Innovation vs. Automation: Digital Business Model

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It’s not enough to make a difference on product quality or delivery readiness or production scale. It’s important to innovate in areas where our competition does not act. ~ CEO, IBM Global CEO Report

Innovation in Business Models

Innovation in business model drives the creation of new markets and/or increases existing ones. Companies like Apple, Gillette and Priceline have expanded their markets by changing their business models to include new markets, selling products in pieces or creating new opportunity through closer relationships with their suppliers.

The truth of the matter is that there is no one single formula that can be used to innovate a digital business model.

In fact, there is no single definition or framework in existence today that can guarantee executives a path to success when it comes to business models. Even the definition of business model itself is disputed by academics and managers.

Regardless of this ambiguity, managers know that innovating business model delivers gains that are unprecedented. And they also know that technology has made it possible to deliver results faster and with far less investment than was previously possible.

Apple Xpansion

Source: Creating Value Business Model Innovation, MIT

Stop Thinking Automation

Many businesses are spending significant amount of dollars to transform physical components of their businesses to digital ones. As they digitize, they are simply taking products or services they already have and automating them for digital channels like mobile, web and phone. Unfortunately, status quo product and service automation will not be enough to drive a meaningful change in their business for the long term. And here is why:

  • Automation is easily replicated by competitors and works to decrease switching costs for customers.
  • Automation creates another layer of complexity on top of existing systems rather than attempts to build a new core digital business that creates new markets.
  • More technological complexity in the infrastructure means higher security risk over time. As technology advances so do the threats and vulnerabilities for the old technology that still remain the foundation of an automated digital business.

Start Thinking Digital Innovation

Digital innovation is not about executing a roadmap made up of series of projects that lay out a layer of new technologies on top of old. It is about creating new markets and expanding the existing business by investment in new technological solutions. This means that managers have to push the boundaries of ‘business as usual’ and work to radicalize their way of thinking.

Here is one suggested path you can take to innovate your digital business model.

Begin with Core Principles

Digital business model innovation should begin with a thorough understanding of the core economic principles upon which the business is built. And where can these principles be found? They are stated in the mission and vision statements for your business.

A mission or vision statement is the first step in understanding what your company believes is at the very core of the business. These core statements are generally created with great care and intensity by senior managers of the company. To start here would be to understand the heart of what is most important.

Of course, what is at the heart of a business can vary from company to company. Some companies are concentrating on products, others are passionate about customer relationships and still others emphasize process. Regardless of what the core principles of your business is, digital business model innovation can take the core to the next level of expansion.

From this centre, the work on digital innovation can move to other domains, markets, technologies, etc. as you explore both external and internal possibilities of expanding your business.

Here you are limited by only two things: i) your imagination and ii) what you can build.

I. Play with Imagination

Design

Developing many possibilities or scenarios based on imagination is the necessary first step. This is the design phase of your innovative digital business model. This is an opportunity for you to thoroughly explore the possibilities without restrictions. Don’t let practicalities hold you back at this stage of game. Doing so may be exercising the circular reasoning of self-defeat.

Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.” ~ Albert Einstein

It is important to create a safe environment for this exercise. The naysayers are a necessary part of the process and they help check the realities of ideas but not during the design stage. Fact is that the imagination can easily be quashed by reality and yet it is imagination that can open up new opportunities for the business that would never have been considered before.

Design phase is the one place where everyone can make mistakes and get away with it. The leader for this effort should ensure that the rules of exercising innovation sessions are well-understood.

Here are some high level examples of how financial services can imagine their digital business models:

Models that centre on Situations

situational

Models that centre on Segments

segment

Disclaimer: Above are only preliminary ideas and require further regulatory and technological due diligence to be functional.

II. Plan to Win

Planning is an important part of defining how the innovative business models should work to increase the pie. The process of planning is systematic and will help think through how customers will be served, how revenue will be generated, what will the costs be. Business Model Canvas is a great place to start thinking through a detailed plan for your new business models. Below is a brief video that explains the Business Model Canvas and here is a downloadable doc that gives even more details on the process.

In addition to Business Model Canvas, there is a great compilation of different types of digital business models currently operating documented by Professor Michael Rappa from University of North Carolina. This resource can also help in the Designing phase to kick-start discussions of innovative business ideas. The categories of different digital business models described on the site can provide a foundation for what type of business innovation makes sense for your business. Or even generate a new economy or disruptor.

Create Innovation Mindset

To create innovation mindset in the technology communities of your enterprise, there has to be a deliberate and purposeful effort to drive opportunities for innovation thinking. You might consider the use of a facilitator/consultant who can help accomplish this safe environment for imaginative discussions.

I have facilitated many sessions, from process mapping workshops to developing game plans for digital channels. In every case, the participants are more than willing and able to discuss a new future for their companies. I find that individuals who work in technology selected this career path because they believe in a better future filled with new innovative technologies that solve problems.

Additional Resources

Digital Disruptors: Models of Digital Operations, Part 2/3 Digital Business Transformation
This is a good summary of various aspects of digital business model.

How Kodak Failed
A great article in Forbes that provides a view into decision making process that led to the demise of Kodak, the inventors of digital photography. A ‘what not to do’ guide.

What can a CIO do to drive Digital Transformation?
HBR Digital Innovation and Transformation blog site where there are many searchable blogs about different aspects of Digital Business Models and Digital Transformation.

Defining the Business Model in the New World of Digital Business
An academic index on all the different ways a business model can be defined. It is a great summary and an attempt to define the concept of Business Model.

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Update: October 14, 2014

A great presentation by Didier Bonnet from Capgemini on the need for Digital Business Model Innovation at Oracle OpenWorld keynote:

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OPEN WRX Consulting Inc. is committed to helping companies improve competitiveness through effective decision making by sharing information and generating ideas.

While my passion is business strategy and technology, my work spans a number of corporate disciplines including product development, process design, marketing and financial analysis. I was a Consultant at CIBC and Sr. Consultant at Innovapost where I had the pleasure of working with clients at Canada Post and Purolator. I also worked as a Digital Strategist for NBA, Kraft, Samsung and Travelex. My experience spans from start-ups to Fortune 500 companies.

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ReEvolution of IT: Why CIOs should Own Digital Future

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As products evolve to contain more and more digital components, the skills, experiences and best practices of IT become crucial for success of product development in a digital world. by Patrick Meehan and Tomas Nielsen

Owning the Digital Future

I remember when this IBM commercial first came out in mid 2000’s.  I was very excited about how technology would change everyday life forever. Unfortunately, RFID required large investment in infrastructure and couldn’t connect products with customers from end to end. And so it failed to complete its true promise of connectivity.  Majority of the retailers could not invest in the technology at the scale required. Instead RFID became an instrument of back room inventory and logistics management along with improved operational efficiencies on manufacturing floor. But it did not deliver the promise of “The Future Market”. 

The good news is that today many companies are re-creating “The Future Market” with their own products.  Once again, a new generation of inventors are building a world where products can talk to people through phones, websites and connect throughout the lifecycle. This time digital products or digital components are being developed by both grassroots inventors and product teams in large enterprises everywhere. Finally, the promise of “Digital Future” has value that is driving action and engagement.

Now is the time for CIOs to re-evaluate how IT can add value to the product portfolio by enabling digital products and components to create strategic, long term benefits for customers and company.

Why

Driving Strategy

CIOs have an opportunity to drive business strategy by building functional products that will generate revenue, brand value, customer experience, and valuable customer data.  Objectives may vary based on industry, regulatory environment, customer needs, etc.  But enabling a digital product is a long-term business strategy that can help grow value for customer and company.

CIOs and IT have tech knowledge and methodologies that are indispensable for long term evolution of the company’s product portfolio.  The processes for System Development Life Cycle (SDLC) and Product Design are similar in that the competency can be easily transferred from one to the other. (Source: Gartner, 2014)

SDLC-Prod Des

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The most important gap that exists between IT and New Product Development is business strategy. The business strategy for new products can include understanding target customer, product lifecycle relative to target market, having a measure of market size, pricing, sales, marketing and customer experience just to name a few.  Having an understanding of these important product concepts can allow IT to better transition from the tech side to the business side.

Architecture

IT has the competency to integrate digital products with existing platforms within the company to ensure ongoing service management, upgrades, error correction, etc. IT no longer has to be a back room activity that drives a company’s competitive advantage without directly connecting to the customer.  They can take initiative to ensure that they own the long term vision of product digitization for the company and integrate systems to create one customer experience, one perspective of customer relationship and one representation of customer activities.

Governance and Strategic Partnerships

CIOs already manage governance of information across the enterprise. Adding digital products to the mix will be like adding a new program to governance portfolio.  IT already has the policies, processes, ownership and compliance structure defined and enforced as part of existing governance process for all technologies. Digitized products will simply be an addition to the existing structure with new business owners, policies, processes and compliance reviews. It is important to note that as you change your portfolio, flexibility in governance policies is important. A strategic mindset always aims to explore new options and new ways of accomplishing objectives. 

Another important aspect of governance is building strategic partnerships that can enable higher value for the company and customer through digital products. CIOs and IT have long been working with tech partners and have the know-how to start a symbiotic relationship that can be beneficial to both parties. Again, adding another strategic partner is no more work than enabling a new set of business objectives via contractual relationship. 

Data Capture and Analytics

The greatest strategic advantage digital products offer is data. CIOs can drive a comprehensive information strategy that can not only continue to inform future product development but also marketing, operations, human capital and future strategies. Data is the core of why products should be digitized. Collecting information about how the customer is using the product, when they are using it, why they are using it is essential to long term digital strategy. 

When Nike first got into the data-collection game it stuck sensors to elite athletes running, jumping, spinning and generally doing those impossible things they do. The idea was that the data collected would point Nike designers and engineers toward building better shoes. It did that, but the Nike brain trust understood there was much more the data could unlock”, says Stefan Olander, VP Digital Sport at Nike. “We quickly realized that data can be applied much more broadly,” Olander says. “Why wouldn’t we take all this knowledge, all this innovation and give it back to everyone?” ~ Nike Shoe Sensors Boot Up Performance Data, Michael V. Copeland, CNBC.com.

CIOs can also append product data to other information far more effectively because they own the flow of information from channels, functions and partners. The strategy is to have direct product use data married up to central customers data thus enabling a singular view of the customer from end to end. Analytics can reveal insights about the customer that is both product specific and customer centric.

How

Envisioning Digital Business Model

CIOs should lead the effort to envision a Digital Business Model for their business. The objective of this exercise is to take the traditional business model where technology only automates and improves efficiency of existing processes and “Re-Evolves” it to identify a new value proposition.  This exercise will require team members who think in design and work in technology. But instead of thinking one product at a time, the goal is to think in a product portfolio unified with multi-product customer experience.  These will be challenging discussions that include such questions as who “owns” the product portfolio, customer information and experience. (Gartner, 2014) Given that IT will lead this discussion the owners of the strategy becomes obvious: Information Technology.

But there is another reason why IT should lead the discussion:

 To achieve economies of scale with digital business models requires the development and reuse of digitized platforms across the enterprise. Without such shared platforms, the IT units in companies implement a new solution in response to every business need, creating a spaghetti-like arrangement of systems that do meet specific customer need but are expensive and fragile – and don’t scale enterprise-wide ~ Optimizing Your Digital Business Model, MIT Sloan Management

In order to ensure Digital Business Model is envisioned as a long term strategy, a strategic planning process and roadmap activities are necessary. And creating a Digital Business Model is not only about developing digital products or components but “creating strategic positioning by performing activities differently than rivals do.”  ~Michael E. Porter, HBR.org

Nurturing Key Competencies

Beyond envisioning the Digital Future, CIOs should also consider nurturing key competencies required to enable a strategic direction.

Org

Innovation Mindset

There is an absolute need for IT organizations to evolve their culture to an innovation mindset.  This battle must be fought by all managers, business and tech, within the company. Every manager knows that “change” of any kind is generally a massive undertaking and the thought of re-thinking, re-building, re-evolving requires a brave heart in IT. Yet, this is exactly what is required when you enter the fray of a Digital Future. The word “No” should no longer be the response to “change”. CIOs must encourage the troops to close this mindset gap first and foremost.

How should this be done? Establish a change management team that creates the necessary momentum and maintains it. One of the failings of strategic effort in IT is that after the initial momentum in driving strategic change, people abandon the battle of managing change. So to enable a long term strategy, the troops must battle on, even when things are looking bleak. And giving change management the authority to help manage the tough times is more important than initially building the momentum for change.

Consulting Team

The consulting layer involves selecting or hiring a team of business consultants who ‘get’ both technology and business functions. These are the ‘sales’ managers and the ‘doers’.  CIOs must consider communications with the functions to be the greatest challenge in driving a strategic Digital Future. Gaining the support of key C-Level managers and their subordinates will drive a company wide commitment. Consultants can help manage this communications. Ideally each business consultant would have a speciality and will be the conduit to conversations across the enterprise…both strategic and tactical in nature.

IT Skills Expansion

IT organizations already have many skills that are transferable to new product development platform.  But it is always best to ensure that there are no gaps. Some gaps that may need to be filled include a pure corporate strategy, analytics and customer experience competencies. If IT is to lead the long term Digital Future of the company, having these skills within IT will be valuable. Corporate strategy role will help establish the strategic positioning of product portfolio and internal technology from a business perspective. The analytics role will assist in designing and commissioning information necessary to back the strategy. Customer experience acumen will ensure that regardless of the strategy or information, the Digital Future is serving the customers first. With these skills and the current IT organization, CIOs can’t lose in building and collaborating with the business functions to realize the promise of a “Digital Future”.

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Kiran Sohi’s career has focused on leading businesses to success by enabling strategic decision making. While my passion is strategy and technology, my work spans a number of corporate disciplines including marketing, finance and operations.

OPEN WRX Consulting Inc. is committed to helping companies improve competitiveness through effective decision making. Services include structuring, facilitating and implementing strategic planning process and strategic solutions for businesses, functional departments and/or channels.

Visit openwrxconsulting.com for more info.

Why Planning Matters

Winston Churchill, 1941 by Yousuf Karsh

There is in the act of preparing, the moment you start caring.

~Winston Churchill

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Internet of Things: An opportunity to innovate H2M | M2H | M2M Communications

 

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“Today’s hyper-competitive business climate requires flexible, configurable billing solutions that can handle a wide-variety of consumption and subscription-based business models – and the ability to change them, quickly and without IT intervention.” Andrew M. Dailey, MGI Research

H2M Com
Programming in the 1990s

My first experience of programming was in Fortran (Formula Translating System) for statistical analysis of an engineering experiment for my undergrad. It was the early 90s and Fortran language computer engineers had not yet figured out how to build in demarcations that allowed humans to find the erroneous lines in the program.

One dark and stormy night, I sat in the computer lab trying to compile my program. I kept getting [Unknown error] again and again. I tried everything I possibly could. I went through every line painstakingly. I reviewed the syntax with the hardcover book I had on Fortran programming. But it wasn’t till 3 a.m. in the morning that I realized that I had missed a “,” (comma) in one of my program lines and so the machine could not understand what it is that I wanted it to do. It did not compute my communications!

Feeling beaten by the frustration of not being able to communicate with the machine (H2M) using a language that only worked on a trial-and-error basis; I strapped on my backpack, mounted my bike to ride uphill in the stinging rain towards home. As I approached my home, the rain gave way to a moonlit sky and dark clouds with silver lining. I looked up at the moon and held up my fist up and said:

“As God is my witness, as God is my witness they’re not going to lick me. I’m going to live through this and when it’s all over, I’ll never PROGRAM again.” (Based on Gone with the Wind)

I programmed again…albeit grudgingly.

H2M | M2H Com
Fragmentation of Technology Solutions in 2010s

Fast forward to today, building a technical solution for humans has become a massive co-ordination effort among a team of humans.

Programming has definitely become easier and faster. With today’s object oriented programming (OOP), programmers are integrators of existing code (objects) supplied by the giants of technology like Apple, Google, SAS, etc. At worst you can find the code in code libraries or ask questions in many readily available forums online. Error correction has definitely become simpler and programming languages for the most part are easier to use but still hard to learn.

But the business of developing a technology solution has definitely become fragmented. First, there are approximately 700 different programming languages in existence today. One must learn at least a few of these languages to actually become a coder.

Second, programming in itself is not sufficient to enable H2M|M2H Com today. We must also have:

  • product managers to interpret customer needs and define what to build,
  • business analysts to write it in pieces of requirements,
  • editorial for actually convert information into human language,
  • user experience for visual optimization of screens,
  • design to make sure everything is sized correctly for different devices,
  • marketing for call to action or campaign design,
  • IT for data feed and processing,
  • analytics for analysis of data into information being fed in and out of systems,
  • QA to make sure that there are no errors in all of it,
  • testing to make sure that everything works together,
  • publishing to put it out there in the real world,
  • support to catch any problems from internal business managers, and
  • customer service channels to catch and fix all the problems from customers.

And all of the above does not include team of humans that maintain the hardware and software that allows this communications to physically exist on machines.

Agile ‘process’ is one attempt to shorten the above human based co-ordination process but it only reduces the time that humans (businesses) talk to each other before putting together a complex set of separate systems to then communicate to other humans (customers/businesses/employees). Also, the time saved in the original build is taken up by repetitive iterations of solution updates and changes.

Side: Here is a great YouTube video on Computer Programming.

The fragmentation of H2M|M2H Com in the 2010’s has generated over $1 Trillion of spending in IT and should grow over $3 Trillion by 2016 as technologies in homes, cars, businesses, clothing, watches, household goods, etc. come into existence. The cost of doing business using technology has increased because the cost of building and enabling technology has also increased along with its complexity. (Moore’s Second Law)

So why have human beings become multi-layered translators between a group of humans (businesses) to machine to another group of humans (customers/businesses/employees)?

Because technology today still hasn’t solved the fundamental problem of H2M | M2H | M2M Communications. Communicating through technology today is a bit like playing ‘telephone’ while accumulating errors over layers of recollection from humans to machine to humans.

H2M | M2H | M2M Com
A Proposal for Fusion Innovation in 20XXs

To move forward in Communications through technology, we must look to the past.

Thomas Edison’s critical decisions related to the light bulb’s key component: the material of which the filament is made of, Carbon as oppose to Platinum. Edison knew that using a much cheaper material for the filament would lower product costs and market price, and make light bulbs cheaper and more appealing for consumers. He always went for the jugular of mass market.

(Source: Inspiration Joins Perspiration: Thomas Edison as a Dynamo of Applied Creativity)

‘Internet of Things’ refers to connecting everything we live with to the Internet so that our human needs can be communicated directly to businesses we purchase from on a daily basis. Businesses will be able to mine daily habits of people at an aggregate level and realign product strategies on a daily basis, if they have the man-power to do so based on existing technologies. Big Data can finally be a reality!

However, in the recent WSJ.com blog the following was stated “’Internet of Things’ challenges [current] business models, forcing [companies] to figure out how to cut costs in order to boost volume” and hence serve the mass market.

Challenging the business model is not enough. Like Edison, we must challenge the technology itself and re-invent the fundamentals. It is time to destroy the current fragmentation of first building a solution in technology medium (namely, software, codes, hardware, etc.) and then working to translate it all for human use.

Here are some postulations that may inspire humans to solve our generations ‘light-bulb filament’ problem:

  • Instead of separating tangible (hardware) and intangible (software)…bring them together.
  • Instead of creating multiple machine languages, converge them into one visual language that any human (businesses, employees, families, etc.) can use to build technology solutions in a few hours for any device and then share with others.
  • Instead of forcing humans to code machines to talk to each other, enable machines to machine communications without intervention.
  • Instead of building one ‘IoT’ at a time…allow humans to wire all their experiences:

home – kitchen, bathroom, entertainment system, etc.
car – driving, music, lights, entertainment devices, steering, maps, etc.
finances – payments, purchases, debt, retirement, etc.
travel – plan, purchase, travelling, tell friends, photos, etc.

There are many reasons not to destroy the current complex technology eco-system…actually there are $3Trillion plus reasons to be exact! But fusing technologies will also create new markets, new opportunities and one day legitimately enable H2M|M2H|M2M Communications.

Com


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Kiran Sohi’s career has focused on leading businesses to success by enabling strategic decision making. While my passion is strategy and technology, my work spans a number of corporate disciplines including marketing, finance and operations.

OPEN WRX Consulting Inc. is committed to helping companies improve competitiveness through effective decision making. Services include structuring, facilitating and implementing strategic planning process and strategic solutions for businesses, functional departments and/or channels.

Visit openwrxconsulting.com for more info.

Cloud Computing: Why Strategic Planning is imperative for CIOs

Cloud Computing_Title

Banks, insurers, universities, hospitals, retailers and government agencies as well as their IT service providers are rapidly transforming into ‘digital businesses’ based on the four converging forces: social, mobile, cloud and information. ~Gartner, Feb. 2014

Cloud

Cloud, simply, is a commune of scalable IT infrastructure (hardware and software) that allows multiple users access to storage and applications. It is no different than having a system that is outsourced to third party vendor like CRM or ERP where the users pay cost of ongoing support. The difference is that you are sharing it with a lot of other entities thus, reducing overall cost of operations. And, as cloud is available 24/7, it allows any user to access the content of Cloud at any time, any place and with any device.

Components

Depending on business needs, you can build any type of technology within the Cloud including Software, Platform and Infrastructure. Here is a snapshot that shows different Cloud technology market values.

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Software simply means any application that helps complete a business process, example, annual strategic and business planning process. A Platform is more complex and can include multiple applications running on infrastructure. An example might be a CRM system which may include a real-time database, data storage, campaign build application and analytics software. In a Platform, all components of the system are connected thus allowing applications to use data and process to produce the right information for business. Infrastructure usage can include delivering basic desktop services (aka client/master from old school), network services and even communications services like VOIP telecom. Fact is, Cloud services allow users to build whatever they need for a meagre monthly fee based on usage.

Benefits

Cost

Because Cloud is shared, users can leverage economies of scale to reduce operational costs and eliminate capital investment in technology for their business.

Image*The total capitalized IT spending for the fiscal year (i.e., the full value of capitalized assets acquired in the fiscal year). This includes investments in new application development and IT infrastructure.

^The total day-to-day operations and maintenance expenses for this fiscal year that have not been capitalized. These do not include any amortization and depreciation expenses.

Source: Gartner IT Metrics Data, 2012 IT Enterprise, Summary Report

Agile

Building and deploying various technologies can be far more efficient than trying to maintain in-house systems. Keep in mind that all the best practices for developing, deploying new changes and maintenance of applications still apply even in the Cloud.

Shared

Cloud service providers have built optimized systems that allow users to share the innovation that providers are using themselves. Users can take advantage of this scale and complexity regardless of size of their business.

Reliable

There is greater onus on service providers to ensure that the service is available and reliable. So service levels for Cloud is considerably robust compared to in-house infrastructure.

Web Scale

Cloud service is easy to scale as business needs grow compared to the existing enterprise. Depending on the provider, there can be significant diversity in types of applications that can be built in Cloud.

Image  Source: Of That Blog

Before Entering the Cloud

Working in the Cloud is no different from building a new system in-house or when outsourced to third party. CIOs should set aside time with the organization to plan out a business roadmap that outlines a long-term vision, strategies for growth, tactics and resource requirements. Here is a high level guide on where to start:

Review Tech Portfolio and Costs

A technology portfolio is a complete inventory of your current technologies including infrastructure, platforms, and applications. In completing this effort, managers may find that significant number of applications are old, customized and serving only a small group of users at any given time. They are also not generally mission critical and can easily be transitioned to ERP technologies or the Cloud. This action alone can sometimes save considerable support costs for the company.

For Cloud transition look for the “sweet spot” where application costs are low and criticality to business is minimum. Generally this is the best way to dip your toes into  the Cloud.

ImageFinancial savings benchmarks from in-house IT to Cloud have not yet been thoroughly researched but here are some numbers from Betchel, a giant construction firm (Sales $27B in 2007), that benchmarked its costs for number of IT resources against costs using cloud providers.

Cost structure for Bechtel in-house IT were higher than the best of breed cloud providers:

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Define Service Levels

This is a very important step in making sure that your business needs are being met. Define the service levels based on what you need. So for Desktop-as-a-Service, you will require almost 24/7 availability, especially if the company is global and multiple users can access the Service from anywhere in the world. Here is a very high-level guide to Service Level Agreement that help develop Long Term Strategic Partnerships. Everything is negotiable.

Craft Data and IT Policies

CIOs need to be very clear about Data and IT Policies like data archiving and critical business continuity requirements. Ensure that data archiving policies are defined and enforced in the Cloud, for example, all transaction data will be accessible for 7 years. These policies should be automated to ensure further cost savings in data storage and usage is realized on an ongoing basis. Also, keep archiving policies up to date as new data are collected like social media communications, mobile data, etc.

Business continuity is imperative for CIOs when they are thinking of moving into the Cloud. Regardless of whether the application is low cost and not business critical, business continuity must be in place in case there is an outage. A site called cloutage.org keeps tabs on which Cloud service has experienced an outage and when. But regardless of this information, it is important that your business is ready for any disaster recovery if an incident does impact the service provider.

Document Everything

IT is one of the biggest culprits when it comes to not documenting original build and ongoing changes. Moving into the Cloud demands that you document what you are building in the Cloud and how. Document data flows, work flows, architecture, application lists, service levels, business rules, and even simple programming documentation are a must. Simple reason for this is that if the business decides to move out of the Cloud or switch to another service provider, you will have the details to ensure that the transition is smooth. This will also ensure that you do not get locked into a provider. Not knowing what you own is the greatest sin in technology and it can cost the business money and intelligence.

Knowing your Cloud Provider

Having a relationship with your Cloud Provider is a necessity not a nice-to-have. Here are some key facets to look out for when selecting a provider:

Optimization & Transparency

Most of the larger providers already have a highly optimized Cloud service simply because their own business services rely on it. But make sure you can monitor and manage your piece of the pie because your business depends on it. Ensure there is a dashboard that continuously shows capacity and costs. Amazon Web Services uses Splunk Cloud as a way for users to manage their activities and costs.

Managing the Contract

Where possible, ensure that you have control over the terms of contract especially if you are thinking of moving business critical applications into the Cloud. Smaller start ups may have to accept the terms and be agile enough to move to another provider if the Cloud service restricts any part of your business. For larger enterprises, it is critical to manage the contract on an ongoing basis because this is the only way you can ensure that you build a long term partnership with your Cloud provider that serves your business.

Redundancy and Service Info

Although it is important for the business to clean unwanted data, transactions and applications prior to moving to the Cloud, ensure that you are also able to do this after transition to the Cloud. Having transparency into your costs for Cloud usage is only useful if you can take action to manage it.

Cloud service providers should also be able to provide information on:

  • Where your data resides
  • Who controls the data
  • When data is moved to another location

Strategic Planning For CIOs

In 2014, CIOs and IT leaders want to know how to deliver converging solutions using the four converging forces: social, mobile, cloud and informationGartner, Feb. 2014

Given the “convergence of social, mobile, cloud and information”; it is imperative for CIOs to define a clear vision and roadmap for the future of their business using these technologies. CIOs should not only deliver a Technology Roadmap but also a Strategic Plan that clearly outlines how the organization will build and conduct business for the next 5 years in the context of these technologies. The Strategic Plan should be renewed on annual basis to consider new technological market forces that will impact the business. The business is no longer in competition with only the immediate competitors in the same industry but also business disruptors who will do it for less using Cloud.

Fact is Cloud is an equalizer of small businesses to large enterprises. It provides smaller businesses with the same technological power that larger organizations have already invested in for decades. And more Cloud providers are popping up every day in the market. Bottom line is that Cloud is a cost saver based on economies of scale and organizations should not ignore this phenomenon but figure out how they can use it to their own advantage in their business.

Cloud is the foundation that will lay out the future of Information Technology:

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Kiran Sohi’s career has focused on leading companies to success by enabling strategic decision making. While her passion is strategy and technology, her work spans a number of disciplines including IT, marketing, finance and operations.

OPEN WRX Consulting Inc. is committed to helping companies improve competitiveness through effective decision making. Services include structuring, facilitating and implementing strategic planning process and strategic solutions for businesses, functional departments and/or channels.

Visit openwrxconsulting.com for more info.