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Making Elephants Agile—Lessons from the
Cloudy Battlefield of Capabilities Dr. Stefan A. Deutscher Global Topic Leader for IT Infrastructure Operations
Dublin, September 9th, 2014
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Quiz 1: What is able to ....
… remain stable under 9 tons of load ? … accelerate from 0 to 100 km/h in 3 seconds?
An elephant (of course) !
Evolution 1.0
Source: BCG
A cheetah (did you really know that) ?
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Quiz 2: So, then … what is stable under 9 tons of load and
can accelerate from 0 to 100 km/h in less than three seconds?
Evolution 2.0
Source: BCG
Right! A cheetaphant (of course, you knew that)
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Quiz 3: What did we talk about at the last Autumn summit? Hint: We don't mean our (admittedly also interesting) big data presentation
IVI in a world where every company is a
Technology companyRalf Dreischmeier, Global IT Practice Leader
Dublin, September 24th, 2013
130924 Where every company is a technology company v1.2-PL-SD-BER (abridged).pptx 2
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Every company is becoming a Technology company Three ways in which Technology is driving value
Size of
impact
Nature of impact
• Reduction of unit cost
of Technology services
• Commoditisation and
externalisation of
Technology
Cost reduction • Enhancement of
business processes
• Improved efficiency,
automation and agility
Business
transformation
• Enablement of new ecosystems
and new business models
• High innovation leading to
creation of new products and
services
Business model
innovation
1
2
3
• Focus on Tech cost/operations
• Improvement in agility
• Drawing on individual, commodity
services
• Focus on business strategy
• Drawing on full capabilities as part
of wider transformation
• New business products / services
Source: BCG experience, cloud analysis
Value x 5-10
Value x 5-10
Value x 1-∞
Source: BCG Analysis
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Sandwich position between leaders and nascent players has
put new demands on the global operations organization
New business requirements have led to service disruptions
and performance challenges
Challenger Nascent
Industry sanitized
New opportunities
Coming from ... ... going to
Services Running mature services Data and business process services
Key facts Few mainframes, high operational
maturity and stability
1,000's of servers, less operational maturity,
Very high traffic internet domain, globally
Organization Primarily siloed organization Higher need for cross-silo collaboration
Capabilities "Stable, stable, stable" IT services "Fast, Fast, Fast" business services
Our client's situation
Note: Sanitized Source: BCG project example
Leader
Industry sanitized
Industry sanitized
?
Our Client
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But situation extends beyond that client: External market
pressure on companies is mounting — three key trends
Source: BCG, expert interviews, press research
Value chain is shifting towards direct customer interaction
• <examples of traditional partners reaching out directly>
• <sanitized>
•
Suppliers and customers are redefining their demand
• Traditional business becomes more and more a commodity
• Both customers and suppliers focusing more on value-add attributes
• New requirements on both sides
Key market players are demonstrating different speed of innovation
• Suppliers push the innovation by implementing new technologies
• Selected customers are trying to innovate; most of them act as
followers
• Regulators try to shape the market by introducing new standards
Observations and examples
Shifting
value chain
Changing
demand
Unbalanced
innovation
The bigger picture: Typical situation
Service offering and agility of companies needs to be adapted
to the changing environment – while staying stable
Key trends
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Conventional wisdom has a magic triangle for this problem Cost, speed, stability
What they said
Pick any two … right?
Stability Speed
Cost
Source: H. L. Mencken; BCG analysis
Remember: For every complex problem there is an answer
that is clear, simple, and wrong
Just (re)do it right …
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We therefore performed a global IT Operations benchmark for
operation-related steps of the value chain across key players
Source: BCG, project experience
Demand management
Test Decomission Deploy Build
Change
Databases
Database management systems
Operating systems
Infrastructure IT
Infrastructure facilities
Underpinning contracts & services
Applications
Run
Focus on
IT operations
Focus on impact of
IT operations
What we did
Key player industries
• Financial service providers (esp.,
stock exchanges, MFT / HFT)
• Energy exchanges + distribution
players
• Travel Service companies
• Web giants
• Logistics companies
• IT Service providers
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Five clear archetypes emerge from the first 14 analyzed
benchmark companies1 – overview of characteristics
Key findings: Identified archetypes
Business
archetypes
TTSCs Traditionals Web giants Traditionals TBD
With ecosystem With ecosystem With ecosystem Without ecosystem Tech-driven
Peers Peer 3 Peer 7 Peer 4 Peer 6 Peer 5 Peer 10 Peer 13 Peer 8 Peer 9 Peer 1 Peer 2 Peer 12 Peer 11 Peer 14
A Speed of IT Development of differentiating services
B Governance
model
Centralization
Process maturity
Sourcing model
C
Organi-
zational
agility
Organizational agility index
• Role of IT
• Span of control/ number of layers
n/a n/a n/a
• Interaction culture
• Failure tolerance
• Skill management
• Solution delivery
D Service
provisioning
Provisioning of differentiating services
Provisioning of supporting services
Deployment n/a
E Customer
centricity
Customer environment
Measurement n/a
1
Traditionals
with ecosystem
Companies of the real
economy with a low level of
digitalization of the value
chain which operate in
complex environments with
multiple customer, partner
and competitor patterns and
use IT to support their core
businesses
2
Web giant
with ecosystem
Global companies of the
digital economy with a
comprehensive product and
service offering which
operate in complex
environments with multiple
customer, partner and
competitor patterns
3 Web giant
without ecosystem
Multinational companies of
the digital economy with a
limited product or service
offering which operate in
homogenous environments
with stable customer,
partner and competitor
patterns
4
Tech-driven
traditionals
Companies of the real
economy with an average
level of digitalization of the
value chain which
recognized emerging
importance of the technology
as the business enabler and
leverage on it
5
1. And where supported by the following companies we added to the benchmark Source: BCG
2 3 4
5 1
Traditional Travel
Service companies
Peers which operate in the
market for traditional travel
services providing software
and IT solutions to travel
agencies, corporations,
individual travelers, airlines,
hotels, car rental, railway,
cruise and tour operator
companies
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... define their customers from a business view and align service provisioning and speed
of IT by customer type (e.g., end-customers and those directly interacting with them vs.
internal and support functions not immediately impacting customers)
Benchmark unveils five key dimensions of relevance to
counter the main "speed and stability" challenge
1. Subject to particular starting situation 2. Could be some form of cloud or just any other highly automated environment – your mileage will vary Source: BCG
... provision, operate and maintain an IT environment designed for (often different)
speed requirements of business needs, e.g. an industrial speed IT or digital speed IT
... establish appropriate management structure, processes and sourcing model to
enable and sustain business value contribution of IT at the required speed (e.g.,
centralized vs. federated, in-house vs. outsourced)
... establish the appropriate organizational pre-conditions for adaptation to a changing
environment or speed requirements of business (specifically: leadership, team setting,
team members and organizational structure)
... provide customers/the business with the needed IT services at appropriate cost,
service level, and speed (e.g., standard vs. custom-made) and the appropriate
development and deployment mechanisms (e.g., traditional test-deploy vs. agile)
Key dimension
Speed
of IT A
Org.
agility C
Governance
model B
Key findings: Key dimensions
Customer
centricity E
Service
provisioning D
These form part of, and should be addressed as, a whole in a well-
designed sequence1, isolated fixes will not "move the needle"
The capability of the IT organization to ...
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When moving to automated platforms or cloud, several
capabilities need to be enhanced or built up
Managing IT like a
business
Managing the
IT budget
Managing IT for
business value
Managing the
IT capability
IT Leadership and Governance ITG
BPM Business Process Management
BP Business Planning
SP Strategic Planning
DSM Demand and Supply
Management
CFP Capacity Forecasting and
Planning
RM Risk Management
AA Accounting and Allocation
ODP Organisation Design and
Planning
SRC Sourcing
IM Innovation Management
SAI Service Analytics and
Intelligence
FF Funding and Financing
BGM Budget Management
PPP Portfolio Planning and
Prioritisation
BOP Budget Oversight and
Performance Analysis
EAM Enterprise Architecture
Management
TIM Technical Infrastructure
Management
PAM People Asset Management
RAM Relationship Asset
Management
RDE Research, Development and
Engineering
SD Solutions Delivery
SRP Service Provisioning
UTM User Training Management
UED User Experience Design
PPM Program and Project
Management
SUM Supplier Management
CAM Capability Assessment and
Management
TCO Total Cost of Ownership
BAR Benefits Assessment and
Realisation
PM Portfolio Management
KM Knowledge Management
Significant Impact
Some Impact
Source: Innovation Value Institute; BCG global IT benchmarking of top companies; Cloud Computing research
Key findings: Capabilities
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Example: Capability levels for migration to Cloud of large entity Private vs. Public cloud
Managing IT Like a Business The others: Managing the
IT Capability, the budget, for business value
1
2
3
4
5
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 1 9 3 4 5 6 7 8 2 10 11 1 2 3 4 5 6
IT-CMF critical processes
SRC - Sourcing
CBB
EAM – Enterprise Architecture TIM- Technical Infrastructure SRP- Service Provisioning CP
Key: Private
Public 1 Initial
2 Basic
3 Intermediate
4 Advanced
5 Optimising
Increasing
business
value
This assessment concentrates on the critical processes for
Cloud Implementation
Source: BCG Client example
Key findings: Capabilities
e.g. TIM
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Top performing companies move applications into production
in a 1 week to 1 month timeframe (this was 2008/2009)
Project
(business)
Place order
Vendor
Production
•Service mgmnt.
•Operations
Application
operations
Production demand
1 day
2-20 days
Installation
Application installation Application test, stress
tests
4-8h 1-2 days
1-2 days 1-2 days
Server arrival
Configuration
testing
Application ready for
production
Key success factor
OS image
industrialized
Install procedure and
dependencies documented
Test scenarios documented
Tests indicators embedded within
application Key
Standard hardware
Limited number of vendors
Pre-command (stock?)
Total duration: 8 to 29 days1
Backup before
production
4-8 h
Testers
recruiting
(business)2
1. Depending on application complexity / server complexity 2. If needed Note: Not showing the design, operate, or deprovision/decommission steps Source : BCG benchmark
That won't do today, but there are still many companies in
2014 which take that long – or longer
Key findings: Platform – Example TIM
Example
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The Technical Infrastructure Management (TIM) CC of the
IT-CMF covers the whole infrastructure life cycle (for now)
Decom-
missioning
Operation and
Maintenance
Deployment
Continuous
Improvement
Build
Designing, planning, and testing
models, prototypes, and concepts for
later deployment, e.g. OS images,
policies, configurations, patches
Setting up and distributing
physical components (e.g.,
PCs, servers, routers) or virtual
entities (e.g., patches, updates,
configurations), ready for
operation
Retiring physical
assets and virtual
entities
Operating, maintaining, and
supporting physical components and
virtual entities
Ongoing activity to
optimize processes of all
lifecycle phases
Category Service tower
Decentra-
lized IT
PC management
Peripherals
management
Mobile device
management
Decentralized
server
management
Network
LAN/RAS
management
MAN/WAN
management
Voice management
Back-end/
data center
Server management
Storage
management
Overarch-
ing
activities
Asset management
Security
management Source: IVI; BCG , TIM WG Stage 4 Submission 2010-01-26
Key findings: Platform – Example TIM
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Business agility increasingly demands for continuous
delivery capability – and firms may appoint a new CIO to get it
The IVI IT-CMF framework can help you assess where you
stand – and get to where business needs you to be
Key findings: Platform – Example TIM
For this ... ... you need that1 , in minutes not days
1. Ability to provision and deprovision infrastructure (physical or virtual) in minutes Source: "Continuous delivery" Jez Humble & David Farley, 2010; BCG project experience
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