Digital Transformation – is it a “thing”? or is it everything?

Digital Transformation continues to be a theme this year as we see in a number of predictions blogs and articles. But what is it?  Is it a thing?  Or is it everything?

DX has been going on in some form long before we called it that. The buzz today serves to direct our attention to the spectacular — inventing new markets, changing society. But not all companies are going to do that, or even need to. But every CIO needs to be looking at how the delivery of IT services is fundamentally changing, and understand how rapidly changing technology and market opportunities continue to impact their business.

Some things today are making DX harder and riskier than it used to be.  And those same factors also make NOT thinking carefully about DX in your org equally risky.  Some of these intertwined topics include the following:

• Rate of change
• Proliferation of technology options
• Understanding/factoring in impact on IT organizations (and the rest of the enterprise)
• Separating the fundamentally sound tech from the shiny objects
• Delivering new services at the speed the market (internal and external) wants them, with the level of control and security also needed

Planning and managing technology transformations is more difficult now than it was in past years, and it’s difficult to know what to bet on. Change is changing faster than ever before.  With new tech coming out every year and the decisions being made having multi-year horizons, how do you plan and manage the tech roadmap in this world?

This is a topic we work on with our clients, and it’s one we think about deeply at The StrataFusion Group. We’ll share some of our thoughts on how we’re doing that next time…

Reed Kingston

Welcome to Cuba

By Sharon Mandell

Introduction

It is an exciting time for Cuba, with its doors opening, and the positive impact this will have on commerce, IT, and global cultural integration.

Obama recently issued a presidential directive that seeks to institutionalize and cement his policy changes toward Cuba and encourage further engagement even after he leaves office. Obama called the presidential policy directive “another major step forward in our efforts to normalize relations with Cuba” and said it “takes a comprehensive and whole-of-government approach to promote engagement with the Cuban government and people and make our opening to Cuba irreversible.”

The landscape of technology and IT in Cuba, where it is currently, and how it will evolve is also of great interest.  I have been fortunate to be one of the earlier travelers to a newly opened Cuba and have witnessed first-hand where IT can go, in light of present challenges. I am going to delve into these challenges and sketch possible scenarios in a couple of posts.

Business didn’t take me first to Cuba; it was my daughter’s university research and my love of ballet. As a person whose business and technology career largely started overseas, however, I was eager to see what was true and what wasn’t about technology usage there. Whenever I travel to a new country, I’m eager to see what the environment looks like – visiting the tech marketplaces of Tokyo or Hong Kong, for example. Or participating in my company’s recruiting efforts at an international university campus.

My daughter was struggling on her first visit, adjusting to a new language and, more surprisingly, finding people who would engage with her openly. Our communications were largely limited to 30 minute WhatsApp sessions, given the ongoing embargo and still closed telephone networks to US companies. With the limited time (wifi remained very expensive, even for an American, at the time) and narrow bandwidth we had for our daily “conversations,” it was hard for me to understand her struggles, and I decided to make an unplanned trip to support her efforts in person.

Before leaving, I went online to see what I could learn about Cuban technology – I quickly found some published computer research and attempted to reach out to a few University of Havana professors in Computer Science. It was late June 2016, however, and most folks I could communicate with were unavailable for the summer.

Cuban culture, remnants of the past, steps towards the future

The contradictions began before I even arrived on the island. First, I was somehow upgraded to first class on my flight – always a welcome event. Still, it felt strange, as I was flying Cubana, the national carrier of a communist nation. As we drove through Havana to our “casa particular” in our restored Chevy, I could recognize the long term relationship with the Soviet Union in the Ladas, and the present day trading partners in the Kias. Despite the embargo, it wasn’t long before a motorbike appeared with an HP printer strapped on the back of it. While I didn’t see all that much computer technology that first trip (it was often a Dell) cell phones were oppositely abundant. However, many were of the pre-smartphone generation, and my iPhone couldn’t connect, so for the first time in a long time, I was on a forced digital holiday.

Cell phones weren’t the only thing that didn’t work for an American — neither did your credit or debit card, despite the recent announcements about financial openings. Commerce was, and I suspect is still, almost entirely conducted through cash. The first cadeca my daughter brought me to was even closed early, because it had run out of cash.

During that first trip, wifi was still available in limited locations (mostly upscale hotels) and if you didn’t want to lose your shirt paying for it, it meant standing in long lines at ETESCA offices to buy the access cards with the codes approximately $4/hour. While I was there, however, 11 new public hotspots (based on Chinese technology) were lit up and the price dropped by half. The buying process shifted, where most of the $2 cards were sold out early in the AM. Now, as a tourist, one buys them on the street from the guys who woke up earlier than you – with a 50% markup and risk of getting arrested, but still easier and cheaper than before. Recently it was announced the entire Malecon would be lit up, and I’m sure that will change the economics and process again.

Organization Structure to Support Digital Business – What to Consider

By John Dick

Central to the changing landscape of IT and business is the proliferation of devices and Internet of Things; by 2020, more than seven billion people and businesses, and at least 30 billion devices, will be connected to the Internet. This interaction leads to the evolution of digital business, and with that evolution is the need for companies to think about how to organize their most important asset – people – in a way that best supports the delivery of their products and services in this new digital business structure.

We have been giving advice to companies on how to thoroughly think about the role of people and organization structure within this evolving and complex equation of people, process, and technology. I have captured some of our leading points around structural questions to consider and critical success factors related to the organization of a company’s technology engineering and delivery groups below. In turn, this blog will lead to a future post outlining digital business organization structure, and guidelines around your company’s infrastructure readiness.

First, there are some questions to consider in thinking about digital business, technical engineering and delivery organization structure.

The first deals with how your company is organized, because it is probably organized the way it is for a reason, such as to most optimally support effective product sales and delivery.  Also, that structure is the eco-system in which you will need to co-exist.

Important Company Structural Questions and Considerations

• What is your company’s approach to centralization vs. decentralization of responsibilities and structure?
• Does your company impose structure through traditional functions, product, process functions, or technical expertise?
• How does your company think about direct line vs. dotted line reporting and to whom?
• Do you fit the technology organization to the business requirements or to the people?
• How do you handle regional | international units?

Understanding the relationship of your organization within its larger context is critical to how you organize your group. For example, if your company is decentralized, it will probably be important to understand why your organization is also decentralized. What are the key reasons your business is decentralized? How will you provide digital support to the decentralized units in a meaningful, personal manner? How will you understand unique customer regional requirements? What if it has aspects of both? A carefully crafted hybrid solution may then become necessary.

From here, we offer key initial points to consider toward optimizing your organization structure for success.

Once you’ve thought through and understand how your company is organized for success around its products and services, you’ll want to transition to what are the critical success factors for your technology associated group. That, once aligned with the rest of the company structure, will assist in developing success criteria.

Critical Success Factors

• Aligning organization with business strategy and function
• Allowing organization to keep pace with company growth and changing business dynamics
• Providing effective decision support and related performance | scorecard tracking
• Integrate organization approaches within company culture

While the first three points are a common theme and well accepted, I believe the last point is often overlooked. All companies have some aspect of company culture in their environments. If your organization is not organized or motivated within that context, success could be difficult. A good way to support this is to subtly develop success criteria that is natural to your environment.

With new roles other supporting or catalyst roles will emerge, and CXOs will need to develop digital leadership capabilities in order to execute an effective digital strategy.

In the next post I will delve further into what this means and how to think about your company’s infrastructure readiness to complete the picture.

StratraFusion – Values

 

The pace and evolution of enterprise technology more than ever calls for strategic advice on how best to use this technology to optimize your business.

We formed The StrataFusion Group as a unique technology and business consulting practice based on knowledge gleaned from practitioners and their years of in-house “hands on” leadership and experience. Our Partners have driven technology and business strategies in disruptive Fortune 500 companies and fast-growing enterprises and firms, and they bring years of practical knowledge into solving each opportunity in its complexities and challenges.

We advise and assist our clients on how to leverage their technology investments to increase revenue, and improve customer satisfaction while reducing risk and cost.

We originally conceptualized and founded The StrataFusion Group to provide expertise ”for CIO and CTOs, by CIOs and CTOs.” The practice has, unlike many other technology consultancies, continued to emphasize the personal operational experience of our Partners. This expertise is then applied directly to your problems and issues by our Partners — not inexperienced stand-ins. You receive our personal attention and commitment to efficient and effective engagement management.

Our passion is to empower companies to be business innovators by combining leading-edge insights with significant experience-based knowledge of markets, technologies and industries. We focus on adding client value, delivering ultimate professionalism, applying team cohesion to expand experience and focus success, with respect for individual values and goals. We truly seek to earn the “Trusted Advisor” status. When you have a serious technology problem we want you to think of StrataFusion, not Ghostbusters!

We offer proven solutions for the most difficult business challenges, focusing on these practice areas:

StrataFusion Practice Areas

• CIO / CTO Advisory
• Information Security
• Digital Transformation
• Big Data / Cloud Analytics

As we go forward and continue to build on our consulting practice areas, how we were formed, our foundation and core values continue to drive how we approach each company with their unique set of of challenges. Underlying all of our work is our set of guiding principles:

StrataFusion Guiding Principles

• We challenge and reinvent the vision
• We create through teamwork
• We nurture the independent, entrepreneurial spirit
• Our personal and operational competence and professionalism is clear and at our clients’ disposal

We look forward to working with you.

John Dick, Partner and Co-Founder, StrataFusion

The Cloud – All In

By Doug Harr

This post will be the first of several outlining my passion for moving IT software and services to the cloud, articulating the exponential value this move provides.

My journey began in early 2000’s when I was VP of IT at Portal Software; there, we moved the function of doing performance reviews out of our data center and into the SaaS / cloud service, Successfactors. This change cut costs in half; this kind of savings we saw almost every time we moved another software package or custom written application off site and into the cloud. Success with this model led me to take the helm at two other high tech companies (most recently at Splunk) where we ran virtually all of our business software and half of our infrastructure in the cloud, via services like Netsuite (financials), Salesforce (CRM), and Amazon EC2 (servers, storage).

These experiences were so positive and influential on my outlook that I’ve been espousing the “all cloud” IT sourcing strategy for some time now. Finally, and most recently, both Microsoft and Google have made it possible to go “the last mile,” to move your corporate domain, which houses the identity of all your employees, along with their organizations and access rights, into the cloud. This positions new companies and more aggressive existing companies to get to the point where you’ll find two fat pipes to the internet as the only technology installed at the company’s offices. The pipes terminate in a set of wireless access points, which themselves can now be managed via a cloud service!

Why is this all nirvana to me?  What does it mean for IT?  It means a lot. In almost every case I’ve seen service improve, both in terms of the time it takes to get things done, and the ability to focus on higher-level concerns, while more control accrues to the business. The focus of the CIO and IT Management team then changes – setting up a strategy, sourcing these cloud services, managing the vendor relationships, monitoring the services, integrating and securing them. We get to the ultimate goal of IT – maximizing the effective use of these systems, and harnessing the information that can be extracted and analyzed from those services. Not too shabby, right?  Sounds like a busy and more enabling, productive IT department, even if the roles have changed.

In future posts, we’ll address how the move to the cloud changes the nature of what resources each department needs to hire in order to effectively run the cloud applications. With sales operations, customer support operations, HR operations, etc., there is the ability for internal corporate employees to be more directly involved in optimizing, running and supporting the applications they use.

More to come.

Big Data that Support Key Business Results

By Doug Harr

CIOs have a tremendous opportunity to harness Big Data. But CIOs are also wary of buzz words and heavily marketed trends which often lead to pursuits that are secondary rather than those aligned to key results. And while it may not be clear to everyone in the executive ranks, CIOs are keenly aware that all systems (not just business systems) in an organization spew out data, much of which can be mined for useful information. When I was CIO at Splunk, we called this systems-generated data “machine data” and I had the chance to witness just how many brilliant things can be done by harnessing it. So when and where does it make sense for CIOs to embark on data driven projects? How can a CIO choose where to focus efforts?

In a typical corporation, CIOs look after everything from business applications, operations and infrastructure, security, and the infrastructure that supports their web presence. Looking across the vast portfolio of services they support, a CIO’s primary concern will be to properly implement capabilities, and then manage them in such a way that the business is effectively and efficiently supported. Taking on analytics becomes the next layer to tackle once each fundamental service is in place. Where the rubber meets the road is when you can use machine/big data to determine more than just the status of your infrastructure. That is, when you can see the opportunity to mine data for services that support the portfolio and ultimately the corporation’s key results.

Getting Started

Select a Use Case: Focus on high-value use cases first. External-customer facing use cases are particularly well suited as first forays into data mining programs. Making the customer experience as compelling as possible is key for all organizations. Developing deeper insights into this experience has enormous potential and will garner support from your marketing team and other internal customers.

Work with Your Internal Business Partners: Meet with your internal team, and departments such as marketing and engineering, to select a use case they care about. Choose a project that will impact their external customers—typically the customers of your company. While internally focused use cases for Finance, HR, Sales or other teams can be instructive, prioritize programs that address the company’s core product or service and customer experience.

Put the Technology in Place: Don’t place all your bets on one solution. Consider your approach and look at real-time products (such as Splunk), cloud offerings, and batch-oriented systems (such as Hadoop). Before you make any purchases, do a proof-of-concept. Ensure you have support staff from the vendor working with you and try a sample set of your data in their engine.

Review the Reports: Step back and review reports from the solutions you are considering. Analyze the insights, both qualitative and quantitative. For example, if you use a customer support system for your proof-of-concept, ask questions like these:

• How long does it take a customer to get through the online sales cycle? How much time elapses from engagement to first customer support call?
• How long are customers spending in our systems?
• How many orders are placed per month? What’s the typical amount of time it takes to book an order? How long does it take to book an order at month end?
• Does it appear anyone is trying to infiltrate our systems?

Demonstrate What You Can Produce: Share your proof-of-concept results with your internal team. There’s no greater fun than giving your sales and marketing customers something they didn’t have before, something that helps them make better decisions more quickly. Note that there are some use cases you will never be able to share widely. For example, security use cases can only be shared with security personnel and auditors.

Delivering Value

Bringing Big Data programs into your company is worth the effort. These data can tell you things about your business and systems you can’t learn any other way. Chosen and managed carefully, these programs can improve customer service (internal and external) provide a qualitative view into the customer experience, offer clearer insight into the products and services, and even enable a company to better understand its own employees.

Doug Harr is a partner at StrataFusion. He has more than 25 years of technology leadership experience both as an executive-level technology practitioner and in senior leadership roles for professional services organizations. Contact him at dharr@stratafusion.com; follow Doug at twitter.com/douglasharr.

When Using the Numbers Makes for Good IT Decisions

By Reed Kingston

In his recent blog post, Mark Tonnesen explained why he didn’t rely on traditional business case analyses, such as value case and return on investment (ROI) evaluations, to justify IT investments. I agree with Mark that these methods too often fail to support the right projects, and can fail to expose the wrong ones. I’ll put my MIT quant hat on here for a minute: if you are using tools that are prone to both false positives and false negatives, you should be looking for a new tool, or at least use the ones you have differently.

The problem is not that the financial analysis of an IT investment isn’t important—in fact, it is imperative, as it is for all investments. A good financial analysis casts light on some of the assumptions and trade-offs that are implicit in a large investment decision.

Problems arise when an investment comes off as lower profile, as happens often when reviewing IT investments. Decision making will always be biased against standalone technology investments as these are often poorly understood. How will “we’ll reduce network congestion and improve security by x%” fare in budget meetings against the sales and marketing team (“we’ll open up more markets!”), engineering (“we’ll design more products customers love!”) or operations (“we’ll lower costs with a new production process!”). That could be a pretty tough sell.

Getting to Good Decisions

Trying to justify IT investments without a business case driven by an internal customer organization can be an uphill battle. So how can CIOs and CTOs drive support for sound IT investments? Make sure important IT investments are tied to business cases that support increased revenue, reduced costs, increased customer loyalty and lower churn. Then provide financial analyses demonstrating how the proposed IT investment supports those business cases. This step defines the strategic value of the planned IT investment, making it a much easier decision for everyone to get behind.

Reed Kingston is a managing director at StrataFusion. Contact him at rkingston@stratafusion.com; follow Reed at twitter.com/reedkingston.

Why I Never Look at the Value Case or ROI

By Mark Tonnesen

When evaluating potential IT initiatives, the most common approach is to focus on the numbers and look at the return on investment (ROI) or value case. For example, say your company is considering implementing a new Enterprise Resource Planning (ERP) system. Chances are the CEO and CFO will ask, “What’s the ROI?” Or, “If the new system will cost $10 million, can you show me how it will produce a much greater gain?”

As far as I’m concerned, though, if you’re asking about the value case or ROI when evaluating IT initiatives, you may be asking the wrong question and looking at the wrong things.

What You Should Be Asking when Evaluating IT Initiatives

What gets lost in the value case or ROI approach to evaluating IT initiatives are the bigger questions that are more important than the finance-driven calculations:

• What problem(s) are we trying to solve?
• What is the value to the business of solving this problem?
• What objective/end state can we achieve with this initiative that we don’t have today?
• What’s the best way to achieve our business objectives?
• How important is solving this problem or achieving this objective for the business’ ability to reach its goals?
• How will this help us make better decisions and run our business more efficiently?

Not Everything Can Be Measured (Using the Same Yardstick)

A problem with the ROI or value case approach is that you might be trying to quantify the unquantifiable. For example, say you are considering implementing wireless internet service throughout your office for $XX per month. How do you calculate the ROI on this? You can take a best guess at how this might improve productivity and come up with a number. But that would just be a guess. And it would ignore other factors, such as the positive impact this might have on employee satisfaction or addition benefits such as mobile applications. Once new capabilities are in place and available to the full team, they may lead to unexpected innovations and enhancements that further improve productivity. It is difficult to predict the benefits new capabilities unleash.

The Numbers Can Tell You Anything You Want to Hear

Your team’s best guess regarding the ROI of a proposed IT initiative is just that: a guess. As an example, I once worked with a large high-tech company that was big on ROI. The team worked on a series of technical support initiatives to develop self-service tools for customers. To justify these projects the team put together graphs showing a reduction in customer support cases and calls, and an increase in customer satisfaction.

Knowing what the cost of a support call, the team developed analyses that showed that the cost of each initiative was lower than the cost savings it would deliver and the projects were approved. Unfortunately, the projected savings never materialized. The team neglected to include factors such as growth, customer adoption rates, issue severity addressed by the tools, continuous improvement costs and operational support costs for the tools. An analysis that included all the right factors—beyond just cost—would have helped the company make a better business decision.

Where to Focus: Business Impact

When evaluating IT initiatives, I recommend steering clear of the value case and ROI approach. Rather than pulling numbers out of the air to justify (or kill!) a program, take a hard look at the business impact that the initiative will have. Ensure you are solving the right problem and include measurement points along the way to check whether the expected goals are being achieved.

Mark Tonnesen is a partner at StrataFusion. Contact him at mtonnesen@stratafusion.com; follow Mark at twitter.com/mtonnese.