The Departing CIO

Everyone is different… aren’t they?

Just read a post by Nicholas Carr about the diminishing role of CIOs.  Not sure whether I am ready to believe that CIOs are not necessary yet but I certainly believe that they need to get their asses out of the dead end of operations and management of IT and much more into the role of trusted adviser to the board around innovation and access to the right services at the right cost.  Slightly tangentially, though, one comment really caught my attention.  Buried amongst a load of stuff about how CIOs were effectively being left marginalised by increasing technology maturity and commoditisation was the following comment answering a number of points from the post (original post content being commented on underlined):

“Hopper, who predicted that IT would come to be thought of more like electricity or the telephone network than as a decisive source of organizational advantage.”

From a software perspective, I have my doubts that it will ever happen. The goal of IT is business process automation. But businesses processes are inherently different across businesses. For example, no two business does finance the same way. No two real estate company processes loans or property inspections the same way. Therefore, they each need their own specialized applications.”

Umm… why?

Umm… why?  Why do no two businesses do finance in the same way?  I accept that this may be the current state but I see no reason why this should be accepted as the right way?  What competitive differentiation does doing 80% of non-differentiating things in different ways provide to the organisations concerned?  Given the fact that I tend to believe strongly in capability driven organisations I can see a case for co-sourcing these functions with specialised providers – in that context no two finance providers will necessarily have the same processes but all other kinds of companies will increasingly just integrate these standardised offerings from third parties and will therefore absolutely share the same services – why wouldn’t they?  In this context the IT becomes just a component part of the shared capability being offered and thus the need for consuming organisations to each have their own applications in non-differentiating areas is gradually reduced over time.  This will increasingly occur across all capabilities that organisations have – they will outsource, co-source or share non-differentiating capabilities in order to concentrate on those that are truly differentiating, leveraging these outstanding capabilities into wider value networks to maximise their value whilst simultaneously multiplying their value by combining them with others best in class capabilities.  As I’ve discussed before, the capabilities around which an individual company wishes to differentiate itself may still need IT support to realise effectively but this will increasingly not require the ownership of that IT.

The bald truth

I’m getting fairly tired of having these conversations with people so let’s put it down in bullet form:

• You are not special – 80% of what you do is not special and you’re just wasting money and attention competing with other people who are equally dumb.  Understand your capabilities, understand where you are special and unbundle the rest for pities sake – find specialised providers, talk to IT service companies about offloading the stuff or work with your competitors to pool resources.  In no circumstances be tempted to customise packages or implement applications or processes in non-differentiating capabilities – either deploy or (better still) gain access to standard offerings;
• IT is not differentiating – Owning and operating IT gives you no competitive advantage; in fact it drains your resources, locks you into processes that are simultaneously uncompetitive and non-differentiating, is ridiculously expensive to scale or right-size and gives you your own islands of function that stagnate outside the rapid learning possible for IT service providers.  What you do with IT – in terms of process enablement for differentiating capabilities – may be important depending on your industry but you don’t need to own and operate the IT platforms required to do it any more than you need to own electricity infrastructure to work the photocopier – it’s increasingly going to become a utility and should be treated as such.

Different types of value

If we look at the types of value chains that organisations typically bundle together – and which we fully expect to be broken up over the next few years to recognise the differences in economics and culture needed to be successful in their provision – these points can perhaps we made a little clearer:

• Physical value chain:  In this context certain capabilities require the ownership and leverage of physical assets. The economics of these capabilities respond strongly to economies of scale and therefore tend towards shared usage rather than differentiation for each organisation.  IT platforms are increasingly tending towards economies of scale and are therefore likely to be increasingly consolidated over the coming years – essentially building service platforms that enable services to be created, deployed and delivered scalably are capital intensive activities that drive them towards being shared.  In this context anyone who aims to own and operate their own bespoke IT platforms and operations in the longer term is probably not concentrating effectively. 
• Transactional value chain:  In this value chain we have information resources and business processes that implement capabilities.  These capabilities again tend towards economies of scale as 80% of capabilities are non-differentiating to individual organisations – as a result we would expect to see the emergence of specialised providers who leverage economies of scale by offering their capabilities for integration into the wider value web of their customers and partners.  In that context, again, trying to build and operate applications that you customise to allow you to execute non-differentiating capabilities – such as the finance example given originally – in ways which are different to others is a waste of time, money and focus.  For your own specialisation, however, you would absolutely want to create bespoke applications and services to support you in your endeavors but given the previous discussion on physical value chains you would want to ensure that you don’t have to take on the ownership and management of the platforms needed to do this – rather you would want to reduce risk and capital exposure by leveraging partners that can offer such service platforms to you on demand.
• Knowledge value chain:  Knowledge value chains absolutely represent differentiation for your organisation as by definition you are dealing in capabilities that have knowledge and IPR not available to others.  Perversely, however, this does not mean that you necessarily need any particularly differentiating IT as software that enables you to capture, develop and leverage knowledge will be available in the transactional value chain.  Again in this context IT is not a differentiator and you need to focus on using standard applications and services to support you in your IP creation and leverage.

 So just stop

In breaking down the typical organisation we can see that IT provides very little differentiation in the majority of the work that gets done.  Platforms will increasingly be consolidated and shared, removing a large part of the IT related work that most organisations currently spend time and energy getting stressed about.  There will be some applications and services that represent your differentiation but in this context you will increasingly be using shared platforms to compose and deliver these services in ways that are different from the IT delivery of the past.  The challenge for CIOs is to understand how they remove themselves from daily battles trying to keep their heads above water in the physical value chain and concentrate more on helping their business colleagues to unbundle non-differentiating capabilities from the transactional value chain to improve focus and performance and on finding the best platform partner to rapidly compose differentiating capabilities that represent valuable IPR for their company.

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Enterprise Architecture is yesterday’s news

Amazed to find this post that suggests that Enterprise Architecture is the next big thing.  I thought that EA was a late 90s, early 00s silver bullet and that we were now all moving on to a concentration on fractal business architectures supported by federated IT.  Now I realise that judicious EA can encompass this view – indeed that it should – but realistically EA as a term was hijacked by geeks who used it to enforce technical standards and who gibbered at their business colleagues in a threatening way about governance and compliance whilst creating impenetrable mountains of useless documentation that was out of date as soon as it was created (and made no sense to business people or developers). 

Worse than that most EA practitioners genuinely believe that they can document the whole organisation top down in a complex chain of dependencies – a horrible fallacy in a world of federation – and then micro-govern people by putting cumbersome processes in the way of getting anything done (and given the difficulty (nay – impossibility) of doing this they end up obsessing on forcing shared and inappropriate IT on people instead of supporting business improvement). 

Taking it all a bit further it’s also unfortunate that most EA efforts top out at business processes (rather than capabilities) and so are a pure expression of how things get done rather than a sensible framework for enabling decisions about what should be done (I enjoyed Steve Jones’s post about this very issue).

Before I get flamed to the extent that I am consumed by a terrible conflagration I have to say a couple of other things; are the aims of EA crazy (i.e. to understand and govern the organisation)?  Umm, no.  Should we still be seeking to do this?  Umm, yes.  Does the kind of top down, all encompassing approach taken by most EA efforts actually work?  Umm, no.  By saying that EA is no longer useful I’m basically saying that the concept is absolutely right, it is more necessary than ever in a world of services – indeed services could be the missing abstraction that finally fill the gap between intent and execution – but that initial efforts in this direction didn’t take sufficient notice (indeed why would they have) of unbundling and federation.  So I believe that EA needs to evolve to help govern the portfolio of capabilities required by an organisation to function and to include some light touch policies that specify how they should work together.  Below this level we start again, essentially with a smaller EA for each capability, recognising federation and unbundling will remove our ability to control every aspect of the way that an organisation works centrally and from top to bottom – EA essentially needs to become explicitly fractal.

Either way I’m not sure that EA is the next big thing, but then again maybe I’ve just dreamt all of this and the future is bright etc.

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It’s about umm… Services, duh!

<Rant>

Every now and again you see something that makes you realise that you’re on a different planet to many other people.  In this instance it was an article by Dan North aimed at demystifying SOA (http://dannorth.net/classic-soa), applauded by Joe Mckendrick for taking a technology-agnostic view of the thing.

Now don’t get me wrong – I absolutely agree; service orientation is an abstraction that allows us to consider things from the perspective of services, their providers, their consumers and the agreements that exist between them.  What freaks me out (often) is that this seemingly simple concept is ignored by most people who fly into acronym and technology land – SOA, ESB, BPM, Registry, Repository, Legacy enablement, web services, SOAP, REST etc. etc – or even worse product land – microsoft biztalk, websphere ESB, weblogic application server, Jboss, <insert whatever pointless thing you’re now in a rage that I’ve left out>.  In both cases people get in to the most heated arguments about which technology or vendors approach to any particular issue is ‘the one true way’ (a point made by Joe).  Essentially they pile into explaining and arguing about ‘how’ – in the form of immense and complex technical detail and the exponential combinatory options – rather than succinctly trying to express ‘what’ – in terms of understandable concepts, benefits and outcomes.

But why do people do this?  Why do they try to explain SOA in those terms and more importantly why does the power of the concept get swamped in pointless arguments about subtle ways in which different ways of realising some insignificant part of it are better than another way of realising that same insignificant part?  What is so hard about the concept of services?  We all consume hundreds of them every day.  Why do those who try to simplify the concepts of SOA end up taking about Lego?  What’s wrong with services – banking, retail, media – we buy services from service providers all the time, each where we desire something that they are willing to provide agreed through the medium of a contract of some sort.  Would you build and run a bank at the bottom of the garden just to keep your own money in?  How much of your time would that take and wouldn’t that time be better spent living your life?  How good an interest rate could you give yourself given the small amount of money involved and wouldn’t it be better to pool your resources with others to maximise the economies of scale?  And how risky would it be to try and guard your money yourself – how much security could you afford?  Of course this would be a ridiculous proposition.  So if using service providers makes sense in our personal lives why do our companies do their own logistics/finance/underwriting/branding/whatever when we could increase our performance and focus whilst reducing risk through using services provided by specialists in a similar way?  Even if we’re shy of co-sourcing wouldn’t it be better to increase transparency by understanding what services are being provided by capability units within the organisation and how well they manage performance, cost and risk in their specialism on behalf of the company?

To be honest if people aren’t having the sorts of conversations that Dan brings out with their business colleagues – i.e. ones about who is responsible for realising what value for whom and to what level of service – then I despair of SOA ever delivering anything – we are such an immature industry.  From  a product provider perspective of course they are going to be talking about technology and features as realistically they have their own interests at heart rather than those of the business they are talking to (bit harsh but realistic) but surely service companies such as the one that I work for or internal IT departments should be able to help their business colleagues grasp the concepts and benefits whilst becoming expert realisers of those benefits and hiding all the crap?  If people went into a garage looking for a car and a hundred people descended on them shouting about different brake pads, spark plugs and rivets and why in each case the ones that they want you to buy are better then we’d all still be walking with no idea as to what the benefits of a car actually are. 

Why does this have to be so complicated?  The concept you’re looking for to help explain service oriented architecture is.. um… services.  Your colleagues are smart people – give them a real world concept and they’ll get it.  Concentrate on helping them to understand what their business would look like as a set of services, what benefits this brings – using real world, familiar examples – and leave all the grubby technical bollocks in the shed until you actually need to do the digging so that you don’t mess up the nice clean offices of people who just want to get things done.  Any implementation of SOA needs to be based on business value and outcomes and until you can explain why it’s a good idea there’s no point even putting the usual acronym laden presentation together – everything you write will be bollocks until you make it real and understandable using – unbelievably – plain english and the simple truth.

</Rant>

 ADDENDUM:  Just also read Bobby Wolfe’s article over on developerworks about ESB-oriented architecture and it made me laugh out loud.  Different angle but similar argument about the futility of technology navel gazing.  Really appreciated IBM’s quick disclaimer about the value of ESBs, too, lol (another of my pet hates, btw, given that they are basically (nearly) all proprietary hub-and-spoke products that fly in the face of all of the lessons of the last 10 years with regard to federation).

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