What lean startup theory means to IT buyers

Gigaom Research analyst Haydn Shaughnessy has a new report out on Applying lean startup theory to large enterprises. For those in the IT buyer community, the implications of lean product development can come from numerous angles, with the following just a few examples:
1) Serving as a customer partner with IT hardware, software or service providers. This early use and involvement can provide a jump on the competition temporally, or by influencing product design such that it is better tailored to the enterprise’s specific situation or environment.
2) Testing potential technology spinoff offerings from the company’s core business. Gigaom Research cloud curator David Linthicum has been writing about the trend of enterprises providing cloud services—not just as a means of generating revenue,but also to strengthen customer or supplier bonds.
3) Testing new, more digital versions of a company’s established, core products. Boston magazine has a piece on new Boston Globe owner John Henry’s attempt to rescue and revive a regional newspaper by introducing new theme-oriented news sites—e.g., in technology, entertainment and religion. Henry looks to follow the advice of a U.K. journalism professor who told him, “Don’t ask your people to innovate. Tell them to experiment. Turn the Globe into a giant laboratory for journalism.”
4) Aligning new marketing technology that fields and measures A/B tests of different online product pitches with the lean and provisional product development approach described in Haydn’s report.

Cracking the data silos in banking

Few industries face more regulatory tangles, legacy systems, and transformational new technology than the banking sector. “Banks set the stage for customer acquisition”, an article in the February issue of Bank Systems and Technology,  has an interesting study in one bank’s approach to managing customer data for sales and marketing purposes.
The fundamental challenge for banks is that they have long been organized by product and/or channel, and customer data has typically accumulated within application silos that serve that departmental structure. Great Western Bank, a South Dakota-based bank with $9 billion in deposits, tackled the challenge of creating accurate and integrated customer data by forming a data team comprised of members from across the bank. The committee, which reports to the bank’s business intelligence operations council, created standard definitions for different tiers, pricing and terms on accounts that are now used across all systems.
As Ron Van Zanten, VP of data quality, noted, getting buy-in from various users who had built fiefdoms of data within their departments had been difficult as a centralized data warehouse was built. But since they’ve been able to standardize and improve data quality, they have been able to integrate external data from Experian and start to base their marketing on integrated, predictive models–something that fewer than half of all banks were able to do according to a recent SAP survey.
In short, the ability to use external data effectively required getting internal data in order, and getting internal data in order required the buy-in and participation of all departments in the bank.

Continued spending growth with a focus on new investment

Confirmation of growing investment in cloud and analytics, especially, comes from a new Morgan Stanley survey as reported by the IDG News Service. The 150 mid-sized to large U.S. and European firms surveyed plan a 4.5% increased in 2014 spending over 2013, with a greater emphasis on new investments than simple cost cutting. Those figures represent a slight slowing of growth (from 5.2% to 4.8%) in the U.S. and a slight acceleration (from 3.5% to 3.7%) in Europe.

Growing commitments to cloud and BYOD support translate into lesser relative spending on servers, storage and mobile equipment. ERP spending is expected to increase as attention moves from the front to the back office for updating systems. Security continues to be a concern as companies adapt to the cloud environment and to multiple, high-profile security breaches over the past year.

Closer IT and engineering collaboration: beyond the message from CES 2014

Although many of the countless, specific applications announced at CES 2014 won’t take off, there was a dominant theme to this year’s show, and that was that Internet-connected devices from home automation to the connected car and wearable sensors and cameras have arrived and are gaining traction.

Some implications for IT are clear, as big data will evolve to gargantuan data, and more intelligent networks will be required to handle the complexity and volume of traffic. The consumer applications are vast, as are the commercial and industrial ones. Cisco CEO John Chambers spoke at CES to the demands that he hopes will spur a new generation of growth for the dominant networking firm.

The implications for corporate IT

Corporate IT networks and processing need to be hardened, expanded, and advanced in capability to handle the new demands. Many corporate products, services and processes will be affected at some level within the next five years—which means that much product development and engineering will involve IT planning and design..

This trend will hasten and intensify the need for corporate IT and engineering to be more closely coupled  from planning through production and product support. The use of IT outsourcing will likely encompass more, integrated outsourcing of engineering design teams. Engineering will rely more upon IT network integration, and IT networks will require more engineering into the physical and logical aspects of products and production systems.

A role for integrated engineering and IT outsourcing

Outsourcers such as India-based HCL Technologies have been investing for a number of years in integrated IT and engineering services; and they have built teams of engineers and IT specialists in lower-cost, offshore locations in India and APAC that are specialized within specific industries.

Among the implications are the following:

  • All firms will need to more closely coordinate their product planning and engineering functions with their corporate IT.
  • More IT outsourcers will add or integrate with engineering expertise in order to provide seamless systems development and, ultimately, maintenance services.
  • U.S.-based firms will face more competitors that rely on offshore engineering, thus putting pressure on the cost and agility with which they are able to integrate IT and engineering for an increasing number of products and processes.
  • The flexibility of emerging software-defined network (SDN) technology, which enables easier updating of network resources, will in some cases provide an advantage in adapting to support new devices and services.
  • Firms that keep both engineering and integrated engineering and IT processes in-house, will need to leverage the other advantages to be gained from the close interdepartmental cooperation (e.g., with manufacturing, sales and services) that is possible with an onshore approach.

The CES spotlight may not have shone on enterprise engineering departments directly, but attention should be paid to the new IT, engineering, and organizational challenges to support a dramatic increasr in the number of Internet-connected devices for consumer, commercial, and industrial functions.

Healthcare case study as positive contagion

There’s applicable cross-industry wisdom in a case study informationweek.com has on one hospital network’s incorporation of comprehensive new systems. Partners HealthCare and its predecessor hospitals have been innovators in technology for half a century (back to Mass General’s MUMPS system that has evolved through current use today).

Some of the best practices noted in the article include the CIO working closely with a ‘chief health information officer’ MD executive leader of the new system, with CIO James Noga commenting that he doesn’t “see Partners eCare as an IT initiative at all. We’re just providing enabling technology.”

Noga says, “If you really do it correctly and take on the clinical transformation — that’s really where the expense lies. It’s in the people. It’s not in the hardware, and it’s not in the software.” He estimates that a straight health IT implementation itself could be done for a third of clinical transformation that Partners is undertaking.

Partners is replacing a custom system that it had developed before its capabilities were available on the market, and the firm is looking toward APIs to enable customization going forward. Noga suggests it takes doctors six months to get up to speed on the clinical use of electronic records, and Partners is well beyond that curve: I had a specialist at their Brigham and Women’s hospital gush while showing me their piloted, integrated capabilities as part of the ‘future of medical care’ over a decade ago.

Partners’ rollout of the Epic solution, with database capabilities that trace back to MUMPS, is staged and selective. Partners’ already successful patient portal will not be replaced, but its collections/revenue cycle will be—before the more sensitive, costly, and transformative clinical systems follow.

The case study is a good read with an approach that is applicable across industry sectors today.

The shadow CIO

Most sizable enterprises are experiencing the phenomenon of shadow IT, whereby non-IT departments are taking advantage of Software-as-a-Service (SaaS) offerings to bring in new applications more cheaply and more cost effectively than traditional IT has been willing to accommodate them.

Increasingly, this impulse is reaching the CEO and board level, as well, with organizations looking for a ‘shadow CIO’ to provide strategic leadership on how the company can and should transform itself in light of the cloud, mobile, big data and social technologies that are likely transforming their industry.

The trendy title for this shadow CIO is ‘Chief Digital Officer’ (CDO), and Cio.com recently offered an update on the proliferation of the position.

Searching for a leader

In designating the head IT as the organization’s Chief Information Officer (CIO), enterprises were looking to locate a poobah in charge of everything involved in applying IT to their business.

Most enterprises, however, get the CIOs they deserve. If they don’t hire, promote, evaluate and incentivize their CIOs to be strategic business executives at the table for discussions on business vision and strategy, then the head of their IT portfolio will not be that kind of strategic business executive.

Many enterprises haven’t; and many CIOs aren’t.

Because the current generation of disruptive technologies is truly transformative, organizations are looking for a genuine leader to communicate a comprehensive vision for their company’s sustaining role in a transformed industry and how the company can get there.

Not surprisingly, instead of turning to a CIO whose frequent contribution to technology-related discussions has been, “No. Not that fast. Not that cheaply. Not now,” a number of organizations are looking for someone else to fill the void.  

Just as shadow IT first took firmest hold in marketing with new applications for social monitoring and analysis (listening platforms), the shadow CIO—AKA CDO— often has digital marketing expertise and is given a social media and digital marketing portfolio as part of his or her charge.

Whither the traditional CIO

As with shadow IT, the shadow CIO serves a real purpose and can deliver a real business advantage. But like shadow IT, the shadow CIO can

  • shine a light on the limitations of current IT management;
  • confound and complicate presumably duplicative responsibilities and functions in the IT department, and
  • lead to the diminishment of the IT department role and responsibilities.

CDOs and CIOs can potentially have a direct reporting relationship, whether up or down, or be organizational peers. But make no mistake about it: Unless the CIO is the CDO or has the CDO reporting to him or her, the addition of a CDO is a subtraction from the official CIO function.

Many Chief Whatever Officers (CWOs)

Europeans have long chuckled at the American penchant to name dozens, if not hundreds or thousands, of ‘vice presidents’ within the rank and file of a company’s mid-, lower-, and non-management staffs.

CWOs of course are now all the rage, and all that’s required now is for a proliferation of whatever portfolios for the Chiefs to manage, followed by the pushing down and multiplication of CWO title holders. E.g., an increasing number of large firms now have multiple, division-level, CIOs.

Chief Innovation Officers (more CIOs!) or Chief Knowledge Officers (CKOs) have sometimes been named aside or under the traditional CIO function. Traditional CIOs may also have a Chief Technology Officer (CTO), Chief Data Officer (CDO), Chief Infrastructure Officer (still more CIOs!) and more on staff.

What really matters with the shadow CIO/CDO is whether the right strategic vision and plan for leveraging transformative technology is being communicated and effectuated to the CEO and board levels of the company.

If the traditional CIO doesn’t have the capability and support to fulfill that role, someone else needs to. If the organization already has too many chiefs, Chairman of Technology (CoT) or ‘shadow chairman’ has something of a nice ring to it.