Capgemini's CTO on Why Cloud Computing Exposes the Duality Between IT and Business

Transcript of a BriefingsDirect podcast in conjunction with latest The Open Group Conference in San Francisco. Capgemini CTO Andy Mulholland discusses the transformed enterprise.

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Dana Gardner: Hello, and welcome to a special BriefingsDirect thought leadership interview series coming to you in conjunction with The Open Group Conference this January in San Francisco. I'm Dana Gardner, Principal Analyst at Interarbor Solutions and I will be your host throughout these discussions.

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 here now with one of the main speakers of the conference, 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.

As a lead-in to his Open Group conference presentation on the transformed enterprise, Andy and I drill down on one of the year’s hottest technology and business trends: cloud computing.

Capgemini has published 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.

To find out more about these two cloud imperatives, please join me now in welcoming Andy Mulholland, Global Chief Technology Officer at Capgemini. Welcome back to BriefingsDirect, Andy. [Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]

Andy Mulholland: Hi, and thank you very much for inviting me.

Gardner: My pleasure. I really enjoyed reading a preview of this white paper. I read it with great interest, and what jumps out at me this duality. Why do business people think they have a revolution on their hands, and yet IT people look at as an evolution, something about efficiency of infrastructure?

Mulholland: Well, that’s because 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, what you’re going to see is how I can use it in that model. Some of the technologies from cloud computing, principally virtualization, give you ways to improve how you deliver the current cloud server-centric, application-centric environment.

So you see there’s an evolution, and you start asking questions about how far can we go: Would I go outside and put enterprise applications on the cloud? Would I maybe run a private cloud internally? Etc.

However, when the business people want to talk about that subject, they tend to talk about it and 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: In the paper, it describes the IT view of cloud as "inside-out" -- so their IT-centric world, their legacy, their requirements, what they view as their mission, and how to project that outward. And then the term it uses for the business side that you just described is "outside-in." That is to say, beyond the perimeter of IT, beyond the perimeter of the business.

How is it these seemingly disjointed and confusing approaches can come together? Is there a need for them to somehow mesh and be aligned?

Mulholland: Most businesses ought to be aligned in their operations or it becomes quickly quite a problem. But if we just pick up the terms, which we used as ways to define the first word, the function inside is the primary function, and out is the secondary function, and the other way around.

Most businesses ought to be aligned in their operations or it becomes quickly quite a problem.

IT is clearly internally focused. When we look at what we do outside the firewall, we define it on the governance, security, and the risk structure of inside IT. In other words, we're worried about the exported information. We're worried about who comes through the firewall and under what circumstance. And we’re worried that when you go out with your corporate machine in the big wide world, someone might steal it with data on it.

Alternatively, you might be unfortunate enough on the Internet to pick up some nasty malware that could have some bad effects. For all of those reasons, we put very heavy governance and restrictions on PCs. They usually lock down more than only one control, but when we go outside, we’d like to hear there’s a virtual private network (VPN) to reincorporate inside the firewall for safety.

By definition, we have a way around outside-in. People are saying, well no, actually, I require very little about the internal world. I'm very focused on the external world. Obviously, that serves people, service engineers, but actually it’s quite a lot of people.

The small joke there is that people don’t buy iPads in order to get better use of enterprise IT. They buy iPads to escape the limitations of enterprise IT, because that's fundamentally working on the web outside, with very limited internal links.

When I’m out on the road, there are four services I use from Capgemini. All of them are web-mounted. I simply don’t use a VPN connection, and I don’t use a lock-down machine during the day. I tend to do it in the evenings or in the early mornings, when I have to do things that are about the more sensitive side of our operations.

The rest of the day, web-based, push email works really well on my iPad. Not to give particularly advert for that, but I also use a Windows phone. I also use social networking system, and I use a knowledge management system, and I use time and expenses recording systems.

The outside world

All of them enable me to function in the outside world without a number of restrictions. Why? Because the primary task I have is to work with industry partners, clients, and various teams based on other people’s sites. All of that is about how I function in the outside world.

Now when we take an interesting example of that: customer relationship management (CRM). You can see very clearly CRM has meant how the company keeps its sales funnel, its clients, and other things inside its IT, transacts it, secures it, and grinds it into business information so it knows where it is.

Today, we talk about social CRM and when we talk about social CRM, we mean it's outside-in. We mean it's sales people using packages that can look at the person they’re selling to, find all the information about them by looking at various social sites. They can exchange through collaboration and knowledge, and share in social networks with their colleagues, any information about the account that's known or whatever is happening. In other words, it becomes an external task.

Now the two sides clearly exist together because you must keep your funnel up. You must know what’s happening. You must keep the internal clients. The other way around, the sales people want to exploit insights of what’s happening that they can gain from very different directions than classic internal structured information.

Gardner: So there are some significant advantages to users like yourself to pursue outside services, recognizing that they can get process innovation, data sharing or transference. There's an opportunity to engage with partners. At the same time, IT still needs to be mindful of its mission around security and protection.

They slowly, but surely, destroyed the business integrity of the data by all having different versions.

So I'm wondering again, not so much alignment, but somebody has to bend. Does IT need to go thinking more "outside," or do the folks who are doing these outside activities need to think more about IT? How can they meet up in the middle somewhere?

Mulholland: Now we’re back to your point about enterprise transformation and what that really means. I'm always very conscious of the fact that the phrase has been used for a long time in a variety of ways, as have many of the other buzzwords that go with it.

But this time, what we actually mean is that -- as with the last wave of where the big technology changed in late 80s and early '90s, when we brought in the PC, there is almost a direct correlation between the two [trends]. Business people brought in PCs, because they could use spreadsheet and could be more insightful in their use of information, such as it was at that time.

But what happened was that they slowly, but surely, destroyed the business integrity of the data by all having different versions. Where we went to with that was two things. We went to enterprise resource planning (ERP), which was one version of the truth. But the really important point was that we started to redesign around business process reengineering to flow all the process across the organization. Not that we had separate isolated departments, but the question was how do we flow across.

That was quite difficult at that time because it presented a lot of command and control problems. In fact, email was brought in as the answer, because you needed the names of the people along the process and you could do command and communication along the process, even if in the previous structure, department organization hadn’t fit.

Business transformation

That was a business transformation at that time. It was a transformation around the way we organized our business to do business. From that, we organized our business model to be based on that.

So we use phrases like "do more with less," "concentrate on one or two or three lines where you're the number one or two in the market," etc. That was a very clear business transformation in the way we do business, the way we organize our business, and our business models.

Two of the most popular books recently, include Seizing the White Space, which argues that in the past, it was difficult to transfer your business model too far. I use an example, Amazon. If they sold books, they could sell DVDs, because fundamentally the same business process supported both. But in Seizing the White Space, a popular book on Harvard Business Press, it defines for a lot of people 19 new business models that their enterprise could adopt.

It defined the idea that actually they could do something like Amazon Web Services, where how they service the market was distinctly different from how they ran their business process and created an invoice.

A more popular book more recently has been The Power of Pull, and in all of these, 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.

That was a very clear business transformation in the way we do business, the way we organize our business, and our business models.

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.

Most of the major technology players in the software industry are pretty advanced with this in the way that they're supporting their current application-centric IT environment, developing a new environment in front of that, and offering middleware and mix the two together.

But the real challenge is -- and it was put to me today in a 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."

Gardner: All right. So we certainly have a strong case for transformation being necessary and pressing, especially as organizations try to react to their very dynamic markets, accommodate them, and then to try to tool the means of orchestrating the processes and supporting those new market requirements.

At the same time, Andy, there's some added complexity in that, the external landscape has shifted when we think about things like mobility, which means any connection, any device, any service. Also, when we think about cloud, which is compute and development resources, as well as past and present IT resources on demand, and then we think about big data -- so real-time information and intelligence as well as greatly improved efficiencies around storage and search.

Then, I suppose, the last big variable to consider in this mix is the external economic environment. The timing is that most organizations are still facing reduced spending. They have also expectations from the customers that are more demanding.

Most organizations are still facing reduced spending. They have also expectations from the customers that are more demanding.

So, given the fact that we’ve identified the need, how can we leverage these changes in the market -- things like mobility, cloud, big data, and the requirements around efficiency and productivity -- to spur the enterprise forward?

What do we need to start doing differently that was not the same as in the early 90s with business process reengineering?

Mulholland: Let’s go back again to the 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.

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.

It’s a model around big data, saying that there is information everywhere. How do I get the insight I want from it? And when I’ve got the insight I want from it, which is more driven by search than ever was driven by queries in the old landscape, how and where do I use it? In other words, how do I start to evoke a process between different companies?

Let’s just reiterate this whole theme about clouds, mobility, and so on, in a very simple way. It is actually the fourth generation of the Internet. Some people will talk about it being the third because they will miss out one of the stages. I would say it’s the fourth for the following reason.

Web 2 is quite important, because it showed us that actually we are focused upon people making insightful decisions, as much or more than we've ever been focused previously around the computer.

The first generation was universal connectivity. That’s what underpins mobility. The second generation was universal shared content. We could read and look at content, the beginnings of the big data model that we know today, the beginnings of the shift to the search engine model, and the way we used the big data model of the web.

The third one is sometimes not included by one or two other people. One or two of my colleagues, friends, and companies don’t always include Web 2. I think Web 2 is quite important, because it showed us that actually we are focused upon people making insightful decisions, as much or more than we've ever been focused previously around the computer.

The fourth one is that if I can connect to you, if I can see the content, if I can interact to find out that, that really is what I want to do. I ought to be able to trigger shared process. I ought to be able to trigger something that the process is from the various parties in that model. Travel, as I just said this morning, are actually able to come together to give me my version of what I want, and that includes other comments people hear about open data, etc.

If you want to see a classic example of this it's from Apple. I appreciate that I'm using Apple a lot, but I'm using it because this is relatively mature at the moment and it's pretty easy to demonstrate. Go to the Apple App Store and load iFly. If you're a frequent airline flyer, you're going to thank me a lot for this.

It takes the information which is published all the time in an open data format by various airports, airlines, etc., and consolidates it to give it a polarized view for you of the travel you're about to do. It tells you about the airport you're going to go through, you can find out what restaurants are by the gate you're going to travel from. It tells you whether the aircraft is on time/off time, how it synchronizes with the next flight you're going to make, etc.

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Transformation model

That is a transformation. When we talk about these elements, if we recombine them around this loose structured coupling to give different polarizations to the person, the situation, or the event, by combining those four factors, that’s what’s leading to the business transformation model.

Gardner: I guess it's important to point out here, Andy, that the stakes are relatively high. If you look at these issues and you think that it's a perfect storm that these are things that are too complicated, difficult to manage, you're just going to hunker down, reinforce your firewall, then this could be an existential decision.

On the other hand, like the CEO that you mentioned this morning, if you look at this as a game changing opportunity, 20 percent improvement in revenue and share, but at no additional cost, well, then this could be a game-changing beneficial approach.

How do organizations make sure they're the latter, and not the former? 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: Frankly, it's happening in most organizations already in much the same way as I said earlier. There's a direct correlation with what happened with the PC. If you go into many organizations today, and the advice I usually offer is go through the corporate credit cards and find out who is spending money with places like Amazon or Google or something like that, the answer is usually pretty shocking. It's much more than people realize.

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.

My point about that exercise is that the business managers on these systems -- which are relatively easy to do something quick around, like a quick spreadsheet was -- are actually already implementing and getting good results.

The other way around, 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.

I recognize also that there are a lot of companies where they have actually formed a whole new business division to behave differently. Again, the real example is a global company in desking systems recognizing the number of people in offices at desks is finite at best, and possibly going down, starting a division around virtual offices and supporting their employees to work away from a fixed office.

It's the same clients they're dealing with, the same customers, the same core competences. They're just reinventing a new business model to get them new revenue as there are uncertainties about the other one.

Now the question behind that was that it's clearly a business strategic decision, but there was the possibility of recognizing that it could be done, the technology existed, and the customers were changing their mind.

They're just reinventing a new business model to get them new revenue as there are uncertainties about the other one.

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.

We had CIOs who were not sure what was the right answer. Some of them came in with the PCs themselves, and some of them were business managers who took over the role and started to look to see what they could do.

So right now, I don’t know that there is a single, fixed 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: So perhaps it’s going to be some organic or combination of organic and structured approaches. It could be any number of people that are the drivers in these different companies and in different verticals. I suppose what’s really important then is identifying successes, and then making them repeatable.

How do the roles, the traditional roles of the enterprise architect and the business architect come to bear on this ability to recognize successes -- the inside-out, the outside-in successes, some combination? Make them repeatable and perhaps move toward this cloud opportunity, rather than cloud as a handicap, to your company’s success?

Issuing invoices

Mulholland: Well, this goes prominently about the new world and the transformed environment, but we should never forget that all sorts of business are actually about the issuing of an invoice and proving that it was a valid invoice to an auditor.

So, that puts us firmly back in the old world. What we're really talking about is how do you move through three different recognizable layers in an organization, while remaining compliant -- the world that says we have to able to show to an auditor procedures and processes and data and methods that are all clean and good.

Then if we look above that, we have our core competencies. What is the industry we're in, and, if I put it in business jargon, what is the value that the shareholders are buying from us.

Motorcars might be an example. We have factories, skilled staff, and every detail. But in that layer, we see a very rich set of applications that enable us to, if we stick to automotives, design CAD, do things with them, etc. All we're talking about is in front of that is a new layer that asks how we differentiate.

Classic differentiation has been around brand. There's Volkswagen, Audi, Fiat and Škoda. If we take a European respective of a very successful car company, each of those brands reaches a different marketplace, and that gives them more reach than if they only had one brand.

At the back, it's very focused on the procedure, application, and data. At the front, it's very focused on orchestration of clusters of different services to seek different environments.

But that differentiation is built on the same chassis in each one of those cars. So their core competency actually gives them a core base ordered to express differentiation. Beyond that, how do the people map to the layers?

If you start looking at the business that way, you actually start this top-down. You ask where we differentiate, how do we engage with a market in a different way, or is our new business model where you look bottom up? You ask how we make sure we're issuing valid invoices?

If you check that through, that use of thread in a process that runs through from the front to the back, always has to be. At the back, it's very focused on the procedure, application, and data. At the front, it's very focused on orchestration of clusters of different services to seek different environments.

Each of those services is a definable entity with a definable task. Success starts from SOA, which frankly we didn’t do very well as an industry. It starts from the idea that we know and define each web services properly, and we define the rules in terms of how the orchestration of those can work. That’s why there is a lot of interest at the moment in business process management.

Redesigning process

What we’ve eventually done is say at the back we’ve bolted the clusters together in a monolithic application and how we integrate those together, whereas at the front, our task is actually to identify spectacular small business service elements in a very well-defined manner, so that they can be clicked together to give us the freedom to redesign process on the fly in order to adjust to this new market.

So the clarity of thinking about business, the transition of that into technology architecture has not decreased at all. In fact, if anything, it’s gotten more complicated and more interesting as we now add this new layer of business to technology architecture.

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.

We're about out of time Andy, but on this sense of urgency in getting started, as you say, a lot of these things are happening already. How does it become something that you can manage, something that you can measure that becomes something that is lower risk and more comfortable for the leadership in these organizations?

Mulholland: I usually reply to most challenges I'm given about the complexity of trying to keep everybody going in the same direction in Capgemini with one very simple answer. 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.

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.

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. In other words, do we want to go from books into DVDs or do we want to go from DVDs into web services -- the example I gave earlier.

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.

Gardner: Very good. We’ve been talking with Andy Mulholland, the global chief technology officer at Capgemini. As a lead-in to his opening group presentation on the transformed enterprise, Andy and I have been exploring some of the major concepts from an upcoming Capgemini white paper on the intriguing dualities of cloud computing.

This special BriefingsDirect discussion comes to you in conjunction with The Open Group conference from January 30 to February 3 in San Francisco. You’ll hear more from Andy and many other global leaders on the ways that IT and enterprise architecture support enterprise transformation.

So thank you very much, Andy, for joining us. It's been a fascinating discussion.

Mulholland: Thank you, very much indeed. I’ve enjoyed it.

Gardner: And I look forward to your presentation in San Francisco. I also encourage our readers and listeners to register, explore, and attend the conference.

This is Dana Gardner, Principal Analyst and Interarbor Solutions, your host and moderator throughout these series of thought leadership interviews in association with the conference. Thanks to you for listening, and come back next time.

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Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: The Open Group.

Transcript of a BriefingsDirect podcast in conjunction with latest The Open Group Conference in San Francisco. Capgemini CTO Andy Mulholland discusses the transformed enterprise. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

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Case Study: How Portfolio Management Helped Nottingham Trent University Transform IT

Sponsored podcast discussion on how one of the UK's largest universities gained better control of project management with an HP Transformation Experience Workshop.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’re listening to BriefingsDirect.

Today, we present a sponsored podcast discussion on how Nottingham Trent University has sought and gained strategic operational efficiency and improved IT management.

In this case study discussion, we hear how a combination of professional services and portfolio management technologies allowed this 25,000-student university, one of the UK’s largest, to improve end-user satisfaction while freeing up IT resources to pursue additional innovation.

To understand how, we're joined by Ian Griffiths, Director of Strategic Partnerships at Nottingham Trent University. Welcome to the show, Ian.

Ian Griffiths: Thank you. Glad to be here.

Gardner: We’re also here with Michael Garrett, Vice President of Professional Services for HP EMEA. Welcome to the show, Michael. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

Michael Garrett: Thank you Dana.

Gardner: Now, Ian, the first question goes to you. When you began to think about improving how you did IT there, in your mind what was the one glaring thing that needed to be changed?

We were very, very good at moving forward and doing lots and lots of things, but delivering products at the end of that period was more difficult.

Griffiths: We were very, very good at moving forward and doing lots and lots of things, but delivering products at the end of that period was more difficult. We seemed to be running around in circles and didn’t quite meet customers’ expectations. So, we were doing a lot, working really hard, but not really delivering the last mile.

Gardner: When you started to peel away the layers and tried to figure out why that was the case, what did you discover and why did something like a professional services involvement become a priority for you?

Griffiths: We found that our processes were not really defined well enough. We really weren’t getting sign-off from the business, and the expectations were never really met. So it was clear that we were not doing something well, and we didn’t quite know what that was. And our teams within the department weren’t gelling that well together either.

Gardner: So perhaps having some outside additional authority and experience seemed to work for you?

Earlier attempt

Griffiths: Yes. That worked really well. We had had another attempt about 18 months before and had some consultants in, but it didn’t really gel. We were aware that we had a partnership with HP, and HP Professional Services seemed a sensible way to go. But we were still doubtful as a management team within the IS Department whether it was really going to work. And we are very pleased with the outcome.

Gardner: Let’s learn about Nottingham Trent University, one of the largest. You’re in Nottinghamshire and you have 25,000 students. Tell us a bit more.

Griffiths: We’ve been a higher education establishment for about 160 years. We’re one of the biggest providers of "sandwich education," which means that students have two years at the university, a year in industry, and then a year at the university.

We're seen as a popular university that has good reputation for placing students at the end of their courses, and we got top of The Green Agenda twice in the last three years within the U.K. We've got about 150 people working in the Information Services (IS) Department on three campuses and nine academic schools.

Gardner: Tell us about your responsibilities. What is it that you’re involved with in terms of helping these 150 people do their jobs better?

It’s often imagined that these organizations look to pure play consulting organizations for that advisory activity.

Griffiths: I have responsibility for the strategic partnership we have with companies and with firms. I have responsibility for the regional network within the East Midlands of the U.K., which is connecting all the universities in that region and all the further education colleges. And I also manage relationships with key suppliers, such as HP.

Gardner: Let’s go to Michael Garrett. Michael. It sounds as if Ian has had a relationship with HP, but looked for something bigger, and they were even doubtful that you could help them at first.

Garrett: It’s often imagined that these organizations look to pure play consulting organizations for that advisory activity. In Nottingham Trent’s situation they were willing to listen to a different type of vendor or organization in that space as to what they could offer in their approach. What’s different for HP Professional Services is that it forms part of HP’s Software organization. Our consulting capability is very focused on IT transformation, operations, organizations, and applications.

But it’s about bringing that into real practical use quickly with the support of technology. That's the real differentiator we wanted to bring to customers like Nottingham Trent, and hopefully that’s true with what we've seen in the practical implementation and the work we've done with them.

Gardner: Ian, tell me a bit about the journey. How has this worked out for you? When you began to try to determine what was wrong and what you needed to do, how did that unfold? It sounds as if you had a forest, but the trees somehow weren’t working in a capacity that allowed you to achieve your requirements.

Initial workshops

Griffiths: That's correct. We had some initial workshops where all the senior management team of the IS Department worked with HP and looked at what we wanted to achieve and looked at what the journey might look like to get there. I have to congratulate HP. They were able to get that team to gel together within IS in a way that we hadn’t before.

We spent a lot of time working together and working through the structure, the plan of the department, and what we called the tube map of the department. Everything, in a sense, was allowed. HP was very good at giving us a straw man to look at. In other words, giving those examples of what other companies have done, but forcing us to discuss them in detail and change them into what was right for Nottingham Trent.

They weren’t trying to sell the straw man, but were using the straw man as an example to move us forward, and it worked extremely well. Although there were some heated discussions amongst IS staff, HP was very good at facilitating those discussions.

Gardner: Typically we hear about the need to address people, process, and technology, when it comes to these sorts of projects. But it also sounds as if you needed to have a high level of customization, that it needed to be recognized that you are your own organization with your own variables, and that a cookie-cutter approach or a too general or methodological approach wouldn’t really be right.

Griffiths: That's correct. We had to go back to the rest of the department to try not to force something new on people that, as far as they could see, had no relevance to the situations they were in. We had to find a way as well of getting the business to buy into our new methodology, getting the business to feel some ownership, and getting the business to make some decisions during the planning of projects and the ending of projects.

We had to find a way as well of getting the business to buy into our new methodology.

Gardner: Michael Garrett, the need to customize, is that something that you valued? Do you think that this is an example of an area where HP is differentiated?

Garrett: It’s that level of being able to bring the input, the straw man, and then guide organizations around that model. To customize from scratch takes a great deal of time and can take too much energy and cost. What we’re trying to do is bring our method and models at the start point and then work in a very collaborative, but directed, way to get clients to a point, although, a configured approach rather than a completely dispersed approach.

Therefore, we get to things more quickly, but absolutely meet the requirement of the individual organization. We’ve got to appreciate they are different across different industries and different areas, and strong cultural alignment is critically important. We certainly saw that in this program.

Griffiths: The important thing again was that we were producing our outline, and that outline allowed us to go away and do a lot more detail later. In other words, we got the big picture agreed upon and then all the details were passed back to teams within the department to build up details in the areas where they had real knowledge of what happened.

Gardner: It also seems important, when you’re going about such a large-scale activity, to be able to measure along the way how things are going and perhaps offer feedback. Incentives were necessary or even helped a few more heated discussions, as you said, but you can’t measure where you’re going if you don’t know where you are.

Was there a point at some time, where you needed to get a state, an understanding of where and what’s going on in order to know how to measure, and what did you to do to get that?

Define projects

Griffiths: An important step early on in this was beginning to define how many projects we were running as a department and to categorize work into projects that were developmental and projects that were more of the business-as-usual type.

We found in the end that we had over 100 projects running simultaneously. Some of those projects had been running for more than a year, some had no real defined endpoint, and the customer requirements weren’t documented in a thorough way.

It’s important to measure how many projects you’ve actually got, and actually have a start date and a planned finish date for them. One thing we learned was that 100 was too many for us to run, and we were able to cut down by finishing some off, to less than 50 that we have now.

Gardner: So by rationalizing this, getting some visibility, exercising triage and prioritization, you've been able to cut your active projects in half. Is that correct?

Griffiths: That's correct.

Gardner: And what has that done now? What are some of the metrics of success by getting more of a handle over your portfolio and managing it?

We were actually delivering something that the customer was expecting.

Griffiths: Probably the biggest one is that projects are getting completed and the project didn’t become the be all and end all and continue running forever. We were actually delivering something that the customer was expecting. And the customer, the student or the staff department, had a glow that they have had something delivered to them.

Gardner: And what have been some of the educational benefits at a larger perspective beyond the strict technology benefits? Has this improved in any way in which you can measure your success and your basic mission in life of educating students?

Griffiths: The student satisfaction with IS has gone up over the last two to three years. They're very happy with our technology and technology moving forward. But again, we found that people were happier with the delivery of an item, rather than as IS was before, striving for technical perfection.

Gardner: So you were really understanding your requirements and what was necessary to get these goals.

Griffiths: If I have to give advice to other people, it is about the 80/20 rule that 80 percent can be delivered in 20 percent of the time. Most people are happier with something delivered that matches the expectations, but perhaps not all the bells and whistles, and then move onto the next project.

Gardner: A lot of times in organizations, the budgets are not growing rapidly and nowadays that's clearly the case. I imagine you had to be thinking about cost consciousness and energy conservation. Is that true that you’ve been able to keep your cost level, but increase satisfaction and allocate your IT resources more efficiently?

Aiming at 50/50

Griffiths: Yeah, it’s correct. Before, we’ve had the figures of, again, 80 percent being used in the areas of business-as-usual and only 20 percent in project and development work. We quickly moved to a 70/30 split and our target is to move towards 50 percent. We're not quite there yet, but we’re a lot more like 60 percent business as usual, 40 percent new development work.

Gardner: So all things being equal, you've been able to take your operating, maintenance-level budgeting, reduce the percentage there and put it more into innovation, creating more productivity, and developing therefore even higher satisfaction. It sounds like a virtuous cycle of adoption.

Griffiths: It’s a virtuous cycle and the other thing that is gained from that is appreciation amongst other departments within the university and with senior management with what IS was delivering, and getting them to prioritize what we did.

There was a problem, if we look back two or three years. IS very much decided what the priorities were. Now, the business is deciding and even deciding in the case that a project that was a favorite of a senior member of staff, he or she may decide that it no longer is a top priority, compared with other projects that needed to be delivered.

Gardner: Is there something about the products themselves, the portfolio management approach, that now allows the business side of the organization, the leadership in this case, to have more visibility or input? How were you able to get it?

There was a problem, if we look back two or three years. IS very much decided what the priorities were.

Griffiths: More visibility and more input. The example we always give is of a jam jar. You can keep putting rocks into a jam jar, but in the end, it becomes full. Unless you allow something to come out of that, nothing happens. So you’ve got to be able to allow things to finish and give you some capacity.

The other thing that I talked about was looking at the business benefits of everything we were doing and deciding the nice-to-haves probably weren't going to get prioritized at this stage.

Gardner: You mentioned earlier the tube map. Has that also provided visibility across the IT and leadership or organizational divide, or is this something you’re strictly using within the IS or IT organization?

Griffiths: We're using it outside the department to make people realize that we are working to an operational framework. As such, we have them stuck up round the department. And in the rooms where we have project meetings, they exist as well. As to vocabulary, we have senior staff using the phrase "the gate," where approval has to be given. The business has to be involved in the approval and deciding what priorities it has at that stage.

Gardner: Michael Garrett, the way that Ian is describing this, being able to double their innovation budget, cut their project numbers in half, get buy-in from leadership, a sense of cooperation across the organizational boundaries, is this typical? How would you describe this in terms of the industry at large?

Typical situation

Garrett: It's a typical situation that we see in a lot of organizations, even in very mature, even global and enterprise organizations that struggle with these challenges of organizational alignment and processes to support that. Project selection identification and transitioning to survey is the common problem we see.

With Nottingham Trent, we regulated it very quickly through that organizational design, then into the process to support that, and then working out what are the catalog and services that they offer. How do we then build that into projects and programs and then manage that into service transition?

It's very common. We see it in a lot of places. More mature organizations believe they do this very effectively. Nottingham Trent acknowledged that they needed help. It probably put them ahead of a lot of other organizations, especially in university space, which is a fast moving sector in UK, to be able to do something that many other large organizations just can't do.

Gardner: And clearly, the need to understand the software, the technology, the culture, really is a comprehensive holistic activity. Hitting one or two of those alone won't do it.

Garrett: It's important that it's continuous. If you build the right organizational relationship and engagement model, you take the workshop approach that we have up front and take your organization through that, right through to something tangible that’s delivering the real outcome in the business that’s very visible and usable. I think that’s very different than having different organizations do different types of consulting.

There aren’t many organizations that have that breadth and scope of capability to take someone from conceptual situation right through to practical implementation of technology to support that problem.

There aren’t many organizations that have that breadth and scope of capability to take someone from conceptual situation right through to practical implementation of technology to support that problem, and that’s where we like working with organizations like Nottingham Trent, that’s a great model.

Gardner: And Ian, is this something now that you’re building on? You mentioned that virtuous effect, the adoption effect. Are you able now to move toward working at service-level-agreement (SLA) levels or with key performance metrics and indicators. Is there a broadening of how you’re rationalizing and even professionalizing how you go about these processes?

Griffiths: That's correct. We produced a lot of what we call Level 3 processes from this and we looked at what our customers felt. We found that we’re having regular discussions about how we can tweak the diagrams and the systems that we’ve got in place. We see it very much as a live document, a live methodology and we’re looking at ways we can improve as time goes on.

Gardner: In wrapping up, I was hoping, Ian, that you might be able to share some 20/20 hindsight. If you were to offer some advice to an organization that was beginning to move more towards a comprehensive portfolio management, project management approach, looking at this more holistically and from the process level, what might you offer them in terms of lessons learned?

Griffiths: It's important that you have all your senior staff together designing the system from the start. We found that if people miss the early workshop, we tended to go back around the loop again. So I would say get your staff together and devote enough energy to it.

Feeling ownership

But don’t go into all the detail. Leave your staff on the ground, who’ve got more knowledge of the details inner workings of some elements of it, to do some work so they feel some ownership. And very quickly get an appreciation with your senior staff within your organization, not within IS, but from outside the IS department, of what you're doing and what you're trying to achieve.

But in the end, you need a few quick wins. In other words, if you can get a couple of projects working through the scheme quickly, people begin to think it's going to work.

Gardner: They'll see the success and they'll double down on that. Michael Garrett, we've come back to this workshop concept several times in discussion, I think that it's called the Transformation Experience Workshop. Why is that so powerful? Why does that seem to really work in terms of coalescing and getting these larger projects under way?

Garrett: It's something we've used for a few years now, something we developed in-house and we see as a really effective mechanism. It starts off in a fairly classic way of where are we, the current state, looking at future state, and workshop of the organization through that. But it's done in a very live, interactive way.

Leave your staff on the ground, who’ve got more knowledge of the details inner workings of some elements of it, to do some work so they feel some ownership.

So it's not a classic style workshop. We walk people around the room. We take them on a journey, and we bring them together through that process. As Ian said, if you didn’t attend the early workshop process, then you struggle sometimes to buy into it. It takes more time, and we end up reiterating things later on. The Transformation Experience Workshop is a way of bringing people together and bringing them around their own problems in a very active physical way.

We can do it in a small period of time, but usually people dedicate a day or so to that process. What they get out of it is that they bring themselves together around the challenges, the problems, and as Ian said, the quick wins, the things we can then go and address quickly. So it has a very different feel and a very different outcome than a classic workshop approach that many consulting firms have.

Gardner: Very good. I'm afraid we have to leave it there. You’ve been listening to a sponsored podcast discussion on how Nottingham Trent University has sought and gained strategic operational efficiency and improved their information technology management. I'd like to thank our guests. We've been joined by Ian Griffiths, Director of Strategic Partnerships at Nottingham Trent. Thanks so much, Ian.

Griffiths: Thanks very much, and it's a delight to pass on our experiences to others.

Gardner: And we've also been hearing from Michael Garrett, Vice President of Professional Services for HP EMEA. Thank you so much, Michael.

Garrett: Thank you and thank you, Ian, for the great partnership and work.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks again for listening and come back next time.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Sponsored podcast discussion on how on the UK's largest universities gained control over project management with a transformation workshop. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

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

Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San Francisco on how enterprise architecture can lead to greater efficiency and agility.

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Jan. 30 - Feb. 3 in San Francisco.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: The Open Group.

Dana Gardner: Hello, and welcome to a special BriefingsDirect thought leadership interview series coming to you in conjunction with The Open Group Conference this month in San Francisco. I'm Dana Gardner, Principal Analyst at Interarbor Solutions and I will be your host throughout these discussions.

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.

Today, we're here with one of the main speakers at the conference, 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, Jeanne and I will now explore how enterprise architects have helped lead the way to successful business transformations.

Please join me now in welcoming Jeanne Ross, Director and Principal Research Scientist at the MIT Center for Information Systems Research. Welcome back to BriefingsDirect, Jeanne. [Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]

Jeanne Ross: Thank you, Dana. Nice to be here.

Gardner: Your upcoming presentation will describe how enterprise architecture has contributed to success for such companies as Campbell Soup and Southwest Airlines, but before we go into that, it has been typically difficult to concretely link things like IT productivity and general business success. I wonder, then, how you measure or determine that enterprise architects and their practices are intrinsic to successful business transformations? How do we link the two?

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.

So we do have evidence. It’s just that if you really don’t want to believe it, you could poke holes in it. There still is a certain amount of faith attached to the link between performance and architecture.

Gardner: I certainly get your point that repeatability would be a chief indicator, that if you intend to do something repeatedly, you can point to the ways in which you would carry that out. How about the intent from the perspective of wanting to transform in a certain way that you haven’t done before? Is there something that being an architect allows that’s different from the past? 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.

Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem and solve it.

What we're trying to do is adopt a culture of discipline, where there are certain things that people throughout an enterprise understand are the way things need to be done, so that we actually can operate as an enterprise, not as individuals all trying to do the best thing based on our own experience.

The fundamental difference of being an architected firm is that there is some underlying discipline. I'll caution you that what tends to happen is great architects really embrace the discipline. They love the discipline. They understand the discipline, and there is a reluctance to accept that that’s not the only thing we need in our organization. There are times when ad hoc behaviors enable us to be much more innovative and much more responsive and they are exactly what we need to be doing.

So there is a cultural shift that is critical to understanding what it is to be architected. That’s the difference between a successful firm that’s successful because it hasn’t gotten into a world of really tough competition or restrictions on spending and things like that and an organization that is trying to compete in a global economy.

Gardner: It’s interesting to me that we're focusing not so much on the individual, the enterprise architect, but more the office of the enterprise architect.

Ross: Right. Would you like me to speak to an architect instead? Would that help?

Cultural phenomenon

Gardner: No, the point is that the champion that is important is not just an individual. It’s that putting into place a repeatable office of the enterprise architect that is a cultural phenomenon, rather than a charismatic one.

Ross: Yes.

Gardner: What then is the role of the architect, if this isn’t just about a champion, but really about change that’s repeatable and that’s culturally inculcated? What, then, is the role and what should they do?

Ross: The architect plays a really critical role in representing the need for this discipline, for some standards in the organization, and for understanding the importance of shared definitions for data. The architect should be able to create a very constructive tension in the organization, and that’s the tension between individuality, innovativeness, local responsiveness, and the need for enterprise thinking, standardization, and discipline.

Normally, in most companies, the architect’s role will be the enforcer of discipline, standardization and enterprise thinking. The tension will be created by all kinds of people who are saying, "Wait, I'm different. I need this. My customer insists on that." When the tension is working effectively, you get just enough architecture.

One thing we've learned over the years, as we've studied architecture, is that’s actually what we want. We don’t want to be a tightly architected organization, because tomorrow we're going to wake up and the world is going to change, and we have to be ready for that. We want to be architected enough to be efficient, to be able to reuse those things we need to reuse, to be agile, but we don’t want to start embracing architecture for architecture’s sake or discipline for discipline’s sake.

We don’t want to be a tightly architected organization, because tomorrow we're going to wake up and the world is going to change, and we have to be ready for that.

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: Let’s take a contextual view here. It’s 2012 already and there's a lot happening in IT with disruption in the form of cloud computing trends, an emphasis on mobile computing, big data, and the ability to harness analytics in new and interesting ways, all sort of churning together. We're also still faced with a difficult environment, when it comes to the economy. Is this a particularly good time, from your vantage point, to undertake enterprise architecture, or is this perhaps not the best time?

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.

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Jan. 30 - Feb. 3 in San Francisco.

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. So is that the case from your perspective?

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.

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: And as you pointed out, being able to repeat this is really essential. So that gets back to that discipline. But you've mentioned that you've got ongoing research, and you've mentioned a company, USAA that you're working with and you're familiar with. I suppose this gives us a chance then to step back and take a look at what the MIT Center for Information Systems Research is and does and your role there.

Value from IT

Ross: The Center for Information Systems Research is part of the Sloan School of Management. We were formed in 1974 to study how companies get value from information technology.

In 1974, we were studying mainframes and IT directors. There was no such thing as a CIO yet, but we have certainly gone through the stages of the increasing importance of IT in organizations. We went through the end-user computing. We went through enterprise resource planning (ERP) and e-business. We've followed, and hopefully led, thinking around how IT adds value in organizations.

You mentioned this is a good time to be introducing architecture. This is a good time to be at the Center for Information Systems Research, because IT is so central now to business success, and many companies that didn't start as digital companies are really struggling to understand what it means to transform for the digital economy, and that's exactly what we study.

Gardner: You've mentioned one company, USAA. Let’s take a look at a number of companies. I know you're going to be mentioning several during your presentation. Are there any salient lessons that are common among them? Are they all different and therefore you can't draw such common denominators, or are there a couple that jump out?

Ross: Well, our established research on this, and this is the work that appeared in the Enterprise Architecture as Strategy book. We find that the things we learned as we prepared that book are still very true. Companies indeed go through stages, and they're very predictable -- we've not yet seen an exception to this -- and they're hard.

You have to respond to the marketplace. You have to do whatever it takes.

Stage one is the stage of, don't worry about the discipline, just have fun, learn how to use IT, apply it to any strategic need where it makes sense, and go out there and do your thing, but eventually all of that will lead to a fairly messy legacy environment.

We saw, when we studied these stages, that as companies understood these stages, they would avoid stage one, but it turns out that, if you are a fast growing innovative company, you can't avoid that stage. You actually don't know how you're going to make money. You have to respond to the marketplace. You have to do whatever it takes. Then, as you get really good at things, you start to establish yourself in what is often now a new industry.

You've created an industry. That's how you succeeded. But because you're making money, you're going to attract competitors. When you get to the stage that you actually have competitors, then you look at what you created and you say, "Oh no, we really have to clean up some of this legacy." That’s really what stage two is about. It's the underlying technology.

Now, we're learning how to not make quite as big a mess, but there is still this stage of, "Okay, let's refrain from kind of the crazy innovation and be more disciplined about what we put in and how we reuse" and all that kind of thing.

In the third stage, we get much more emphasis on building platforms that wire in those core processes that enable us to do high-volume transactions. These are things around order-to-cash, human resources (HR), or finance. There will be some of that in the earlier stages, but we really worry about scale in this third stage, scaling up so that we can manage large volume transactions.

We think this third stage is going to look different in a world of software as a service (SaaS) and cloud, because in the past, third stage often meant you put in Oracle, SAP, or something like that. Nowadays, it's much more about piecing together some cloud services. It does look different. It goes in faster, but it's still pretty tricky. If you're not architected well, you can really create a mess in stage three.

Working smarter

Stage four is really about working smarter on this platform, learning how to innovate off the platform. And companies are struggling to get there, because once you get in this platform, it takes a while to really make it solid and learn how to use it well. We've been studying that for some time, and companies get there.

This is the story of Campbell Soups and the Southwest Airlines. They're trying to use the platforms they've created, even though the process of putting them in takes a very long time. So you're still putting them in, while you are trying to learn to get good at using them. It's a challenging world out there.

Gardner: So I shouldn’t reach the conclusion that the enterprise architecture kicks in, in stage three and four. It should be something that would be there and useful throughout these stages.

Ross: That's correct. What happens is that in stage one you don't think a lot about architecture. If you don’t think at all, you are going to regret it. But you just can't predict what are going to be the critical capabilities in your organization. When you can't predict the critical capabilities in your organization, it limits how much you can architect.

You can bet on some things. There are some things around finance and HR that are pretty predictable even in stage one. But that early stage is where you're really defining yourself as a company, and that can last for some years, as you grow. As long as you're under $500 million in sales or at least, let's say, $200 million in sales, you've got some leverage there, because you can only create so big of a mess.

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.

If you start growing beyond that, you're going to need more architecture. That’s when you really get into stage two and start seriously defining your standards and the processes that enable you to get them in and recognize when you need exceptions and when they're out of date and that kind of thing.

Gardner: So even as we have had this evolution in these stages that happen within these enterprises, we have also had historical evolution in the definition, standardization, and certification around the architects themselves. Where are we there? Is there a stage three or four that we are at with the architects?

Ross: I think we'll be constantly tweaking the certification processes for architects. We get smarter about what they need to know and what they need to be good at, but I don’t know that I would so much call it stages for the architect certification as just getting smarter and smarter about what great architects will excel at. We have the basics in place. I haven't been involved a lot in certification programs, but I think there is a good sense of the basics that are required.

Gardner: We certainly seem to be well into a professionalization phase and we've got a number of different groups within The Open Group that are working on that across different disciplines. So I'm curious. 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? Did we cover them all? What did we leave out?

Ross: Well, we're still doing the analysis on our latest survey. So I'm not exactly sure what the key findings will be that I'll be sharing. 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.

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.

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.

We've been studying companies, and the easiest ones to study are ones like 7-Eleven Japan and Protection One, which is a security company. These are companies that have replicated models. You look at one branch or one store and you say, "How are you doing this?" Then you say, "Okay, here is the best one. How are we going to make sure that everybody uses our technology and the information that's coming from it? How are we going to do that throughout the company?"

That’s even harder than designing and implementing an architecture. Architects are going to have to be well aware of that, because if companies are not driving value from what they have built, you may as well stop spending the money. That’s a tough thing for an architect to admit, because there’s so much you can do just on a rational basis to make the company look better. But if they are not using it, it's not worth anything.

Gardner: That might explain some of the attention that’s been given to things like cloud and mobile, because there is a sense of an organic adoption going on, and if the workers, the managers, the departments, specific functional groups like marketing, for example, are going to SaaS, cloud, mobile for "bring your own device," or consumerization of IT benefits, perhaps there's an opportunity to take advantage of that, learn from it, and then standardize it and implement as a platform. Is that somewhere close to what you are seeing?

Ross: Yes, absolutely.

Getting started

Gardner: Before we segue out, let's consider advice about getting started. When you're an organization and you've decided that you do want to be a level three or four maturity, that you 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.

When they see real demand and real leadership around certain enterprise capabilities, they focus their attention on addressing those.

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.

Gardner: We'll be looking forward to learning more through your research and through the examples that you provide.

We've been talking with Jeanne Ross, the Director and Principal Research Scientist at the MIT Center for Information Systems Research. Jeanne and I have been exploring how enterprise architects have helped lead the way to successful business transformations as a lead-in to her upcoming Open Group presentation.

This special BriefingsDirect discussion comes to you in conjunction with The Open Group’s Conference, which is January 30 to February 3 in San Francisco. You'll hear more from Jeanne and many other global leaders on the ways that IT and enterprise architecture support enterprise transformation.

So thank you, Jeanne, for joining us in this fascinating discussion. I really had a good time.

Ross: Thanks so much, Dana, I enjoyed it.

Gardner: And I look forward to your presentation in San Francisco and I encourage our listeners and readers to attend the conference, if they're able. There’s more information available on our website and through this content.

This is Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator throughout this Thought Leader Interview Series. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: The Open Group.

Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San Francisco on how enterprise architecture can lead to greater efficiency and agility. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

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