Business Service Management Hub

The Hub Commentary_

I cannot pass on this article today.  Last Friday I closed the week with a bit of humor on Qmunity entitled, “Eat or be Eaten – IT Transformation Underway”.  As a long time application developer and once with EDS and IBM have often known the revenue is driven by the services and software side versus the hardware.  In fact, I once had the opportunity to work for an insurance company who received their first life insurance programs (ALIS – Advanced Life Insurance System) which was free when this company purchased it’s first mainframe hardware.  

As is called out in the article, the world is upside down these days and the device, HW just facilitates the real value add of the service.  As soon as the Kindle came out, I suspected the price would drop as it is more about the subscription than the device.  Much like Cloud services, provide an easy mechanism to purchase and hope no one monitors the consumption.  High transaction volume, low price point model.

Michele

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Lately I’ve been seeing a quote by Marc Andreessen everywhere. It states that “Software is eating the world” which he declared in an article for The Wall Street Journal last summer. His argument was that “more and more major businesses and industries are being run on software and delivered as online services.” Which I completely agree with. At the time he pointed to Hewlett-Packard as an example: It had announcemed that it was exploring jettisoning its struggling PC business in favor of investing more heavily in software, where it sees better potential for growth as a prime example of this trend.  (Read Full Article…)

The Hub Commentary_

Here is another industry under great change and a state with the foresight to attract and keep technology talent.  Again, I applaud the efforts of this woman, Vice President and CIO Mamatha Chamarthi, for having understanding and putting in place a strategy to right source the commodity and the high value stays in-house.

She is absolutely spot on with her strategy, it’s not that all of the technology function are going to the outsourcers and the cloud, it’s the commodity.  The internal roles are changing to apply technology for innovation in to grow the business.  This requires business knowledge and how to apply technology for innovation.  These roles and duties are unique to each organization and their strategies for growth.  These functions have never been a good target for an outsourcer unless the skill set does not exist in the organization to drive business innovation.

How are the roles in your organization adjusting to this great transformation of IT?

Michele

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Consumers Energy, a large utility in Michigan, has hired an offshore outsourcing firm to take over some of its IT operations. But instead of cutting its internal IT employees, it is retraining them for new types of work.  (Read Full Article…)

The Hub Commentary_

As a native Virginian, this is very positive news for the area in general from housing, jobs and quality of life.  The extension of incentives aligns with the growth of cloud providers and Amazon already has a stake in the Ashburn data center craze already.

I arrived back in this area during the dot.com bust and it was disheartening to see the number of empty buildings along the Dulles tech corridor.  Good to see the expansion and growth and the foresight to take advantage of this period of high tech growth in this region.

Michele

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Is it news to say that the data center business is booming in Ashburn, Virginia? Not exactly, as the town in Loudoun County has been a key connectivity hub since the early days of the Internet. But recent groundbreakings, facility openings and leases make it clear that Ashburn’s prominent place in the geography of the data center industry continues undiminished.  (Read Full Article…)

The Hub Commentary_

Outsourcing has never been for a cost saving measure.  You must manage the vendor and once in a service agreement, anything requested beyond the originally contracted service comes with a fee.  Let’s face it, additional services and service requirements begin to change as soon as the ink is dry and where the providers starts making their profit.

Cloud computing provides platforms, infrastructure and commons services, but affords flexibility to they buyer in the management of the services without owning the infrastructure or technology in place with the cloud provider.  This does put the ownership of service management on the contracting organization.

Cloud computing is disrupting the traditional outsourcing model as well as in-house IT organizations which drives innovation into organizations.  When properly instrumented and managed, organizations have much to gain in re-thinking their sourcing and IT infrastructure strategies.

Where are you with your sourcing and infrastructure strategy?

Michele

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For CIOs, the halcyon days of IT systems and architecture that were built and managed entirely in-house, or partly outsourced to a few mammoth vendors, are gone. In its place a hybrid model rises — one that maintains elements of the traditional IT foundation, but also takes advantage of new technology and platforms as they emerge.  (Read Full Article…)

The Hub Commentary_

As I began reading this article I thought there is a CIO in tune with her business.  R&D is the heart and soul of pharmaceutical companies and IT needs to work to drive business growth and cost saving in these days of transformation.  AstraZeneca is on the outside of the recent Fortune 500 list, but if innovation continues with this strategy in mind, I would expect to see growth out of them in the coming years.

I found the commentary interesting that follows the article.  Sales organizations have one and only one metric, are they selling and did they hit the number.  Sales professionals know this and while AZ may have lost members of the sales organization for a variety of reasons, I suspect, I applaude the Angela’s strategic thinking and confidence not to take a back seat in driving innovation into the organization with technology.

I ask, how are you driving innovation into your organization with technology?

Michele

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The strategic review undertaken each summer by pharmaceutical giant AstraZeneca acquired additional significance this year in the wake of a first quarter in which sales fell by 11%, to $7.3 billion, and earnings plummeted by 44%. Resultant investor criticism cost chief executive David Brennan and chairman Louis Schweitzer their jobs in recent weeks.  (Read Full Article…)

The Hub Commentary_

I’ve often written that you do not outsource for cost savings.  Cost savings can be achieved when right sourcing and giving up control, taking advantage of the economies of scale offered by a provider and allowing standard services (the commodity services of your organization) rather than custom services.

I find the commentary that follows the article interesting.  While I might agree that it may be an article for soft selling Google Cloud Services, you would be foolish to think any vendor doesn’t write to their strengths, but also wonder if some of the commentary comes from those IT organizations reluctant to change?

You don’t go the cloud just because you can, you right source it and must manage it accordingly and then you can spend your budget with the greatest gain.   In a CIO article today citing an MIS Quarterly study, for every dollar/employee invested in technology, twelve dollars/employee can be realized in sales gain.  The time for management and innovation investment is upon us and outsourcing the commodity.

How are you investing in the cloud?

Michele

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The economics of cloud computing are driving down the cost structure of business so far and so fast that it’s scary, Google CIO Ben Fried says.

“It deeply disturbed me … in 2006, 2007 consumer companies were forcing efficiencies on a scale never seen before,” Fried said Thursday during remarks at the Bloomberg Link Enterprise Technology Summit in New York.  (Read Full Article…)

The Hub Commentary_

Alex Barrett wrote a nice article a couple of weeks ago that I too wrote about last week.  IT is transforming and dwindling.  I suggest that there will be only a small staff left called “Operations”, there will be architects and there will be an Office of Innovation that resides closer to the business units knitting together the services that grow and manage the business.

Alex provides a couple of nice examples and worth the read and contemplation how your IT Organization will transform this coming year.

Are you part of the downsizing or part of the innovation?  How is your organization changing?

Michele

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Like a hurricane barreling up the coast, cloud computing is gathering strength and expected to make landfall shortly. In some IT shops, cloud is already here, bringing the winds of change along with it.  (Read Full Article…)

I ended last week with a little tongue in cheek humor. I had started the week on a conference call on Monday and as I was looking out the window, a large bird came swooping past my window to land in a tree overlooking my patio.Curiosity of a Scorpion was getting the best of me to figure out what kind of big bird just landed so close. With a handy pair of binoculars I see it is a fairly large owl, that’s kinda cool, but what is it doing. It took a minute or two to discern what exactly it was doing, oh no it’s eating a mouse or rat. This provided my quote of the week, “Eat or be Eaten”.

I posted twice this week, IT and the CIO Fast Forward 5 Years – How Will You Get There? and IT Departments Need to Run Like IT Vendors and it seemed I couldn’t stop finding articles regarding the IT transformation:  (Read Full Article…)

The Hub Commentary_

Good Monday Morning!  Scanning the early news and came across this list of metrics from Forrester that they are building out for their next conference.  In the comments to the article, there is a link to the KPI Library.  

These IT metrics have been around for decades and are good for evaluating and implementing process improvements.  In this day of the Cloud and competition for IT business, I might suggest that these need to be in context of the service and could even go one step further and categorized for 4 high level services:  Growth, Quality, Productivity and Cost.

All services are not created equal and thus the metrics for each will vary based upon the priority of the service to the business.  I’ve posted here on this chart of services last week and in a previous post.  These metrics are suited for IT Operators, while the rest of IT is slowly being outsourced or moved to the business focusing on the services offered by the business and the services that will drive the business.

How do you measure your technology for the transformation that is underway?

Michele

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Help us build out a list of metrics that organizations are using to measure their infrastructure and operations departments. We will use this data to create a list of consensus metrics and benchmark their values.  (Read Full Article…)

The Hub Commentary_

Nice article regarding the transformation of IT.  I would disagree with the transformation being fueled by the consumerization of IT, but rather the competition that has come into play with the consumerization of IT.  This is the New IT as I call it in many of my posts.

Transformation is already happening and IT is already in the business and it is this competition from the outside presenting the business with options to get things done in a manner that IT has not been able to present services.  It is this competition and requirement to speak in terms of cost, value, right sourced deployment options, driving business growth, etc. that is the catalyst for change in IT.

Why does anyone do anything?  Because someone else is out there working to do it better and faster than the current supplier – competition for change.

The role of IT is no doubt changing and will be a manager of service and integrator of how those services are delivered to be effective in the future.

How is your IT Transforming?

Michele

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As technology becomes easier to use, it becomes more complex internally. That means IT is less necessary in some ways and more essential in others.

There is a paradox in the technology that IT employs and deploys. As it becomes easier to use and simpler to manage, it is actually increasing in complexity. And there is a paradox within this paradox concerning how IT relates to the business. More on that in a bit.  (Read Full Article…)

IT is in the midst of a great transformation and wrote about this in a previous blog as referenced by a CIO article and a Forrester blog.  For those of us who have been in and around IT for the past 20 years, we’ve seen this ebb and flow of change.  New technology, growth of service providers, decentralization and then back to centralization and cost containment.  It was desktop computing and LANs, web services and eCommerce and now it is the cloud.  This time is different though, the business is driving and creating the new IT.  There is competition and easier buying models that didn’t exist previously.  I will also state that outsourcing is not cheaper, it is creating the change that cannot be created from within – the new IT requirement.

In the previous post and CIO article, I mentioned IT needing to run more like the vendors they purchase technology from and marketing would become a key component.  Many think of IT marketing as marketing great technology services and uptime within the organization.  It is just this wrong kind of marketing that is driving the transformation for change.  Your business does not care about technology uptime, the business cares about driving out cost for profitability and driving up revenue for growth and profitability.  Marketing of IT has 3 facets:

• Know your services, their cost and value
• Know your competition and their capabilities
• Know the market requirements of your customers

This is a transformation where internal IT is already late for the dance and few possess the capability to enter the dance floor with a perfect tango balancing technical capability and innovative intrigue.  The competition knows this weaknesses and is capitalizing on it.  Technology vendors are also making the shift as to who the new buyers of technology and services are – the business and the service providers.  The difference between the technology vendors and IT is that the vendors are used to identifying markets, trends, shifts and making the adjustments required to capitalize on a market based upon the buyers and their requirements.

Know Your Services

Assess your current landscape of services and future services and where they fall into this simple grid.  This will help you to understand business drivers.  For example:  services for competitive advantage have little care for cost or quality, it is about speed to market.  In order to accomplish this, IT will require the flexibility to deploy with speed and mitigate cost and negative customer impact with controlled risk.  This is service enabling the infrastructure leveraging management technology to perform the monitoring and controlled risk, while the technologists apply the internal IP to the services with the right technology and right deployment options.

This will transform IT into the service managers that are developing in the business today with the underground New IT movement.  I would suggest that the model adopted by IT in their strategy to transform would be applying focus of time and resources as accordingly:

• 50% on services driving competitive advantage
• 30% on services for service quality and service efficiency
• 20% on services driving out operating cost

The competition is focused on addressing the requirement of competitive advantage in your business, this is ITs greatest weakness and the service provider / vendors greatest ability to drive value.  ITs marketing efforts must begin here in developing the holistic strategy of technology, deployment options, cost and value to the business.

Know the Competition

Developing a holistic strategy will include a multi-vendor and service provider approach.  Understand internal strengths, weaknesses and the outside capabilities to drive the highest value, lowest cost solution and deployment.  This would break the traditional cycle of change driven out of frustration to outsource, not value or cost.  Outsourcing is not the lowest cost option, but right sourcing to meet the right objectives to deploy the right solution is IT transforming into strategic.

The competition also has weaknesses in high growth times like these.  The strength of IT is operational focus, while both the providers and IT could benefit from a bit of operational maturity, now is the time to illustrate operational maturity with good management practices, processes and ability to communicate business value.  The service providers are investing in the communication, while taking a risk (controlled risk in some cases) on management in meeting a time to market requirement.  To meet the same time to market requirement within your organization, evaluating how you leverage management technology to automate your processes and provide the communication required for your business, would provide both competitive advantage and allow you to focus your IP on driving new services.

Know your Customers

Typically when you ask IT about their customers, they respond with their users and internal employees.  Here I am speaking about knowing the customers of your business.  Why do they select your company for your services?  What do you do better than your competition?  Who is the competition of your business?

Instead of working to control the environment so tightly and throw up obstacles and barriers to change and adoption of new technology and interactions with both the employees (Service Efficiency) and customers (Competitive Advantage), embrace them.  Understand how and why they seek to use specific devices, technology, methods of interaction, etc. and how to best deploy the right option.  This is understanding the requirement, not necessarily mimicking each and every device and method.  Provide the flexibility, while balancing control and risk.  This is most important when evaluating customer requirements and creating loyalty.

Think about who you prefer to do business with and why in your personal life and bring this into your IT organization to start the transformation revolution.  While I agree that marketing within your organization is relevant, marketing the right services and message will drive the greatest value in your organization.  This is dependent upon knowing your customers, requirements, competition and a focus shift from technology operators to communicating and driving revenue as service managers.

Do you know your services, customers and competition?

Michele

This past week Kim S. Nash, Senior Editor for CIO, publshed an insightful article, “Top CIOs Predict the Five-Year Future of the CIO”.  I’ll paraphrase a few of the key points that I jotted down and stuck out when I read through the article:

• CIO of the future will be an Entrepreneur, Futurist, Global Talent Scout, Connector, Master of Business Metrics
• CIO / CTO Split?  No support for this prediction and fractures the ability to manage / deploy technology and be a strategist
• Big Technology Trends – Cloud, Mobile, Social Media, Consumerization, Big Data, etc. will not change the role
• Manage change, Not Technology
• Set strategy, Not server thresholds
• Technology will change the way a company interacts with it’s customers
• CIO Effectiveness – He/She handles and sparks major business shifts
• Entrepreneur
  • In-house futurist, will be measured by financial measure, will run a business and market like the vendors they purchase from
  • Set aside technology and focus on business outcomes
• Connector and Futurist
  • Will foster partnership with the providers to his company to deliver joint solutions
  • How workers, consumers and suppliers will create competitive advantage
• Global Talent Scout
  • Roles will change from operators to managers
  • Location won’t matter
• Master of Business 
  • Responsible to create new products and attract new customers, new revenue and thus new accountability
  • Innovate

There has been a long standing initiative and talk in the press and analyst papers regarding IT being part of the business and not separate from the business.  However, according to the analysts, more than 90% of IT organizations remain reactive and disconnected from the business.  I would concur with this.  We all attend industry conferences and think about how you answer this question, “What do you do?”.  Most of the time when I ask it, the response is something like I manage servers, I manage UNIX servers, I administer databases, I manage the networks, etc.  Then I look at their badge, see who they work for and respond with, “Oh you sell insurance or investment banking or ……”.

Before I visit a customer, I do a quick read of their annual report, the letter from the CEO and peruse their website so that when I shake the first hand, I have a fair idea what powers their business.  I continue to be surprise by the number of IT technologists that do not know the business their own organization is in or what powers the business, thus setting the easiest to identify priority.  Technology without imagination is a commodity, Technology with imagination has endless possibilities, however, most of us act as mere commodity operators keeping the lights on.  Keeping the lights on carries an annual cost of 1-2% of revenue, the time has come to power the business and drive with technology.

According to a Gartner and Forbes survey of Board of Directors (BoD), 65% of BoD count on technology to drive competitive advantage for the business and according to IDC >50% of IT will be outsourced by 2013.  The role of IT must evolve and it has become an imperative with the advent of competition and new buying models.  Competition with the MSPs/ASPs/ISPs, Cloud, SaaS, etc. has arrived and why the business has the buying decisions and is choosing to outsource IT.  The time has come to transform and the catalyst is the competition.  Kim does a great job describing the role of the CIO and the new face of IT in 5 years.

As a previous analyst in the outsourcing market, I will tell you as I have told many customers, no one outsources for cost.  It is a perceived cost reduction.  What isn’t factored into the equation is 3-7% of the cost of the contract to manage the relationship and the service and keeping overspending in check.  Outsourcing occurs to create change in the environment that is near impossible to do from within.  I wait each day for the new Fortune 500 list to arrive and I will hold it to compare with next year’s list.  Those that make the transformation to power their business with technology will take leadership spots in their industry’s.

Now let’s talk about what it will take to make this transformation.  To achieve the things Kim speaks of, IT must first know what the business is; then how best to use technology to operate it, create competitive advantage, communicate and market results, proactively make real-time changes, and why customers engage to drive future strategy.

What is the Business

In most businesses to drive revenue, you evaluate why customers engage with your organization.  In this case, IT in most cases, doesn’t know the business or the services of the business.  Step 1 must be to understand the business and current services.  I’ve written a previous post on The BSM Hub describing how to categorize and know your services based upon their value to the organization.  This will define how you manage these services and the supporting technology.  All services are not created equal and thus knowing the services and their relevance to the business is the first step to transforming to Service Managers versus Service Operators.

Here is a true story.  I once spoke at a medium sized regional event on the topic of Service Value and managing services in the winter of 2009.  After I finished speaking a man approached me and indicated while the discussion was interesting, IT is not strategic to his organization.  I looked at his badge and noticed he worked for a candy manufacturer.  So my first question was to go after the life blood of the business, the manufacturing line of the candy.  “Does IT have anything to do with the manufacturing line?”, the response was “no”.  Second question, “I know you must have an ERP system, correct”, “why yes we do…….”.  “I venture to guess that sales and distribution to your customers is important business, right?”, “Why yes it is”.  Now he is standing taller.  I mention how in September 1999 Hershey made the front page of the Wallstreet Journal for the poor deployment of an ERP and CRM system costing them Halloween, Thanksgiving, Christmas, Valentines and most of Easter.  The lesson was that the public wasn’t as loyal to chocolate as they are to toothpaste and will buy what is on the shelves at the time.  “So managing and providing high availability of your sales, distribution and customer relationship management is critical to your business, wouldn’t you say?”.  He left with a different perspective than he came to the conversation with.

Companies are in the headlines everyday due to technology failures pointing out that if you do not know your business and what it costs you to be a mere operator, reacting to incidents, the press and the outsourcers will put  value on the situation.  The time has come to know the business, the services and their value and the supporting technology in order to manage it accordingly.

How Technology Supports the Business

Now that we know what the business is, let’s take a look at how the technology supports the business.  It is no longer sufficient to keep the lights on and manage all equipment the same.  Understanding the underlying infrastructure that supports the services defined above will change the way you manage the infrastructure.  Priority must be applied, not just severity of an event, business impact will be factored into the management of the technology.  Service enabled management in real-time must be applied, it is not a nice to have, but a must have.  Given the organization is wasting 1-2% of revenue annually, a service enabling management infrastructure is cheap and paid for before the first year is over.

Many management vendors speak of speed to root cause and speed to restoration.  This is still reactionary IT.   What is required is real-time, actionable intelligence to do something before a business impacting event occurs and avoid that business impacting event.  This now brings me to what many of the financial institutions already know, management is a mission critical service and requires high availability redundancy (as described in a post by my friend Tobin).  Don’t believe me?  So then I ask this question, “When flying on an airplane, do you want the pilot flying without instrumentation?, Then why would you run your business without instrumentation?”.

Now that you know the business and how your current technology maps to those services, it’s time to evaluate the best technologies and deployment options for the services and service enable them with management upfront, not as an afterthought.  Again, go back to the quadrant of services I described earlier.  Just because you have capability in-house to deliver commodity services, that isn’t generally the best choice.  Outsource the commodity.  Keep the competitive expertise in-house and evolve to manage services and put the proper instrumentation in place to service enable the infrastructure to mitigate risk, provided controlled risk for speed to market and provide the real-time actionable intelligence to make shifts on the fly to keep business running and creating quality customer experiences.

Why Customers Engage

Now that you have a grasp on today, let’s now use this new service enabled infrastructure to start creating the strategy to provide  stickiness with your customers, improve the customer experience with technology, creates competitive advantage and driving revenue.  This evaluation is 2 fold:  keeping current customers and gaining new customers.  Look at how customers want to do business with you, what devices they use, where and when they conduct business, etc. and often times creating a higher quality of service to maintain current customers will drive gaining new customers.

True innovation changes how an industry does business, think of eBay in the early days.  These sorts of transformations are rare, however, we are in the throws already of just this sort of transformation with how IT must revolutionize itself into the new IT.  Business is creating the new IT on it’s own by taking business folks with consumer technology knowledge and making the technology purchases in a decentralized manner.  Some call this “shadow IT”, I call it the “New IT”.  They are doing this because the current IT thinks more about managing and not enough about how to use the technology they are so good at running.

Running technology is the commodity, leveraging the IP in house to use technology to drive both revenue and competitive advantage is the new reality.  Now we’re back to where I started with my opening question, “What do you do for a living?”  Know your business, customers and how best to engage with them to drive your business.  Shift the focus of IT because the change is already happening all around us.

As I conclude on how to approach this transformation,  an interesting quote from Kim’s article by Nasir Khan, Executive Director of Infornetics at Blue Cross and Blue Shield Association, the administrator of 38 Blue Cross and Blue Shield health care providers covering 99M people, “Tactical reactionaries will be obsolete”.  This is why I look forward to comparing this years Fortune 500 list to next year’s as I fully expect that there will be a shake up at the top of many industries.  The shake up will occur because some make the transformation and do it rapidly and others remain as operators and commodity IT.

I do not want to leave you with the impression that the first two steps leave the business out.  Starting with Step 1, knowing the services and business, IT must engage with the business, start managing priorities and services as they power the business.  This cannot be an IT project.  The second step of mapping technology and deployment options to the services cannot become an inward IT CMDB project.  Yes, a CMDB does support this initiative, but it is about the services, not the project of creating IT documentation fondly called a CMDB.  Another ascertion I would make is that a CMDB project is of no value, but I’ll save the discussion as  to why for another post.  This transformation cannot be another IT project, it is a business transformation and those that succeed, will lead their industries in next year’s Fortune 500 list.

Investment must be made as a business investment that gives IT the management capability to manage services, manage providers, communicate real-time in business terms and use that management intelligence to drive competitive advantage both with new services and quality services that keep customers loyal.  Drive the cost out of the commodity and drive value  into the revenue.

How are you preparing for your transformation and service enabled infrastructure?

Michele

The survey, which was conducted in the first half of this year, measures the maturity of BSM initiatives industry-wide. The report provides unique insight into the working relationship between IT and their business counterparts, across departments and roles. It measures the effectiveness of IT service support and identifies the current use and planned adoption of ITIL v2 and v3.  Read More Here . . .

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Nice set of statistics from large, small, global organizations both from IT professionals and business executives.  In 2011 15% of technology buying decisions were made by the business, in 2012 it is expected to rise to 25% and by 2015, 50% of buying decisions will be in the business.  The level of frustration that IT sees themselves separate from the business they enable is driving this trend.  

In a recent Gartner Forbes Survey of Board of Directors, it was found that “65% of Board Members hold ‘high to very high’ expectations for IT strategic contribution to the business in 2012”.  Your business is counting on you to deliver value, are you ready to take the lead?

Are you “keeping the lights on” or are you powering your business for competitive advantage?

Michele

Mobility and wireless network infrastructures are the big takers when it comes to IT budget planning for 2012, our latest study reveals. Even so, organizations are moving to the next stage of the IT infrastructure build-out across multiple budget areas, and our 2012 IT Investment Patterns Study shows how the strategy trends of innovation, integration and reversion are having a significant impact on 2012 spending patterns.  Read More Here . . .

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In this survey results for spending in IT Operations/Management/Governance are the only area with an increase is Data Center Management. Those that are following the lead of the service providers will see this as the management of the technology to deliver that consistent and stable IT performance for business value from my previous post. Mobile delivery options prevail as a leading technology as the consumerization / BYOD (bring your own device) of IT continues. However, these solutions must perform and be available to drive your organizations competitive advantage in the market.  This is the link to business for 2012 investments requiring the stitching together of data from the many systems and applications that are in place today and turning it into real-time actionable information.

Does your IT just run the business or does it drive the business?

Michele

Like many CIOs, you may find yourself struggling to innovate in advance of an anticipated economic recovery, while still striving to keep costs down in a decidedly uncertain business climate. And, even though you’re striving to be seen as a valued, senior member of your management teams, the enterprise perception of how much IT contributes to a competitive edge is decidedly mixed.  Read More Here . . .

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As part of its look to the future CIOInsight highlights the Top 3 initiatives keeping CIOs up at night: cutting costs, operational efficiencies and deliver consistent and stable IT performance to the business. These initiatives are neck and neck with the number of organizations that see IT as their competitive edge in the market. Most IT organizations still spend ~85% of their IT budget “just keeping the lights on”, with minimal focus on supporting and delivering upon stable and consistently performing innovative services aligned with business objectives. This percentage of spend is generally ~ 1 – 2 % of revenue spent annually operating rather than driving.

The cost of not evolving is far greater for IT organizations than the cost of transforming and adding value to their business.  Buying decisions are also migrating to the business because they have more options and they are creating change.  Outsourcing is never done for cost savings, it is to create change in the environment that the organization is unable to create on it’s own.

Time for change may have arrived in 2012.  Good set of insights.

Michele

It’s that time of year when the press is filled with the latest IT predictions for the coming year. A couple of articles and surveys caught my attention as they relate to the unspoken imperative of connecting to the business to drive the business for competitive advantage versus just operate the business. This practice, while not called out, is Business Service Management and is the heart and soul of success for many of these initiatives.

In the Gartner Forbes 2011 Survey of Board of Directors, “65% hold ‘high to very high’ expectations for IT strategic contribution to the business in 2012” and “52% rate ‘maintaining competitive advantage’ of ‘extremely high importance’…”.  It is no longer IT and the business, IT enables and drives the business.  The key question is, “does your IT operate or power your organization?”

As part of its look to the future CIOInsight highlights the Top 3 initiatives keeping CIOs up at night: cutting costs, operational efficiencies and deliver consistent and stable IT performance to the business. These initiatives are neck and neck with the number of organizations that see IT as their competitive edge in the market. Most IT organizations still spend ~85% of their IT budget “just keeping the lights on”, with minimal focus on supporting and delivering upon stable and consistently performing innovative services aligned with business objectives. This percentage of spend is generally ~ 1 – 2 % of revenue spent annually operating rather than driving.

There is also an equal amount of press on new technologies and how to convince your CEO of a new technology. Shouldn’t we be driving solutions leveraging the right deployment technology to drive competitive edge into the organization. Technology for the sake of a technology has no real value. While I agree with many of the points in this particular article on 10 Ways to Sell your CEO on Cloud Computing, it is still selling technology versus a business driving solution. We as IT have to change our thinking to that of the service providers that are popping up daily in selling our CEOs solutions leveraging technologies that drive agility and quality performance into the business, just so happens they use things like virtualization and cloud computing.

I’ve been working with many service providers as of late and it is reminiscent of the dot com era. Those that will survive and thrive are not just chasing the latest technology trend for the short term, but are baking in the practice that will sustain them for the long term and what business is asking of its own IT organizations, the ability to answer 3 questions:

(1)    “Am I open for business?”

(2)    ”How are we performing?” ”What is the customer experience?”

(3)    ”What is the risk of an outage?”

all in real time so as to take action, rather than reporting on it after the game is over.  The reason most organizations outsource services is not for cost, but for change that they cannot create from within the organization.  The time for IT to change and become the service provider of choice driving value and competitive advantage into their organizations has come.

In a recent CIOInsight survey results for spending in IT Operations/Management/Governance, I see the only area with an increase is Data Center Management. Those that are following the lead of the service providers will see this as the management of the technology to deliver that consistent and stable IT performance for business value. Mobile delivery options prevail as a leading technology as the consumerization / BYOD (bring your own device) of IT continues. However, these solutions must perform and be available to drive your organizations competitive advantage in the market.  This is the link to business for 2012 investments requiring the stitching together of data from the many systems and applications that are in place today and turning it into real-time actionable information.  Another Survey illustrating many of these and further results is the BSMReview.com 2011 BSM Maturity Benchmark Study.

In 2003 Nicholas Carr wrote a 28 page article for the Harvard Business Review, “IT Doesn’t Matter”.  In the article he discussed the outsourcing of IT and the changing roles within IT.  Now fast forward 9 years and the advent of the cloud, the explosion of service providers and new buying options.  The business is purchasing on its own and creating “The New IT” for those that are not evolving fast enough.  Leading analyst firms predict that by 2015 50% of all IT buying decisions will be made by the business, not IT.

I have had many conversations with organizations that are replacing their commodity monitoring tools from the Big 4 Vendors with lower cost options and turning that savings back into the investment of turning their IT organization into service providers of choice creating business value.  The investment is in the real time Business Service Views that transform the IT organization into proactive Service Delivery Managers versus reactionary red light / green light monitors turning the sea of data into actionable, intelligent information.  The service providers arealso making the very same investments to illustrate operational capability and market differentiation to capture market share fast during this great period of change.

I’ll quote from a long time customer who has leveraged the Operations Center solution for many years now. Their implementation, while it started technically as a single-pane-of-glass, has evolved into the trusted Business Service view and situational awareness of the environment running the business. Because this customer made the transition to trusted adviser and communicator as to the health of the business, he is trusted with purchasing decisions because as he states, “I provide value”. This is the secret sauce – providing business value and relevance for IT.

2012 will be an interesting year without a doubt with new technologies like mobile and cloud computing entering into leading IT organizations, the risk takers seizing the opportunities to drive their organizations.  The leaders will emerge as those risk takers who also bake in their operational management and efficiencies with controlled risk to deliver consistent, stable performance and value to the business.

Michele

Here are a few topics around monitoring the Enterprise that are common problem areas for IT.   While this is not the entire list, it is a common problem area I hear about often.  Do you have more, please let me know.

1) You have many tools monitoring your infrastructure. While you may be feeding events from many tools into your favorite management tool (AKA: Manager of Managers), you still rely on the underlying consoles for day to day management (IE: while events are able to come in, you are not able to access other features of the underlying management tool to look at performance charts, issues actions against alarms, seeing topology maps, etc).

2) While looking at a sea or red, it is not quickly obvious which outages or performance problems should be worked on first. Is it easy for Level 1 operators to know that server1.mycompany.com is a critical component of three different important company Services (IE: EMail, Purchasing, etc) and server2.mycompany.com is a single node is a cluster of ten and not as critical.

3) The IT Department is graded on the availability of the Services (and/or systems) and you have to manually update spreadsheets at the end of the period (monthly, quarterly, etc) to determine your grade. You have no way realtime to see where you are at within an active Service Level period. You are not able to map current outages to key/important SLA’s.

4) It is not clear that help desk tickets have been opened for a problem identified by one of your management tools… or the current status of the ticket… or if change requests has been opened to address the problem.

When looking for your next upgrade, one stop shopping to a single vendor is not always ideal. The Enterprise has many tools from many vendors and while the one particular management tool has ways to integrate with third parties, it was not designed to do full fledge bi-directional integration. Most tools report on how you did for an SLA and ignore how you are currently doing.  Mapping of critical business processes and/or services is typically within a silo (IE: just that management tool, it might have some additional feeds, but not a true end to end view of the service and components supporting the Service). Many tools open tickets, but very few allow you to visualize all aspects of the total health of the device (think all the ITIL practices here).   Use a product that was designed from the ground up to integrate, correlate and visualize vasts amounts of data from several underlying management tools.

– Tobin

Cloud computing is clearly having a huge impact on the technology industry. Recent reports have US CIO Vivek Kundra putting pressure on departments to get involved in cloud computing and to do it quickly. Just the other day news reports surfaced that Microsoft is intending to devote 90 percent of its R&D budget to the cloud. If these major players are in, what’s holding you back?

Now, just because the other kids are doing is not necessarily a good reason to shift your entire IT focus to the cloud. Think about what your mom said: If all the kids jumped off a bridge, would you? Peer pressure is a powerful force, but it shouldn’t be the driving force behind your IT decisions. It should be about how it maps to your particular business requirements.

But when Microsoft announces that it’s devoting $9 of every $10 to cloud development, you have to at least wonder what the heck is going on. This isn’t some small amount of money we are talking here. As Kevin Jackson points out on the Forbes Cloud Musings blog, “Since Microsoft’s annual R&D budget this year is $9.6 billion, this investment translates to a massive $8.6 billion.” That’s some serious dough.

What’s more, Microsoft’s bread and butter is on the desktop where mainstays Windows and Office continue to generate the majority of the profits. But perhaps Microsoft sees the future in the cloud and realizes that the money from these sources could dry up at some point as companies move away from expensive licensing and toward cloud-based solutions (like Office 365).

I’m not sure what Microsoft’s long-term strategy is or how much you can believe the hype about their foray into the Cloud, but the company is clearly spending money there and hope to at least have a stake. Windows Azure, the company’s Platform as a Service (PaaS), is certainly getting some attention.

But regardless of what Microsoft really does, the fact they are making this noise about the cloud is a bell weather, and as such you need to at least be paying attention. It doesn’t mean you have to put that kind of percentage of your budget in the cloud today, but you have to at least begin looking at it and the pieces you will need in place to help build and monitor that cloud when the day comes to flip the switch. All the kids are doing it may not be any better a reason now than when you are kid, but in this case, maybe there’s a good reason they’re all doing it, besides being slaves to fashion.

Photo by Web_Anna on Flickr. Used under Creative Commons License.