How many times a day are you told by your business leaders and CEO that the IT department needs to move faster? I would bet that one of your first thoughts is “Let’s transform service delivery.” If you think that’s a silver bullet to solve the agility and speed to solution problem, you’re in for a surprise.
When asked by CIOs how to approach service delivery transformation, WGroup contends it’s more about the people and the process, including governance versus the technology that will drive a successful service delivery transformation. While technology plays a very large supporting role, the people and processes make it work. Taking a page from our Digital DNA strategy brief, transforming service delivery means a real mindset change in the IT organization and an openness to embracing automation, exceptional customer and user experiences coupled with appropriate security and risk management.
Part of the journey for transformation service delivery is to change the orientation of your organization from one that is a builder of solutions to one that is an integrator of solutions. It’s an evolution and not a revolution. It won’t change overnight, but building a transformation roadmap which defines the key organizational attributes, relationship management, governance and outcomes desired will allow the IT leadership to enable the necessary changes.
There are a number of prime candidates to start your service delivery transformation: End user services, DEV/Test infrastructure provisioning and management, and self-service catalog. If these services are outsourced, you’ll need to engage your service provider and delivery executives. If your agreement is coming due, it’s time to take a step back and think about the next generation of outsourcing (see outsourcing blog “Give Yourself the Best Chance for Business Improvement When Outsourcing IT Services”) and the outcomes you will need to be successful. By the way, outcomes do not necessarily mean more SLAs!
Today, start your journey by reviewing the outcomes your business leaders and CEO demand against your organization’s capabilities. Be honest. Evaluate those capabilities on the basis of: Build versus buy and integrate, speed of adoption, total cost of ownership (including technical debt), and adherence to standards and risk posture.
Measuring your progress and ROI is an important aspect of your communication plan. Service delivery transformation may include the use of unestablished technology or radical process changes. As such, calculating the ROI is not straightforward. Consider the following:
When there is a lack of clarity of ROI, let the investment pay for itself. Not only the initial CapEX but the ongoing OpEX.
When there is some clarity of ROI, consider managing like a venture capital investment. In this scenario there needs to be a platform for rapid iteration of ideas and allowing for quick failures.
If a venture capital investment style is not suitable for your organization or culture, implement pilots to gain additional experience and data to support the business case and projected ROI. Make adjustments as necessary during the pilot.
Question: For those people who are not necessarily in the anti-money laundering (AML) or fraud detection business, what scenarios seem like a good fit for somebody evaluating Pneuron? How would you identify that?
Tom Fountain: There’s a wealth of use cases. I’ll cite two examples. In the supply chain arena, more and more of its components have been outsourced. There’s very distributed components of that chain, including warehousing, distribution centers, and so on. One of the pilots that we did literally in one day was to bring together information from across a supply chain and give it the visibility that the owner ultimately wanted. Another example is with call centers. If you think similar in terms of a money laundering alert, a customer calls into a call center. When the help desk picks up the phone, ideally you’d want all the relevant information associated with serving that customer account right at your fingertips; and you want to quickly respond to inquiries that customer makes. Having a very fast and flexible way to access a breadth of systems, to bring that information to bear in the serving process, is something that pneurons can be configured to achieve.
Question: “How do you select projects for rapid prototyping?”
Jeff Vail: If you want to know how to measure value, there’s only two ways: 1) “How much more revenue will it produce?”, and 2) “How much will it lower our costs?”
I believe that there’s a space that needs to be filled by innovation labs in large enterprises that don’t follow traditional metrics for success and failure. It’s a good idea to have a lab that’s testing technologies at all times that don’t have any traditional measures associated with them to allow you to experiment and to find out how they could have a value for your business. You need to experiment with things that don’t follow traditional measures to determine how they could affect your business.
Tom Fountain: Project selection has always been a challenge. I categorize those different types of opportunities almost to an equivalent of basic research versus applied research. To your point, a lab experimenting with very new things versus a much more targeted value-intended experiment. In short, addressing a very specific live problem where there’s real money up for grabs.
I think the value and ease of execution is a very appropriate way to present a very simple framework. What we talk about with customers is that ease of execution piece, our story is that we’re trying to dramatically shift where the dividing line is on that ease of execution axis between fast, low cost, less complex; versus longer, higher cost, more complex. In the traditional way, a lot more of your sample projects or possibilities fall into that bad end of the continuum.
With an approach like Pneuron, a lot more of those potential projects move much further left or to the easier end of that ease of execution, so we’re trying to open the envelope of good sound candidates that can be executed still within that same framework. When I was running IT organizations, everything we did had a purpose. That purpose was: revenue up, cost down, safety up, environmental impact down.
Frankly, something that would teach us and enable us in a platform kind of thinking way (or a foundational way to do future things better) because there are some things that need to be done that don’t immediately produce better revenue, better cost and so forth, but they’re critical enablers, and if you categorize those, you can’t do all, just those types of projects, nor should you only do just the ones that drive cost down. Having a good mix in a conscious way gives you the kind of balance that really can pay dividends.
Question: How do you advise on dealing with this issue of friction between upper management (the business leaders) and IT control?
Tom Fountain: At the end of the day, the credibility of the IT organization is paramount. I always had a simple equation. I said, “Alignment plus execution equals credibility”. If you’ve established credibility with your business customer, you get the latitude to try things, and you get the willingness to partner.
When there isn’t that connection, then there’s a huge temptation for the business to go off and try things on their own, and do it in the shadows. There has to be a candid assessment of the degree of credibility and engagement that your IT organization has with the business, get to the heart of why it is, where it is, and if it’s not where it needs to be, do some concerted actions to establish that. Start with small steps.
This is not an overnight change, but by simply connecting with the business leaders that are the more influential, that have the most resources to share with you, to work with you, and helping them see that your vested interest is making them successful, I’ve seen tremendous things come from that, but the only way to deal with that friction is to take it head on. You can’t do it in isolation.
Jeff Vail: I would add that in the spirit of creating co-innovation together with the business, there’s a number of cases where I’ve seen the business and IT partner on achieving innovations to try to get to the outcome that they’re after and doing that collaboratively and together.
Tom Fountain: Exactly, because when IT goes off in the corner and says, “We’re looking at stuff”, the business loses visibility to that, they feel like they’re not involved, they don’t know what’s coming when, and they feel like, “If anything’s going to happen to IT, I’ll go do it myself”. Make them a part of it. Invite them into the process and have them contribute their expertise which is critical. You don’t have time to wander around, hoping you find an oasis. It’s a lot better to know that the vector is east because the business person is there helping you understand what direction innovation is really going to pay off.
Question: How to effectively enable change management and get people to think and work differently for the types of changes we are talking about here.
Jeff Vail: To encourage change in your organization, go back to tried and true methods: leaders communicating why change is necessary; developing the organizational skills that would support the change; reinforcing or setting up reinforcement mechanisms and incentives that would enable people to be incentivized to adopt and accept the change. Lastly, that the actions of the leaders in an enterprise is the number one driver of culture – I’d say 80% of the driver of culture. If you want to achieve a change, the actions and the role models that the leaders are conveying to the organization is very important.
Tom Fountain: Incenting people to try new and different things is not an easy proposition in many cases. It really comes down to the tone that is set from the top. How you establish the right balance, how you reward people who take intelligent risks. You got to have the word “intelligent” in that. You can start this on a very small scale, and be a leader to achieve that level of innovation that everyone needs. Try those practices, germinate those good ideas, continue to build out that sphere of influence, and promote those kinds of practices.
Question: Technology is very dependent on infrastructure; anytime something changes, then the technology that sits on top is affected. How does Pneuron respond to changes that happen to the infrastructure beneath it over time?
Tom Fountain: To make a distinction, when I think of robotics, I think about presentation layer integration. Other people define robotic as just simply an automated process. The definition doesn’t matter, but all of those elements are in the mix here. The response to change is a crucial component of innovation, of just serving your customer well as an IT organization.
From the ground up, Pneuron is built to have the agility to respond to different types of change very effectively. For example, our container runs in a virtual or physical machine. The pneurons don’t know or care about what’s underneath. So if all of a sudden you want to move the hosting out to a cloud environment, it’s a straightforward process.
We’ve engineered this so that each component of the workflow can be very rapidly configured or reconfigured to respond to the changes from underneath or from above, and allow you in a very rapid, incremental fashion to deal with what hits you every day. The individual aspects of the workflow can be in a very targeted way matched to that change and without impact on the rest of the workflow.
In the coming years, retailers will face a nearly unprecedented amount of technology disruption and consumer intelligence. If they haven’t developed IT principles to embrace these forces they are falling behind. With innovative new retailers like Amazon that see themselves as technology companies first, traditional retailers need to act quickly and plan effectively to stay ahead of the curve. They will need a roadmap to address the introduction of disruptive change into their business. But changing all areas of IT at the same rate is not optimal, leading to ineffective allocation of resources and losses of access to effective systems. In order to stay competitive, IT must learn to develop dynamically.
Establish your Plan
At one time, it was common for retail IT shops to operate around a unified, monolithic platform of systems. As IT becomes a foundational component of every retail business, this can no longer be the case. Today, organizations need to innovate while still providing access to legacy systems. By organizing transformation efforts by business specific processes based on needs of the business, retailers can begin to embrace the technology disruptions while continuing to provide reliable business critical services.
Although each retailer’s needs may be different depending on their goals and business model, they must start the journey to a more agile organization than what many retailers have today. They need to drive their business in real time. In order to facilitate this change, retailers must adjust their planning to focus on multiple key service and application groups, each being implemented at independent speeds to maximize growth, reliability, and efficiency.
Group 1: Support the Core – This group involves systems which are stable and require minimum support. These systems often form the core of a retailer’s shared IT services. Upgrades to these systems are infrequent and generally well planned. Any large-scale changes to these systems should focus on development around the affected business process and reintegration into the remaining systems through the implementation of micro services. These systems should also be subject to a high degree of governance to ensure that they meet internal and external requirements. These projects can also benefit from DevOps techniques to increase flexibility and development speeds.
Group 2: Optimize your Change – Many retailers have or are planning to implement comprehensive omnichannel retailing programs. These will typically include integrations of merchandising, distribution, store operations and customer relationship management systems. These integrations will almost always include an electronic commerce channel. This provides a perfect opportunity to optimize those systems closest to your environment by learning from some of the largest electronic commerce retailers. Implementing these applications using cloud capabilities, micro services, big data, deep learning, real time data analytics and other emerging systems will provide critical and timely customer insights, predict future buying behavior and allow for instantaneous changes to maximize the profitability of each channel. They will position the retailer for the agility to respond to all future competitive pressures and market opportunities. These systems require a significant investment – one which should be deployed against a solution set with staying power and great value.
Group 3: Innovate or Die – This group provides the testbed for items in both above groups and includes cutting edge IT services, including emerging technologies, process disruption and service innovation. This area should be leveraged by not only the IT organization but also by other constituencies throughout the enterprise. Successful innovations are then moved into the enterprise via the appropriate group function. This group is subject to a reduced degree of governance and can benefit from a very rapid development schedule using Agile and DevOps.
Disruptive technologies leave nothing unchanged. Introduction of these functions will require a series of organizational changes to maximize the value delivered. It may also change the retailer’s approach to internal versus external application management. Roles and responsibilities will require reevaluation and adjustments. The software acquisition process might need to be modified. The impact of these changes makes it imperative to develop a thoughtful and complete approach to disruption.
The primary concern that retailers should have is not whether or not to innovate, but by how much and in what order. By planning and prioritizing against specific targets, measuring progress and adjusting where necessary, the organization can better optimize its resources and roll out new services according to their value to the business.
For more in-depth discussion of innovation in information technology in retail, request a copy of the white paper, The Evolution of Retail IT by clicking here or visiting http://www2.thinkwgroup.com/The-Evolution-of-Retail-IT.