ESSO strategia

Otto motivi SaaS si solleveranno in 2008, writes that 2008 is “going to be the year when SaaS becomes impossible to ignore”.  Also see Jeff Kaplan’s blog Top Ten Reasons Why On-Demand Services Will Soar in 2008 and Nicholas Carr’s blog 2008: SaaS’s breakout year? both of whom are wrote in early January predicting that 2008 will be the year on-demand software distribution will finally be adopted by the large firms. 

Here is another perspective: Fortune magazine in its January 9 article Tech stocks for Tough Times, says that in this choppy economic times “firms that run a software-as-a-service model and ones that are pushing the limits of computer-virtualization technologies” are positioned to withstand the tempest and “no matter what the prevailing economic winds, because they are riding trends that will barrel ahead in good times and bad”.

 In my view, SaaS delivery model will be mainly seen from a financial perspective.  For the first time the offshoring (mainly to India) is beginning to look expensive.  Not only has the employee pay in India gone up, the dollar has depreciated dramatically against the rupee thus making offshoring to India less attractive.  At the same time ‘virtualization’ and dropping storage costs, is enabling more and more utility computing.  So SaaS delivery model provides an excellent alternative to offshoring to India especially in this tough ‘recessionary’ like environment in the US.

When the mainstream financial media like Fortune Magazine begins to concur about the viability of the SaaS delivery model, the CFOs and CIOs will wake up to see the its advantages.  (Also see my blog on advantages and disadvantages of SaaS here). I think, SaaS is here to stay and more and more software providers will use SaaS to seamlessly plug into the IT infrastructure of large organizations. 

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Organizations as they gets larger, add layers of complexity to their organization structure to deal with increasing complex external landscape (Also read my other blog titled Globalization and Managaing Complexity)

Ron Ashkenas in his HBR article “Simplicity Minded Management” writes on how to strip complexity out of organizations. He says that a simplification strategy must also be treated as a business imperative, not a soft, “nice to have” virtue but a key contributor to bottom-line success. One way to do it according to the author is to engage employees across the organization in process simplification, particularly at the grassroots level. “Complexity can and does hold back business innovation, create confusion and cause employee frustration,” Ron says. “With increasing demands on business performance and tight labor markets, no company can afford unnecessary complexity slowing down their business and causing unnecessary pressure during the talent war.”

Check out the author’s simplicity checklist

Make simplification a goal, not a virtue

• Include simplicity as a theme of the organization’s strategy

• Set specific targets for reducing complexity

• Create performance incentives that reward simplicity

Simplify the organizational structure

• Reduce levels and layers

• Increase spans of controls

• Consolidate similar functions

Prune and simplify products and services

• Employ product portfolio strategy

• Eliminate, phase out, or sell low-value products

• Counter feature creep

Discipline business and governance processes

• Create well-defined decision structures (councils, committees)

• Streamline operating processes (planning, budgeting, and so on)

• Involve employees at the grassroots level

Simplify personal patterns

• Counter communication overload

• Manage meeting time

• Facilitate collaboration across organizational boundaries

For me, the most interesting observation the author makes is that in every organization the complexity begins with the individuals. What that means is ‘you and I’ are responsible for the complexity around us at work! We are part of the problem. Ron says that one way to create simplicity is to seek feedback from colleagues, managers and peers at work. Ask them how is your task creating complexity for them. Seek suggestions to simplify work for them. I am going to take this advice to heart starting right now!

Click here to take a survey on an interactive tool to find out if your organization is too complex and listen to the interview with Ron Ashkenas.

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Research by McKinsey titled Making Talent a Strategy Priority finds a contradicting trend (This is an extension to their initial paper in 1997 titled ‘War For Talent’). While there is a rising acknowledgement by the executive that in this globalized knowledge economy, the demand for right ‘talent’ far exceeds the existing supply leading to ‘war for talent’ and HR needs to play an important role in talent management. At the same time this research confirms the idea that HR’s influence within the organization is declining.

Study finds that “Three external factors—demographic change, globalization, and the rise of the knowledge worker—are forcing organizations to take talent more seriously. But the threats don’t come solely from the outside; companies themselves have made matters worse. Internal problem like managers who are too ready to treat talent in a reactive, knee-jerk manner—say, by hiring additional sales and marketing people only when new products take off.”

For the executives that want to chalk out a growth plan for the next 5-10 years, they need a solid support from HR to provide right talent resource at the right time. If less than two third HR directors report to the CEO directly (That’s what the study finds), I suspect far less HR directors are invited to the business strategy planning session. With no visibility into the company’s strategic growth there is no way HR can fulfill its role to manage talent in the hyper competitive globalized environment. This begs an important question. With most organizations in a reactive mode (as the paper suggests) when it comes to talent management, is there really a ‘War’ on talent. Remember a ‘War’ has a strategic element to it (read Art of War by Sun Tzu). I suspect currently organizations are only involved in day to day firefighting mode.

Only when the organizations let the HR partake in the business strategy we will see a real ‘War for Talent’ unfolds.

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Brian Watson of CIO Insight on his blog “Does Green IT Matter?” tackles an interesting trend in ‘greening’ of products and services. He says that “regardless of businesses’ motivation, investment in eco-friendly technologies continues to grow—fast”. He talks about a study by KPMG, in which “venture capitalists, bankers, entrepreneurs and others said a quarter of new investments will towards green IT”.Why is Green IT suddenly important? Here is my opinion - the confluence of 2 events that are creating new challenges and opportunities for the IT to go green.

1. The rise of commodity prices over the past 5 years, mainly due to insatiable desire by Asian countries (led by China) to modernize, will continue into the future. Demand for base commodity that enable production of power is going to be greater than the supply. The era of cheap commodity is over (at least in for next 7-10 years). This means that the CFO will be under pressure to find alternate viable source of energy in the quest to manage the overhead costs.
2. We have reached a tipping point where majority of consumers are concerned of impact of global warming. There is real drive to “reduce the footprint”. CMO (Chief Marketing Officers) are adapting to the new reality and are baking ‘green’ into their product brand image. CMO’s don’t have the luxury of ignoring the demand by the consumers who want to make sure that the products they use are environmentally friendly. Even hardcore oil companies like Chevron and BP are touting how green they are.

Hence there is huge push on CIOs to deliver an IT infrastructure that is environmentally friendly. Should going green be part of IT Strategy?

If the goal of IT is to align with the business strategy, it’s very easy to envision that the IT Strategy that enables the businesses to achieve both of its objectives a) reduce/manage overhead costs b) increase brand value is not just necessary but extremely essential.

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Read the interview with Nicholas Carr on CIO insight, titled Nicholas Carr: Why IT will change, where he talks about his new book The Big Switch: Rewiring the World, from Edison to Google

In the interview with Ed Cone, Nicholas Carr defends that “the IT department is unlikely to survive, at least in its familiar form. It will have little left to do once the bulk of business computing shifts out of private data centers and into ‘the cloud’ or ‘the grid’. Business units and even individual employees will be able to control the processing of information directly, without the need for legions of technical specialists” and “The shift seems to be proceeding quickly…”

Nicholas Carr continues to say IT is turning out to be a commodity and defends his view that he initially presented in the HBR article titled “IT Doesn’t Matter”. In that HBR article, he mentioned that IT will go the way of Electricity. Everyone can and will hook into the IT grid (similar to electricity) and in the long run it does not provide any competitive advantage to deploy IT.

To a question Ed asks “What becomes of the corporate IT function in the age of the grid?” Carr responds “Over the next five or 10 years, the technical aspect of the IT department will become less important. It will slowly evaporate as more of those experts go outside onto the grid. But the information management and information strategy elements will become, if anything, more important. The ways companies take advantage of digitized information will become more important, not less.”

I am confused here. If IT is going the route of electricity to become a commodity how will it be more important for companies to take advantage of it? I don’t see ‘Electricity Strategist’ as a role in any organization.

The fact that IT can be used to differentiate the firm from the competitors (that’s why you would want an IT Strategist in an organization) is an indication that IT Does Matter. Is Nicholas Carr contradicting himself? Well, he further clarifies on how he viewed IT when he first wrote the paper “When I wrote Does IT Matter?, I focused on the noun in “information technology.” But information has always been a critical strategic element of business and probably will be even more so tomorrow. It’s important to underline that the ability to think strategically, to think in business terms about information—whether it’s information about your business or the transformation of your products into pure information—those skills will be critically important to companies, probably increasingly important, in the years ahead”.

If you look at IT only from the sourcing (make, buy or outsource), distribution (‘grid’ or otherwise), technology (open source or custom created application) or the infrastructure (email etc) perspective you can argue that IT is becoming a commodity. I agree it’s a matter of time before all of the above component will become commodity. But to somehow pigeon hole IT in this narrowly defined aspect is a fruitless exercise, because information in the word IT encompasses critical and strategic thinking. THAT can never become a commodity!

I am happy to see Nicholas Carr clarify his stance on IT and I am in agreement with him there!

(Also read Carr’s interview in Wired magazine and the review of his new book by CIO Insight)

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Information Week’s article Cisco’s Emerging Collaboration Strategy talks on how Cisco’s Chairman John Chambers intends to build hardware and software solution to take advantage of collaboration that will enable traditional organization to transform its business model. Chambers says that collaboration will fundamentally change the nature of work, enabling productivity growth to soar back into the realms last seen in the economic surge of the late 1990s.

While other traditional companies are unsure on how to deploy and use collaboration, interactive technologies (aka Web 2.0), Cisco is internally deploying interactive Web forums like wikis and blogs; IM; interactive “teamspaces” and videoconferencing and telepresence–a life-size, high-def, multiple-screen system for face-to-face meetings among users in multiple locations. By ‘eating its own dog food’, Cisco is branding itself as a game changer again.

Though, the article questions “is Cisco’s latest initiative just Videoconferencing 2.0, or is it really something revolutionary”? I believe Cisco is more in tune with collaboration opportunity the global networking ‘cloud’ has created. It will only accelerate the productivity in coming years because of the network effect. The article talks on how “I-Zone wiki, a company-wide forum for new business ideas launched not by IT but by the Emerging Technologies Group”. This is a clear example of how collaboration technologies within Cisco are bringing about new innovations.

Though there is certainly some hype with Web 2.0 (similar to ‘dot com’ hype), collaboration and social networking technologies have far more impact on the improving global productivity than the initial introduction of internet (aka Web 1.0). The race is on for the Companies to get ‘collaboration’ right which in turn will enable them to build complex talent-based competitive advantages that competitors won’t be able to duplicate easily. Kudos to Chambers for seeing this opportunity and positioning his company to take advantage of huge collaboration infrastructure investment by all companies in near future. Telepresence (its giant size video conference) will not make a huge impact on Cisco’s bottom line initially but it is sure to have a phenomenal impact on its brand. Cisco’s Collaboration Strategy is bombastic yet realistic and it will reap huge benefit because of its belief in the future of ‘human network’.

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