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Capgemini’s CTO on How Cloud Computing Exposes the Duality Between IT and Business Transformation

By Dana Gardner, Interarbor Solutions

This BriefingsDirect thought leadership interview comes in conjunction with The Open Group Conference this month in San Francisco.

The conference will focus on how IT and enterprise architecture support enterprise transformation. Speakers in conference events will also explore the latest in service oriented architecture (SOA), cloud computing, and security.

We’re now joined by one of the main speakers, Andy Mulholland, the Global Chief Technology Officer and Corporate Vice President at Capgemini. In 2009, Andy was voted one of the top 25 most influential CTOs in the world by InfoWorld. And in 2010, his CTO Blog was voted best blog for business managers and CIOs for the third year running by Computer Weekly.

Capgemini is about to publish a white paper on cloud computing. It draws distinctions between what cloud means to IT, and what it means to business — while examining the complex dual relationship between the two.

As a lead-in to his Open Group conference presentation on the transformed enterprise, Andy draws on the paper and further drills down on one of the decade’s hottest technology and business trends, cloud computing, and how it impacts business and IT. The interview is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. The full podcast can be found here.

Here are some excerpts:

Gardner: Why do business people think they have a revolution on their hands, while IT people look cloud computing as an evolution of infrastructure efficiency?

Mulholland: We define the role of IT and give it the responsibility and the accountability in the business in a way that is quite strongly related to internal practice. It’s all about how we manage the company’s transactions, how we reduce the cost, how we automate business process,and generally try to make our company a more efficient internal operator.

When you look at cloud computing through that set of lenses, you’re going to see … the technologies from cloud computing, principally virtualization, [as] ways to improve how you deliver the current server-centric, application-centric environment.

However, business people … reflect on it in terms of the change in society and the business world, which we all ought to recognize because that is our world, around the way we choose what we buy, how we choose to do business with people, how we search more, and how we’ve even changed that attitude.

Changed our ways

There’s a whole list of things that we simply just don’t do anymore because we’ve changed the way we choose to buy a book, the way we choose and listen to music and lots of other things.

So we see this as a revolution in the market or, more particularly, a revolution in how cloud can serve in the market, because everybody uses some form of technology.

So then the question is not the role of the IT department and the enterprise — it’s the role technology should be playing in their extended enterprise in doing business.

Gardner: What do we need to start doing differently?

Mulholland: Let’s go to a conversation this morning with a client. It’s always interesting to touch reality. This particular client is looking at the front end of a complex ecosystem around travel, and was asked this standard question by our account director: Do you have a business case for the work we’re discussing?

The reply from the CEO is very interesting. He fixed him with a very cold glare and he said, “If you were able to have 20 percent more billable hours without increasing your cost structure, would you be bothered to even think about the business case?”

The answer in that particular case was they were talking about 10,000 more travel instances or more a year — with no increase in their cost structure. In other words, their whole idea was there was nothing to do with cost in it. Their argument was in revenue increase, market share increase, and they thought that they would make better margins, because it would actually decrease their cost base or spread it more widely.

That’s the whole purpose of this revolution and that’s the purpose the business schools are always pushing, when they talk about innovative business models. It means innovate your business model to look at the market again from the perspective of getting into new markets, getting increased revenue, and maybe designing things that make more money.

Using technology externally

We’re always hooked on this idea that we’ve used technology very successfully internally, but now we should be asking the question about how we’re using technology externally when the population as a whole uses that as their primary method of deciding what they’re going to buy, how they’re going to buy it, when they’re going to buy it, and lots of other questions.

… A popular book recently has been The Power of Pull, and the idea is that we’re really seeing a decentralization of the front office in order to respond to and follow the market and the opportunities and the events in very different ways.

The Power of Pull says that I do what my market is asking me and I design business process or capabilities to be rapidly orchestrated through the front office around where things want to go, and I have linkage points, application programming interface (API) points, where I take anything significant and transfer it back.

But the real challenge is — and it was put to me today in the client discussion — that their business was designed around 1970 computer systems, augmented slowly around that, and they still felt that. Today, their market and their expectations of the industry that they’re in were that they would be designed around the way people were using their products and services and the events and that they had to make that change.

To do that, they’re transformed in the organization, and that’s where we start to spot the difference. We start to spot the idea that your own staff, your customers, and other suppliers are all working externally in information, process, and services accessible to all on an Internet market or architecture.

So when we talk about business architecture, it’s as relevant today as it ever was in terms of interpreting a business.

Set of methodologies

But when we start talking about architecture, The Open Group Architectural Framework (TOGAF) is a set of methodologies on the IT side — the closed-coupled state for a designed set of principles to client-server type systems. In this new model, when we talk about clouds, mobility, and people traveling around and connecting by wireless, etc., we have a stateless loosely coupled environment.

The whole purpose of The Open Group is, in fact, to help devise new ways for being able to architect methods to deliver that. That’s what stands behind the phrase, “a transformed enterprise.”

… If we go back to the basic mission of The Open Group, which is boundarylessness of this information flow, the boundary has previously been defined by a computer system updating another computer system in another company around traditional IT type procedural business flow.

Now, we’re talking about the idea that the information flow is around an ecosystem in an unstructured way. Not a structured file-to-file type transfer, not a structured architecture of who does what, when, and how, but the whole change model in this is unstructured.

Gardner: It’s important to point out here, Andy, that the stakes are relatively high. Who in the organization can be the change agent that can make that leap between the duality view of cloud that IT has, and these business opportunists?

Mulholland: The CEOs are quite noticeably reading the right articles, hearing the right information from business schools, etc., and they’re getting this picture that they’re going to have new business models and new capabilities.

So the drive end is not hard. The problem that is usually encountered is that the IT department’s definition and role interferes with them being able to play the role they want.

What we’re actually looking for is the idea that IT, as we define it today, is some place else. You have to accept that it exists, it will exist, and it’s hugely important. So please don’t take those principles and try to apply them outside.

The real question here is when you find those people who are doing the work outside — and I’ve yet to find any company where it hasn’t been the case — and the question should be how can we actually encourage and manage that innovation sensibly and successfully?

What I mean by that is that if everybody goes off and does their own thing, once again, we’ll end up with a broken company. Why? Because their whole purpose as an enterprises is to leverage success rapidly. If someone is very successful over there, you really need to know, and you need to leverage that again as rapidly as you can to run the rest of the organization. If it doesn’t work, you need to stop it quickly.

Changing roles

In models of the capabilities of that, the question is where is the government structure? So we hear titles like Chief Innovation Officer, again, slightly surprising how it may come up. But we see the model coming both ways. There are reforming CIOs for sure, who have recognized this and are changing their role and position accordingly, sometimes formally, sometimes informally.

The other way around, there are people coming from other parts of the business, taking the title and driving them. I’ve seen Chief Strategy Officers taking the role. I’ve seen the head of sales and marketing taking the role.

Certainly, recognizing the technology possibilities should be coming from the direction of the technology capabilities within the current IT department. The capability of what that means might be coming differently. So it’s a very interesting balance at the moment, and we don’t know quite the right answer.

What I do know is that it’s happening, and the quick-witted CIOs are understanding that it’s a huge opportunity for them to fix their role and embrace a new area, and a new sense of value that they can bring to their organization.

Gardner: Returning to the upcoming Capgemini white paper, it adds a sense of urgency at the end on how to get started. It suggests that you appoint a leader, but a leader first for the inside-out element of cloud and transformation and then a second leader, a separate leader perhaps, for that outside-in or reflecting the business transformation and the opportunity for what’s going on in the external business and markets. It also suggests a strategic road map that involves both business and technology, and then it suggests getting a pilot going.

How does this transition become something that you can manage?

Mulholland: The question is do you know who is responsible. If you don’t, you’d better figure out how you’re going to make someone responsible, because in any situation, someone has to be deciding what we’re going to do and how we’re going to do it.

Having defined that, there are very different business drivers, as well as different technology drivers, between the two. Clearly, whoever takes those roles will reflect a very different way that they will have to run that element. So a duality is recognized in that comment.

On the other hand, no business can survive by going off in half-a-dozen directions at once. You won’t have the money. You won’t have the brand. You won’t have anything you’d like. It’s simply not feasible.

So, the object of the strategic roadmap is to reaffirm the idea of what kind of business we’re trying to be and do. That’s the glimpse of what we want to achieve.

There has to be a strategy. Otherwise, you’ll end up with way too much decentralization and people making up their own version of the strategy, which they can fairly easily do and fairly easily mount from someone else’s cloud to go and do it today.

So the purpose of the duality is to make sure that the two roles, the two different groups of technology, the two different capabilities they reflect to the organization, are properly addressed, properly managed, and properly have a key authority figure in charge of them.

Enablement model

The business strategy is to make sure that the business knows how the enablement model that these two offer them is capable of being directed to where the shareholders will make money out of the business, because that is ultimately that success factor they’re looking for to drive them forward.

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If you are interested in attending The Open Group’s upcoming conference, please register here: http://www3.opengroup.org/event/open-group-conference-san-francisco/registration

Dana Gardner is president and principal analyst at Interarbor Solutions, an enterprise IT analysis, market research, and consulting firm. Gardner, a leading identifier of software and cloud productivity trends and new IT business growth opportunities, honed his skills and refined his insights as an industry analyst, pundit, and news editor covering the emerging software development and enterprise infrastructure arenas for the last 18 years.

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Filed under Cloud, Cloud/SOA, Enterprise Transformation, Semantic Interoperability

MIT’s Ross on How Enterprise Architecture and IT More Than Ever Lead to Business Transformation

By Dana Gardner, Interarbor Solutions

This BriefingsDirect thought leadership interview comes in conjunction with The Open Group Conference this month in San Francisco.

The conference will focus on how IT and enterprise architecture support enterprise transformation. Speakers in conference events will also explore the latest in service oriented architecture (SOA), cloud computing, and security.

We’re now joined by of the main speakers, Jeanne Ross, Director and Principal Research Scientist at the MIT Center for Information Systems Research. Jeanne studies how firms develop competitive advantage through the implementation and reuse of digitized platforms.

She is also the co-author of three books: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, Enterprise Architecture As Strategy: Creating a Foundation for Business Execution, and IT Savvy: What Top Executives Must Know to Go from Pain to Gain.

As a lead-in to her Open Group presentation on how adoption of enterprise architecture (EA) leads to greater efficiencies and better business agility, Ross explains how enterprise architects have helped lead the way to successful business transformations. The interview is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. The full podcast can be found here.

Here are some excerpts:

Gardner: How you measure or determine that enterprise architects and their practices are intrinsic to successful business transformations?

Ross: That’s a great question. Today, there remains kind of a leap of faith in recognizing that companies that are well-architected will, in fact, perform better, partly because you can be well-architected and perform badly. Or if we look at companies that are very young and have no competitors, they can be very poorly architected and achieve quite remarkably in the marketplace.

But what we can ascribe to architecture is that when companies have competition, then they can establish any kind of performance target they want, whether it’s faster revenue growth or better profitability, and then architect themselves so they can achieve their goals. Then, we can monitor that.

We do have evidence in repeated case studies of companies that set goals, defined an architecture, started to build the capabilities associated with that architecture, and did indeed improve their performance. We have wonderful case study results that should be very reaffirming. I accept that they are not conclusive.

Architectural maturity

We also have statistical support in some of the work we’ve done that shows that high performers in our sample of 102 companies, in fact, had greater architecture maturity. They had deployed a number of practices associated with good architecture.

Gardner: Is there something that’s new about this, rather than just trying to reengineer something?

Ross: Yes, the thing we’re learning about enterprise architecture is that there’s a cultural shift that takes place in an organization, when it commits to doing business in a new way, and that cultural shift starts with abandoning a culture of heroes and accepting a culture of discipline.

Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem and solve it. But we do want to get past heroes sub-optimizing. What companies traditionally did before they started thinking about what architecture would mean, is they relied on individuals to do what seemed best and that clearly can sub-optimize in an environment that increasingly is global and requires things like a single face to the customer.

We also have statistical support in some of the work we’ve done that shows that high performers in our sample of 102 companies, in fact, had greater architecture maturity. They had deployed a number of practices associated with good architecture.

Gardner: Is there something that’s new about this, rather than just trying to reengineer something?

Ross: Yes, the thing we’re learning about enterprise architecture is that there’s a cultural shift that takes place in an organization, when it commits to doing business in a new way, and that cultural shift starts with abandoning a culture of heroes and accepting a culture of discipline.

Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem and solve it. But we do want to get past heroes sub-optimizing. What companies traditionally did before they started thinking about what architecture would mean, is they relied on individuals to do what seemed best and that clearly can sub-optimize in an environment that increasingly is global and requires things like a single face to the customer.

We really just need architecture to pull out unnecessary cost and to enable desirable reusability. And the architect is typically going to be the person representing that enterprise view and helping everyone understand the benefits of understanding that enterprise view, so that everybody who can easily or more easily see the local view is constantly working with architects to balance those two requirements.

Gardner: Is this a particularly good time, from your vantage point, to undertake enterprise architecture?

Ross: It’s a great time for most companies. There will be exceptions that I’ll talk about in a minute. One thing we learned early on in the research is that companies who were best at adopting architecture and implementing it effectively had cost pressures. What happens when you have cost pressures is that you’re forced to make tough decisions.

If you have all the money in the world, you’re not forced to make tough decisions. Architecture is all about making tough decisions, understanding your tradeoffs, and recognizing that you’re going to get some things that you want and you are going to sacrifice others.

If you don’t see that, if you just say, “We’re going to solve that by spending more money,” it becomes nearly impossible to become architected. This is why investment banks are invariably very badly architected, and most people in investment banks are very aware of that. It’s just very hard to do anything other than say, “If that’s important to us, let’s spend more money and let’s get it.” One thing you can’t get by spending more money is discipline, and architecture is very tightly related to discipline.

Tough decisions

In a tough economy, when competition is increasingly global and marketplaces are shifting, this ability to make tough decisions is going to be essential. Opportunities to save costs are going to be really valued, and architecture invariably helps companies save money. The ability to reuse, and thus rapidly seize the next related business opportunity, is also going to be highly valued.

The thing you have to be careful of is that if you see your markets disappearing, if your product is outdated, or your whole industry is being redefined, as we have seen in things like media, you have to be ready to innovate. Architecture can restrict your innovative gene, by saying, “Wait, wait, wait. We want to slow down. We want to do things on our platform.” That can be very dangerous, if you are really facing disruptive technology or market changes.

So you always have to have that eye out there that says, “When is what we built that’s stable actually constraining us too much? When is it preventing important innovation?” For a lot of architects, that’s going to be tough, because you start to love the architecture, the standards, and the discipline. You love what you’ve created, but if it isn’t right for the market you’re facing, you have to be ready to let it go and go seize the next opportunity.

Gardner: Perhaps this environment is the best of all worlds, because we have that discipline on the costs which forces hard decisions, as you say. We also have a lot of these innovative IT trends that would almost force you to look at doing things differently. I’m thinking again of cloud, mobile, the big data issues, and even social-media types of effects.

Ross: Absolutely. We should all look at it that way and say, “What a wonderful world we live in.” One of the companies that I find quite remarkable in their ability to, on the one hand, embrace discipline and architecture, and on the other hand, constantly innovate, is USAA. I’m sure I’ll talk about them a little bit at the conference.

This is a company that just totally understands the importance of discipline around customer service. They’re off the charts in their customer satisfaction.

They’re a financial services institution. Most financial services institutions just drool over USAA’s customer satisfaction ratings, but they’ve done this by combining this idea of discipline around the customer. We have a single customer file. We have an enterprise view of that customer. We constantly standardize those practices and processes that will ensure that we understand the customer and we deliver the products and services they need. They have enormous discipline around these things.

Simultaneously, they have people working constantly around innovation. They were the first company to see the need for this deposit with your iPhone. Take a picture of your check and it’s automatically deposited into your account. They were nearly a year ahead of the next company that came up with that service.

The way they see it is that for any new technology that comes out, our customer will want to use it. We’ve got to be there the day after the technology comes out. They obviously haven’t been able to achieve that, but that’s their goal. If they can make deals with R&D companies that are coming up with new technologies, they’re going to make them, so that they can be ready with their product when the thing actually becomes commercial.

So it’s certainly possible for a company to be both innovative and responsive to what’s going on in the technology world and disciplined and cost effective around customer service, order-to-cash, and those other underlying critical requirements in your organization. But it’s not easy, and that’s why USAA is quite remarkable. They’ve pulled it off and they are a lesson for many other companies.

Gardner: Is The Open Group a good forum for your message and your research, and if so, why?

Ross: The Open Group is great for me, because there is so much serious thinking in The Open Group about what architecture is, how it adds value, and how we do it well. For me to touch base with people in The Open Group is really valuable, and for me to touch base to share my research and hear the push back, the debate, or the value add is perfect, because these are people who are living it every day.

Major themes

Gardner: Are there any other major themes that you’ll be discussing at the conference coming up that you might want to share with us?

Ross: One thing we have observed in our cases that is more and more important to architects is that the companies are struggling more than we realized with using their platforms well.

I’m not sure that architects or people in IT always see this. You build something that’s phenomenally good and appropriate for the business and then you just assume, that if you give them a little training, they’ll use it well.

That’s actually been a remarkable struggle for organizations. One of our research projects right now is called “Working Smarter on Your Digitized Platform.” When we go out, we find there aren’t very many companies that have come anywhere close to leveraging their platforms the way they might have imagined and certainly the way an architect would have imagined.

It’s harder than we thought. It requires persistent coaching. It’s not about training, but persistent coaching. It requires enormous clarity of what the organization is trying to do, and organizations change fast. Clarity is a lot harder to achieve than we think it ought to be.

The message for architects would be: here you are trying to get really good at being a great architect. To add value to your organization, you actually have to understand one more thing: how effectively are people in your company adopting the capabilities and leveraging them effectively? At some point, the value add of the architecture is diminished by the fact that people don’t get it. They don’t understand what they should be able to do.

We’re going to see architects spending a little more time understanding what their leadership is capable of and what capabilities they’ll be able to leverage in the organization, as opposed to which on a rational basis seem like a really good idea.

Getting started

Gardner: When you’re an organization and you’ve decided that you do want to transform and take advantage of unique opportunities for either technical disruption or market discipline, how do you go about getting more structure, more of an architecture?

Ross: That’s idiosyncratic to some extent, because in your dream world, what happens is that the CEO announces, “This is what we are going to be five years from now. This is how we are going to operate and I expect everyone to get on board.” The vision is clear and the commitment is clear. Then the architects can just say, and most architects are totally capable of this, “Oh, well then, here are the capabilities we need to build. Let’s just go build them and then we’ll live happily ever after.”

The problem is that’s rarely the way you get to start. Invariably, the CEO is looking at the need for some acquisitions, some new markets, and all kinds of pressures. The last thing you’re getting is some clarity around the vision of an operating model that would define your critical architectural capabilities.

What ends up happening instead is architects recognize key business leaders who understand the need for, reused standardization, process discipline, whatever it is, and they’re very pragmatic about it. They say, “What do you need here to develop an enterprise view of the customer, or what’s limiting your ability to move into the next market?”

And they have to pragmatically develop what the organization can use, as opposed to defining the organizational vision and then the big picture view of the enterprise architecture.

So in practice, it’s a much more pragmatic process than what we would imagine when we, for example, write books on how to do enterprise architecture. The best architects are listening very hard to who is asking for what kind of capability. When they see real demand and real leadership around certain enterprise capabilities, they focus their attention on addressing those, in the context of what they realize will be a bigger picture over time.

They can already see the unfolding bigger picture, but there’s no management commitment yet. So they stick to the capabilities that they are confident the organization will use. That’s the way they get the momentum to build. That is more art than science and it really distinguishes the most successful architects.

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If you are interested in attending The Open Group’s upcoming conference, please register here: http://www3.opengroup.org/event/open-group-conference-san-francisco/registration

Dana Gardner is president and principal analyst at Interarbor Solutions, an enterprise IT analysis, market research, and consulting firm. Gardner, a leading identifier of software and cloud productivity trends and new IT business growth opportunities, honed his skills and refined his insights as an industry analyst, pundit, and news editor covering the emerging software development and enterprise infrastructure arenas for the last 18 years.

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Filed under Enterprise Architecture, Enterprise Transformation, Semantic Interoperability

Save the Date—The Open Group Conference San Francisco!

By Patty Donovan, The Open Group

It’s that time again to start thinking ahead to The Open Group’s first conference of 2012 to be held in San Francisco, January 30 – February 3, 2012. Not only do we have a great venue for the event, the Intercontinental Mark Hopkins (home of the famous “Top of the Mark” sky lounge—with amazing views of all of San Francisco!), but we have stellar line up for our winter conference centered on the theme of Enterprise Transformation.

Enterprise Transformation is a theme that is increasingly being used by organizations of all types to represent the change processes they implement in response to internal and external business drivers. Enterprise Architecture (EA) can be a means to Enterprise Transformation, but most enterprises today because EA is still largely limited to the IT department and transformation must go beyond the IT department to be successful. The San Francisco conference will focus on the role that both IT and EA can play within the Enterprise Transformation process, including the following:

  • The differences between EA and Enterprise Transformation and how they relate  to one another
  • The use of EA to facilitate Enterprise Transformation
  • How EA can be used to create a foundation for Enterprise Transformation that the Board and business-line managers can understand and use to their advantage
  • How EA facilitates transformation within IT, and how does such transformation support the transformation of the enterprise as a whole
  • How EA can help the enterprise successfully adapt to “disruptive technologies” such as Cloud Computing and ubiquitous mobile access

In addition, we will be featuring a line-up of keynotes by some of the top industry leaders to discuss Enterprise Transformation, as well as themes around our regular tracks of Enterprise Architecture and Professional Certification, Cloud Computing and Cybersecurity. Keynoting at the conference will be:

  • Joseph Menn, author and cybersecurity correspondent for the Financial Times (Keynote: What You’re Up Against: Mobsters, Nation-States and Blurry Lines)
  • Celso Guiotoko, Corporate Vice President and CIO, Nissan Motor Co., Ltd. (Keynote: How Enterprise Architecture is helping NISSAN IT Transformation)
  • Jeanne W. Ross, Director & Principal Research Scientist, MIT Center for Information Systems Research (Keynote: The Enterprise Architect: Architecting Business Success)
  • Lauren C. States, Vice President & Chief Technology Officer, Cloud Computing and Growth Initiatives, IBM Corp. (Keynote: Making Business Drive IT Transformation Through Enterprise Architecture)
  • Andy Mulholland, Chief Global Technical Officer, Capgemini (Keynote: The Transformed Enterprise)
  • William Rouse, Executive Director, Tennenbaum Institute at Georgia Institute of Technology (Keynote: Enterprise Transformation: An Architecture-Based Approach)

For more on the conference tracks or to register, please visit our conference registration page. And stay tuned throughout the next month for more sneak peeks leading up to The Open Group Conference San Francisco!

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Filed under Cloud, Cloud/SOA, Cybersecurity, Data management, Enterprise Architecture, Semantic Interoperability, Standards