Radical Shift 5: Diminished Standalone role of IT
Shift 2 to 4 may lead to a diminished standalone role of IT over the next few years. Potentially, a part of IT will become part of centralised business services and other parts will be outsourced with the focus of IT on managing service providers.
So what is left? Within the Natural Resources sector, I would expect that a smaller IT function will survive at the BU level. This function will possess business skills and have a fundamental understanding of core business processes and operational technology. The (day to day and SLA) management of outsourced providers will be part of this function but is strongly supported by the Supply organisation for contract management and administration.
This smaller IT function may be better positioned under Operations or Business Optimisation than its current typical position under Finance.
At corporate level, IT may become part of Business Services providing common systems and infrastructure. The infrastructure and application management are however extremely suitable for outsourcing and IT as part of Business Services will focus on the management of outsourced service providers. Enterprise and Information Architecture should remain a key responsibility for IT and it is the question whether this strategic aspect of IT will receive appropriate attention when this is part of more generic Business Services. A possible solution to this is to subsume this activity in the Corporate Strategy function.
Frits de Vroet
Wednesday, September 29, 2010
Tuesday, September 21, 2010
The Future of Corporate IT - Externalised Service Delivery & Greater Business Partner Responsibility
Radical Shift 3: Externalised Service Delivery
The hyped emergence (and apparent rapid adoption) of Cloud Computing, Software as a Service (SaaS) and other 4-letter acronyms will drive further outsourcing of IT services. This is supported by the increased availability of industry-standard business processes that will allow better governance of outsourced services. The adoption of the Cloud will lead to externalisation of assets with more flexibility and unit based costing.
The management of outsourced providers becomes a more important competency of the IT organisation. Again, this may lead to integration with other functions that are focused on partner management (e.g. Supply).
The adoption of Cloud Computing in the Natural Resources industry is still in its early stages. Obvious concerns around security and provision of services to remote locations have prevented widespread adoption. This is however expected to change over the next few years. The challenge in this industry will more around the remoteness of operations, available bandwidth and continuity of service. There is a need for high resilience, but with current single points of failure in the network provision (either in the exchange, the line or core switches) this is difficult and expensive to offer. Specifically in Australia where different telco providers share infrastructure in remote areas, supplier differentiation for secondary infrastructure doesn’t necessarily resolve this.
As a result, there will be a mix of Cloud Computing and owned infrastructure which will require different skills for the IT organisation.
Radical Shift 4: Greater Business Partner Responsibility
The increasing importance of information (technology) for operations and high level of (private or individual) experience with technology lead to the wish for greater ownership of IT by the business. The development of new technology for virtualisation of desktops and applications offers users more flexibility and leads to increased demand. Easier procurement of IT services through Infrastructure as a Service (IaaS) and SaaS provides a way around the perceived bureaucracy and slowness of the IT function. All this gives business leaders more independence of IT as they can access benefits of large scale of infrastructure (via Cloud) and access to expertise (tech savvy staff) themselves.
The traditional IT organisation sees this as a risk as it feels it is loosing control. The paper rightly points out that greater business responsibility should entail more business led requirements identification, more business ownership of business process design and some flexibility for business to procure directly. This does not and should not entail a free for all with a return to proliferation and decentralisation.
The obvious challenge for the business as a whole is to control and manage this in a disciplined manner. Within Asset-Intensive industries, there is already the challenge to manage the dividing line between IT and OT (Operational Technology) and this may only add to the complexity. Close engagement and an open mind for adaptation and collaboration from both sides is critical in ensuring that this is managed well.
Frits de Vroet
The hyped emergence (and apparent rapid adoption) of Cloud Computing, Software as a Service (SaaS) and other 4-letter acronyms will drive further outsourcing of IT services. This is supported by the increased availability of industry-standard business processes that will allow better governance of outsourced services. The adoption of the Cloud will lead to externalisation of assets with more flexibility and unit based costing.
The management of outsourced providers becomes a more important competency of the IT organisation. Again, this may lead to integration with other functions that are focused on partner management (e.g. Supply).
The adoption of Cloud Computing in the Natural Resources industry is still in its early stages. Obvious concerns around security and provision of services to remote locations have prevented widespread adoption. This is however expected to change over the next few years. The challenge in this industry will more around the remoteness of operations, available bandwidth and continuity of service. There is a need for high resilience, but with current single points of failure in the network provision (either in the exchange, the line or core switches) this is difficult and expensive to offer. Specifically in Australia where different telco providers share infrastructure in remote areas, supplier differentiation for secondary infrastructure doesn’t necessarily resolve this.
As a result, there will be a mix of Cloud Computing and owned infrastructure which will require different skills for the IT organisation.
Radical Shift 4: Greater Business Partner Responsibility
The increasing importance of information (technology) for operations and high level of (private or individual) experience with technology lead to the wish for greater ownership of IT by the business. The development of new technology for virtualisation of desktops and applications offers users more flexibility and leads to increased demand. Easier procurement of IT services through Infrastructure as a Service (IaaS) and SaaS provides a way around the perceived bureaucracy and slowness of the IT function. All this gives business leaders more independence of IT as they can access benefits of large scale of infrastructure (via Cloud) and access to expertise (tech savvy staff) themselves.
The traditional IT organisation sees this as a risk as it feels it is loosing control. The paper rightly points out that greater business responsibility should entail more business led requirements identification, more business ownership of business process design and some flexibility for business to procure directly. This does not and should not entail a free for all with a return to proliferation and decentralisation.
The obvious challenge for the business as a whole is to control and manage this in a disciplined manner. Within Asset-Intensive industries, there is already the challenge to manage the dividing line between IT and OT (Operational Technology) and this may only add to the complexity. Close engagement and an open mind for adaptation and collaboration from both sides is critical in ensuring that this is managed well.
Frits de Vroet
Monday, September 13, 2010
The Future of Corporate IT - IT Embedded in Business Services
Radical Shift 2: IT Embedded in Business Services
The suggestion for this shift is that the Corporate Centre is reaching its limit in driving further efficiencies for centralised functions such as Finance, HR, Supply and IT. The next way of seeking further efficiencies is by combining these functions into a joined Corporate Business Services unit. The back-office operations for these functions have similar aspects that are particularly suited for outsourcing and off-shoring. Global System Integrators and Business Process Outsourcers such as Accenture, IBM, Infosys and Wipro have been building capabilities over the last years and are arguable able offer this in an integrated way across various functions.
For IT in specific, the increasing adoption of ITIL v3 provides a good platform for outsourcing or collaboration between partners. Core ITIL processes like incident, problem and change management are applicable to other functions as well and could drive significant improvement in the (currently limited) effectiveness and efficiency of non-IT outsourced (or centralised) functions.
The opportunity here is to approach the provision of business services in an integrated way as it will involve services from a number of functions. The paper quotes the example of establishing a new supplier which requires services from Supply, Finance, Legal and IT. The onboarding of new staff or contractors is another good example where HR, Finance and IT are involved.
With Asset-Intensive industries like Natural Resources, distinction should be made between common services that are delivered across the corporation and Asset or Business Unit specific IT services. The former are Enterprise Services that lend themselves for centralisation and integration with other business services to provide integrated services for specific activities (e.g. staff onboarding, customer creation, master data management).
Business Unit IT services will focus on Safety, Manufacturing (MES, Process Control) and local functional systems (as few as possible) which will fulfil specific requirements. Similar to the previous Shift, the focus on delivering BU IT services will require in-depth knowledge of operations and strong engagement with the business. Infrastructure management and application support can still be outsourced but need to be localised.
The challenge in differentiating ‘Enterprise’ and ‘Business Unit’ services is to do this in a way that accountabilities are clearly defined, boundaries are clearly marked and that the provided services still co-exist to deliver a seamless end-user experience. Achieving this is a prerequisite for (Enterprise) IT Services to be embedded in Business Services.
Frits de Vroet
The suggestion for this shift is that the Corporate Centre is reaching its limit in driving further efficiencies for centralised functions such as Finance, HR, Supply and IT. The next way of seeking further efficiencies is by combining these functions into a joined Corporate Business Services unit. The back-office operations for these functions have similar aspects that are particularly suited for outsourcing and off-shoring. Global System Integrators and Business Process Outsourcers such as Accenture, IBM, Infosys and Wipro have been building capabilities over the last years and are arguable able offer this in an integrated way across various functions.
For IT in specific, the increasing adoption of ITIL v3 provides a good platform for outsourcing or collaboration between partners. Core ITIL processes like incident, problem and change management are applicable to other functions as well and could drive significant improvement in the (currently limited) effectiveness and efficiency of non-IT outsourced (or centralised) functions.
The opportunity here is to approach the provision of business services in an integrated way as it will involve services from a number of functions. The paper quotes the example of establishing a new supplier which requires services from Supply, Finance, Legal and IT. The onboarding of new staff or contractors is another good example where HR, Finance and IT are involved.
With Asset-Intensive industries like Natural Resources, distinction should be made between common services that are delivered across the corporation and Asset or Business Unit specific IT services. The former are Enterprise Services that lend themselves for centralisation and integration with other business services to provide integrated services for specific activities (e.g. staff onboarding, customer creation, master data management).
Business Unit IT services will focus on Safety, Manufacturing (MES, Process Control) and local functional systems (as few as possible) which will fulfil specific requirements. Similar to the previous Shift, the focus on delivering BU IT services will require in-depth knowledge of operations and strong engagement with the business. Infrastructure management and application support can still be outsourced but need to be localised.
The challenge in differentiating ‘Enterprise’ and ‘Business Unit’ services is to do this in a way that accountabilities are clearly defined, boundaries are clearly marked and that the provided services still co-exist to deliver a seamless end-user experience. Achieving this is a prerequisite for (Enterprise) IT Services to be embedded in Business Services.
Frits de Vroet
Thursday, September 9, 2010
The Future of Corporate IT - Information over Process
Radical Shift 1: Information over Process
This is about the value drivers of IT. The current focus is on the automation of business process. This is expected to shift to a focus on more output related elements such as customer or user experience, data analytics, enablement of knowledge workers and facilitation of a service oriented approach. Yes, SOA is still there, especially in the customer interface and interaction area.
This shift is obviously driven by the rise of social networking, new ways of customer interaction, requirements of knowledge workers and the enablement of smart data capture through GPS, external services, smart devices and wireless connectivity.
The role and focus of IT changes from business processes to combing various data elements and presenting them to customers, employees and other stakeholders alike. Information Architecture becomes more important and the IT function is the natural owner of this.
In the Natural Resources industry, we tend to be late adopters of new front-end information technology (as opposed to the adoption and innovation of operational technology). Our relationships with customers are B2B and long term with Metal Exchanges playing an important role in price setting. The focus of production units is on safety, production and cost reduction. These objectives can however benefit from automatic capture of data and combining these data elements to drive better informed decision-making. Our focus should shift to end-user experience and the enablement of analysis of data from Distributed / Process Control Systems, Manufacturing Execution Systems and Safety systems. With the rapid emerge of wireless devices, remote operations and GPS enablement, IT has the opportunity to play a central role in capturing and elevating data to value added information.
IT will need to focus on engaging with operations to become a trusted partner. The real shift is the move from a back-office department to a critical partner that facilitates information management for value added decision making. This has implications for IT organisation structures, required competencies and mindset in general.
Frits de Vroet
This is about the value drivers of IT. The current focus is on the automation of business process. This is expected to shift to a focus on more output related elements such as customer or user experience, data analytics, enablement of knowledge workers and facilitation of a service oriented approach. Yes, SOA is still there, especially in the customer interface and interaction area.
This shift is obviously driven by the rise of social networking, new ways of customer interaction, requirements of knowledge workers and the enablement of smart data capture through GPS, external services, smart devices and wireless connectivity.
The role and focus of IT changes from business processes to combing various data elements and presenting them to customers, employees and other stakeholders alike. Information Architecture becomes more important and the IT function is the natural owner of this.
In the Natural Resources industry, we tend to be late adopters of new front-end information technology (as opposed to the adoption and innovation of operational technology). Our relationships with customers are B2B and long term with Metal Exchanges playing an important role in price setting. The focus of production units is on safety, production and cost reduction. These objectives can however benefit from automatic capture of data and combining these data elements to drive better informed decision-making. Our focus should shift to end-user experience and the enablement of analysis of data from Distributed / Process Control Systems, Manufacturing Execution Systems and Safety systems. With the rapid emerge of wireless devices, remote operations and GPS enablement, IT has the opportunity to play a central role in capturing and elevating data to value added information.
IT will need to focus on engaging with operations to become a trusted partner. The real shift is the move from a back-office department to a critical partner that facilitates information management for value added decision making. This has implications for IT organisation structures, required competencies and mindset in general.
Frits de Vroet
Friday, September 3, 2010
The Future of Corporate IT
The Information Technology Practice of the Corporate Executive Board has published an interesting study on The Future of Corporate IT. In this study, they foresee five radical shifts in IT Value, Ownership and Role. The paper provides advice on how to prepare for these shifts.
The radical shifts are:
1. Information over Process
Competitive advantage from information technology shifts toward customer experience, data analytics, and knowledge worker enablement; consequently, information management skills will rise in importance relative to business process design.
2. IT Embedded in Business Services
Centrally provided applications and infrastructure will be embedded in business services and delivered by a business shared services organization.
3. Externalized Service Delivery
Delivery will be predominantly externalized as vendors expand service provision and internal resources become brokers not providers.
4. Greater Business Partner Responsibility
Business unit leaders and end users will play a greater role in obtaining and managing technology for themselves where differentiation has more value than standardization.
5. Diminished Standalone IT Role
IT roles will embed in business services, evolve into business roles, or be externalized. Remaining IT roles will be housed in a business shared service group. The CIO position will expand to lead this group or shrink to manage IT procurement and integration.
In the next 5 blogs, I will discuss these shifts and assess to what extend they apply to my world.
Frits de Vroet
The radical shifts are:
1. Information over Process
Competitive advantage from information technology shifts toward customer experience, data analytics, and knowledge worker enablement; consequently, information management skills will rise in importance relative to business process design.
2. IT Embedded in Business Services
Centrally provided applications and infrastructure will be embedded in business services and delivered by a business shared services organization.
3. Externalized Service Delivery
Delivery will be predominantly externalized as vendors expand service provision and internal resources become brokers not providers.
4. Greater Business Partner Responsibility
Business unit leaders and end users will play a greater role in obtaining and managing technology for themselves where differentiation has more value than standardization.
5. Diminished Standalone IT Role
IT roles will embed in business services, evolve into business roles, or be externalized. Remaining IT roles will be housed in a business shared service group. The CIO position will expand to lead this group or shrink to manage IT procurement and integration.
In the next 5 blogs, I will discuss these shifts and assess to what extend they apply to my world.
Frits de Vroet
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