Microsoft has increasingly put focus on value realization over the past few years. Our team has been at the forefront of this journey and we’d like to share what we’ve learned with the broader community of practitioners to help bridge the gap between the state of the art and the state of the practice, as well as move the ball forward.
Our Value Realization Framework (VRF) team is part of Microsoft’s Enterprise Strategy Program The VRF team creates methodology, tools, and prescriptive guidance to help our Field practitioners to plan for and execute business value realization and business value acceleration. (More on this below.)
For clarity, in our context “Value Realization” is value extracted from a business-focused technology initiative. (And a key concept here is that value is in the eye of the stakeholder.)
The purpose of this blog is to give you a behind-the-scene look at how we support our Enterprise (large) customers in achieving Value Realization and to share stories from our Field practitioners around driving business outcomes through business capability transformation underpinned by technology.
You can think of this as opening up the doors and windows to our workshop, where we’ll share the raw, the real, and sometimes the radical, as we continue to learn and improve our Value Realization techniques. It’s an ongoing journey of learning and improvement.
Here are some of the types of things we’ll share on the blog:
First, for a little bit of context -- The mission of Enterprise Strategy is to help customers maximize value of their investments in our technologies. When customers sign up for the program, they get a Microsoft senior architect who helps them plan their strategy and execute programs of change. The architect leverages our methodologies, collective know-now, and unique access to Microsoft’s internal resources making sure that every customer gets the benefit of “100% of Microsoft.”
As you can imagine, there are a lot of Enterprise customers considering how to respond to and leverage Cloud, Mobile, Social, Big Data / Analytics. They are also thinking about how to adapt their business to a digital economy and how to digitize their processes and products accordingly. This is where an architect can help envision the future possibilities for the business and how an Enterprise can innovate and use technology for a competitive advantage.
But ultimately the value is in the change – we don’t stop at value identification or planning for value, we differentiate ourselves by emphasizing Value Realization. Our architects support customers through the entire lifecycle of initiative definition & prioritization, solution implementation, adoption until the anticipated business value is realized.
Our architects take a “business before technology” approach. They are chosen for their industry expertise (banking, healthcare, retail, etc.) and experience of linking business priorities to enabling technological solutions. They understand market drivers and business imperatives, and can rapidly help customers to build consensus around investment objectives, business benefits, required business change, and possible technological solutions to support the change.
Importantly, our architects never focus solely on technology. Even when the initiative moves into the solution implementation phase, we look at it as a holistic program of change with technological, people and process components, since for the business benefit to materialize all these dimensions need to be addressed. Of course the architect utilizes other, more technology-focused resources within Microsoft, but she herself remains the champion of business value realization with focus on business capabilities and business outcomes.
To help customers make the most of their investments in Microsoft products and technologies we need a “method.” That’s where the Microsoft Value Realization Framework comes into play.
In the simplest terms, it’s a value-driven, repeatable approach for our architects to identify, prioritize, and execute programs and projects that will help the customer realize and accelerate more business value. As mentioned earlier, we go beyond technology and consider other aspects of change (e.g. governance, adoption) to help reduce, as Gartner would put it, “value leakage.”
Specifically, the Microsoft Value Realization Framework helps Enterprise customers:
The Microsoft Value Realization Framework helps customer executives address the following questions:
An important aspect of the Microsoft Value Realization Framework is that it’s a multifaceted, multidiscipline view that connects technology to business outcomes and business transformation. The Microsoft Value Realization Framework effectively balances and blends a technological perspective with change management perspective and, most importantly, ever-present focus on business value.
We’ll be covering the Microsoft Value Realization Framework in more detail in future posts.
Value Realization Framework guides end-to-end advisory engagements that we undertake for, or rather, in partnership with our customers. In addition to that we have also uncovered a set of more granular services that could help our customers with specific aspects of their business-focused, but technology-driven initiatives. Having a defined set helps us get specific about the inputs, the outputs, the flow of activities, and helps customers understand what to expect.
Here is a brief summary of each Value Realization service:
Most of what you’ll see in this blog will be coming from our practitioners, so we felt it would be helpful to introduce them. We represent a team of seasoned experts with business acumen and architect backgrounds who can drive our “Business Before Technology” approach
With their industry focus and expertise, our practitioners can provide unique insight on the trends that matter in a highly relevant way. Instead of a generic discussion around Cloud, Mobile, Social, Big Data, they can talk to with great specificity how those are impacting the retail industry or the banking industry or healthcare, etc. They can share stories of what others in the industry are doing, and how technology is helping achieve business outcomes and business capability transformation.
And of course, as part of knowing the business, our practitioners know the KPIs that count, the value drivers that influence them, the pitfalls that lead to “value leakage.” This makes it a lot easier to connect technology back to the business in relevant ways, while accelerating business value and optimizing our customers’ investment in technology from both an economic value and from a strategic perspective.
This is probably enough context.
In subsequent posts we will share more detail on how our approach and services are working in the real-world, what Enterprise customers are finding most useful, what key learnings our architects are sharing. As this blog is meant to be for the benefit of the broad practitioner community, we will welcome your comments, inputs, posts that could advance our mission of helping businesses realize maximum value from their technology investments.
Please add your comments here and send your suggestions/submissions to vrblog@microsoft.com.
We thought it would be helpful to share some perspectives on how we are seeing customers realize and accelerate business value from the four Mega-Trends (Cloud, Mobile, Social, and Big Data/Analytics), so we asked one of our colleagues to share what he’s learned about how companies are getting business value from Cloud in the Enterprise..
Here is Paul Slater sharing his observations and insights on Value Realization with the Cloud …
As an architect in the Microsoft Services Applied Incubation team, I work with enterprises, service providers, public sector organizations and governments. I get to help these organizations define their cloud strategy, and put that strategy into action.
In this post, I’m going to explain some of the core challenges my team sees organizations face in cloud adoption, and how we propose that these are addressed.
Increasingly, cloud computing is a mainstream concept in organizations. At this point, pretty much everyone knows what cloud is, and who the major players are in private and public cloud computing. Yet adoption still has a long way to go, and many organizations still lack a coherent cloud strategy.
In part, we believe that this is driven by an economic reality. Sure, the cloud can transform the way IT is practiced, allowing organizations to focus on activities that add value, rather than low level infrastructure management. But moving to the new world is not free, and can be highly complex.
New organizations will typically jump into the cloud head first, but for most existing companies, cloud use is limited to net new development, applications reaching end of support in their existing environment, and applications where the migration path is well understood and the benefits well documented. The rest of the applications and data remain in underutilized datacenters, gradually approaching obsolescence.
Ironically, while this approach can be driven by economics, it can costs organizations real money. Hidden inside a portfolio of thousands of applications could be real opportunities for cost reduction or improved revenuefor the business.
And once a critical mass of applications and data move to the cloud, then there are opportunities for real savings and reinvestment. SANs can get shut down, entire network segments removed, platforms retired, facilities closed.
As my team works with customers and partners on their cloud strategy, we are starting to see a series of patterns emerge that suggest a different view of the cloud world. Firstly, as cloud becomes mainstream, it is starting to become the enabler of the other megatrends we so often hear talk about, namely Mobility, Social and Information. In effect, instead of this:
We are starting to see this:
Secondly, except for some very small organizations, hybrid computing models are a reality and they are here to stay. As organizations are deploying new applications they are making decisions on where they should deploy those applications, often by using a decision tree that looks something like this:
The result rapidly becomes a mix of applications sitting across different public and private clouds, but of course the complexity doesn’t stop there. Applications are often interconnected sets of components that may for technology, governance, risk, compliance or even political reasons may sit in different places. You will frequently end up with a mix rather like the picture below:
Another change we see is towards supplementing full public cloud and private cloud environments with in-country service providers. This allows enterprises and governments to choose a mix of services, and trade off cost, control and data sensitivity against each other.
Recognizing this trend, Microsoft is working closely with in country service providers to provide capabilities on a common Microsoft platform that supplement our public cloud and private cloud offerings, as shown in the following diagram.
Amidst all this complexity and confusion, we frequently get asked to help organizations chart there way forward, and while every organization is different, there are a set of hurdles that need to be cleared in most organizations in order to progress:
I’ll go into each of these in a little more detail.
My grandmother had an investment strategy – she put all her money in the mattress. In the same way many organizations have a cloud strategy, but the strategy isn’t necessarily well thought out, consistent, or even actively useful. Microsoft conducts workshops with organizations to help them establish an effective cloud strategy, and there are many things that need to be established in order for it to be useful. These include understanding the business drivers behind cloud adoption, architectural principles pertinent to cloud, capabilities of the organization to execute on the strategy, approach to net new and existing applications, what cost savings are projected and how they will be reinvested, what the business value is of the transition, and how risks associated with migration and the target environment will be managed. If organizations do not have their cloud strategy defined and accepted, it will be very difficult to build effective business cases. For example, moving one application to the cloud may result in a net increase in costs, as you pay for the new cloud service, and resources that you were previously using (technology and people) remain in the organization. Only once you combine each of these individual projects together are you likely to see significant cost savings to the organization.
Cloud eliminates much of the need to care about underlying infrastructure, but organizations still need to care about their data, and how that data is generated and manipulated via applications. After all, when organizations move to the cloud, it is their data and applications that actually move.
Many governments have realized the importance of information classification for some time, and are now in the process of mapping their information classification frameworks to specific cloud solutions, allowing them to determine what data can go where in a complex hybrid world. Some are reevaluating decisions previously made, in the light of changing costs and improved reliability in the public cloud, but also as a result of the Snowden revelations. Enterprise are typically playing catch up here, developing their own information classification frameworks and information strategies. Applications are another critical part of the puzzle, and many organizations do not even know what applications they own, let alone the value they bring to the organization.
We recommend that organizations move over time to make both enterprise information management and IT portfolio management core competencies. By developing a detailed understanding of all of the information and applications in the environment, they can measure the value they bring, and ensure that that value increases over time.
Cloud ready organizations look very different from traditional IT organizations. Many traditional system administration skills diminish or disappear. Other skills, such as architects to manage the transition, and rapid response cloud consultants who help determine the approach for deploying a new capability, and piece together the various parts of a hybrid system that need to work become much more important. Traditional technology siloes, such as compute, networking and storage become irrelevant and destructive.
Building the organization ready for cloud is a very significant challenge for most IT leaders. It can involve significant retooling of existing staff, and sometimes new resources are required. We have worked with our internal IT organization to understand more deeply the types of skills most suited for this new environment, and alongside technical acumen, three skills come to the fore – situational awareness, impact analysis and effective triage.
This is where the hard work really begins, but at least at this point it should be built upon a well-defined strategy for cloud, applications and information in the organization. The IT portfolio actually consists of a number of different related portfolios, as shown here:
Developing a full understanding of each of these portfolios, the dependencies they have on each other, and how they use data is a critical part of maximizing the value of any transition. That said, the reality is that many organizations at this stage will focus on one main area, the set of applications. They will trawl the application portfolio, looking for opportunities to move the cloud, either to improve capabilities, or to bring down costs.
The 5 R’s – Rehost, Refactor, Revise, Rebuild and Replace, are a good way to describe the work that needs to happen to applications. To this, we add two more – Retain and Retire, as in some cases you will actively choose to do nothing to the application, and in others you will eliminate it entirely from the portfolio as it is not adding value.
This kind of portfolio analysis is, unfortunately, always time consuming, and there are few shortcuts if done properly. There are literally hundreds of dimensions to consider when determining the right approach for an application. And to be effective, you need a combination of top down and bottom up analysis. Top down analysis of the portfolio starts at the business capability layer and helps to answer the question “what is the organization supposed to do?” Bottom up analysis starts with just a list of applications, and helps to answer the question “what is the organization actually doing?” There is frequently a surprising delta between the two, and that delta can be the source of significant cost reduction, or even potential innovation, as the organization finds a way to monetize existing capabilities.
Almost every large organization is likely to retain at least some capability on premise. And even those that don’t will likely use in country service providers. Organizations undergoing a cloud transition face a choice, maintain the existing datacenter footprint, consolidate datacenters without modernization, or embrace modernization to improve efficiency and capabilities of the portfolio.
To stay competitive in a cloud services world, Microsoft has fully embraced datacenter modernization. In fact we run some of the most modern datacenters in the world. We have invested more than $15 billion in an infrastructure that supports more than 200 online services, including Bing, Hotmail, MSN, Office 365, Xbox Live, and the Windows Azure platform. The Microsoft Global Foundation Services (GFS) organization is responsible for the Microsoft public cloud infrastructure, and comprises a large global portfolio of data centers, servers, content distribution networks, edge computing nodes, and fiber optic networks.
Sure, we run datacenters at scale far greater than most of our partners and customers. But we have realized that many of the lessons learned from our own experience apply directly to others. Key principles behind building and operating a modern datacenter include:
Organizations that design, build, and operate their data centers according to these principles will be positioned to provide reliable and flexible high-performance services at an effective price point. Those organizations that do not follow these principles will affect the cost and responsiveness of their IT services, and ultimately put their ability to remain competitive at risk.
Once organizations have a good understanding of the portfolio, and the proposed dispensation of their applications, they are now in a position to modernize the applications. As I already mentioned, a good way to think about this is through 7 Rs, but there are some important other considerations.
Firstly, modernization of an application represents a real opportunity to increase its value. So while rehosting an application may seem to be the easiest option, it is not always the best. To fully get to the value, you may need to refactor or even rebuild the application. However in a large portfolio, it can be difficult to build individual business cases for modernizing each individual application, so it’s important to go back to the overall cloud and application strategy and establish the value at that level.
Secondly, when determining candidates for application modernization, many organizations make the mistake of ignoring internal applications, leaving them to become more and more dated. This can have significant impact on productivity and on organizational morale.
Finally, if you are modernizing large numbers of applications in the organization, much of the work may be automated, or at least done following a standard pre-defined process. You may choose to build this yourself, or using a partner that has developed repeatable processes for doing this work.
Building applications for the cloud is requires a very different approach to traditional application development. In general you know very little about the underlying infrastructure, so you cannot rely upon redundancy in the underlying infrastructure to ensure uptime. Demand may scale unexpectedly for public cloud applications, or parts of an environment may fail. Application containers are not segregated from each other physically. Components may span multiple geographies, multiple security boundaries, and even multiple cloud service providers, and you may wish to move those components as platform capabilities improve or costs change. In addition to these challenges, there are huge opportunities to connect together social, mobile and information components into applications with capabilities that were formerly impossible.
To develop effectively for cloud, new skills are required. We have published guidance on this topic, called Failsafe: Guidance for Resilient Cloud Architectures. I’d highly recommend you read it and apply it to your own application services organization.
As I mentioned earlier, some of the larger economic benefits associated with cloud can only be realized by removing legacy environments, from servers and platforms to entire datacenters. This can be very difficult in many organizations – it is so much easier to new environments than retire existing environments. In some organizations, skills shortages are now starting to reach emergency proportions, with the workforce skilled in a particular application or platform literally dying out. Effective portfolio management and application lifecycle management can help with this problem, and it’s important to recognize that in most enterprises this is as much a political or cultural challenge as a technical one.
Fortunately, many organizations are now coming to terms with the fact that eliminating legacy environments has the capacity to redirect significant money away from keeping the lights on and towards technology that differentiates the organization. These organizations are providing top down mandates to enforce change, and ensuring that support for that change permeates throughout the organization.
As I’ve illustrated in this blog, simply building a set of cloud capabilities does not ensure that organizations or individuals will adopt cloud computing. While there are many benefits, the hurdles are big enough to make the journey difficult for most.
Recognizing this, some teams at Microsoft have made some significant investments to help our customers and partners undergo this transition. Our Enterprise Architects are working with organizations to help them define their cloud strategy, their approach to application and information strategy, and to analyze their portfolios. Our Cloud Vantage Services help organizations navigate the transition to Cloud. Some teams at Microsoft have also invested in helping our customers modernize applications, and here we are working directly with customers, but also through our partner ecosystem.
As mentioned earlier, an essential part of our cloud strategy is to provide in country services through cloud service providers, supplementing Microsoft public cloud offerings, and on premise private cloud capabilities. This can be particularly important for local and national governments, so we have also established a National Cloud strategy to support governments in their transition to cloud. You can find more information about their work here.
Looking forward, my team and other teams in Microsoft are continuing work to make cloud adoption easier, and the value proposition of cloud higher. For example we are investigating how organizations can more accurately understand in their existing datacenters, and align them to services, so that they know when moving makes sense from an economics perspective. We continue to explore innovations in datacenter and infrastructure design, and methods to reduce the costs associated with application modernization. And we are working to ensure that when applications are deployed to the cloud, they are done so in the most efficient and flexible way. This will allow applications to be seamlessly redeployed when the capabilities of the underlying infrastructure and platform alters.
While Cloud transformation is well underway, there is still a long way to go for many organizations, and the destination will continue to evolve. However, I’m happy to say that as an organization that is fully committed to the cloud, we will continue to invest in capabilities and services that help our customers and partners navigate the journey.
Welcome to the Value Realization Team Blog!Delivery Documentary: Contoso Hospital Goes MobileDelivery Documentary: Establishing a Value Realization Center of Excellence (COE) at Contoso BankMobile in the Enterprise: Value Realization with Enterprise MobilityIntroducing the Enterprise Agreement Value Roadmap ServiceIntroducing the Value Discovery Service
Delivery Documentaries are a behind the scenes look at how our Enterprise Architects (EAs) in the field perform Value Realization activities for customers. The documentaries are raw and real, and the purpose is to share what actually happens on the ground. They are always a learning opportunity, and we hope that over time we can help bridge the state of the art with the state of the practice, and continue to move the ball forward.
What happens when a company considers strategies for enabling future business transformation by focusing on the business organization as a whole, rather than just the IT organization and practices? Let’s see…
This is a Delivery Documentary of an engagement led by the Microsoft Enterprise Strategy Program (ESP), which provides services to help customers realize the most value from their technology investments. In this engagement, an Enterprise Architect helped the company examine possible strategies for its future approach to business transformation with information and technology.
Rather than focusing on a particular IT solution, this engagement was more about integrating technology into business strategy. As such, the analyses addressed the business organization as a whole instead of just the IT organization and practices.
A consultant for the company connected me to an executive within the business. The executive was interested in a holistic analysis of problems facing the business (and the industry as a whole).
The consultant and I researched the industry. We found that in the domain of the company’s business, the following issues are currently affecting production, and those affects are increasing:
Defining the Scope and Assembling a Team
The consultant and I discussed some possible approaches to help solve challenges around meeting resource demands. We considered analyzing the business processes and overhauling them according to “Lean” methodology, but we decided that this approach would take too long. We considered treating the issue as a knowledge management problem or a workflow improvement problem, but both approaches were too small in scope to address the problem effectively.
We finally decided to target our analysis on all of the processes associated with obtaining resources, and by examining the value chain. We planned to gain a holistic view of these processes, taking the following factors into account:
Our goal in this analysis was to produce a roadmap that Contoso can use over time to create the technology, functionality, and information that to support the needed business capability. Contoso already had implemented a number of solutions for providing workers with information they needed to do their jobs; however, these solutions did not share information and workers had to access multiple applications during tasks. A holistic approach would be more efficient.
We planned to center our analysis on models of the business, generating and revising those models based on meetings with workers involved in core processes. We wanted to develop models that would be sophisticated enough to simulate the business processes and operations. We would then be able to:
At this point, the following additional resources joined the team:
The team members helped write the vision document for the next phase of work. They also planned out the workshops that we needed to hold with the staff.
We met with business leaders at the company to explain our approach, which would use information gathered from the workers themselves to model the current business environment and processes. Based on these models, we would be able to recommend changes that would help close the capability gap through leveraging the appropriate technology.
To gather the information, we held a series of workshops that were designed based on our previous experiences with such engagements.
Our goals for the workshops were to:
The workshops themselves focused on learning about the workers: who they were, what they did, why and how they did it, and who they worked with. We asked for their goals and the problems that they commonly dealt with, separating personal and business issues.
We also asked them to rank these issues. We approached these sessions from both the user experience and business architecture points of view. Our user experience and business architecture experts helped refine and facilitate the workshops so that both areas could be addressed in a single, continuous session.
We worked with Contoso staff to create preliminary models based on industry research, benchmarks, knowledge management and search theory, and so forth. We were able to start expanding and revising the models as we obtained specific information from the workers themselves.
We applied statistical techniques to the ranked goals and problems; the results provided insight into priorities. We also defined a taxonomy that the team could use to describe the data and results.
In general, we looked for patterns in the workers’ responses, issues and priorities that were common to both the junior and senior workers, and areas in which the groups differed. We noted the impacts of the worker’s environments, perspectives, and variations in data handling.
We modeled Contoso’s organizational maturity with respect to its workers, business, knowledge, and the ways in which information was used and distributed. This model was particularly important for Contoso because the business processes were not written down, but instead were embedded in the organizational culture.
Using this information, we produced an agent-based process model for engineering processes using personas and meaningful scenarios. Contoso outlined the scenarios of interest.
Finally, we identified a set of themes based on the workshop data, defined changes that Contoso could make that would yield measureable benefits, and mapped dependencies and relationships among those benefits. We mapped the themes and benefits into a model focused on capability.
We presented our results and recommendations to several different sets of stakeholders, from engineers to executives. We adapted our presentations to the audience. Where appropriate, we used formats that the company used internally.
We organized our findings into three deliverables:
Welcome to the Value Realization Team Blog!
Going Mobile at Contoso Hospital (Delivery Documentary)
Establishing a Value Realization Center of Excellence (COE) at Contoso Bank (Delivery Documentary)
Security Strategy for Devices at Contoso Insurance (Delivery Documentary)
Business Transformation at Contoso Bank (Delivery Documentary)
Modern Apps at Contoso Health Insurance (Delivery Documentary)
When “Stop” is the Most Valuable Answer (Delivery Documentary)
How do you build relationships with business executives? Often times your opportunity to shift from a fleeting, impersonal relationship with a senior business decision maker (BDM) to a more direct relationship stems from what you can do to build rapport and curiosity in a few unplanned moments.
For Microsoft Enterprise Architect Ron Lamb, the “win” is to gain interest from the BDM for a 1:1 meeting on a topic that is of great personal curiosity or challenge. You may have an unplanned meeting in a coffee room, elevator, or after completing a larger meeting. You have a few moments to create rapport and take the first steps in building a relationship that works on a new plane, one that transcends any specific initiative that you and Microsoft are working on at that moment. What techniques and patterns seem to work to gain that initial 1:1 opportunity, and then build upon it?
This post summarizes the experiences and observations of Ron Lamb, a Microsoft Enterprise Architect involved in business strategy planning.
Over the years I’ve expanded my services from technology into business-focused development and business strategy, especially as I’ve acquired more experience across many industries and around the world.
One of my career objectives has been to quickly build great relationships with chief executives and business decision makers during our engagements. Though my participation often begins as a subject matter expert or to help drive transformation, a personal connection creates opportunities to have a larger and broader impact, and perhaps even become a special resource to that executive. David Maister’s book “The Trusted Advisor” describes the opportunity and techniques best.
For me, an important part of creating rapport and building relationships is quickly opening the door for an exchange and testing of ideas, while presenting learnings from peers.
My goal is to help business executives walk away having learned something, with skills or insights that they didn’t have earlier. I want to provide individual value, in addition to the value I bring as a part of the project team.
In my short conversation with the executive, I share my focus on a challenge that I’ve been researching and struggling with and provide some provocative element of the challenge. I seek an indication that they are challenged / perplexed by the same thing, and if so, ask if perhaps I could invite them out for an opportunity to talk to them about it. I choose a challenge that I know the executive is also curious or concerned about. I share my understanding of the size of the challenge and the opportunity, the lack of a clear industry answer, and the risk of committing to a path that has a suspect likelihood of success. Business executives have a full plate of such highly unstructured, perplexing challenges, so perhaps not unsurprisingly, I often get a positive response.
The opportunity that I imply and hope an executive responds to, is an opportunity to:
Some of the characteristics of topics that work well include:
By demonstrating your willingness to share your insights / hypotheses, you’re putting some personal capital on the table. When executives recognize this, they may reward your openness by sharing their own personal insights and hypothesis.
Very importantly, this must be a “Safe Conversation.” What you are each sharing is to the benefit of each of you as individuals, and not to become the subject of the next day’s conversations amongst the project team, or at Microsoft. This also explains the value in having this type of conversation be 1:1.
To further cement the understanding that this is not part of the ongoing work, and is between the two of us, I arrange for the meeting to be over dinner or perhaps a social setting after work. That is, I’m not using the executive’s or my “chargeable” or business time for this discussion. I avoid meeting in the executive’s office or building. Otherwise, there is an implication that this is work associated with context of the executive’s role, and existing business relationships and contracts. Meeting at the office also introduces time pressures from the need to attend upcoming meetings. The goal is to create a level of separation between the existing client / partner relationship and a burgeoning trusted relationship / advisor connection.
Avoid topics closely tied to the work you have in play at the client. Remove any sense of conflict with the Microsoft or client teams. Try to avoid the project teams questioning, “Why are we not invited to this meeting?” You have to use your own knowledge of who to inform before such a meeting. It is also your challenge to do so in a way that removes the potential of a “gate keeper's” intercession.
Discussions that I’ve personally had with executives in this setting include.
I let executives know our meeting is meant to provide an opportunity to share insights and the opportunity for me to share with them information about what some of their peers in other industries have done when facing similar challenges. When discussing lessons learned (successes and equally important for lessons learned, failures), the executive can look at ways to apply ideas to their own situation and industry.
The “Internet of Things” is made up of connected sensors and devices for just about any type of equipment, from phones to household items to heavy machinery. The Internet of Things makes it possible to monitor equipment in real time, as well as use predictive analytics to identify potential disruptions and malfunctions before they occur. The combination of monitoring and analytics can help businesses save huge amounts of money in avoiding defects and service disruptions.
This post is based on an upcoming white paper called “It’s not about Big Data, it’s about Big Insight” by Achim Granzen, Architect in the Data Insights Center of Excellence, with contributions from Ken Collins, Fidan Boylu, Philip Reilly, Benjamin Wright-Jones, and Delbert Murphy.
With new generations of connected devices appearing everywhere, the new world of data described in the post “Enabling Big Insight with Big Data (Trends and Insights)” is even more rich with possibilities. Whereas customer insights employ a mixture of traditional and new data attributes, the data produced by the Internet of Things can only be described by the flexible attributes associated with the new world of data. The Internet of Things produces data as diverse in format and structure as the devices themselves, detailed but often messy, plentiful, and generated outside organizational boundaries (physical as well as logical boundaries).
Gaining insight from this type of data is nearly impossible if managing and analyzing with traditional approaches, especially when time to insights is considered. However, this data holds information that is critical to an organization, as it can help lower damage and repair of equipment (predictive maintenance), prevent health and environmental hazards (event and incident monitoring), increase quality of services and products (performance management), and help optimize service operations (route optimization).
Sometimes, scenarios touch or even overlap, however it is ultimately the business goal that determines the scenario. Even consumer devices such as mobile phones and tablets are considered part of the Internet of Things, as they are essentially connected devices. Better understanding of the phone user’s – the customer’s – location, preferences, likes and interaction history enables customer insight. Monitoring the handset for early signs of equipment failure and detecting coverage gaps by location-specific signal strength analytics provides operational insight in terms of predictive maintenance and (network) performance management.
A key challenge for any operational insights scenario is the wide, potentially regional or global, distribution of the devices to be monitored and analyzed, Before the availability of large scale cloud-based services for ingesting, storing, and analyzing data, many of these scenarios were cumbersome to realize, and in many cases not feasible or plainly impossible.
Similarly, the huge variety of data types and formats in the past – each device having its own format and structure – made it extremely difficult to process data from such devices, let alone employ predictive analytics on a large scale of attributes and parameters.
Now, key technology capabilities can enable a typical analytics solution for operational insights, including:
An analytics solution for operational insights will mainly deal with externally created data, of a large variety of structure and format. Hence, a cloud analytics platform that enables this is a core component of any architecture. External data can be processed through a cloud based data ingestion, storage and management system, with support for streaming data. Most analytics such as predictive maintenance can be performed directly in the cloud, as it is normally not required (nor feasible) to bring that data on-premises.
Internal data from data warehouses and operational systems, which might be required to augment the data analyzed (for example, serial numbers and other basic equipment identification data) can be uploaded into the cloud analytics platform and stored in either structured or unstructured form.
To close the loop, analytics results need to be made available to the business, for further exploration and visualization by business analysts, or for inclusion in management dashboards and other reporting systems.
Figure 1. Schematic Architecture for a Primary Cloud-Based Analytics Platform
The above describes a typical architecture in a scenario where the majority of data is created outside of an organization. In scenarios where a large share of the data is created and available within an organization (i.e. not geographically distributed), the architecture will more closely resemble a hybrid approach, as discussed in the post “Customer Insight—The New Age of the Customer.”
The key theme in predictive maintenance is risk management, particularly reducing the risk of potential high cost events such as machine part failures or quality issues, by being able to take corrective action before the event occurs.
Predictive maintenance as a business scenario is not a newcomer on the stage, however the recent development and availability of cheap, interconnected sensors opens up a large number of use cases and scenarios, and the availability of cloud-based data ingestion and analysis dramatically reduces the need for complex infrastructure. Both trends make predictive maintenance much more pervasive than in the past, literally touching every household (for example, smart meters, energy use, and so on).
For example:
Avoid costly asset downtime and reduce maintenance costs
Contoso was struggling to deal with vehicle failures within its fleet management system. As a result of unexpected malfunction and the time wasted on the maintenance, the company was losing money and resources in correcting the issues after the failures happen.
By using extensive amounts of telematics data that are collected through on-board sensory systems integrated with environmental and product data, Contoso is able to use predictive machine learning methods to perform health tests on the current operating conditions of the vehicles and identify vehicles that require immediate maintenance action.
Reduce warranty claims due to unexpected failures
Contoso was struggling with frequent warranty claims on a certain line of its products due to unexpected failures.
Predictive maintenance now identifies when equipment in the field is likely to fail or need maintenance in order to predict future warranty claims costs and maximize uptime for equipment used to deliver service. By using predictive maintenance, Contoso is able to eliminate bad publicity and minimize resulting lost sales from negative customer product reviews.
Improve inventory management of spare parts by predicting failures
Contoso was having problems with predicting the inventory for its expensive parts that may have long lead times, leading to high inventory cost and risk of low inventory levels. The company needed just-in-time inventory management to reduce costs.
Using predictive analytics capabilities, the manufacturer can determine if certain products are likely to fail and then analyze the financial implications of the failure. The analysis also shows where the failures will occur and what the demand in a given region will be for the replacement parts. The manufacturer can then ensure that the correct supply of replacement parts can be available at the appropriate time.
Managing the performance of an organization, or of a part of its business, goes much beyond the classic financial reporting, best described as financial performance management. Using both descriptive and predictive analytics capabilities to track, analyze and improve the performance of a system (such as component production or discrete manufacturing) has a direct impact on the bottom line of an organization where every element of “waste” can attribute to significant costs.
Improve Production Quality Assurance and Yield
Contoso was having problems with its certain line of products coming out defective with some parts or the products not meeting quality standards. These needed to be recycled or fixed, which led to loss of time and effort and caused delays in the assembly and shipment of the products.
By using an analytics approach to examine the sensor data collected from the assembly line, Contoso is able to accelerate root-cause analysis to determine the source of the problem and sustain quality standards by understanding the key predictors in the assembly of the products that eventually leads to defects.
Safety is the key objective for event and incident management and monitoring, with potentially severe implications not only financially but in many cases to human lives. Especially in the natural resources and energy industries, health, safety and environmental (HSE) is a key concern in every aspect of the operations: problems can affect the lives of thousands, even millions of people.
Similarly, organizations secure locations, buildings, and events not only to prevent financial implications (intrusion, theft, damage) but also to address the safety of the public as well.
Better protect Health, Safety and Environment
Contoso was unable to achieve a near-real time view of their equipment condition, which is distributed over a large geographical region with difficult access. This led to situations where equipment malfunctioning was going unnoticed for a considerable period of time, causing severe HSE issues. With HSE being a key performance metric for Contoso, it was important to get an accurate picture of events, and mitigate any event that has happened.
Using a cloud-based remote equipment monitoring system, Contoso’s operations control center is able to get accurate and timely information on all of their equipment, visualized in an easy-to-understand format, and with capabilities to take direct action. As a result, potential hazards to the health and safety of their workers, as well as to the environment, can now be addressed much quicker, resulting in lower severity and an overall improved HSE KPI.
Improve Situational Awareness, Security and Tracking
Contoso City was challenged in analyzing data from various streams of public safety systems in a timely and consistent manner to present law enforcement and crime prevention officers with a concise description of a crisis situation, preventing them from acting quickly and precisely.
Using a consolidation and comparison system which can ingest a large variety of data types from video to license plate readers, and employing monitoring, visualization and analytics capabilities, Contoso City can now provide real-time analytics and improved situational awareness for the men and women on the front lines of law enforcement and crime prevention, which helps to further enhance public safety outcomes for Contoso City citizens.
Going well beyond the classic “Travelling Salesman” problem, route optimization applies to a multitude of scenarios where things have to be moved from A to B in the most optimal, most cost-effective, or most secure way: it applies to moving people (transportation from buses to planes), discrete goods (from parcels to containers) and resources and utilities (gas, water, electricity).
Besides “Where” (to optimize the transport mechanism or medium) – the How is equally important. This is particularly evident when dealing with power grids and networks, as there are many more elements involved (power plants, transformers, distribution stations, meters) than just the power lines.
For example,
Optimize Power Grids and Networks
With ever increasing pressure to conserve energy and reduce energy loss and peak loads, Contoso was struggling to analyze load patterns and distributions, and encouraged selected consumers to shift to off-peak hours.
By employing a network of smart meters connected to a cloud based data ingestion and analysis system, Contoso can monitor energy consumption and the effectiveness of off-peak special offers in real time, and take other corrective measures as required. The system also allows Contoso to analyze and predict electricity usage patterns much more detailed and accurate than ever before.
Optimize Traffic and Goods Movement
Contoso Airlines was challenged to increase their revenue per seat-kilometer (RPSK), primarily by optimizing ticket pricing, capacity and scheduling; and additionally by increasing ancillary revenue (non-ticket revenue). For example, the ability to accurately forecast seat upgrade demand for a given flight – based on a combination of factors such as flight, region, period of the year, loyalty program status, early/late purchase, etc. – would allow them to set the price of the premium seat accordingly. Contoso was unable to do a proper analysis based on data, as they lacked analytics and data preparation capabilities.
Using a cloud-based analytics solution leveraging Machine Learning, Contoso Airlines is now able to optimize the decision-making process for schedule optimization and for ancillary revenue. For example, they can priority rank customer attributes according to their relevance on customers’ propensity to upgrade their existing seat.
Customer insight is a prime objective for many business scenarios using Big Data. Such scenarios also provide examples of how organizations may have to change in order to reap the benefits of the “new world of data.”
Over the past several years, customer behavior, communication channels and buying mechanisms have irrevocably changed. As a result, organizations have adapted their marketing and sales techniques. The new richness of information about customers, though complex, presents the potential for deep insight that was not previously possible or feasible.
[For more details about the “new world of data” and data leadership, see the prior post “Enabling Big Insight with Big Data (Trends and Insights).”]
The new age of the customer represents, more than anything, a cultural change as consumers embark to embrace continuous learning and questioning of products, services, and messages. For customers, information to make buying decisions is now ubiquitous; they are armed with sufficient information to make decisions on the spot.
For organizations targeting those consumers, it means moving away from a steady state world, driven by processes and workflows, towards a constantly changing world described by new parameters such as context, device, and location. No longer can an organization rely on a one way marketing for a fixed (and fixated) audience.
Organizations can now get a very detailed understanding of who their customers are, how they are perceiving the organizational brand and its products, and how they are comparing the brand to competitors’ brands and products by analyzing the sentiment (tone) of public posts on social media.
Using (near) real-time capabilities, an organization can “keep an ear to the ground” about the current discussions regarding brands and products. This can provide direct and very accurate feedback on the impression on a target audience of a new marketing campaign or product launch, and enable an organization to immediately know and address overtly negative perceptions and take corrective actions to protect the brand.
Nowhere is the data evolution more obvious (and indeed more progressed) than in customer insights. The change of customer perspective from record-centric to interaction-focused is even more radical. The new way of marketing in this environment requires new insight and a far more detailed understanding of the customer than ever before, being:
These are all new attributes to consider in a complex total customer view. These attributes were neither available nor captured in the traditional world of customer data.
The new world of data goes beyond classic customer analytics which primarily builds upon internal, structured data. New data allows marketing organizations creates a multi-facetted single customer view with actionable business insights from such diverse sources as Point of Sale transaction data, loyalty data, online/web experience data, lifestyle information, market research and demographic data, marketing channel response data; and specifically social media and direct communications channels.
The classic customer analytics tools such as segmentation, churn, cross-/upsell, are enriched and complemented by text and sentiment analytics, marketing and advertising analytics to enable closed loop marketing and portfolio optimization, retail behavior prediction, customer service and satisfaction improvement, and brand research/protection.
Key technology capabilities for a typical customer insights analytics solution are:
An analytics solution for customer insights will always require the combining of internal, primarily structured data, with external, primarily semi-/unstructured data in an as seamless as possible manner. A hybrid analytics platform that enables this is a core component of any architecture. External data can be processed through a cloud-based data ingestion, storage and management system, with support for streaming data. Certain analytics such as sentiment analysis can be ideally performed directly in the cloud, as it is not always required (nor feasible) to bring that data on-premises.
Internal data from CRM and ERP systems, and data warehouses, can be brought into the hybrid analytics platform either through traditional ETL, or through an Extract-Load-Transform (ELT) process, using a non-structured format as (intermediate) storage before being transferred into a (temporary) structure as needed for specific analytics purposes. Also, analytics results must be fed back into operational systems to leverage them in business processes. For example, customer churn probability and best offers must be available to all customer contact points.
To close the loop, analytics results need to be made available to the business for further exploration and visualization by business analysts, or for inclusion in management dashboards and other reporting systems.
Figure 1. Schematic Architecture including a Hybrid Analytics Platform
When it comes to obtaining new customer insights, the possibilities and promises of exploiting social media are almost always at the forefront of an organization’s action plan. In the excitement over the seemingly endless possibilities for social media analytics it is of utmost importance to understand how social media works, and how it can be utilized. More than anything, this requires a social media strategy.
Promote the brand with social media and sentiment analytics
Contoso is struggling to deal with changing customer behavior and eroding brand perception. Competition from new market entrants presents additional challenges as they push new innovations, offer lower prices, and provide better overall customer experiences.
By tapping into the vast amounts of information generated through social media and connected devices, Contoso finds new opportunities to better understand their customer’s preferences and perceptions of their brand. The social data is easily combined with internal market data to gain deeper insights into brand awareness and profitable customer segments.
Targeting an organization’s existing customer base to drive additional revenue is a major objective for any marketing operations team. Improving the return of any marketing campaign, increasing the wallet share and tapping into new markets have always been and will remain top priorities.
Support better business and sales decision-making
Contoso is struggling to provide their business users with a unified view of all internal customer information: the services, sales and marketing teams have to struggle to assemble required information from a multitude of systems.
Using a consolidation approach across internal as well as external customer data, the Contoso IT organization is providing their business users with a 360-degree customer view for key business applications. Services, sales and marketing teams are able to react quickly and decisively in their daily business and sales decision making, as they have an accurate view of all customer information available to them at any time.
Implement effective customer segmentation to create targeted campaigns
Contoso is struggling to identify the main segments of their customer base accurately. As a consequence, they are not able to create targeted marketing campaigns, or place successful cross-/up-sell offers with their most profitable customers. A one-size-fits-all approach is increasingly responsible for a bad brand image.
By employing descriptive analytics, Contoso marketing professionals are able to identify and understand their customer segments better, and create specific offerings and campaigns targeted at each segment, which results in a much higher response rate and increased brand perception, as customers “feel understood” by Contoso.
Increase market and wallet share using predictive customer analytics
Contoso is struggling to increase their market and wallet share, and is unsuccessful in creating high return marketing campaigns. Competition from new market entrants presents additional challenges and lure once loyal customers away, resulting in an erosion of Contoso’s customer base.
By employing predictive analytics on their aggregated customer data, Contoso is able to understand customer preferences, intentions of changing brands, customer lifetime value; and discover the highest yield route to driving market and wallet share. The internal data is easily augmented with external data to gain deeper insights into customer preferences and profitable segments.
Despite the trends towards new channels and means of interactions between an organization and its customers, the traditional call-center is nowhere near to becoming obsolete. On the contrary: businesses are offering more and more services without an actual physical or local presence (for example, car insurance), making call centers a primary means of communication for these online services, as well as for traditional businesses shifting services to a lower cost mode of operation.
Maximize customer retention and satisfaction through improved service
Contoso Call Center is challenged by the inability of agents to access all relevant customer information when in a call, which results in a low customer satisfaction and cancellation of services. Contoso needs to capture data from customer service interactions and provide real-time customer insight to help call center staff deliver high quality service experiences to customers.
Employing an analytics solution within their call center operations, Contoso can now provide call center staff with a complete view of the customer in real-time. This leads to an overall improvement of the quality of their customer service, with agents having at their fingertips a combined view of customer preferences and profitability. Contoso call center operations can also capture and integrate call center performance data at the individual customer level, including call volume, call duration, and resolution status to identify past performance and take corrective action where necessary to continuously improve the customer experience.
Delivery Documentaries are a behind the scenes look at how our Enterprise Architects (EAs) in the field perform Value Realization activities for customers. They are raw and real, and the purpose is to share what actually happens on the ground. They are always a learning opportunity, and we hope that over time we can help bridge the state of the art with the state of the practice, and continue to move the ball forward.
What happens when a bank struggling to connect it’s IT investments to it’s business impact decides to implement a Value Realization Center of Excellence to turn things around? Let’s take a look …
This is a Delivery Documentary of an engagement led by the Microsoft Enterprise Strategy Program (ESP), which provided services to help customers realize the most value from their technology investments. In this engagement, a Solution Architect helped a customer to identify shortcomings of the current IT delivery model, and to produce better quality, value, and integration from IT solutions.
The Solution Architect and colleagues proposed that the bank establish a Value Realization Center of Excellence (COE), aligned with the organization of the bank. The Value Realization COE is designed to be responsible for quality deliverables, innovation using fewer commodity solutions, and efficiency from having more uptime and continuous value. The bank agreed to perform a one year assessment of the model while continuing to pursue other IT initiatives.
The Solution Architect was involved with the initial pre-sales, business development meetings; in creating the enterprise agreement; aligning the bank organization with the Value Realization Center of Excellence functions; performing value-based measurement; and engaging as needed upon request of the Services Executive.
During the past few years, Contoso Bank has had prior contact with many vendors, primarily to deploy isolated pieces of technology, and not always coordinated in ways designed to achieve maximum value.
The bank was lacking over-arching envisioning, planning, and value realization. In addition, the bank had not yet maximized and fully leveraged the agreement already held with our Enterprise Services team. One way to address these issues was to create and help staff a Center of Excellence and Innovation for Value Realization for Contoso Bank.
I began shaping a Center of Excellence to focus on three goals:
My next step was to talk to the executive sponsors as to the benefits they would realize if we had a more strategic partnership: one for which we established this Center of Excellence and staffed it with Enterprise Architects on work streams.
I spearheaded meetings to discuss the proposal with the Sr. VP of Contoso Bank, the CIO, and the CIO direct reports. The CIO became quickly interested in broadening the discussion to reveal more details.
Our meetings were just conversations in which the Services Executive, the Account Executive, the Executive Business Director, and I discussed the universe of the possible with the bank executives. We considered the different ways in which things would work and be structured.
We began planning and scheduling “alignment sessions” to involve next tier stakeholders, such as the VP’s in charge of strategy, innovation, revenue, and collaboration.
To prepare for the meetings, and as part of my role of developing the vision, I obtained information from experts in COE structure, and requested research materials from our Global Delivery department on spending patterns and the banking industry in general. I did not yet drill down into capabilities or adoption.
The alignment sessions included stakeholders from the bank and Microsoft participants, including the Services Executive, Account Technology Strategist, and the Account Executive. We also pulled in colleagues from other Microsoft teams.
During the alignment sessions, we started with just a notion and presented a few items about value realization to spur the discussion. But we primarily listened and learned, before we attempted to help shape things.
We used the alignment sessions to get everyone on board about the direction, methods, and budget for our efforts. We walked employees from the bank through the idea of simplifying and transforming the complex and costly to be more efficient and aligned to business requirements.
We painted in broad strokes how Enterprise Architects would be aligned to the structure that the bank already had in place. We didn’t portray that we had everything figured out. Instead, we brought insight from our research. We described successful patterns, and we obtained more information about how such patterns could be applied to the organization, considering the current level of architectural maturity.
The bank faced significant tasks to reach a higher level of maturity. But we demonstrated that this was an opportunity for implementing an easier service model using items they had already purchased. This would enable them to repurpose the IT staff, reduce complexity, reign in expenses, and make the transition to a more mature architecture. The bank could then begin considering offering their infrastructure as a service.
We emphasized that we have a number of Enterprise Architects focused in the areas the bank was transforming. We encouraged stakeholders to work with these service area specialists. Ultimately, we even provided a Program Manager for the Center of Excellence as well, since the bank was lacking the expertise.
When we finished these meetings, the sponsors understood the problems of continuing to grow the bank’s footprint of complexity, and the advantages of establishing a simpler service model.
We prepared a proposal for a one-year engagement to establish and assess a Center of Excellence within Contoso Bank for defining and managing value from IT projects.
I worked with the Services Executive to structure the engagement aligned with our three models:
We assigned an Enterprise Architect to each area to perform the following activities:
The assigned Enterprise Architects worked with executive sponsors. A lead architect within the Value Realization Center of Excellence managed the overall work, address blocking issues, decrease cycle times, and present possible solutions to problems as they arose.
The one year test of the Center of Excellence was a success, and enabled us to build trust in the model with our executive sponsors. Contoso Bank decided to engage additional staffing for the Value Realization Center of Excellence as a more permanent addition to the enterprise, in addition to managing the initiatives that were necessary for transforming to a more mature platform.
The managing architect of Contoso Bank is now the leader of the Value Realization Center of Excellence, with a team of Enterprise Architects, a Program Manager, and an Engagement Manager.
The team performs health checks on deliveries, and the Services Executive and Engagement Manager review the results with an executive committee with business sponsors and a proxy for the CFO.
Welcome to the Value Realization Team Blog!Delivery Documentary: Contoso Hospital Goes MobileThe Enterprise Mobile Story: How To Get Business Value from Enterprise MobilityIntroducing the Enterprise Agreement Value Roadmap ServiceIntroducing the Value Discovery Service
We thought it would be helpful to share some perspectives on how we are seeing customers realize and accelerate business value from the four Mega-Trends (Cloud, Mobile, Social, and Big Data/Analytics), so we asked one of our colleagues to share what he’s learned about how companies are getting business value from Mobility in the Enterprise..
Here is Arno Harteveld sharing his observations and insights on the Enterprise Mobile story …
In my current role I interact on a regular basis with customer executives during customer briefings regarding Enterprise Mobility which gives me an insight what drives customers and what customers are doing in this area. Microsoft recognizes four mega trends which are shifting the industry in profound ways how people work and how we do business. It is changing how we buy stuff and how we interact with others. There is a big opportunity to use the four mega trends to unleash business value.
We recognize mobility as one of the four mega trends (mobility, social, cloud and big data) that are changing how we work and how we conduct business. These four mega trends are likely to be the dominant forces of change in the coming decade and represent what is most important to Microsoft customers today:
These trends are revolutionizing how organizations engage customers, deliver innovative products and services, compete in a global economy, attract and retain talent, and manage expenses. This paper focuses on the effects—and potential uses—of mobile technology in this context.
It’s estimated that by 2016, one billion global consumers will have access to smartphones or tablets, which makes mobile technology a crucial medium for interacting with customers. Considering that 2.4 billion consumers connect to the Internet, one-third of the world’s population is a click away from your business, product, or service.[1][2] Mobile consumers have faster access to better information than ever before.
By 2015, the world's mobile worker population will reach 1.3 billion, representing 37.2 percent of the total workforce.[3] Working at away from an office desk has become the new normal.
To realize the potential benefits of the four mega trends, reevaluate business processes to get business value from mobile IT capabilities. Your organization can take advantage of mobile technology to adapt to today’s changing business environment; however, to do so, it must adapt new agile approaches to delivering technology options and services to both customers and employees. Any of the following three strategies can be used bring mobile technology into an organization:
Figure 1. Three strategies for integrating mobility into an organization[4]
Every organization has different needs, different capabilities, and different available resources. These strategies can help to tailor your mobility strategy to meet the current needs of your organization, and you can update your strategy over time as the organization’s needs, capabilities, or resources change. This paper provides guidance and examples of how these strategies can accelerate adoption of mobile technology in your organization.
The Run strategy outlines how organizations can adopt mobile technology in ways that make employees more productive and business processes more efficient, while at the same time controlling costs and maintaining a secure environment. The objective of this strategy is to reduce total cost of ownership to make the IT organization more efficient; this objective does not affect overall revenue directly, but it can make an organization more efficient while providing new mobility capabilities.
Your organization can adopt mobile technology in the following ways:
Adopting the run strategy will primarily affect mostly the IT organization. However, by carefully planning and implementing your mobility strategy, you can make improvements without compromising security or placing a significant new burden on your IT department. During this process, your organization may need to examine (and change, if needed) the way it does the following:
In addition, your IT organization may need to make changes in the way it supports the following capabilities:
There are a number of ways you can use mobile technology in your organization. This section describes the following popular uses:
The following figure provides an overview of how employees can use devices to work more flexibly and efficiently.
Figure 2. To bring mobility into current business processes, IT supports new ways of working
When your employees can work anywhere, your organization can realize the following benefits:
Implementing the ability to work anywhere is more complex than simply handing devices to your employees. You should adapt your business processes to use the new capabilities most efficiently. Your employees need to carefully consider the following:
In addition, your employees can consider new approaches to their work, such as:
The following figure provides an overview of how you can integrate externally owned devices into your operations.
Figure 3. Contractors bring their own devices into the corporate environment. After they register their devices on the corporate network, they can access corporate resources.
When contractors and other partners can use their own devices to work with you, your organization can bring them up to speed quickly and at the same time reduce device handling costs.
To use their own devices with your network, contractors and other partners need to understand the following:
Overall, your organization can mobile technology to work more effectively with contractors and business partners.
This strategy describes how a business can adopt mobile workstyles in ways that enhance existing business processes and develop new business processes. Organizations can increase revenue and profit by providing employees with new and more efficient ways to work while at the same time improving customer service and customer experiences.
In this strategy, your organization can use mobile technology to accomplish the following:
The changes required for this strategy impact both the IT organization and the lines of business. Planning and implementing such a strategy may require your business to examine (and change, if needed) the way it does the following:
There are a number of ways you can grow your organization’s current business by using mobile technology. This section describes the following popular approaches:
In highly competitive markets, mobile technology can increase the effectiveness of your sales force. Using mobile technology, your sellers can access customer data, product data, and sales data when they want, from wherever they want--even from a meeting with the customer. They can close transactions while still on site with the customer, and share data with sales colleagues. Figure 4 illustrates how this process can work.
Figure 4. A mobile sales rep can record transaction details, provide information to the customer (collaborating with peers as needed), and close the transaction
When your sales people can record, access, and collaborate on information anywhere, your organization can realize the following benefits:
Implementing this approach is more complex than simply handing devices to your sales people. You should adapt your business processes to use the new capabilities most efficiently. Your sales people can consider new approaches to their work, such as:
Using mobile devices, field service workers have access to the information they need when they need it:
Such access makes field service workers more efficient and, more importantly, increases the uptime of capital-intensive equipment. Figure 5 illustrates how field service workers can use mobile devices on the job.
Figure 5. By using a mobile device to receive schedules, store documents, collaborate with colleagues, and file reports, a field worker avoids extra trips to the office
By deploying mobility technology to field service workers, your organization can realize the following benefits:
Implementing this strategy might require redesigning or optimizing business processes instead of simply handing devices to your field service people. You should adapt your business processes to use the new capabilities most efficiently. Your field service people can consider new approaches to their work, such as:
BT (British Telecommunications plc) needed a mobile solution to support more than 6,000 OpenReach field engineers, who provide critical provisioning and repair services for BT (and its millions of customers). The laptops used to that point needed frequent repair and actually hindered customer service.
In December 2012, BT deployed 6,000 Panasonic Toughbook CF-C1s to the field engineers. Key features of the new systems included:
By adopting a mobile strategy based on Windows 8 devices, BT has realized benefits that include the following:
This strategy outlines how a business can adopt mobile technology with smart connected devices in ways that transform your business and give it a competitive edge. In this strategy, your business can take advantage of mobile technology in ways such as the following:
During this process, your organization may need to examine (and change, if needed) the way it does the following:
One approach to transforming an organization’s business is to provide an existing service in a new way that makes your service more economical for customers. For example, instead of providing maintenance service to on-site machinery on a set schedule, provide service on a custom schedule based on the usage of the machinery. As an example, consider Fabrikam, which manufactures and maintains elevators. To differentiate itself from its competition and generate revenue, Fabrikam uses mobile technology to customize maintenance schedules for its elevators. Figure 6 illustrates how this process can work.
Figure 6. Mobile technology generates the data needed for Fabrikam’s new service
By developing a new service that uses data generated by mobile technology, Fabrikam realizes the following benefits:
To plan and implement this strategy, Fabrikam needed to be able to do the following:
Another approach to transforming an organization’s business is to provide an existing service to new groups of customers—for example, customers in geographic areas that the organization has not dealt with before. A bank, for example, can tap new markets by delivering cloud-based services to mobile devices, as shown in Figure 7.
Figure 7. A bank reaches new markets by providing cloud-based services to mobile devices
By delivering services to a new market of mobile devices, the bank realizes the following benefits:
To plan and implement this strategy, the bank needed to be able to do the following:
This article provides overviews of three strategies to integrating mobility technology into an organization to accelerate business value:
To determine which approach or combination of approaches would be most effective for your organization, you can do the following:
[1] Kevin Turner, Financial Analyst Meeting, Microsoft, September 19, 2013
[2] World Internet Users Statistics Usage, June 2012
[3] Crook, Stacy K. et al, Worldwide Mobile Worker Population 2011-2015 Forecast. IDC Corporate USA, January 2012.
[4] Based on Hanford, Michael. The 'Lights-On' Portfolio, but How Many Lights?Gartner, Inc, 2010.
[5] Microsoft, Microsoft Case Studies, “BT: Telecom Boosts Field Staff Efficiency, Service with Latest Mobile Computing Platform.” 2013
License Agreement Value Roadmap is one of the services that Microsoft architects conduct with businesses as part of the Microsoft Value Realization Framework. It’s one of the Value Realization services that we mentioned in our earlier post, Welcome to the Value Realization Blog.
[The most common form of Microsoft licensing is “Enterprise Agreement,” which is why in our practice we typically refer to this Service as “Enterprise Agreement Value Roadmap”]
We perform the service to help businesses evaluate current returns on license investments and identify potential to maximize the business value from such investments by ensuring fuller, more effective, earlier use of purchased licenses.
A few questions that an architect might address about license value realization are:
Typically, this type of evaluation occurs near the end of a License Agreement, prior to renewal. But many businesses also like to look into value anytime a major strategic or vision change occurs, from the business or IT side.
One important role an architect plays is helping to clarify the definition of value in different business contexts. To precisely assess this value, an architect needs to review the business capabilities, priorities, and initiatives, in light of the broader business landscape -- all influencing and characterizing business value.
When a Microsoft architect performs the License Agreement Value Roadmap Service with a business:
The License Value Roadmap Service includes activities for assessing value, and for making recommendations to businesses about ways they can optimize the value they receive from license investments. Importantly, architects must go beyond simple auditing of licenses to create a comprehensive analysis:
After we create a value roadmap and present recommendations, the stakeholders at a business clearly understand the value of their investments, and the opportunities for increasing value.
License Agreement Value Roadmap documents how existing licenses are used by the business, what additional value could be derived from this pool of licenses, what specific initiatives would capture that additional value.
As the end of an Enterprise Agreement approached, the CIO Team and Director of Enterprise Licensing for a large bank began examining whether their IT investments were performing and producing value for the bank.
The bank had traditionally used a large amount of free open source software that met internal standards. However, stakeholders at the bank were finding that they needed capabilities that their solutions did not provide, and the IT teams and Head of End User Services were under pressure to meet quickly evolving business needs.
To gather the necessary information, the Microsoft architect consulted with directors and members of many teams at the bank, including:
The Microsoft architect developed an Enterprise Agreement Value Roadmap to help the bank evaluate licensing investments in light of priorities and results:
The Value Discovery Service is one of the Value Realization services that we mentioned in our earlier post, Welcome to the Value Realization Blog.
Many large enterprises, given the complexity of their business environment, operating model, and IT infrastructure find it difficult to visualize how best to use IT to achieve business goals of agility, cost-effectiveness, stronger customer relations, relevance, competitiveness, and, ultimately, improved shareholder value.
The Value Discovery Service helps to create consensus between business and IT stakeholders on what IT-enabled initiatives should be prioritized to generate the greatest business value and create desired capabilities within the organization.
When performing the Value Discovery Service, an Enterprise Architect and team first identify initial ideas and leads about the business’ priorities, tactics, and relevant scenarios that will likely deliver value to the business. These value-delivering scenarios are referred to as “hypotheses.” The Enterprise Architect then tests these hypotheses with business and IT stakeholders in the context of a one-day workshop, further developing scenarios, translating them into possible IT initiatives, and determining the priority of these initiatives.
The Value Discovery Service:
The Value Discovery Service can explore a single initiative, or many initiatives in which an enterprise is interested. The service produces a mutually agreed upon prioritized list of opportunities described by scenarios and value estimates, and provides recommendations about possible Microsoft’s involvement to maximize value.
A Summary Report documenting (i) the prioritized list of initiatives agreed upon by business and IT stakeholders at the workshop (with rationale), and (ii) initiative overviews describing initiatives’ objectives, future capability vision, key business/technology/people changes required, and value estimates.
Through the Value Discovery Service enterprises obtain:
Using information obtained from the enterprise, and expertise and proven practices from Microsoft, we:
Bank X has participated in mergers and acquisitions to increase their client base and portfolio of offerings. Over time the systems at the bank had become overly complex, with much duplication.
The bank decided to rationalize, simplify, and standardize its IT environment, but needed to define a way for implementing this change. The Value Discovery service from Microsoft helped to formulate and evaluate the possible approaches:
Not surprisingly, the final answer chosen by the bank mixed the approaches, but evaluating them initially in their pure form helped the stakeholders to crystallize their priorities, make the trade-offs, and build consensus.
Enterprises are increasingly moving services out of the realm of IT, and business units now obtain many services for themselves from providers other than their IT organizations. During and after the process of moving services out of IT, IT and business units may have overlapping responsibilities, and will benefit from establishing formal roles, liaisons, and oversight during transitions in service.
This article continues exploring the move of services out of the IT organization, using industry examples to illustrate topics in the post “What Happens When You Move Services out of IT? (Trends and Insights)”
Thanks to the following people for providing information and feedback for this article: Brad Clayton, Larry Hanthorn, Brian Loomis, Stephen Kell, Blessing Sibanyoni, and Sree Sundaram.
To drive moves from internal IT to external cloud-based services, more and more the business units are creating their own CIO-type roles.
Typically, such business units each designate a senior business leader (or someone who reports directly to such a leader) to act as a liaison with the IT organization. These high-visibility liaisons help manage the business units’ supply and demand relationships with the IT organization.
For manufacturing organizations, such as chemical and auto manufacturers, functions such as IT are usually centralized; individual business units may have designated “liaisons” to coordinate with the IT organization.
However, business units sometimes run particular applications or services outside of the central IT organization. Such applications or services tend to serve specialized functions or require specialized environments, such as:
For these businesses, running such applications and services outside of IT is not a new development; they have been operating this way for some time. In each case, the decision to run (or at least start) an initiative in a business unit instead of IT originates at a fairly high level; for example, from a sales director who wants to standardize his organization on a common process or product.
In some cases, the business units may hand the new application or service off to IT at a later time, when the new application or service is operating to the business unit’s satisfaction.
Three factors usually determine whether a business unit attempts to run a service on its own:
“Alignment” between the IT Organization and the Business Unit
How well does the IT organization understand and respect the priorities of the business unit? The two types of organizations may have significantly different priorities. For example, both may care about saving costs while maximizing value—however, they may define value very differently.
This type of disparity may become especially problematic in companies that use a “tax” model to fund IT (each business unit contributes a percentage of its budget to fund IT). The IT organization uses the resulting budget as it sees fit to provide services to the business units. Unfortunately, if the IT organization does not accommodate the priorities of the business units, the services may not meet the needs of the business units.
If sufficiently dissatisfied, the business units may use their own budgets to seek alternative solutions (and may seek to reduce the contribution they provide to the IT budget to compensate).
Skills and Resources of the IT Organization
Does the IT organization have the appropriate capabilities to provide the services that the business units want? This issue becomes particularly important when the business units need highly specialized or flexible services.
In general, IT provides services efficiently using consolidated, monolithic systems. Custom-tuning solutions for different business units is far less efficient, especially if different business units have significantly different needs. The IT organization may not even have the skills in house that are required to customize solutions in this way.
Some IT organizations find it embarrassing to admit that they don’t have the specific skills needed. However, if it does not have the right expertise, the IT organization may misinterpret the business unit’s requirements and produce a solution that does not satisfy the business unit at all.
Responsiveness of the IT Organization
Is the IT organization willing to work with the business unit to find solutions, and can it develop solutions in the timeframe that the business unit requires? In particular, companies have found this to be an issue when data access and security is involved.
In one case, a business unit was working with experts outside the company and needed to share data with them. The IT organization refused to grant the outside experts access to the data. The business unit found a way to share the data anyway, going around IT to do so.
In another case, a company wanted a secure central repository for IP. The IT organization took on this project, but worked in isolation without getting feedback from the business units that would be using it. As a result, the repository was not ready when the business units needed it. Long before the project was complete, a scientist left the company (and the country) taking confidential information with him to use for his own purposes. The company suffered a substantial loss of business and had to give up that line of research entirely.
In general, these changes can have a transformative impact on an organization, and for employees and IT they require a shift in mindset similar to the historical move from mainframes to desktop PCs and servers.
Cost savings vary depending on the type of change; for example, moving from internal IT-managed stores to cloud-based storage services can produce massive cost savings. Other services may not necessarily be cheaper when moved off of internal servers, but are definitely more agile. Faster provisioning and reduced time to market for new services are crucial for organizations in highly competitive markets.
Both the business units and the IT organizations can benefit from this distributed arrangement. Business units can get better, more responsive services without taking responsibility for the whole infrastructure involved. IT organizations can narrow their areas of responsibility to better achieve valuable objectives.
One particular finance company is moving line of business (LOB) applications and services out of its central IT organization. The decision to do so was made at the vice-presidential level.
The heads of the business units determined that the internal IT organization was not responsive enough to the needs of the business units: it was not flexible enough, and what changes it did make were far too slow.
From the point of view of the IT organization, the changes that the business units wanted would not be cost effective (for IT). Therefore, the IT organization helped the business units move services:
The change did not involve any change in budget or resources for the IT organization, although it may be able to redistribute its focus to produce cost savings in the long term.
Preliminary indications are that both the business units and the IT organization are satisfied with the progress so far. The services do not necessarily cost less, but the business units are happier with the quality of service. They can make changes to their services more quickly, and their external partners can provide solutions specific to them (instead of general solutions that have to serve all of the business units). The new arrangement has eased tensions between the business units and the IT organization.
So far, the main challenge that the company has faced involves GRC. Previously, the IT organization was responsible for GRC and data security issues. However, the new arrangement moved PII data out of the IT organization’s domain, and the business units were not familiar with GRC issues. The new services and applications potentially put PII data at risk. To resolve this problem, the IT organization stepped back in to monitor GRC and to work with the business units to maintain data security.
Business unit consumers seem to be largely happy with the results of moving to cloud-based services. By and large, they aren’t worrying about bigger, longer-term issues (even though some groups, such as Marketing, probably should be).
In general, the IT organizations have concerns about security, reliability, integrity, and so forth that the business units may not consider. Such concerns (in addition to potential loss of budget or headcount) may deter IT organizations from supporting the business units in these changes—or at least motivate the IT organizations to bring such changes under their control.
A national government identified IT as one of many areas where the government must reduce costs. To implement this initiative, the government established a network of leaders for the digital initiatives, consisting of a leader from each main government department.
This new organizational structure overlaps the existing IT structure, in which each main government department has a CIO who runs an IT organization, which includes data centers and outsourcing agreements with external system integrators. The new digital leaders (Chief Digital Officers, or CDOs) in each department have organizational ranks equal to or higher than the CIO, though they have a smaller organizational budgets.
Responsibilities are being divided between the two structures:
One unforeseen impact has been the departure of CIO personnel. CIOs tend to see the CDOs as rivals, especially as the CDOs’ areas of responsibility grow.
In this engagement, an Enterprise Architect supported a hospital facing challenges related to having no strategy for supporting user devices, as the devices rapidly proliferated among the staff.
The EA helped the hospital identify an actionable strategy, educate stakeholders about mobility issues, provide a strategic direction, and introduce a framework for addressing mobility. During the engagement, the EA worked primarily on-site, and with the close support of the engagement manager, services executive (SE), and account technology strategist (ATS).
During the engagement, the EA met with primary and secondary stakeholders to perform assessments, performed research into mobile strategies using existing IP and personal contacts, and created a deliverable that contained key findings for a mobility strategy, recommendations, trends, adoption frameworks, and best practices.
Contoso Hospital was having pre-sales conversations with an account executive (AE), ATS, and SE about the needs of the hospital for a mobile strategy. I began participating because I had experience working with mobility and BYOD (“Bring Your Own Device,” where employees use their own devices to perform work).
I was the point person in the pre-engagement meeting. Our goal for the meeting was to try to understand and scope the engagement. I was joined by the Microsoft delivery excellence director and the account team.
The initial stakeholders were IT decision makers, directors that report to the CIO. We set expectations right from the start about what a strategy is, and what it isn’t. We discussed that the deliverable would lay out priorities and address the issues that the hospital is experiencing now.
We discussed that the deliverable would achieve the following:
We discussed that the deliverable would not:
Over the course of the next two weeks, I visited again with the account team, and did some basic preparation for the engagement while the contracts were signed and the sales motion finalized.
The heart of the kickoff was level setting. During the kickoff, I communicate the following to the stakeholders:
I began working full-time on-site, finding it valuable to be close to the stakeholders. I was able to introduce myself, my work, and my associates. My account team also helped with appropriate introductions.
My engagement manager and account technology strategist attended assessment and planning meetings. They helped provide insight and ensure that we were working towards the goals of the engagement.
When I began working on the deliverable, I had a sense of the stakeholder priorities from the prior meetings, but to identify more details I needed to conduct a wider stakeholder assessment. I decided to use personas as a cornerstone for developing strategy, and for communicating about mobility tools and scenarios.
Following guidance from the key stakeholders, I identified primary, secondary, and additional stakeholders with which to perform assessments. I met stakeholders, learned about their roles, interests, and stakes in the mobility initiatives. For example: how mobility affected their activities, what they saw as the main issues and valuable opportunities, and the look of success.
I then started developing a BYOD strategy for the hospital. I accessed many resources during my research. Here are some examples of the resources I used:
In the final deliverable, I aimed to provide a focused collection of items for the hospital to explore. Here is a list of some of what I identified:
My final deliverable for Contoso Hospital was a presentation supported with a slide deck that included the following topics:
Is there more the story?
You bet.
This was only the beginning.
In the prior post, “Driving Business Transformation through Business Capabilities (Trends and Insights),” we discussed using business capabilities to support strategic business transformation. Here we’ll present more information about identifying and clarifying strategic objectives, and organizing clusters of capabilities within a strategic technology portfolio that also addresses infrastructure, team, data, and processes.
This article is based on the observations and experiences of Atul Totre, a Microsoft Enterprise Architect who has helped many organizations define strategy, assess business capabilities, and improve their strategic technology portfolios.
From the perspective of a business capability model, the driving force behind investment is to transform business capabilities.
But first a business must focus on strategic objectives and understanding how value is achieved through those objectives, before choosing capabilities to transform, and then doing so in ways that produce demonstrable strategic value.
Assessing capability requirements and maturity is very difficult if strategy issues are not resolved first to provide objectives and context. Early collaboration with business leaders about strategy helps ensure an organization realizes strategic business value when transforming business capabilities.
Questions to ask regarding strategy and the current state of the business include:
Once these questions are explored, additional information is identified for planning purposes, such as:
Microsoft Enterprise Architects have been increasingly involved with COOs and defining business strategy, as well as with CIOs and the IT organization. Enterprise Architects also become involved during strategy planning when IT organizations have difficulty mapping IT investments to the balance sheet, and have difficulty identifying return on business strategy and innovation.
When Enterprise Architects are involved further upstream, they are able to provide strategy planning services in many areas, having deep knowledge, broad industry experience, and active networks of expertise to draw on.
For example, one company having difficulty meeting supply chain KPIs began investing in more warehouses, without first identifying a more effective and valuable strategic solution of adding better analysis and distribution methods. After involving an Enterprise Architect, the company was able to translate business strategy to improved operations based on analytics and identify significant KPIs and the value contributions of improving the supply chain.
Each strategic objective may involve many capabilities, clustered into services, and dependent on data, infrastructure, people, and processes. The view of how capabilities will be matured, rather than how technology is deployed, better represents the value of long term investments.
When planning a technology portfolio to fulfill strategic business objectives, a team will ask:
More specifically, important portfolio considerations:
Do we have the right items in the portfolio?
Do we understand dependencies, risks, and assumptions?
What constraints should we consider in our portfolio?
When delivery is in progress, question include:
An organization often finds it easier to tie meaningful KPI’s to a portfolio of projects, rather than to single initiatives. For example, when attempting to improve metrics for a supply chain, a business might have a portfolio of projects comprised of productivity software, analytical tools, and inventory management applications – all together producing improved KPIs related to the supply chain.
Clearly associating a portfolio of projects with the value it will produce makes it easier to obtain funding for business transformation. Rather than attempting to fund new IT components in isolation, business leaders have more success funding, for example, improvements in warehouse management capabilities. Such improvements will involve broad investment in process changes, software, infrastructure, and integration -- but the value of the investment is clearly visible and aligned with business strategy.
This article highlights some ways that businesses are using app stores, based on the experience and observations of Microsoft Enterprise Architects.
The following contributors provided input from the field: Blessing Sibanyoni, Brad Clayton, Brian Loomis, Johan Klut, Larry Hanthorn, Peter Deane, and Robbi Laurenson.
For both customers and employees, the numbers and types of available mobile devices have exploded. At the same time, increases in the availability of broadband access, decreases in latency, and a drop in telecom costs have made mobile devices easier and cheaper to use.
In their off-work hours, employees have access to public application stores, and have become accustomed to the flexibility and agility of quickly downloading the functionality they want on any device when they want it. They want this flexibility at work, too.
Many companies have found that their customers are also familiar with public app stores, and have come to expect that type of service.
To satisfy this demand, many companies are investigating how they can use app stores, both to deliver apps to their customers and to manage employee applications.
This article looks at three ways in which companies are using app stores, and several of the factors that affect the feasibility of an app store and the effort that might be needed to adopt one.
Most businesses that have implemented app stores use them for mobile apps. Now, new Windows features are leading some businesses to explore the idea of using enterprise app stores to distribute and manage software (more than just mobile apps) for employees.
Windows 8 includes features that make it app store-friendly, helping to make app stores a more feasible approach for distributing apps to desktops as well as to mobile devices. Public app stores (Windows Store, GooglePlay, and iStore) have been around for a few years. Now enterprises can use management systems such as System Center Configuration Manager to build private enterprise app stores that can control app versioning and usage reporting. For example,
Some businesses are using public app stores instead of building private enterprise app stores. In some cases, these businesses don't have a System Center Configuration Manager deployment on which to build; in other cases, businesses want the flexibility to offer apps not only to employees but also to public customers.
One bank produces a number of mobile apps for both customers and employees. The bank decided to use the app stores to make their apps convenient and easy to access for both customers and employees. The customer apps provide access to banking services. The employee apps help employees do their jobs. The bank maintains control of which apps are generally available, and which apps are restricted. The bank also can keep tabs on which apps are popular, and who is using them.
The bank's development team worked with these stores to customize access to and delivery of the apps. For example, they have built a federated trust relationship between the identity stores that the app stores use and the bank's own Active Directory store. As a result, employees can use their bank credentials for the app stores, and the bank can manage employees' access permissions using its own directory.
As a further benefit, the app stores can deliver apps to both company-owned and external devices. The bank described previously takes advantage of this flexibility to support a BYOD program for its employees—they can use their own devices, which are not fully managed by the IT organization.
This approach saves significantly on device management costs. The bank does maintain one aspect of device management; to maintain the security of corporate data, the bank uses a Mobile Device Management (MDM) system to identify employee devices; if a device is reported stolen, the MDM can wipe it remotely.
In working with businesses that are investigating or adopting app stores, enterprise architects have identified several factors that a company that is considering an app store must deal with:
How do you manage your current infrastructure?
App stores automate policies and processes that govern and track who installs which apps. In this function, they resemble other asset management systems such as System Center Configuration Manager. If you do not already have processes in place for distributing and managing applications, you should develop them in order to take full advantage of the app store's capabilities.
Enterprise architects in the field have observed that companies who do not have mature asset management systems, or even solid approaches for distributing and managing applications, find it difficult to adopt app stores.
Can you migrate your legacy applications, or would you use the app store only for new apps?
App stores typically support apps that are discrete units that function independently. This is not true of most line-of-business applications. Those applications tend to be large, complex, and integrated with each other. These characteristics do not lend themselves to an app store model. Some companies still have line-of-business applications that run on mainframes; these applications would be even more difficult to update to an app-like format that could work with an app store.
For these reasons, many companies view an app store as a Greenfield project--something to start from scratch to use with new apps rather than legacy applications.
Do you have the development capabilities to build or adopt an app store and the apps for it?
Adopting an app store requires some development resources and capabilities, whether you build an enterprise app store or use a public app store. Obviously, the capabilities you need to design and build an enterprise app store depend on the current state of your infrastructure.
On the other hand, the capabilities you need to adopt a public app store depend on the way in which you intend to integrate the app store with your own systems. This integration process may include customizing the access controls and tracking mechanisms that the app store uses to accommodate your company's needs. Whichever type of app store you use, you also need to consider the development capabilities you need for apps—new apps, migrated apps based on legacy applications, or both.
Can your existing staff supply these capabilities, or do you need to hire additional staff? What training would your staff need?
What impact would an app store have on your business processes and budgeting systems?
In addition to budgeting for the app store adoption and app development, you may need to consider updating the chargeback and recovery models that your company uses. For many companies, the IT organization is not the only part of the company that needs to change its processes to move to an app store.
For example, some companies distribute IT costs through the business using a charge-back model (assigning costs to business units depending on software installations within that business unit). For these companies, moving to an app store not only means changing the mechanisms that track who has what software, but also updating the accounting and budgeting methods. Some companies may need to change their budgeting assumptions, or even change whether certain budget items are considered OpEx or CapEx.
If it's within the capabilities of your company, an app store--public or private--can provide an effective and flexible means to distribute and manage apps. An app store can provide desktop or mobile apps to employee computers or devices. And depending on the type of store, they can also provide customers with easy access to apps that deliver your company's services.
This post is the first in a series about using business capabilities to support strategic business transformation. Upcoming posts will discuss more details about strategic planning, and building technology portfolios to meet business objectives.
This article is based on the observations of Atul Totre, who has helped many organizations define strategy, assess business capabilities, and develop transformation roadmaps.
When businesses consider business transformation, they do so to meet strategic business goals, not necessarily technology goals. Project teams throughout a business seek quantifiable value from maturing business capabilities, without focusing on details about IT, data center modernization, identity, or other infrastructure issues.
When business problems need to be solved, an organization using a business capability model can launch a planning program to first identify and clarify strategic objectives, and then consider the business capabilities that need to be transformed, prior to designing a technical solution.
After strategy and capabilities are aligned, solution teams can implement services as collections of capabilities, specifying the infrastructure, team, data, and process elements.
This method delivers an integrated plan for business value-driven transformation, aligning business strategy with technology investments and reducing cost and waste.
A business capability represents what a company needs to be able to do to carry out its business strategy, support its mission, and maintain its position in the marketplace. For example, to manage warehouses efficiently, one company has developed capabilities for integrated planning, advanced forecasting, and flexible supply chains.
Business capabilities are not intended to model processes or define how a business does work. By focusing on capabilities rather than processes, business leaders can create the right mix and sequence of initiatives to align with strategy, not just on doing things “better, faster, cheaper.”
Business capability models vary between businesses and industries. Even in a single business, several unaligned capability models may be in use at the same time. Often, the most difficult part of developing a capability model or approach is aligning the strategies of different groups, who often use different language to describe their priorities, and differing KPIs for monitoring success and making operational adjustments.
Without performing strategic alignment, though, it remains difficult to specify or implement the services that would enable the organization to realize strategic value from investments in transformation.
Business capabilities exist in hierarchies within an organization: Strategic capabilities are made up of underlying core business capabilities, and supported with enabling business capabilities. For example, corporate strategy is aligned with sales and product development capabilities, which in turn are enabled by human resources, IT, finance, and other capabilities.
Capabilities are aligned with business functions, business services, and business processes. For example, human resources capabilities include talent acquisition business function supported by recruiting.
Multiple services typically support a business function, with each service further described by groupings of aligned capabilities. For example, talent assessment, performance management, and career planning are services that comprise the talent management business function.
When managing business capabilities, a business establishes performance goals for capabilities based on the amount they contribute to the value proposition defined in the business strategy.
From the perspective of a business capability model, the driving force behind investment is to transform business capabilities. Capabilities are intended to support strategy; investments in projects enable the new and matured capabilities.
After defining strategic objectives, a planning team begins determining information about pertinent business capabilities, functions, and services. A business asks:
Early collaboration with business leaders about strategy helps ensure an organization realizes strategic business value when transforming their capabilities. A Microsoft Architect helps a business rationalize capabilities across departments and look at how strategy can be realized by maturing groups of capabilities.
Importantly, by focusing on strategic objectives first, and understanding how value is achieved through those objectives, capabilities can be chosen and matured in ways that address specific goals and KPIs, and produce demonstrable value. Microsoft Architects often become involved during strategy planning when organizations have difficulty mapping IT investments to the balance sheet or identifying return on business strategy and innovation.
Assessing capability requirements and maturity is very difficult if strategy issues are not resolved first. A strong understanding of strategy is needed to start answering the following questions, while giving appropriate context to them:
After defining strategy objectives, an organization considers the business capabilities that will enable the strategy.
Business capability work is largely conceptual, and precedes process modeling or designing physical implementations. The approach is shown in the following steps:
Since business capabilities can span departments, functions, and services, a business can assign shared responsibility for business capabilities among appropriate business groups. Considering capabilities intact, rather than breaking them down into enabling components, makes it easier to align transformation with strategic objectives, and in turn with the associated initiatives and benefits.
Roadmaps can provide a multi-year view of technology investment needs for a capability, while supporting an integrated planning process. The language used in the roadmap is based on descriptions of key business functions, not systems. Planning discussions around these roadmaps relate to business problems, not technology.
We use several tools during a capability assessment, creating materials that become sources for the transformation roadmaps:
In the next post about using business capabilities to drive transformation, we’ll discuss more about the approach, strategy planning, and the value of defining a strategic technology portfolio to enable business capabilities.
A business case is indispensable when a team seeks funding for a program of change. The business case provides a defensible financial position for an investment. The business case, and the value model on which it is based, clearly communicate the benefits, risks, and costs of an initiative.
Business Case Development is one of the services that Microsoft Enterprise Architects conduct with businesses as part of the Microsoft Value Realization Framework.
The Business Case Development Service provides financial analysis based on a recommended architecture definition and planned program of change. A Microsoft Architect creates a business case and associated value model to produce detailed predictions of cash flows, costs, and benefits for a program.
When we perform the Business Case Development Service:
The Business Case Development Service produces a business case that illustrates the financial benefits of funding a program of change.
When a business engages a Microsoft Architect to perform Business Case Development, the business obtains:
To perform the service, a Microsoft Architect works with the account team, financial personnel from the client, and the management and steering committees for the program of change. Using information obtained from an enterprise, and expertise and proven practices from Microsoft:
During a well-planned initiative to improve business capabilities, a business achieves valuable results throughout the transformation, not just at the end of the project. To help ensure that value can be demonstrated and that a business is achieving objectives, a project team or architecture board can measure and track an initiative’s progress according to specified indicators.
To help a business track established KPI’s and measure value being realized during a project, a Microsoft Architect performs the Value Management Service.
When we perform value management, we measure and validate KPI’s that are integrated with the company’s commitments, its scorecard, and its cadence.
The Value Management Service:
During the Value Management Service, a Microsoft Architect performs many activities, including:
The Value Management Service helps ensure that the plan developed during the Value Planning Serviceis put into action in a way that stakeholders can measure and acknowledge benefits.
The Value Management Service provides a constant focus on delivery of projected business benefits, with full visibility of progress against an agreed plan. A business obtains:
To perform the Value Management service, a Microsoft Architect works with the account team, business and IT stakeholders, and the management and steering committees for the program of change.
1. We verify value measurement approach, confirming key metrics and KPIs that will be used to measure program benefits and costs.
2. We track program costs and benefits, collecting, analyzing, categorizing, and summarizing costs and benefits realized during the current reporting period and on a cumulative basis for the program.
3. We identify and mitigate risks to value realization. We review risks identified through program governance, risk and compliance efforts and adjust value realization projections based on the selected approach to risk mitigation.
4. We periodically aggregate and summarize value realization, measuring the costs and benefits realized by the program. We adjust future projections of value realization based on known risks.
5. We drive acknowledgement of value realization, gaining consensus of value to program stakeholders realized through the program of change.
A number of change management tools and models are not only useful when transforming a business or landing a project, but also in understanding why some businesses don’t operate effectively.
Two very important aspects of improving business in general and business transformation involve focusing on awareness and desire: to improve employee awareness of ways to work better, and increase desire to adopt new methods and technologies.
This post is based on the experiences and observations of Robbi Laurenson, a Microsoft Enterprise Architect and certified Prosci® consultant, who has found value in using change management principles in diagnosing organizational issues.
I recently began consulting with a company that has been struggling to effectively carry out strategic plans. It’s been easy to see at an intuitive level that there’s dysfunction in the business, but it’s been hard identifying or describing it explicitly and understanding how to approach solving it.
The problems have been especially evident as we’ve pursued changes in business operations and infrastructure. Attempting to carry out and manage necessary changes has revealed that there are deeper problems stemming from the organization itself that need to be addressed.
Morale has been low in this business, politics is evident around every corner, and there’s a lack of direction in current and planned activities.
One of the executives has turned out to be very negative about business changes. Other executives haven’t had the mandate to make decisions, and the business often seems paralyzed rather than able to effectively move forward.
Even just one problematic executive affected the larger organization. The leader was not engaged in the right ways, and was unaware of the impact this silent message was having on the rest of the organization. This was not driving the business in the right direction.
Though my influence as an Enterprise Architect is sometimes limited to driving specific initiative activities, I found this engagement largely about helping make the right things happen, in the midst of executive turmoil. I had to rely on a set of soft skills to help unblock the political situation.
I had an intuitive understanding of the organizational issues in this engagement, but I wanted a more structured approach that would help generate solutions. For example, after diagnosing business issues, we could address them during account planning, identifying key players if things go wrong, methodology for addressing organizational issues, and describing how tools and relationships can be used to communicate compelling value statements to the organization.
During this engagement, I attended Prosci® Change Management Training (see http://www.prosci.com/training/trainingoverview/).
I soon found myself mapping change management principles to diagnosing the organizational dysfunction at our client, as well as ideas for overcoming it.
The Prosci® ADKAR® model (see http://www.prosci.com/adkar-model/) describes a process that individuals go through in terms of change:
Specifically of interest to me were the phases of awareness and desire. I realized that communication issues relating to awareness were interfering with carrying out changes in my engagement, and that desire for change was ambivalent at high levels within the business.
Most people affected by change suffer from lack of awareness, which impacts all the other stages of change management. It often requires many contacts, using multiple types of media, to communicate to stakeholders. There are also different levels of awareness that people acquire about upcoming changes. Employees may be technically aware of a change without realizing that the change applies to their work.
Without adequate awareness, change does not happen smoothly, and sometimes does not happen at all. For example, one business that sublet some of their facilities forgot to inform the help desk about the new people using the equipment. When the change in facilities usage began, the help desk began getting calls from people they didn’t support, and conflict arose.
People also dislike having changes forced on them, without an explanation of the value of the change. This can make stakeholders feel that they are just cogs in a machine, without the need to know or understand. Stakeholders should understand why a change is better for them, as well as for the business. They should view opportunities enabled by the change, such as being more effective, and directly impacting the bottom line of the business.
Desire is a difficult stage of change to get through. How do you create desire in the face of resistance to change?
Keeping people informed helps overcome initial reactions against change. More desire is gained by clearly showing solutions that people will find useful.
But in most engagements, we should be building buy-in with ongoing participation of stakeholders and those who will be affected by the changes. Influencing desire begins early in the planning process. Invest in stakeholder engagement early. During this phase, it can be very useful to make a vocal champion out of someone who was antagonistic at the beginning, but who has since become a supporter of the changes.
Desire is not a set quality, especially as opinions change as changes are rolled out in phases. A great new system, with exciting and valuable benefits to the business may eventually cause someone to say, “Wait, they’re going to lay people off.” In this case, repair work needs to be done to raise the desire for the planned change and lower the risk of having adoption problems.
Desire is a fickle thing, and extremely dependent on keeping stakeholders informed of changes, value, and rationale. Changes must be seen as being well thought-out, and have involved the participation of stakeholders. Also, when business stakeholders communicate well with technical stakeholders during planning stages, IT has much more desire to enable business changes.
Both awareness and desire hinge on how you run communications through the change management process, especially in the disrupted world of a rapidly changing environment.
Two of the most important people to the success of change management are the CEO of the business, and the immediate line manager where changes are occurring. There is often no substitute for these participants: other managers don’t generally have the same influence or effectiveness in driving conversations and setting direction about change.
When you enter an account, it’s important to know if someone in a leadership position is bucking something happening, without desire for change, or thinking things won’t work out. You need to understand this individual’s drivers and personal context in order to optimize your influence. You’ll need to get this person on board: If a leader doesn’t “feel it,” the leader can’t communicate the right message to others.
When trying to influence people to “come to the party,” different approaches are needed: sometimes you can approach executives directly, and sometimes you need to approach with subtlety.
Some of the techniques for influencing business leaders include:
As I was taking the Prosci® Change Management practitioner training, it immediately became evident to me that the principles were far reaching because they deal with the core of how we get things done – people changing. Much like TOGAF® did for the harder skills in Enterprise Architecture, Prosci® tools provided a language and a framework to describe and influence how, and more importantly why, we can employ other soft skills to land successful engagements.
It’s not enough just to plan and implement – the heart of Value Realization is in landing the change that engages an organization together in creating something better. That means winning the hearts and minds of everyone involved, from start to finish.
When I find that I am struggling to understand why an engagement is not turning out the way I want, turning to the human aspects of awareness and desire is often key to understanding the underlying restrictive dynamics.
I’ve realized that change management principles are both an essential tool for landing projects, and a critical lens for understanding the inner human mechanics of the organization. In this era where we are driving not only purchase and deployment of solutions, but also adoption and utilization, change management is going to be a key pillar of our success.
What happens when an insurance company looks into modernizing business applications to increase productivity, improve customer service, and create a more easily supportable ecosystem for their employees and customers? Let’s see…
This is a Delivery Documentary of an engagement led by the Microsoft Enterprise Strategy Program (ESP), which provides services to help customers realize value from their technology investments. In this engagement, an Enterprise Architect helped Contoso Health Insurance develop a strategy to transform the business with mobile devices, and to rationalize and streamline the enterprise application portfolio.
The Enterprise Architect worked with a team of colleagues and subject matter experts (SME’s) to help stakeholders and end users envision a mobility strategy that would increase productivity and improve customer service. In addition, the team provided recommendations for adopting a modern application platform that would improve app hosting and enable agile development and testing of apps.
I was originally brought into Contoso Health Insurance by a Project Lead responsible for workstations, in response to new requirements for supporting mobility, and multiple devices and platforms. We continuously reported our status, findings, and recommendations to the Project Lead, even prior to formal presentations to stakeholders.
We also brought in different recognized industry and regional SMEs in health care, a mobility architect, IT strategy consultants, and Microsoft IT about our use of system center. We established peer-to-peer connections between the Microsoft IT department, and the IT department of Contoso Health Insurance. This quickly revealed many different perspectives about the issues, priorities, and pain points.
Before starting detailed discovery, we facilitated kick off meetings where the executive sponsors, CIOs, and CTOs presented their perspectives on business value. These views guided us through the engagement as we identified and compared value propositions of different possible initiatives.
We had many meetings with individuals, teams, and sub-teams to explore the areas in which we could make valuable changes. The discussions focused on productivity, optimization, and security. We were just finding out the lay of the land, not making recommendations yet. The breadth of topics was comprehensive, covering business processes, platforms, how apps are hosted, standards, security policies, industry trends, and more.
In some cases, we provided information and guidance from Microsoft SME’s. For example, we drilled more into the nature of information protection strategies, bring your own device strategies, and measuring results from such changes. The detailed guidance that helped at the beginning of the engagement included information about:
During the discovery process, we reviewed the pains and needs of the company as expressed by the CIO, CTO, and many stakeholders. We conducted activities to help executives and stakeholders envision their goals, and discussed business goals that could impact the architecture. We also presented some context about how our recommendations could be addressed, while maintaining a focus on business objectives.
To make the discovery process as efficient as possible, we first focused on capturing as much information as we could. We then took a short break from the process to gather additional data and perform analysis to support discussions of business value. After preparing a summary of our findings, we met again with executives and stakeholders to validate our findings.
The validation meetings revealed more about the details we needed to frame our recommendations, especially in emphasizing value to all stakeholders. For example, one discussion we had in the first week of discovery was around security and identity management. We found they had many security-related systems, each handling different aspects. There were also projects in progress for updating some of the systems.
When we analyzed this area, we found that a new overarching project was necessary to provide the desired benefits. When we met again to validate our findings, we talked to the security team and confirmed that we were on the same page with them about the value of these projects.
We created a report of our recommendations and presented it to our sponsor to review. After discussing the details with the sponsor, and other business leaders, we met with a broad audience. During the meeting we discussed what we had done so far, itemized the areas we looked at, described what we had found, and talked about the areas that we suggest receive the most focus.
Our presentation covered these topics:
We had an additional recommendations meeting with stakeholders who would be paying for the work. In this meeting we focused on the high value areas of work, quantitative measurements, the expected return on investment, and the cost. We identified a number of strategic changes that created a large enough value proposition to offset the cost of adding an architecture resource.
During this meeting, one of the company’s directors gave a presentation validating our work, providing additional support for our recommendations.
In summary, we proposed the following work streams, which a Microsoft Architect could help drive.
Application Rationalization
Numerous overlapping applications were deployed within different areas of the Contoso organization. Prior efforts to rationalize, integrate, or migrate applications had been unproductive; many applications no longer had active owners or anyone in the business with knowledge of how to modernize them. In some cases, IT had to maintain support for old operating systems on servers and workstations to enable outdated applications to continue working.
We proposed to rationalize the portfolio to identify apps to retire, and which apps they already have that can provide modern app capabilities they desire.
Modern Applications and App Hosting
There was no standardized app platform at Contoso, preventing effective mobile use of business apps, creating service-level problems, and hindering the creation of modern apps.
We proposed that moving to a platform that would enable modern apps, demonstrated prototypes and pilots from industry teams (such as healthcare and insurance), and quickly gained support from management to move forward on this work-stream.
We created a number of deliverables during the engagement in the process of collecting, analyzing, and presenting information:
Delivery Documentary: Contoso Hospital Goes Mobile
Delivery Documentary: Establishing a Value Realization Center of Excellence (COE) at Contoso Bank
Delivery Documentary: Security Strategy for Devices at Contoso Insurance
Delivery Documentary: Business Transformation at Contoso Bank
We are all familiar with the many IT mega trends of today: Cloud, Social, Mobile, Big Data, the Internet of Things, etc. The common theme is clear; the role of Information Technology (IT) in the turbulent, digital economy has become absolutely critical in helping organizations respond and adapt to these mega trends.
No matter how dramatic the shifts in digital economy are, an essential requirement that has not diminished or changed is the crucial importance of creating shareholder value.
In today’s connected, global economy, boards and managers increasingly recognize that their primary responsibility is to maximize the total wealth-creating potential of the enterprises under their direction.
For today’s senior executives, finding the answers to the following three questions is still critical:
Even more fundamentally, answers cannot be had without first understanding the following topics:
The fundamental economic principle for creating shareholder value, or shareholder wealth, is for businesses to earn a profit that is greater than the cost of capital. This measure of profit, first described by the British economist Alfred Marshall 250 years ago, is called Economic Profit (EP) or Economic Value Added (EVA©). EP, sometimes called Residual Income, has been known to accountants for decades. EVA is also a standard part of MBA curriculum in most business schools. EP or EVA is a measure of shareholder value that has been adopted by thousands of companies globally.
The EVA framework uses a practical application of well-established corporate finance tenets. The two most important are:
EVA profit is measured by deducting the full cost of debt and equity capital from net operating profit after taxes (NOPAT).
EVA = Net Operating Profit after Tax - A Capital Charge EVA = NOPAT - Cost of Capital x Total Capital
Creating wealth requires that managers grow sales and manage costs. However, they must also effectively manage the capital provided by investors and lenders in order to create wealth.
Calculating company EVA shows whether shareholder value is being created. In order to de-construct the sources of economic value within the company, the economic value contribution of business units, customers and products need to be calculated as shown in the diagram below. Finally, the value contribution of IT services is revealed by tracing these services to the value drivers that impact products and customers.
Unpacking the definition of EVA, the Financial Value Drivers are revealed as:
Measuring IT’s impact on shareholder value is aided by a visual map showing the value drivers that create it.
Using Discounted Cash Flow
The economic value of the firm is simply the sum of the economic value of all the business units and initiatives undertaken by the firm. The best single measure of economic value is the present discounted value of cash flows; or Net Present Value (NPV). The process for calculating the NPV of an IT initiative is diagramed below:
Although there are many methods for mapping IT programs and initiatives to the financial Value Drivers of a company, the two most effective are Activity-Based Management and the Cranfield Business Dependency Network.
Activity-based management (ABM)
ABM is a method of identifying and evaluating activities that a business performs using activity-based costing to carry out a value chain analysis or a re-engineering initiative to improve strategic and operational decisions in an organization. Activity-based costing establishes relationships between overhead costs and activities so that overhead costs can be more precisely traced to products, services, or customer segments. Activity-based management focuses on managing activities to reduce costs and improve process productivity. Acorn Systems, an activity based costing software company, has combined ABC and EVA to calculate the Economic Value Contribution of customers. (1)
Benefits Dependency Network (BDN)
The Cranfield University in England has developed a Benefits Management program for delivering value from investments in business projects and change programs. The Benefits Dependency Network (BDN) is part of a convincing and robust business case. The business case must be aligned to the business drivers of an organization. The means of collecting the information may come in a highly structured process involving many workshops, discovery sessions, and interviews; or management might be able to quickly identify the business benefits or might even have them already documented. The goal is to ensure that the proposed investment is tied to real drivers for the organization. The BDN becomes the communication tool to ensure that management understands, and more importantly, agrees with the relationship between the proposed changes, the benefits, and their objectives and drivers.
The use of the BDN will help to facilitate the necessary discussion to answer the following questions, identified by Cranfield research as critical to the successful development of an effective business case:
Aligning IT initiatives with business goals and objectives is critical. The number one goal of any for profit organization is to improve shareholder value. Consequently, it is essential that technology executives demonstrate to their fellow executives and shareholders how the value of IT is measurable and traceable to shareholder value.
Footnotes
(1)Houston, TX, May 17, 2004-Stern Stewart, pioneer of its proprietary EVA® framework and Acorn Systems, the leader in profit and cost analytics, have partnered to deliver Customer Value Analytics (CVA), a solution that enables companies to measure and identify opportunities to increase the Economic Profit of their customers.
“Acorn Systems’ Consumption-Driven Costing is the most advanced and scalable profitability analytics package in the market today,” said G. Bennet Stewart III, Senior Partner, Stern Stewart. “With CVA companies can now accurately measure the economic profit of individual customers and customer segments and identify actions they can take to grow their most profitable customer base and to increase the profitability of underperforming customers.”
Evergreen IT refers to running services comprised of components that are always up to date. Evergreen IT encompasses not only the services at the user level, but all of the underlying infrastructure, whether onsite or outsourced. Many organizations believe that evergreen IT holds promise for reducing the resources and energy they need to expend on providing the up-to-date and flexible services that their users are demanding.
This article, based on the experience and observations of Microsoft Enterprise Architects, explores the nature of evergreen IT and what it requires of IT systems, as well as the challenges that IT organizations face in pursuing the most common types of evergreen IT solutions.
The following contributors provided input: Johan Klut, Larry Hanthorn, Mary Lynn Pontier, Peter Deane, Robbi Laurenson, Sree Sundaram, and Stephen Kell.
Companies like the idea of offering applications that are always up-to-date or that can change quickly in response to business needs. Companies also seek to provide this flexibility while reducing the time and expense required to do so.
However, most companies find these goals next to impossible to reach using their current systems, technology, and management approaches. As systems have become increasingly complex, the amount of effort and expense needed to maintain them has increased, and the prospect of making changes to them has become daunting. Businesses may have to change their IT strategies and infrastructure to pursue evergreen IT.
For IT organizations that want to keep all of their systems in-house, converting to evergreen IT is similar to modernizing their data centers:
Many companies aren't interested in an extensive overhaul of their IT systems. As a more economical solution, many companies conclude that the best way to control the burden of updates and restore flexibility to their systems is to replace some of them with cloud-based evergreen services.
However, simply subscribing to an evergreen service does not make an IT organization evergreen. In order to get the full value out of an evergreen service, the IT organization still needs to modify its systems and strategies to become at least partly evergreen itself. Integrating with an evergreen service impacts at least the following areas:
Subscribing to an evergreen service is only one step toward providing users with an evergreen experience. The IT organization needs to make sure that its applications and their supporting infrastructure are compatible with the service, and—most importantly—that it can maintain that compatibility as the provider updates the service.
For example, some companies have published APIs to facilitate business-to-business integration with both their suppliers and customers. Their IT organizations now have to think of themselves as service providers, and provide versioning support and backward compatibility for the API customers. These IT organizations need to be sure that an updating service won't disrupt these APIs.
Smaller companies typically find it easier to adapt their IT organizations and technology to evergreen IT. For example, multiple standardized but configurable systems are easier to update than multiple custom one-off systems. But standardizing systems is easier to accomplish for smaller organizations than for larger organizations that may be burdened by accumulated legacy systems.
The IT organization's operations and management processes need to account for and respond to factors that originate outside the company—outside of the traditional IT domain. These impacts can affect many different areas of operations and management, some obvious and some less so. Issues that the IT organization may need to deal with include:
How should the change management processes accommodate the evergreen service?
An IT organization that is mature enough to successfully integrate an outsourced service typically uses a change management system to log all change proposals and approvals for the managed systems. However, an evergreen service provider is unlikely to send its frequent updates through each customer's change management process. The IT organization needs to confirm what kind of communications or notifications the provider can supply.
How should the incident management processes accommodate the evergreen service?
If there is an interruption in service, incident management processes need to trigger immediate remedial action as well as appropriate communication between the business and the service provider to help resolve the issue. Microsoft, for example, is helping businesses using Office 365 to adjust their incident management processes.
What privacy and data security standards must be applied to this service?
In a general sense, using a cloud-based evergreen service means treating the internet as part of the business network and the business network as part of the internet. The IT organization must ensure that the data processed, communicated, or stored by the service is appropriately protected. In addition, the IT organization must ensure that integrating the service into its systems does not introduce vulnerabilities or possible avenues of attack.
How does the company's regulatory environment affect the way it can use the service?
Regulations may restrict how a business can use a cloud-based service. For example, some countries require that companies store certain types of data onsite, and not in the cloud. In other cases, regulations may restrict the ways in which the IT organization can integrate the service into its systems.
How do budgets need to shift to accommodate the evergreen service?
Typically, subscribing to an evergreen service reduces a company’s capital spending on IT, while increasing its operational (service) spending. Depending on the magnitude of the service costs involved, such a change may take a full budget cycle to implement. In addition, implementing the service may incur substantial one-time costs for training, communication, and change management. In the long term, the business may have to adjust its budget cycle to accommodate the evergreen service billing schedule.
Does the IT organization's Help desk need to support the evergreen service, or does the service provider include support?
What legal issues may arise from using the service?
Although the IT organization may not need to maintain as many systems as before, it needs to keep the remaining systems coordinated with a constantly changing evergreen service.
To do this, the IT organization needs to improve its agility and efficiency. Many companies have built their IT organizations around the need to design, build, and run large-scale services—projects that can span years. Adapting to an environment where services may update every few weeks or months—with updated content under the control of an external provider—can be challenging, especially for large IT organizations.
The IT organization needs to maintain a close relationship with the business units and other customers it supports. As the evergreen service changes, the IT organization needs to communicate any potential disruptions to the business units, and provide information about new or changed features. In addition, the IT organization needs to understand the needs of the business units and make sure that the service is meeting those needs.
IT organizations can pursue evergreen IT as a means to improve the level of service to the business while controlling costs. To get the full value out of evergreen IT, the IT organization needs to do more than just subscribe to a cloud-based evergreen service: Effectively using that service may mean changing existing systems, revising management processes, and changing the way the IT organization interacts with the business it serves.
What steps does a company take after finding out that large amounts of IP have been leaking into the hands of competitors? This example, provided by Sree Sundaram, describes how a Microsoft Architect helped a business create a strategy for protecting information.
This is a Delivery Documentary of an engagement led by the Microsoft Enterprise Strategy Program (ESP), which provides services to help customers realize the most value from their technology investments. In this engagement, an Enterprise Architect helped a client create a strategy for changing employee behavior and business processes to stop IP leakage and support robust IP protection.
Though the IP protection strategy that was developed had technical underpinnings, this engagement was primarily about
Over the years, Contoso has witnessed their IP gradually leaking into the hands of competitors, and management has recently become aware of large releases of confidential material in very short amounts of time. Problems with IP protection have affected customers, partners, employees, and governing agencies on a global scale.
The company was in the process of deploying new productivity software and a collaboration platform, and IT had addressed the technical details of protecting data at rest and in transit. However, because IP leakage had previously occurred in similarly protected environments at the company, the stakeholders began to focus more on people and processes.
Contoso needed a business strategy, not a cyber security solution. Not only was technology maturity required for IP protection, but the business wanted to know how to change people and processes at the company to ensure adoption of new technology, and awareness of and adherence to policies. A strategy, envisioned target state, and a roadmap was necessary.
I did an extensive survey of Contoso, encompassing all global employees in different divisions and different roles.
To begin, I had access to the members of a business liaison committee that had been established for an earlier project. I met with each of the senior directors that made up the committee and described the help I thought was needed, and how I could represent their interests while addressing business goals.
The directors adamantly wanted to work from a business view, not from an IT view. Supporting this, I explained the methodology and strategy I would use to improve IP protection in light of business requirements, employee behavior, and operations.
I met early, and often, with the Chief Security Officer (CSO) of Contoso. I pledged that the conclusions and advice I offered would be rationalized and based on facts, and that I would present all assessments and recommendations to him so he could discuss with his team prior to wider distribution. During the engagement, I was also able to facilitate and improve his access to the IT team regarding the status of the work. As a significant stakeholder in the engagement, it was important to be able to build trust with the CSO and his team.
While independently meeting with stakeholders, I found that many employees were worried about their work being misrepresented by others, especially in regard to responsibilities for protecting information. In my role, I was able to have separate discussions, outside of formal workshops, to effectively gather information from employees who might otherwise have been reluctant to share ideas or point out problems.
Taking a business-focused approach was critical, even though IT was a champion of improving information protection. Prior experience with IT had left many business divisions feeling that their business needs were not being addressed.
I held several workshops, with different groups of stakeholders, to determine their business perspective of information protection. How did information protection and stolen IP affect and expose them? There were many stakeholders with differing views, but after our workshops, all participants were able to more clearly articulate their requirements and better participate in the entire conversation.
The stakeholders responsible for data classification at Contoso were interested in meeting to discuss how Microsoft performed data classification. We held a workshop about our methods, the challenges we faced, outcomes, and our place in the journey.
The legal staff had originally done the data classification work for the business. After I developed a more detailed data assessment survey, the staff was able to enlarge their vision of the work necessary, and requested that I assist them with implementing improved data classification methods.
Given the information that we had gathered, we assessed the maturity of the Contoso information protection maturity when considered against various models.
We assessed using models from Gartner and Forrester, as well as using the Microsoft Enterprise Information Management Architecture, and determined the maturity ranking, and a target ranking their could realistically strive for within a short amount of time.
Bringing in a team of SME’s, we determined how IP and information could be protected on-premises, and as the enterprise moved to the cloud. We created a Proof of Concept (POC) that detailed the target state, including a roadmap, value points, and deliverables.
As part of the POC, we provided insight from experts from MSIT about how Microsoft protects information and IP, and showed how Contoso could adapt our processes given their maturing capabilities.
After the POC was delivered, we held a workshop on the next steps. Participants included senior executives, the CSO, business stakeholders, legal, and IT. We were able to deliver a consistent message about implementing the recommended strategy and meeting requirements for information protection while expanding business operations to the cloud.
This example, provided by Atul Totre, describes what happens when a Microsoft Architect finds that one of the projects he was called in to help with is not likely to produce the expected return on investment. What steps led to this finding, and what changes did the Microsoft Architect recommend to help the business succeed? Let’s find out…
A Microsoft Architect was called to help with a project that he assessed and found was not likely to produce the expected value. After thoroughly assessing the project and interviewing stakeholders, the enterprise architect presented his findings to the CIO and other top stakeholders. After reviewing and discussing the evidence, they agreed that continuing the project was not in the best interests of the business, and the resources involved could provide more value in other projects.
I began helping a business with a multi-year project to design and implement a new Identity and Access Management (IAM) system. The project had begun after an internal audit found that most of the IT systems failed the security compliance checks. The new system was supposed to replace the multiple identity systems currently in use at various facilities, to help bring the systems back into compliance with security standards.
Because the audit results had attracted attention within the company, the IAM project was well-funded, even though it was not expected to significantly change productivity. Its main impact was expected to reduce risk and improve understanding (and manageability) of the affected systems.
When asking for Microsoft’s help with the IAM project, the CIO expressed skepticism about the project’s progress. In the CIO’s opinion, the project was too big and there was a lack of structure in the approach of the internal project team. As the first priority, the CIO was looking for leadership and guidance from Microsoft to help:
After these steps were complete, the engagement could move on to redefining the strategy, roadmap, and plans for the IAM project.
For the first part of the engagement, I worked with five customer stakeholders and stakeholder groups:
Within a few weeks, I expected to have assessed the current state of the IAM initiative, including:
I also made a preliminary assessment of the expected (“To Be”) state of the IAM system following the current project. This assessment covered:
I also talked to the stakeholders and others to gain the perspective of the business on the IAM initiative. During discussions with the stakeholders, I also provided information about best practices for IAM strategy, as identified by Microsoft.
Following the assessment, I spent the next period on initiative planning and stakeholder workshops. The results of this planning process included roadmaps for business capabilities, the IT service model, and technology for the initiative for the current year, and a strategic roadmap for the initiative for the next 3 to 5 years.
To keep the stakeholders informed during the engagement, I regularly reported status:
I completed the first assessments, which included infrastructure optimization, maturity, compliance, as well as investment assessments, and a standard ESP initiative assessment. The information I gathered during this process helped me understand:
As I conducted my assessment and discussed it with business leaders and stakeholders, I began to see factors that contributed to the problems that the initiative was having.
I began a deeper examination of the IAM initiative based on my own perspective, knowledge, and experience. I found it to be a “horizontal” initiative that affected business groups throughout the organization, affecting operations throughout the organization. And it would cost a lot of money to implement. To succeed, the initiative must have support and ownership beyond the IT organization, and it must take the concerns and considerations of the business priorities into account.
In addition, I confirmed the CIO’s view that there was a lack of structure in the project team’s approach. In my experience, an initiative of this scope and size must be built on detailed structural analysis and strategic work, which was lacking.
To complicate matters, although the CIO had defined priorities for the IT organization, the strategies for supporting those priorities were not yet fully defined. Without those, it would be difficult to determine how to bring the initiative in line with those priorities (or if that realignment was even feasible).
I concluded that the business was unlikely to succeed with the current initiative, which did not directly address the needs of the business, and did not have enough support to succeed. The business would have to finalize strategies supporting its eight IT priorities, or face ongoing difficulties in defining a identity and access management solution that would be satisfactory across the business.
I presented my results to the CIO and the leadership team at their regularly scheduled meetings and used that forum to start the larger conversation about the identity and access management needs of the business. I shared my analysis, showing that the current path would not produce a solution that met the needs of the business, and I recommended that the business would be better off not spending money on a solution until having identified one with a better chance of success.
After reviewing my recommendations, the CIO agreed that the IAM initiative in its current form could not provide the needed return on investment, and he made the call to shelve the project.
The business also released the third-party consultants that had been helping with the IAM initiative, and redeployed its internal resources to address other initiatives:
Innovation is hot. There are a huge number of articles about being innovative; every company wants to think of itself as innovative; consultants warn us that only innovative companies will survive and grow.
But what is innovation, and how can IT participate in a central and valuable way?
This post, written by Stephen Kell, explores these topics.
I believe the main characteristics of innovation are new ways of doing things that help an organization or community realize more value from strategies and investments.
For a company, benefits could be either greater efficiency, new revenue streams, or improved brand perception. For a not-for-profit organization, innovation could produce benefits that increase social impact and the value of services provided to a community.
In order to manage innovation ideas, I categorize innovation into three different types:
Continuous Service Improvement Innovation
Technology-Led Innovation
Business Innovation
Small changes or improvements which can have huge impacts on the cost and quality of service delivery
Cross-Industry technology mega-trends that have emerged to offer potential business value
New business models based on new value propositions, disruptive new entrants, technology disruptors.
Can be organizational, process, systems, or facilities.
Industry and market trends, drivers and disruptors and their business impact
Innovation distinguishes business from competition
By categorizing types of innovation, we can apply different processes to the different types of innovation.
Continuous Service Improvement
This type of innovation can come from anyone within the organization and the ideas are often collected by an ideas hub, enabling people to vote for the ideas. The ideas are then passed to a panel from IT and the business to decide whether to move forward with the ideas.
If the idea goes into production then the business often makes a token award to the innovator. These ideas are often small changes but can have a huge impact on the bottom line, making it worthwhile to collect the ideas and sift through them in order to find the real gems.
Technology Led Innovation
Technology Led Innovation is based on new technologies which are potentially disruptive. The IT organization monitors new and potentially disruptive technologies and assesses impact to the business. When valuable technologies are identified, they are then used to create a proof of concept. In order to realise full value, an enterprise will need to create a business change program to accompany the technology project.
This type of innovation is where the most value is derived, but also the most risk encountered. Here, business models are developed around new technology or new value propositions. Companies pursuing business innovation are seeking value propositions that are fundamentally different from that of their competitors. Innovative ideas end up at the board level, although initial ideas can come from anywhere in the company.
An example of a technology led business innovation is eBay, which imitates auction houses but with a different, more accessible business model.
A useful book that discusses this type of business innovation is “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,” W. Chan Kim and Renée Mauborgne, Harvard Business School Press, ISBN: 1591396190.
Companies are very dependent on technology in order to perform their business. The CIO should, therefore, be a key member of the executive management and be seen to be one of the leaders of business strategy and innovation.
However, all too often the CIO and IT department are seen to be the providers of infrastructure, a view that may inhibit innovation because of business restrictions to help ensure security and system integrity.
In order for the CIO and his IT department to be seen as a valued business partner, the CIO has to demonstrate how IT is adding real value to the business by business innovation. Otherwise the CIO may be side-lined as just a provider of infrastructure services, and the business will look for other sources of innovation to add value. Sometimes enterprises even establish rival organizations to IT under a Chief Digital Officer or a Chief Innovation Officer.
Though IT departments sometimes set up “innovation centers,” they all too often stay restricted to testing new technology or upgrades to existing applications or products, with little relevance to the business.
In order to be relevant to the business, innovations have to be linked to business strategy or business initiatives; innovations have to be solutions to business challenges; innovations need to focus on realizing more value from operations, sales, employees, customers, and other facets of the business.
The types of tools that can be useful to drive this relevance and to show the value of the innovations are:
These techniques are useful for demonstrating the relevance of innovations to a business and the value generated from innovations.
When discussing creativity or innovation, one mantra is “think outside the box.” However, I would instead agree with Luc de Brabandere (Thinking in New Boxes: A New Paradigm for Business Creativity, Random House, ISBN-10: 055384119X), who advocates thinking in different boxes.
Brabandere points out that people think in structures and models, not in a vacuum. Therefore a person’s thinking is bounded by the box that he or she is thinking in. In order to be truly innovative or creative a person needs to think in a different box.
The Beatles, one of the most creative bands that shaped the music we listened to for decades after they split up, thought about music in many boxes, including a new one that combined Indian music with jazz and blues. The band embraced the diversity of different cultures to come up with something truly innovative.
Similarly, by embracing the diversity of their employees, rather than trying to fit them to a mold, organizations can become more innovative. Organizations can find different boxes by challenging the way they look at themselves and exploring if there are other ways of categorizing themselves.
Innovation is the life-blood of an organization that wants to grow. But innovation must be linked to business value to be effective. Technology is one of the key drivers behind innovation and the CIO must be one of the innovation leaders in partner with the business. The business and IT leaders should not challenge the organization to think outside the box but rather provide pointers to different boxes that employees can think within to innovate in valuable ways.
Written by Martin Sykes and Paul Lidbetter, this post is a prelude to an article they will publish following the World Cloud Forum in June, 2014.
The McKinsey 2013 survey of business and IT executives found that the top technology priority was to improve business effectiveness and information availability.
However, as leaders become more aware of the critical strategic role of IT, the survey found that leaders are also becoming less satisfied with how effective IT is within their organizations, with just 13% of respondents being completely or very effective at introducing new technologies faster or more effectively than competitors, compared with 22% last year.
The overall focus for many was to increase spending and capabilities on analytics and innovation while reducing spending on infrastructure.
Driven by the growing demand for business digitization, mobile and on-line services, and a need to increase business impact, some line-of-business groups are taking local leadership for some application development and service procurement activities, thereby acquiring and running pockets of their own services and devices. This trend is sweeping away the long evaluation cycles for new technologies and large solution deployments of traditional IT organizations.
The services being acquired by line-of-business IT are coming from the cloud, where design and deployment are no longer challenges for the organization. Now, ensuring adoption, change management and operational oversight become key to realizing the value.
Based on this dynamic environment and the fast growing delivery of product and associated solutions through cloud channels, is the age of the big refresh project coming to end? How does the role of IT within an organization need to change? This is the theme of a paper I have been writing with a colleague recently, that will be published later this year. Here are a few thoughts from that paper that relate specifically to value realization.
There have been some significant changes in how people can acquire and deploy services and devices that challenge the traditional dominance of the IT department. The trends are:
Faster technology cycles, which are now changing within the year, results in business change being always behind the curve and hence the question 'is this still the right investment?' must be asked more frequently. If an organization cannot continually ask this question across its portfolio then not only will opportunities for growth, innovation and differentiation be missed but valuable assets will be wasted, losing competitive advantage.
Faster solution service cycles, with business solutions delivered over cloud services updating in some cases every month place pressure on organizations to decide how (or even whether) to adopt the new functionality as it becomes available. IDC believes that 82% of all net-new software firms will provide their software as cloud services.
Business agility is demonstrated every day as business groups buy services online or bring their own devices to work to rapidly take advantage of new opportunities. Business leaders would probably not talk in these terms, but the reality is they are trying to repeatedly achieve faster delivery of value on investments before competitors achieve competitive parity.
The bulk of traditional IT seems irrelevant to those outside the IT organization in the light of these trends. And yet this is just the start of the change that IT departments will need to adapt to.
EVERY year will beat the previous on the number of service releases until we reach the point where EVERY service changes at least once EVERY year and through cloud subscriptions lands on EVERY device for EVERY one of our users without the IT department having to do anything.
A value management culture becomes the new cornerstone to create the IT-Business foundation for the future to deliver repeated capability improvements for continuous competitive advantage. The portfolio of business investments in IT need to be managed by the value they will deliver, and no longer by the investment profile or internal resource constraints.
Value management drives new approaches to portfolio management as well as a culture change at the top. We believe that to be successful organizations will manage a value portfolio (as opposed to an investment portfolio) for IT to achieve faster business value cycles, with business intelligence supporting governance processes to identify the business capabilities with the greatest value potential.
As well as impacting the role of IT in the organization, such a change to managing value also drives the change to a more pervasive role for IT and a more value focused mind set for the organization as a whole.
As organizations move towards a Value Management/Adoption focus versus a Business Justification/Deployment mind set the message 'we delivered on time and budget' is assumed, the 'we co-delivered measured value to the business and customers' is the future focus. Project Management Offices (PMOs) will change from just tracking the cost of programs and projects delivered to the value realized in the business, with PMs including adoption and realization of value measures in the project scope.
We are not in the business of predictions, but we can say what we are seeing our leading customers do in response to the challenges we have described. Some of these changes are quite disruptive to the existing approaches IT departments have taken, especially where they have outsourced all of IT provision.
IT leaders are managing two portfolios, one with technologies and applications that have become commoditized and can be run at the lowest cost for a standard service, and one where the technology is providing business differentiation.
With the trend over the last 20 years to outsource IT provision there has also been a trend to focus on IT mainly as a commodity. Outsourcing organizations have had a hard time balancing the low costs required of them with the occasional requests for new projects and differentiating capabilities. We are now seeing a clearer separation in the IT strategic planning process of these portfolios and of the sourcing strategies for each portfolio.
With the growth of cloud, mobile, big data and social computing we are seeing organizations make critical information available to ever more people on more devices. This significantly increases the surface area for data loss, or theft. IT remains the central body that must have a firm handle on identity and security policies. It is also the organization that can provide secure access to shared information services, through internal APIs, to allow business units to create their own applications and modernize their own business processes.
Value is a core component of many business cases, but when approval is received and the project commences the project manager is typically focused on delivering to time and cost. The value component is lost.
In leading organizations the project and program managers are now tasked with delivering the value described in the business case, resulting in a trend for shorter projects with better definition of the change processes and adoption metrics for users of business capabilities enabled by the IT systems.
As more solutions are delivered from the cloud, with no IT deployment project, there is also a need for IT staff to focus on change management and user adoption techniques to ensure the user community is able to get value from the new features regularly appearing in the on-line solutions.