incremental value over existing processes, systems, and interfaces, rather than changing them as we know it, which is the reality of investing.

Given their tremendous business acumen, corporate funds have talent, skill set, pedigree, and, ultimately, deep pockets to exist and thrive in a volatile knowledge economy as they look to identify and nurture a truly revolutionary idea beyond just incremental technology value. That said, there is likely to be significant churn once the rose-tinted glasses come off. Still and all, with the strategic depth and domain guidance large enterprises can provide, their portfolio companies are likely to be better positioned to ride the wave.

Why You Need to Buy Security Differently from Managed Services | Sherpas in Blue Shirts

In many newspapers these days, one doesn’t have to read very far without tripping over the latest sensational article on a security breach. The black hat community conducting security attacks is incredibly well funded and incredibly sophisticated and our traditional firewall security precautions are woefully inadequate. The implications of this for companies are stark and robust. I think we must start with how we approach security.

The list of attacks is long and includes, for instance, Target’s customers, Anthem’s healthcare customer records, and the U.S. federal government apparently being penetrated by the Chinese. Behind all this is the frightening prospect of a highly sophisticated black hat community potentially funded by national governments in China and Russia and increasingly being in alliance with organized crime. The black hats are conducting security threats on a scale that is both mind boggling and deeply worrying – not only right now but even more so over times as the R&D effort of this community drives increasing levels of sophistication.

To date, we have approached security as a hygiene vehicle – one and done. We think about it in terms of firewalls securing our data center or making different layers of IT or technology architecture secure. We invest once to try to imbue our technology with a level of defense, and then we seek to spread that investment over the technologies; and we expect the cost to decrease as the learning curve goes down. The problem with this is that it cannot stand against the R&D effort and the rate of improvement in the black hat community.

Therefore, we must change our expectations and how we buy security. We must have a separate security tower in which the expectation is the cost will rise over time and we will invest ever more money and time into ways to counteract the growing black hat menace. The black hats are not constrained to attacking just one functional element of an organization’s service chain; therefore, businesses need an overarching security solution that secures everything. The consequences of not countering this threat are immense.

When we approach security as a hygiene vehicle, we ask for a component of security and monitoring in each technology function. Whether it’s a data center, applications, network, or other infrastructure, we use firewalls, encryption, or other tools and techniques to harden our environment and make it less vulnerable. That’s all well and good, and this should continue. However, this is woefully inadequate on its own with the increasing sophistication and threat from the black hat community. We cannot expect to be defended or even maintain our corporate responsibility if we assume that a hygiene approach is adequate.

It’s clear that we must also procure a different kind of security that is overarching and that matches the rapidly changing security landscape vulnerabilities uncovered and exploited by extremely well-funded and incredibly gifted black hats. We must realize that a hygiene approach to security will prove to be dramatically ineffective against the black hats’ innovation. And we must expect that the cost of an overarching security function will increase because of the need to constantly invest in our capabilities to innovate – and innovate faster – to counteract their threats.

We see the changing expectations starting to happen with the chief security officer in a role outside of technology and reporting directly to the CFO, CEO or board. But we have not seen the kind of budget and capability being invested into that function that are necessary to counteract the growing threat.

Furthermore, we have yet to see service providers providing a managed service to this new entity. The managed services they offer are based on the normal managed services principle of providing a constant service that will get cheaper over time as the learning curve and technologies mature. That’s the underlying theme of all managed services. That principle gets stood on its head in the context of security when the adversaries’ sophistication keeps rising exponentially. The cost of sophistication to counteract the adversaries must rise equally – which doesn’t work in the managed services principle.

Furthermore, no one firm can have the sophistication to take on the Russians, Chinese, organized crime mob, and the black hat ecosystem. That’s not a reasonable expectation for even the largest organizations. Therefore, organizations must turn to service providers that can aggregate customers in order to match the investment of the black hat community. The services industry must get together to defeat this massive threat to businesses, but managed service offerings are not the answer. We must innovate at the same rate at the black hats; thus a provider’s expectation of cost dropping over time is false because the learning curve will not go down.

Bottom line: The cyber attacks situation will get worse. All businesses – including service providers and their customers – must expect that their investments in security will increase to match the ever-escalating threats.


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SaaS versus Enterprise IT as-a-Service | Sherpas in Blue Shirts

New business models are capturing growth and stand to reshape the services industry. Two of the most promising of these are SaaS and “Enterprise IT as-a-Service.” Buyers need to understand that each model takes a different approach to delivering services; their risks also are not the same, and each approach has different consequences.

They are the same in one aspect: both models attempt to change the relationship of IT to the business by better aligning the IT environment to the customer or business needs and making the IT infrastructure more agile and responsive to changes in the business environment. So the prize is better alignment to business value, more responsiveness, shorter time to get new functionality, and more efficient use of IT dollars.

But how they deliver that prize is very different.

SaaS approach

The SaaS promise is strong on efficiency gains. SaaS is inherently a multitenant-leveraged approach in which common platforms are built, standard functionality is developed and is allowed to be configured to a customer’s needs. The platforms come with flexible, powerful APIs that allow the SaaS offerings to be integrated into enterprise systems. But at its heart, SaaS is a one-size-fits-all, unyielding standard. Efficiency gains in a SaaS approach come from having many customers use the same software and hardware, limiting customization through configuration and APIs.

SaaS apps are typically function-based, so they evolve quickly. When the SaaS owner brings innovations, it does so in one stable environment, not having to update or take into account very diverse environments that traditional software packages must accommodate. Therefore, SaaS delivers rapid changes in functionality that benefit the entire ecosystem. In contrast, the traditional software model evolves much more slowly and imposes constant requirements for upgrades that are both expensive and have knock-on consequences for the systems that integrate with them.

Enterprise IT as-a-Service approach

The Enterprise IT as-a-Service model takes a supply-chain approach, moving each component of the supply chain into an as-a-service model. This allows the whole supply chain to be better aligned. It loosely couples each part of the supply chain, allowing each component to evolve and allowing the supply chain to capture the benefits as each component evolves at its own pace.

Similarity in benefits

Both models deliver similar flexibility and agility benefits, but they achieve them in different ways. The Enterprise IT as-a-Service model allows far more customization than the SaaS model. It assembles components into a customized end-to-end offering, whereas a SaaS vehicle achieves those aims through API configuration.

Both models also achieve similar benefits in cost savings. Both approaches can achieve significant efficiencies. SaaS achieves this through high leverage over an unyielding standard. The Enterprise IT as-a-service approach achieves efficiencies partly through reducing the over-capacity that all functional-driven IT departments maintain inside their ecosystem.

Substantial differences in cost, risk, and technical requirements

The two models differ substantially in cost, risk, and technical depth. The risk and technical depth to adopt a SaaS vehicle can be very substantial, particularly if it’s a system of records. Existing systems of records come with substantial technical depth in terms of the integration of the system, unamortized assets and also ongoing software licenses. In moving from that environment over to SaaS, organizations often face substantial write-downs and a risky implementation.

The risk is different in the Enterprise IT as-a-service model in that it can be managed component by component. Organizations can achieve substantial flexibility by not having to move off existing systems of records or existing software. Those platforms can be migrated down this path, therefore lessening the technical debt and presenting a different risk profile.

Which approach is better?

I believe that both approaches are important to the future of IT. At the moment, large enterprises adopt SaaS mostly as point solutions. Enterprise IT as-a-service poses the opportunity to operate at the enterprise level, not at a point-solution level.

I don’t believe the two approaches are mutually exclusive and expect that organizations will embrace both capabilities over time.

Hadoop and OpenStack – Is the Sheen Really Wearing off? | Sherpas in Blue Shirts

Despite Hadoop’s and OpenStack’s adoption, our recent discussions with enterprises and technology providers revealed two prominent trends:

  1. Big Data will need more than a Hadoop: Along with NoSQL technologies, Hadoop has really taken the Big Data bull by the horns. Indications of a healthy ecosystem are apparent when you see that leading vendors such as MapR is witnessing a 100% booking growth, Cloudera is expecting to double itself, and Hortonworks is almost doubling itself. However, the large vendors that really drive the enterprise market/mindset and sell multiple BI products – such as IBM, Microsoft, and Teradata – acknowledge that Hadoop’s quantifiable impact is as of yet limited. Hadoop’s adoption continues on a project basis, rather than as a commitment toward improved business analytics. Broader enterprise class adoption remains muted, despite meaningful investments and technology vendors’ focus.

  2. OpenStack is difficult, and enterprises still don’t get it: OpenStack’s vision of making every datacenter a cloud is facing some hurdles. Most enterprises find it hard to develop OpenStack-based cloud themselves. While this helps cloud providers pitch their OpenStack offerings, adoption is far from enterprise class. The OpenStack foundation’s survey indicates that approximately 15 percent of organizations utilizing OpenStack are outside the typical ICT industry or academia. Moreover, even cloud service providers, unless really dedicated to the OpenStack cause, are reluctant to meaningfully invest in it. Although most have an OpenStack offering or are planning to launch one, their willingness to push it to clients is subdued.

Why is this happening?

It’s easy to blame these challenges on open source and contributors’ lack of coherent strategy or vision. However, that just simplifies the problem. Both Hadoop and OpenStack suffer from lack of needed skills and applicability. For example, a few enterprises and vendors believe that Hadoop needs to become more “consumerized” to enable people with limited knowledge of coding, querying, or data manipulation to work with it. The current esoteric adoption is driving these users away. The fundamental promise of new-age technologies making consumption easier is being defeated. Despite Hortonworks’ noble (and questioned) attempt to create an “OpenStack type” alliance in Open Data Platform, things have not moved smoothly. While Apache Spark promises to improve Hadoop consumerization with fast processing and simple programming, only time will tell.

OpenStack continues to struggle with a “too tough to deploy” perception within enterprises. Beyond this, there are commercial reasons for the challenges OpenStack is witnessing. Though there are OpenStack-only cloud providers (e.g., Blue Box and Mirantis), most other cloud service providers we have spoken with are half-heartedly willing to develop and sell OpenStack-based cloud services. Cloud providers that have offerings across technologies (such as BMC, CloudStack, OpenStack, and VMware) believe they have to create sales incentives and possibly hire different engineering talent to create cloud services for OpenStack. Many of them believe this is not worth the risk, as they can acquire an “OpenStack-only” cloud provider if real demand arises (as I write the news has arrived that IBM is acquiring Blue Box and Cisco is acquiring Piston Cloud).

Now what?

The success of both Hadoop and OpenStack will depend on simplification in development, implementation, and usage. Hadoop’s challenges lie both in the way enterprises adopt it and in the technology itself. Targeting a complex problem is a de facto approach for most enterprises, without realizing that it takes time to get the data clearances from business. This impacts business’ perception about the value Hadoop can bring in. Hadoop’s success will depend not on point solutions developed to store and crunch data, but on the entire value chain of data creation and consumption. The entire process needs to be simplified for more enterprises to adopt it. Hadoop and the key vendors need to move beyond Web 2.0 obsession to focus on other enterprises. With the increasing focus on real-time technologies, Hadoop should get a further leg up. However, it needs to provide more integration with existing enterprise investments, rather than becoming a silo. While in its infancy, the concept of “Enterprise Data Hub” is something to note, wherein the entire value chain of Big Data-related technologies integrate together to deliver the needed service.

As for OpenStack, enterprises do not like that they currently require too much external support to adopt it in their internal clouds. If the drop in investments is any indication, this will not take OpenStack very far. Cloud providers want the enterprises to consume OpenStack-based cloud services. However, enterprises really want to understand the technology to which they are making a long-term commitment, and are cautious of anything that requires significant reskill or has the potential to become a bottleneck in their standardization initiatives. OpenStack must address these challenges. Though most enterprise technologies are tough to consume, the market is definitely moving toward easier deployments and upgrades. Therefore, to really make OpenStack an enterprise-grade offering, its deployment, professional support, knowledge management, and requisite skills must be simplified.

What do you think about Hadoop and OpenStack? Feel free to reach out to me on [email protected].


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How Service Providers Can Illuminate Clients’ Path to Transformation | Sherpas in Blue Shirts

One of the biggest issues facing executives today is that they see the need to change their organization through automation, analytics, or other big ideas that are clearly vetted, but they struggle to drive the change. Their organization is reluctant or frightened to change, much like horses in a steeplechase race that shy at jumping the fences. Consequently, service providers are frustrated. They see potential for their business, but they’re unable to move from project to program. How can a provider help clients to jump the obstacles instead of shying away from them?

How can a provider illuminate the path forward to transformation and get the client on board for change? Let’s start by talking about what doesn’t work – white papers. No executive these days reads white papers. It just doesn’t happen. As I’ve blogged before, they’re too dense, too theoretical and too preachy.  And they’re nakedly self-interested.

So what are the tools that enable clients to jump the fence? At Everest Group we’ve been thinking about and researching this. Executives need simple yet rigorous, relentlessly objective instruments that they can use to challenge their organization. And once they examine an instrument, a clear path forward opens up behind it.

What would such an instrument look like? It might be a maturity index showing competitors’ degree of progress in the field. Everest Group’s PEAK Matrix™ is another example of a first step in instrumentation; it illuminates providers’ capabilities in the marketplace.

Every organization is unique, and they struggle with how to apply transformation or disruptive technologies to their uniqueness. A set of objective instruments allows executives to have a conversation in their organization and challenge their organization. The organization can then ask for help and imagine a roadmap – without a provider telling them what the roadmap should be.

Simple but rigorous instruments will illuminate the way to transformation and assist in the organization internalizing the path forward through the challenges.


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Groundbreaking Rio Tinto and Accenture As-a-Service IT Deal | Sherpas in Blue Shirts

Rio Tinto, a global diversified mining company, recently announced a groundbreaking initiative they are undertaking with Accenture. This can best be described as moving Rio Tinto’s enterprise IT function into an as-a-service model. Game-changing benefits permeate this deal, and it’s an eye-opener for enterprises in all industries.

Let’s look at what Rio Tinto gains by pulling the as-a-service lever to achieve greater value in its IT services.

First, it changes the relationship between the business and IT. It breaks down the functional silos of a traditional centralized IT organization and aligns each service. In doing so, it creates an end-to-end relationship in each service, whether it be SAP, collaboration or any other functional services.

Second, this initiative moves Rio Tinto’s entire IT supply chain to a consumption-based model. This is incredibly important for a cyclical commodity industry, where revenues are subject to the world commodity markets. Rio Tinto’s core product, iron ore, is a commodity that can result in revenues slashed in half in the course of a year, leading to the need for cost reduction initiatives. Correspondingly, in boom times, commodities can double and triple in price, resulting in frenetic energy to expand production. The as-a-service model ends this commodity whiplash impact. It gives Rio Tinto a powerful ability to match costs to their variable consumption patterns.

This move will change the pace of innovation within Rio Tinto, allowing it to future proof its investments in IT. As many enterprises discover, multi-year IT projects often end up being out of date by the time they are implemented. Rio Tinto sought to shorten the IT cycle time so it can take full advantage of innovations the market generates. In the as-a-service model, it can pull those innovations through to the business quickly – which is a struggle for traditional siloed centralized IT functions.

These are game-changing benefits. It’s important to recognize that the journey to capture these benefits required a complete rethinking of how Rio Tinto’s IT (applications and infrastructure) is conceived, planned, delivered, and maintained. Moving from a siloed take-or-pay model to an integrated consumption-based model required wide-ranging re-envisioning and reshaping the ecosystem for deploying its technology; it touched IT talent, philosophies, processes, policies, vendors, and partners.

Clearly this journey will be well worth the effort given the substantial game-changing benefits. Challenging times call for breakthrough answers. The cost benefits alone are significant; but even more important is the ability of this approach to accelerate the transformation of the company into a more digital business. Rio Tinto chose to partner with Accenture to move its organization to this fundamentally different action plan for delivering and consuming IT and meeting the rapidly evolving needs of the business.


Photo credit: Rio Tinto

Old Wine in Old Wineskins | Sherpas in Blue Shirts

A famous teaching of Jesus explains that it’s a mistake to pour new wine into old wineskins because it will burst the skins and both the wine and the wineskins will be ruined. New wine belongs in new wineskins. I think we’re seeing this principle playing out in technology – where the consequences are profound.

New wine expands and grows fast; so it requires a supple, pliant container to allow for that expansion. Old wine is stable and mature; it does better in a stable, consistent environment.

For the most part, now that the cloud experiment is over, we see that new technologies and functionalities have many of the properties of new wine. They are effervescent, change continually, move quickly and often rely on heavy iteration. They constantly expand and change. They are best suited for new architectures such as cloud infrastructure and SaaS services. New technologies also have new requirements; thus, they require new structures, new and more flexible governance vehicles to allow them to capture their full value.

Legacy applications, the systems of records in which enterprises have invested hundreds of millions of dollars, are mature and were designed for their traditional environments, which tightly govern change. They are in data centers that have the requisite management support and requisite talent pools.

The services industry is starting to recognize the profound truth of the new and old wineskins: At this point in time, legacy applications are best left in their old, original containers where they can continue to operate in a mature fashion. Old applications or systems of record need to remain in their existing frameworks or architectures. They should be changed only slowly. Furthermore, new functionalities and technologies need to go into new wineskins, or architectures, that allow for and encourage agility and other attributes that support evolving change.


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