In the prior post “Six Keys to Succeeding in the Changing Role of Enterprise CIO (Trends and Insights),” we summarized observations and experiences from a group of Microsoft Enterprise Architects about what differentiates successful CIOs from those that don’t do so well.
Here we’ll present brief examples of CIOs attempting to manage their organizations and rebuild the relationship between IT and the business, while:
Thanks to the following people for providing information and feedback for this article: Peter Deane, Larry Hanthorn, Johan Klut, Paul Lidbetter, Brian Loomis, Stephen Kell, Robbi Laurenson, Mary Lynn Pontier, Blessing Sibanyoni, and Sree Sundaram.
To make tough decisions, change IT organizations, and make those changes stick, a CIO must have a clear vision of how the IT organization should work, be able to articulate the strategy for the IT organization and for the business units it supports, and must lead an effective team.
Team-Building
In the past, CIO’s in one market were characterized by their autocratic approach to managing their organizations, and those organizations were frequently disrupted by competitive internal politicking between silos.
More recently, new CIOs have tended to take a more collaborative approach. They realize that the IT organizations need to work with networks of dependencies both internally and with vendors and suppliers. As the changes at the top level begin to ripple through the organizations, they begin to become more collaborative and effective.
A bank in this market has now had the same CIO now for five or six years. This CIO is continuing to do well and is making major savings in the company's IT budget by making clear strategies and plans, and communicating them widely.
To start establishing a vision for the IT organization and its role in the company, the CIO instilled a set of shared values among the team leads. The team leads committed to these in written values statements and leadership commitments.
The team leads and the CIO then traveled to the different company sites to engage the rest of the IT personnel and get them on board with this vision. The IT personnel also signed leadership commitments.
In order to keep IT personnel engaged in the organization and its goals, the CIO pays considerable attention to acquiring and managing talent, focusing on team building, and providing excellent collaborative experiences to employees.
Some CIOs have improved their IT operations by consolidating data centers and reducing the data center resources that their companies need. This process includes eliminating redundancies and rationalizing applications, workflows, and processes. These CIOs have also ensured that the processes are standardized, transferable, and leverage known best practices.
During such transformation, the CIO must help develop and communicate a clear set of governing principles. Without such principles, businesses seeking to improve IT operations will encounter many difficulties.
“Running 100 miles per hour with scissors”
One manufacturer recently replaced its CIO. This new CIO is making some leading edge changes, while dealing with an IT organization heavily burdened with legacy systems and processes.
The new approach, combined with new plans that the CEO recently announced, mark a dramatic change in approach for the IT organization. In the past, this company outsourced several services, but still managed to spend a very large amount of money on IT. The pace of change in IT processes and technology was relatively slow.
The new, but still problematic approach has two main components:
There is also an important piece missing from this CIOs approach: a clear set of governing principles. As a result, one stakeholder described the company's actions as "running 100 miles per hour with scissors." This IT organization may be particularly vulnerable to issues arising from unclear governing principles because the majority of the IT workforce consists of new hires. Some of these new employees have been hired from IT organizations in other companies, and are accustomed to doing things in certain ways.
Many other new employees have been recruited from colleges, and are new to working in corporate IT as well as working in teams. With these new hires, team development and skill transfer have become crucial to the IT organization.
The CIO wants to focus on the business, and be able to measure how the IT organization contributes or gives back to the business. One of the main challenges is a workforce that is too new to understand the business well enough to carry this out. The organization is improving ways to understand and communicate business priorities, standards, and policies to create effective teams and meet business needs.
The most successful CIOs are involved in the business planning process, rather than "aligning" the IT organization with the business. These CIOs can express the value of IT to the business – how the IT organization can add more value to the business by acting as a partner, not simply acting in a support function.
The Microsoft Architects have observed that if the business units believe that the CIO understands their business needs, they are more likely to come to the CIO if they want a service change or new service (such as external cloud-based services). The CIO can take on the role of advisor and coordinator for the business unit.
IT as a Business Partner
One CIO has actively coordinated team-building efforts while overhauling the role of IT within the company. This CIO spends 50% of his time on the IT organization, and 50% on business-related projects.
During his work, the CIO talks with business unit heads and other business stakeholders. He also sits on the company board. He has direct access to the business unit heads, and is almost on an equal footing with them. In turn, they view him as a partner in the business.
The CIO has molded the rest of the IT organization to focus on partnering with the business. Previously, the IT organization focused on monitoring systems and reporting measurements and other statistics. Now, the IT organization focuses on outputs that are useful to the business.
The CIO has stated "It's not about effort, it's about outcome." The IT organization maintains cheap, agile test environments where personnel can experiment with new ideas and solutions. These are sandboxes where mistakes, considered inevitable in this type of work, cannot cause harm.
As a result of this strategy, in this company IT is not a cost center. It is a peer organization that contributes to the strategy and bottom line of the business. The IT organization comes up with business-transforming ideas and new products and services.
Recently, the CEO announced plans for substantial new investments in the company, with the majority allocated to IT projects. In addition to services, better communication, and faster processing, these investments will go toward analytics, digitization, and customer relationship management. The CIO has successfully expanded the role of the IT organization to become an invaluable business partner.
Recently, we surveyed a group of Microsoft Enterprise Architects to collect their observations about what differentiates successful CIOs from those that don’t do so well, based on experiences working with and observing CIOs in many different industries.
CIOs often have very limited tenures, lasting about 24 months in their positions. However, there are CIOs who beat this average, and who succeed in leading effective IT organizations. Most of these CIOs use similar strategies and follow similar patterns.
In recent years, to keep up with the changes in the IT environment—new technologies, new services, and new service models—the CIOs who have succeeded have worked to reprioritize the responsibilities and tasks of their IT organizations. These CIOs recognize two primary functions for their IT organizations:
The IT organization provides services on which the business depends.To maintain these services consistently at the level the business expects, the IT organization needs to operate according to a service management model.
In addition, when multiple data centers provide services, the services need to be standardized and globalized to remain consistent. These factors are especially important in companies that have outsourced services; IT organizations in such situations may spend more effort on interfacing with service providers than on fixing technical problems, and standardized service management processes are key to successful integration.
The IT organization helps the company function and compete successfully, thereby adding business value.The IT organization needs to function as a partner to the rest of the business – able to listen to their needs, offer solutions, and help with strategic planning. In general, in companies where the CIO reports to the CFO, the IT organization is functioning as a cost center that is separate from the rest of the business. In such cases, the IT organizations are not closely connected with their respective businesses, and the businesses do not see them as partners or contributors.
We asked Microsoft Architects what they saw successful CIOs doing that less successful CIOs did not do. Their observations boil down into six strategies that successful CIOs use in managing their organizations and rebuilding the relationship between the IT and the business:
In the view of the enterprise architects, the biggest challenges that today's CIOs face involve making tough decisions, changing their IT organizations, and making those changes stick.
To deal with these challenges, a CIO must have a clear vision of how the IT organization should work, and must lead an effective team. The CIO needs to develop a clear IT strategy that identifies what needs to happen, what resources are needed, and how to best use those resources. The CIO also needs to articulate the strategy for the IT organization and for the business units it supports, and needs to present a vision that explains why the strategy is important.
The CIO's area of responsibility is becoming extremely complex, and the role of the CIO is changing. Traditionally, a CIO managed assets within a company's boundaries. New phenomena such as cloud-based services mean that the CIO maintains control of the base IT platform, while managing outsourced or subscription services.
New device technologies mean that the CIO may also end up managing employee-owned devices. The company's boundaries are less relevant and the number of factors beyond the CIO's control has increased. In the meantime, CIOs are finding that business units want to consume services as utilities (like electricity), regardless of where those services come from.
The CIO could now be called the Chief Innovation Officer: the conduit that brings in the services, partners, and technology that the business units need.
As a result of this increasing complexity, the CIO can no longer expect to know everything needed to plan strategies for the IT organization. Some CIOs have realized that they need outside expertise in addition to their own knowledge, and they have benefitted by getting access to this expertise. They are forming strategic partnerships with vendors and service providers that go beyond products and services to the expertise involved.
The Microsoft Enterprise Strategy program is an example of a service provider acting in this role and responding to this need. Its premise is to establish a deep, long-lasting relationship based on trust and intimate knowledge of the customer's environment.
Not all CIOs have integrated this expertise into their environment yet; few have begun to consider service providers as "expertise assets."
The enterprise architects reported that CIOs who stay focused on technology—such as the number of servers they manage—and see cloud-based services as a threat tend to have more difficult relationships with business units.
Faced with this approach to IT, business units are more likely to bypass the IT organization and obtain the services they want on their own. The enterprise architects have seen such moves create significant difficulties for the IT organizations involved, and ultimately for the business as a whole.
Many CIOs today don't understand how convoluted and redundant their IT organizations have become. They may have been able to streamline some processes and reduce some costs by outsourcing, but these savings may diminish over time as provider costs increase.
Some CIOs have improved their IT operations by consolidating data centers and reducing the data center resources that their companies need. They have worked to globalize and streamline the infrastructure, applications, and processes that their IT organizations use.
This process includes eliminating redundancies and rationalizing applications, workflows, and processes. In companies with multiple data centers, these CIOs have worked to ensure that resources are fungible (consistent across all data centers; for example, personnel from one data center can function effectively in another data center, even in a different time zone).
These CIOs have also ensured that the processes are standardized, transferable, and leverage known best practices.
The most successful CIOs are focusing less on technology and more on outcomes that add value to the business. Most IT organizations today are supply-driven: they run certain services, and that's what they provide to the business.
However, demand-driven IT organizations usually function more effectively. In such organizations, CIOs analyze the business, assess the business needs, implement a solution, and effectively market that solution to the business. They can demonstrate the business value of IT investments and strategies. As new technology becomes available, they consider its possible uses, come up with new opportunities, and present those to the business.
In order to accurately understand what the business needs, most CIOs need to improve the communications between IT and the business.
Some CIOs have accomplished this by designating senior liaisons who aid communications between IT and the business units. Not only do these liaisons help IT identify what the business units need, they build faith within the business units that IT will listen to them and respond.
These liaisons can provide immediate feedback from the business units to the IT organization. In addition, because they have approachable points of contact with IT, the business units believe that IT hears, understands, and will address their issues.
Microsoft Architects have seen various types of liaisons, including:
The most successful CIOs are seen as peers by other business leaders in the company, instead of heads of cost centers that report to the CFO. Many of these CIOs have worked in business units or otherwise have business credibility. They are involved in the business planning process, rather than "aligning" the IT organization with the business.
The CIOs that can make this breakthrough are those that can express the value of IT to the business--how the IT organization can add more value to the business by acting as a partner than by acting as a support function.
To do this, CIOs need to use credible metrics to measure added business value, and track and communicate those metrics regularly. They need to be able to define business cases to support their actions in the same terms as the other business leaders in the company.
Microsoft Architects have observed that if the business units believe that the CIO understands their business needs, they are more likely to come to the CIO if they want a service change or new service (such as external cloud-based services). The CIO can then evaluate the request based on business needs and benefits, and determine the best way to accommodate the request. The CIO can take on the role of advisor and coordinator for the business unit.
In companies with CIOs that cannot or do not articulate this idea, Microsoft Architects report that IT organizations become less relevant to the business units, and a culture of conflict (rather than of partnership) may develop between IT and the business units.
In such situations, business units are more likely to bypass IT to buy services from external providers. When business units are not confident that the CIO understands their business needs, they are more likely to pursue changes like external cloud-based services on their own, bypassing the IT organization.
Many CIOs are trying to engage with the business at this level, but as far as Microsoft Architects have seen, only about 50% are succeeding.
Unfortunately, in many companies, the business units tend to react skeptically at first to such planning and prioritizing initiatives. They're not accustomed to discussing issues like productivity, risk management, and compliance with IT. They don't believe that IT understands their business processes or their ROI requirements.
It takes time and multiple conversations between the business units and the IT organizations to build the trust and credibility needed for the groups to work together effectively. Most companies are still working their way through this learning process.
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.
Big Data is at the forefront of the minds of many business leaders, in different domains and industries. In addition, with the widespread hype about Big Data in the media, many businesses have begun looking to spearhead technology initiatives with Big Data features.
When considering such initiatives, it’s important to keep in mind that Big Data is a tool, not a task. When planning, an enterprise must define and focus on business objectives and outcomes that will determine the success of the technology initiatives.
This post, and several future ones, are 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.
The following contributors and reviewers provided input to the white paper from which these posts were drawn: Ken Collins, Fidan Boylu, Philip Reilly, Benjamin Wright-Jones, and Delbert Murphy.
In less than a decade, data and information have moved from the back-room of enterprises to become critical business assets. Data that was previously locked away in structured applications is now made available everywhere, in every form and format.
Across every industry and every organization, data and information have become “first class” citizens, producing new knowledge and insight. New technologies and techniques add significant capabilities to mature Business Intelligence (BI) and Business Analytics solutions for enabling enterprises to obtain business insights.
While most of the current definitions of Big Data are descriptive, a more encompassing definition includes the potential value proposition as well, as in the following description:
“Big Data represents the trends, technologies, and potential for organizations to obtain valuable insight from large collections of structured, unstructured, and fast-moving data.”
Traditional BI uses data from internal business transactions and operations. The infrastructure for supporting such data includes Enterprise Resource Planning (ERP) systems, data warehousing with extract-transform-load and query & reporting capabilities, Online Analytical Processing (OLAP) analysis, and data mining.
In such an environment, data may have attributes such as:
These attributes typically describe a system of records (for example, customer records).
The traditional BI model does not go away—it is enhanced and expanded as technology progresses, for example adding self-service BI capabilities for business users. Traditional BI will continue to be the approach of choice in certain business domains, such as managing corporate financial performance.
However, the traditional BI model and technologies are not well-suited to use semi-structured or unstructured data, especially in case of the data originating outside the boundaries of an organization.
For example, strategic business insights can be derived from audio/video/images, text/xml documents, web logs and click streams, social media postings, data from sensors/devices, and event and streaming data.
In this new world, data has attributes such as:
These attributes typically describe a system of interactions or engagements (for example, interactions with customers).
Traditional relational databases are not well suited to handle such data. With the arrival of Big Data technologies and techniques, it is now possible to bring these data sources into the decision-making process in a financially feasible and timely (often near real-time) manner. Some examples are:
The following illustration shows how the traditional BI model is expanded to include the new data types, new sources, and new technology capabilities commonly grouped under the term Big Data. Traditional BI is represented in green; Big Data elements are represented in blue.
Figure 1. Expanding the traditional BI model in the new world of data
This new world of data has implications throughout the entire organization. Besides the technology impact outlined in the previous section, it impacts an organization’s culture, processes and people. All of these dimensions have to change and adapt, to enable an organization to succeed.
Processes
Business Analytics is an agent for change; ideally it results in a constant loop of asking questions, gaining insights, taking action, measuring results, then asking new questions to get new insights.
Processes in an organization have to adapt to this cycle of constant change. This also affects the way business departments and IT collaborate (or more often than not, fail to collaborate).
The constant insight loop requires a constant and close collaboration to ensure that all undertakings are driven by business questions and result in achieving a set of business objectives. Technology is the means to achieving these objectives.
People
With the now all-popular and ever present Data Scientist taking center stage in any discussion of new roles and skills required to tap into the value of data, the need for close alignment with the business might well justify a more to-the-point description as a “Business Scientist”: a Data Scientist with sufficient business domain expertise to provide the “missing link” (for example, a Marketing Scientist).
Such a role is not an IT or technology role anymore, but solidly anchored in the business, and the key skills are not just about academic qualification, but particularly on the application in a business scenario.
Culture
All of the above can only really happen in a culture that fosters sharing and insight, essentially a data driven culture. Organizations are adding C-level data roles, in the form of a Chief Data Officer (CDA), or Chief Analytics Officer (CAO). These positions recognize the value of data as a strategic asset of the organization – a major cultural change for most organizations.
IT departments these days are often tasked to “start with Big Data;” however, without a clear business objective, such endeavors rarely lead to success. Rather, initiatives should focus on a concrete business objective such as Customer Insights (or Citizen Insights), Predictive Maintenance and Management, and so on.
Two important scenarios (to be discussed more in the next posts), are based on Big Data are Customer Insight and Operational Insight.
Customer Insight
Customer Insight is one of the prime areas when looking at business scenarios impacted by the evolution of data. It is also a prime example of how an entire business has to change in order to reap the benefits of that evolution, as customer behavior, communication channels and buying mechanisms have irrevocably changed over the past 5 to 7 years. As a consequence, the way organizations market and sell has changed already, but the new complexity also comes with the potential for new and deep insight previously neither possible nor feasible.
Operational Insight
With the rise of the Internet of Things – connected sensors and devices for just about any type of equipment, from phones to household items to heavy machinery – it becomes possible to not only monitor equipment in real time, but to use predictive analytics to identify potential disruptions and malfunctions before they occur, thus saving huge amounts of money on defects and service disruptions.
Starting with an understanding of the desired business outcomes is imperative for any undertaking which aims at obtaining insights in the new world of data. New technologies and techniques, along with disruptive market trends, provide the playing field for exciting new ways of running, managing and changing an organization. Analytics is the agent for change, enabling new insights, leading to new ideas, leading to new questions – a perpetual cycle of insight and action.
Figure 2. Perpetual Analytics Cycle
Integrating a perpetual analytics cycle is definitely not something that can be solved by just new technology – it is an enabler, but not sufficient. As outlined earlier, the new world of data requires people with new skills, new ways of looking at business process, and a new culture that values data and insight based decisions making. In addition, the benefits of analytics can only be reaped in a truly collaborative environment of business functions and IT functions.
Figure 3. Four Critical Dimension for succeeding in Analytics
Analytics has the power to change an organization (uncovering new business areas, new ways of doing business, new products and services), therefore managing that change across the four critical dimensions People – Processes – Technology - Culture is the key for succeeding in Analytics. In upcoming posts, we will discuss Customer Insight and Operational Insight scenarios as examples.
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.
Microsoft Enterprise Architects have observed many businesses moving services out of the realm of IT. In addition to this trend, business units are increasingly obtaining services for themselves from providers other than their IT organizations.
This article explores the consequences of moving services out of the IT organization. What challenges have these organizations faced? What impacts did these changes have (foreseen and unforeseen)? How did business and IT employees respond?
In general, the process of moving services out of IT starts with utility services such as email, instant messaging, and hosting; these functions are easy to move out of IT to cloud-based services (as opposed to more complex functions such as Business Intelligence). Some companies have gone further, making business units responsible for the LOB applications and services they use (or for whole functional areas), whether they partner with a third party or not.
The primary motivation behind this trend comes from two drivers:
CEOs and business leaders are reconsidering the purpose and role of IT, looking for ways to reduce costs. IT requires a significant budget, but the value it adds to the business is often difficult to quantify.
At the same time, in many companies the IT organizations have not met the needs of the business units they serve, and business units are considering whether they can get services from other providers or run the services themselves.
Compared to the services offered by the IT organizations, external cloud providers appear to offer cheaper, faster, more responsive service. Because of the large scale at which cloud providers operate, and because cloud providers do not have the same legacy processes and bureaucracy, internal IT organizations find this level of service difficult to match.
This trend encompasses a range of changes in how business units obtain IT-related services, from subscribing to cloud-based services such as email to developing and running their own applications. Many companies are still in an experimental stage, trying to find the balance that works best for them.
Subscribing to third-party cloud services
A common approach is to subscribe to third-party services (such as Office 365) instead of relying on the internal IT organization to provide these services. For example:
Other companies are outsourcing or “smartsourcing” particular capabilities, ranging from storage synchronization to Helpdesk service.
Moving specialized services to the business units
Some companies have been leaving IT in charge of the more general functions, and moving more specialized functions to the appropriate business units. For example, the IT organization develops and maintains centralized data stores, while business units develop and run the LOB reporting tools, analysis intelligence, websites, or other applications. In addition to outsourcing, some business units run their cloud-based social networking and financial lifestyle management web sites.
Microsoft Architects have observed business units design and develop an LOB system, and then hand it off to IT to run. In other cases, business units may contract with third parties to develop or run the LOB system as a cloud service.
Some companies are also moving whole areas of responsibility out of the IT organization and into the business units. For example, one company made its business units individually responsible for their own information security, moving that responsibility out of the centralized IT organization. Each business unit created a Chief Security Officer role. The IT organization helped the business units set up their information security programs, including appropriate governance protocols and training.
More and more the business units are creating their own CIO-type roles to drive a further move from internal IT to external cloud-based services.
To coordinate this distributed functionality, the business units involved typically 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.
The move to services that are external to the IT organization is still a new thing for many companies. As was the case when outsourcing emerged as a trend years ago, they are still finding the best balance between internal and external services. Microsoft has worked with companies as they go through the process of dividing functions between the IT organizations and the business units, and noted several challenges.
Business units and IT organizations do business differently. Projects that require them to interact must account for differences in funding models, and differences between business cycles and IT cycles.
Companies may struggle to define the new relationships and boundaries between the business units and IT, including the roles of liaisons. The issues to address may include:
A big factor that makes this process difficult is that many companies do not have enough information to make the best decisions:
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 may lose some headcount and some control over the service systems, but the more enlightened organizations are aware that they cannot meet all of the needs of all of the business units they serve. By narrowing their area of responsibility, they may be able to better achieve their overall objectives.
The attitude of the IT organization to moving services to the business units can range from positive to overwhelmingly negative. The culture of a company and the implementation approach it takes may be the most important factors controlling the reaction.
In some cases, IT organizations have supported the transfer of functions to the business units; these IT organizations are fully aware that they are not able to meet all of the needs of the business units, and can see how by moving functions they can focus more effectively on the services that remain in their jurisdiction and still control costs.
However, IT organizations often feel that they are competing against cloud-based services, and in some companies other business units have in fact used cloud services as leverage against IT in conflicts over resources. Other more specific reactions include:
This article explores common objectives many companies have when using cloud technology, as well as the impacts they may need to consider. When companies use the cloud to reach customers and support employees, many business areas may be impacted, and IT organizations need to adapt to changing IT functions.
The following contributors provided input for this post: Blessing Sibanyoni, Brian Loomis, Johan Klut, Larry Hanthorn, Mary Lynn Pontier, Peter Deane, Robbi Laurenson, Sree Sundaram, and Stephen Kell.
Consumers have become accustomed to using cloud-based services and devices; as a result, companies have customers who are more informed and more demanding, and expect rapid responses. For example, banks are exploring how they can use cloud-based services for a variety of new opportunities, new service possibilities, and new markets. In addition, some banks are developing mobile apps that can work with these services.
Other companies are developing cloud-friendly APIs so that their customers and business partners can more easily connect their own systems to the companies’ systems, regardless of what technologies each party uses.
Many companies see cloud technology as a way to improve their own agility and flexibility in dealing with customers:
By subscribing to cloud-based services for their employees to use, companies seek to improve the agility of their own business processes:
At many companies, IT organizations are exploring ways to reduce their workloads (and costs) using cloud-based services; in particular, by replacing in-house systems with cloud-based services from external providers. Some IT organizations are outsourcing specialized services, so that they do not have to maintain the necessary systems and expertise.
An increasing number of IT organizations are outsourcing email service for these reasons. Others are outsourcing data management, as described previously. IT organizations are also exploring ways to replace legacy systems with cloud-based services in order to avoid issues with the support lifecycle.
Some IT organizations are subscribing to evergreen services (services that undergo frequent changes and updates) in order to reduce their own burden of managing updates. The post Evergreen IT—Getting the Most Value (Trends and Insights) explores the factors and impacts that come with this approach to using cloud-based services.
Companies have found that using cloud-based technology can impact their operations in a number of ways, both intended and unintended. To get the best value out of a cloud-based service, the IT organization may need to change:
The expectations of employees are changing; many have more advanced technology at home than they do at work. They are accustomed to using social tools to communicate, and want access to them at work as well as at home. More and more, employees are demanding that companies either allow them to work using their own devices, or provide similar technology. Employees are also pushing for these companies to modify their formal business processes to produce a more flexible work environment.
In addition, business units are expecting increasingly agile and rapid response from IT organizations. In some companies, IT organizations are still using processes that were designed for services that took many months or years to design, build, and deploy. In such companies, the growing gap between the expectations of the business units and the actual responses of the IT organization has been highly frustrating for the business units.
For example, the Human Resources unit of one business decided to use a social network to link and communicate with recruits. To accomplish this, HR requested that IT procure appropriate subscriptions to Yammer. In response, the IT organization wanted to consider options and review business cases. However, as far as HR was concerned, the decision was already final and they were ready for the service.
Microsoft Architects have seen that this kind of frustration can lead business units to circumvent their IT organizations to use new technologies and services. In the past, business units did not have this capability, but with cloud-based services, such maneuvers are increasingly feasible.
IT organizations are not used to dealing with this kind of behavior, and are coming to terms with the idea of adapting in order to maintain their authority (or even their relevance). They need to update their processes to account for new services and engage with the business units to provide appropriate services in a timely manner.
Cloud technology has provided the opportunity for some companies to change the way they outsource. Historically, many large-scale service providers have relied on economies of scale to produce stable, non-changing services. In addition, the actual outsourcing deals often involved multi-year contracts between the company and the service provider.
Large enterprises have found that such commitments hinder their flexibility and agility. If the IT organization identifies a provider that fits the company better, the existing contract may prevent them from changing providers. If the internal applications that the IT organization manages depend on a service from an external provider, the IT organization may be limited in how they can change the internal applications until the service provider makes compatible changes. In a business environment where flexibility and agility are increasingly important, such limitations are becoming significant problems.
These enterprises see cloud-based services as potentially much more agile than traditional outsourced services. As the existing contracts conclude, enterprises are beginning to experiment with different types and scales of outsourcing arrangements available with cloud-based services.
Some Microsoft Architects predict that as companies increasingly rely on services that operate across public networks and infrastructure, the companies may become more tolerant of non-guaranteed service levels. In addition, companies may find that they can optimize their agility and flexibility by compromising between services that offer "best of breed" performance and those that offer "fit for purpose" performance.
For cloud-based services, updates and feature changes are the responsibility of the service provider rather than the IT organization. This can reduce the workload of the IT organization. However, the fact that the IT organization no longer controls updates and maintenance intervals brings its own complications.
The significance of this factor varies depending on the type of service involved. So-called evergreen services change and update frequently (on the order of weeks or months), resulting in a number of challenges for IT organizations. Other services may not change nearly as rapidly.
Even when using services that do not change frequently, the IT organization needs to keep an eye on the provider’s update schedule and the way the service integrates with in-house systems. The IT organization is responsible for keeping the in-house systems compatible with the cloud-based service. Some IT organizations minimize this issue by strictly limiting such integration, but this solution is not always practical.
In companies that produce APIs or other applications that depend on such cloud-based services, developers need to pay much more attention to version control and release processes, so that updates do not disrupt customers.
The security implications and challenges of cloud technology are complex. Considerations about security and cloud services are covered in the post 10 Questions to Evaluate Security and Cloud Services (Trends and Insights).
Using cloud-based services, companies have new opportunities to add or improve revenue streams, improve agility, and reduce IT costs. However, managing an environment that includes (or delivers) cloud-based services affects the IT organization's emphasis and its operational model. Using cloud-based services is likely to require an IT organization to:
The extent of these effects depends in part on the types of services the business wants and the extent to which those services must integrate with in-house systems. As a result, the IT organization is likely to need to shift its culture and mindset as well as its capabilities.