Having IT Both Ways, You Bastards

Tuesday Feb 3rd 2009 by Steve Andriole
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Tech professionals are now expected to both cut costs and increase revenue. Here’s how to cope with the schizophrenia.

We find ourselves in a conundrum: just as technology hands us some powerful new opportunities, the financial markets constrain our ability to exploit them.

What to do?

Have IT both ways.

Here’s the short list of how to exploit the trends defining the tech industry in 2009 – and beyond – and how to convince skeptics that the money will really be well spent.

(I will turn my attention to the bastards who created all these skeptics after vetting the short list of save money/make money/exploit technology opportunities.)

Save Money Today & Make Money Tomorrow

The marching orders today are to cut technology costs, but longer-term the orders will be about cutting costs and generating revenue. There will be clear and consistent pressure placed on technology organizations to perform as both cost centers and profit centers.

Prepare for the schizophrenia. Do not throw the baby (profit center) out with the bath water (cost management). Assign someone to whisper in your ear every time you announce that you found another X% to cut that the world does not turn on cost management alone, that this too shall pass, and we’ll once again turn to technology to enable profitable growth.

That said, of course, there will always be pressure to reduce technology costs. So get used to being all things to all people – it’s a permanent state.

Stop Worrying About Devices That Really Don’t Matter

It doesn’t matter how we get to networks, data and applications, only how we get there securely and ubiquitously. We buy one device brand instead of another because we get a better deal, not because we think there are significant performance or reliability differences. There aren’t.

Interoperability is almost complete. Soon it won’t matter what device is used to access networks, data and all forms of media. All content is mobile; all devices are (soon to be) interoperable. Don’t build or buy anything that only works in one place (unless you like wearing tool belts). You can save money here – and make money by increasing the productivity of your clients.

You should also segment your clients into categories that match them to the devices they actually need – and those they don’t. Interoperability means that one size no longer needs to fit all.

Software-&-Hardware-are-Already-Services

Only organizations that believe that they must absolutely, positively own their data, applications and infrastructure will persist with the buy/install/develop/ customize/support process. Just about everyone else will rent applications over the Web.

The software-as-a-service (SaaS) model will enable the trend, since we’ll not only be able to rent standard application packages but we’ll also be able to customize applications over the Web. You can also rent servers from Amazon, Yahoo or EMC – among others – for less than a dollar a day. You can rent just about anything from a growing number of vendors. Pilot some of these alternative hardware delivery models against a set of cost/benefit metrics.

What the hell are you waiting for?

Open Source is Safe, Honestly

Open source software is not competition to proprietary software, it augments it; in fact, within a few years it will begin to replace significant stacks of proprietary software. Will we see the increased adoption of open source desktop software (to compete with MS Office) and even Linux on the desktop? We will see the widespread adoption of open source CRM and data base applications? Yes and yes.

The major proprietary software vendors will reduce their prices to avert the increased adoption of open source solutions. It remains to be seen how aggressively they fight, but they have to make some tough decisions here – and soon. Just download Open Office and be done with it (or StarOffice, or GoogleApps or even Symphony).

There’s Gold in Them There Processes

Buy, rent or activate an existing business process modeling (BPM) application at your company. Many of you already have access to a BPM module through our larger ERP platforms. There are lots of off-the-shelf packages as well.

It makes sense to invest in process modeling training and internal process consulting; BPM expertise should become core to your company. There’s leverage (and gold) in designing, simulating, tweaking and implementing alternative business processes.

Next Page: Loosen Up

Web 2.0 is Really Your Friend

The first wave of Web 2.0 applications was met with caution in the enterprise. Neanderthal technology managers saw wikis, blogs, RSS filters, podcasts, mashups, folksonomies, crowdsourcing and virtual worlds as threats to their governance processes and, ultimately, their control over the technology.

The second wave of Web 2.0 applications is turning heads: wikis for training, blogs for customer service, crowdsourcing for innovation, RSS filters and folksonomies for content management and distribution, among many other creative uses of the technology. This is an opportunity on a silver platter. Take full advantage of it. It’s fast and cheap – perfect for the times.

Data Without Analytics is Useless

Many companies under-exploit their data. (Of course just as many have problems just finding and certifying their data.) But the real payoff is what the data tells us about manufacturing, distribution, customers, sales, marketing and service, among other activities core to the business.

The 3:1 rule is in effect here: for every dollar you spend on database management technology you should spent three on analytics. All DBMS investments should be vetted through analytics criteria.

Organizational Surgery is No Longer Elective

Objectively assess your organizational structure and effectiveness. How’s it working for you? Who’s reporting to whom? Why? And how are they compensated?

Bold lines versus dashed lines are tricky. Make it clear who accounts to whom. Do you need a project management office (PMO)? How about a vendor management office (VMO)? You need a Business Relationship Center of some kind, and you need to populate the Center with kick-ass Business Relationship Managers – the owners of the intersection of business requirements and technology solutions.

People assessment is always tough and always political: What do you mean my brother-in-law is an idiot? I guarantee you that my mistress is valuable: stop picking on her! The economic times provide all the air cover you will ever need to make tough people decisions. Take advantage of the times or wait until the next major downturn. Restructure things to accommodate the new technology and technology delivery models. Do you think that Web 2.0 technology and SaaS/HaaS require different operating and organizational protocols?

Loosen Up

This is tough for the Nazis in your organization who thrive on total control, but decentralization is inevitable, not so much of infrastructure but definitely for applications that increasingly support global activities.

Standardization will be around architecture, like service oriented architecture (SOA)-based standards. Local technology support makes sense instead of tasking the home office to extend support to Asia, Latin America, Europe, North America, Central America, or anywhere else you need to go. Consider loosening the control on what the outposts do (and don’t do). Consider relaxing some of the rules that apply to specific countries and regions.

Control has limits and we need to re-think the hammers we use to influence behavior. Remember that if local/regional/ national outposts have pure profit-and-loss (P&L) responsibility, then enterprise controls will be challenged at every turn. Maybe it makes sense to run from this debate. Grow people regionally rather than shipping them from home office to spend tours of duty around the world. The day IT arrives in a country or region is the day the in-country succession plan should begin.

Next Page: It's Getting Cloudy Out There

It’s Getting Cloudy Out There

Small and mid-sized companies have embraced cloud computing for several reasons, including cost, flexibility, and the desire to define operational technology as a minor – if any – part of their core competency.

Even some larger companies have taken the plunge (or jumped into the ether) usually in pieces – a little SaaS here, a little HaaS there. One of the major strengths of cloud computing is the freedom it provides companies to think strategically about how they want to leverage technology. Instead of worrying about network latency and server maintenance, companies can focus on innovation, sales and marketing, among other revenue generating activities.

Picking from a menu is easier than creating one. Scalability is often just a phone call, text message or email away. The freedom from software maintenance, denial of service attacks, viruses and other operational headaches is a byproduct of cloud computing. Ultimately, cloud computing can save companies 20% - 25% depending, again, on the nature of the infrastructure, the number of users and the number of applications put to work. Time to plug into the cloud to see what it can do for you.

OK, so times are tough – and, candidly, they will get worse. Technology spending will fall dramatically in 2009 and maybe even 2010 and 2011. This is not a “normal” recession. We have been mismanaged by an army of greedy bastards who came close to ruining our economy. Sadly, this not only includes those who packaged and re-packaged (and re-packaged) sub-prime mortgages, but also the politicians who ignored the problems as they accepted money from any number of contributors interested in their re-election. It also includes the bastards on Wall Street who raped and pillaged the economy before and after the bailout. What a country.

The decrease in technology budgets is one of the many, many outcomes of all this accountability-free incompetence, greed, arrogance, and fraud that describes the recent past. Our industry will suffer for years because of what these bastards did and failed to do. Thank God that the dependency on technology has never been greater – so great, in fact, that no one can walk away from their technology infrastructures and applications and stay in business.

The challenge now is to make the right tough decisions in the right way, decisions that have two sides. The first side is about managing through this unprecedented crisis; the second side is about prospering when it finally ends. Technology trends can help with both sides of the equation. New delivery models, for example, can help us save money today and improve our efficiencies tomorrow.

Ending on an optimistic note, I’ve never seen technology trends able to simultaneously save money and make money in the short-term and longer-term. I’ve also seldom seem so much willingness to make tough decisions, though this may have something to do with how many houses are on fire.

Be careful out there.

Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova University where he conducts applied research in business fl‡ technology convergence. He is also the co-founder of The Acentio Group, a new economy consortium that focuses on optimizing investments in information technology. He is formerly the Senior Vice President & Chief Technology Officer of Safeguard Scientifics, Inc. and the Chief Technology Officer and Senior Vice President for Technology Strategy at CIGNA Corporation. His career began at the Defense Advanced Research Projects Agency where he was the Director of Cybernetics Technology. He can be reached at stephen.andriole@villanova.edu.

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