201306 Ode to Simplification and IT Strategic LeadersDocument Transcript
Keynote speech – CIO CITY – Brussels, 3 June 2013Daniel Lebeau – Group CIO at GlaxoSmithKlinePage 1 of 5Ode to simplification and IT strategic leadersWhen I participate in CIO and ITconferences, I inhabit a different planet. Allof the discussions concern the new digitalworld: big data, mobile, social network,cloud, the new role of CIOs. However,when I am back in the office, the majorityof my time is dedicated to the “old digitalworld”: ERP roll-out, risks and compliance,analytics, budgets, upgrades...Harmoniously connecting the best of theold digital world with the un-inflatedpromises of the new digital world is thesubject of my keynote, articulated aroundsix parts. I will first portrait the old digitalworld. I will then describe some challengesof the new digital revolution. In the thirdpart, I will question the co-existence ofboth worlds: trade-off or a paradox? Next,I will explain why “less is more” and then Iwill suggest how to simplify IT. In the lastpart, I will speak about the IT strategicleader and why a long-term vision is sodifficult.1. Portrait of the old digital worldLet me first draw an ugly portrait of the olddigital world.I’m currently in front of the mostprestigious European CIO’s and my simplequestion is « How many applications doyou currently run? 100? 500? 1000?5000?” Few of us know the exact answerbut many of us think “Too many”.In addition to the cost, the management oftoo many applications is a challenge. Letme illustrate some of the impacts.First, the master data are not accurate. Forexample, if I run one hundred HR systems,I still will not know the number ofemployees. If I run one hundred salessystems, I still will not know my customers.Indeed, complexity and accuracy are notfriends.Second. Imagine that the previous ERProll-out was not successful and a new ERPis under gestation. Depending on thecountry or the method of purchase, thereare a hundred ways to initiate a shoppingcard, a hundred ways to plan and ahundred ways to sell. In a complexenvironment, the business processes arehighly fragmented and difficult tooptimize.Third, let me speak of the IT debt. Half ofthe applications have probably not beenupgraded for 5 years or more because ofbudget challenges or laziness. Bydeferring these costly upgrades to the next
Keynote speech – CIO CITY – Brussels, 3 June 2013Daniel Lebeau – Group CIO at GlaxoSmithKlinePage 2 of 5CIO, we create an IT debt which can reachup to two years of operating budget andwhich increases over time like a snowball.Obviously, the lessons of Year 2000 havebeen forgotten.Fourth, obsolete technology. Because of alack of upgrades, applications becomeobsolete and frozen. We cannot quicklyleverage new functionality and thereforewe develop new applications: this is thefundamental vicious circle. And of course,the IT workforce is demotivated. As youknow, no IT employee currently plans forhis career to be in obsolete technologies.Fifth impact is a difficult merger andacquisition process. During an acquisition,none of the GSK systems are good enoughto address the needs of the acquiredcompany and so we keep theirapplications interface with their applicationportfolio. As a result, the numbers ofapplications increase.A sixth impact is the inefficiency of allinterfaces. Because the number ofinterfaces is proportional to the square ofthe number of applications, we have anabundance of interfaces. The number ofinterfaces continuously increases whiletheir quality decreases: interfaces are the‘cancer’ of IT.To summarize; the impact of a complexapplication portfolio is painful:fragmentation of the business processes,inaccuracy of data, inefficient interfaces,costly budget, unsupported technologies,deferred upgrades, difficult mergers andacquisitions.The root cause of the abundance ofapplications is always the same: 20 yearsof legacy systems, different countries, ahistory of mergers and acquisitions, thesilo mentality of the organisation, businessurgency for tactical solutions, supplieroverselling.But the root causes are not necessarily allexternal to IT: some of them depend onthe presence or absence of the strategicvision of IT leaders or of IT’s tenacity inkeeping the compass focused on the longterm direction. Later, I will come back tothis core competency of IT leaders.Remember, the ‘complexification’ of the ITlandscape is unfortunately a vicious circle.More systems induce more interfaces andless upgrades and therefore more rigidity.Old rigid applications lead to newapplications which are initially standalone,then later on, interfaced. And the viciouscircle continues.2. Challenges of the new digital revolutionThe new digital revolution has alsochallenges.A first challenge is the inflatedexpectations which, as the Gartner hypesuggests, are followed by troughs ofdisillusion: remember the disruptivepromise of RFID! In addition, inflatedwording driven by ‘cupid’ suppliers andnaïve customers does not help; somebasic outsourced services are called cloudand simple databases are called “big data”.
Keynote speech – CIO CITY – Brussels, 3 June 2013Daniel Lebeau – Group CIO at GlaxoSmithKlinePage 3 of 5The second challenge is the IT risk, bothfor society and for the company.Obviously, the emergence of the newdigital revolution stimulates the creativityof more hackers, more terrorists andincredibly advanced persistent threats.With new technologies like cloud andmobile, addressing privacy, security andcontinuity starts to become an impossiblemission.But the main challenge is that the newdigital world relies on the solid foundationof the old digital world: accurate masterdata, simplified global processes, explicitrisk and compliance approaches, up-to-date technologies, ability to stay evergreenat low cost, small set of standards (notonly in place but in use), available expertiseand funding.3. Investing in the new or the old digital world?Because such current foundations are notready, the million dollar question is:“should I clean my foundation” or “should Iembrace ASAP the new digital world”?We know that the question is not whetherto invest in the old or in the new digitalworld; we need to invest in both. It is notan “OR” but an “AND”. We are not in frontof a “win-lose” relationship but in front of a“win-win “one. In a word, it is not a trade-off but a paradox.Let me explore the win-win relationship ofthat paradox with some examples.• To provide advanced analytics, Ineed fewer ERP?• To deliver mobile employeeservices, I need fewer HR systems?• To outsource the mail to a cloudprovider, I need fewer activedirectories (AD)?• To leverage a global digitalplatform, I need less fragmentedweb sites?• To deploy new technologies, I needto upgrade my currentapplications?Paradoxically, the simplification of thecurrent landscape is a pre-requisite toharvest the juicy fruits of the new digitaleconomy. Indeed, we need: an old digitalworld, a back office with single globalprocesses and master data, evergreeninfrastructure, reduced standards.4. Why simplifyExperiencing “less is more” is not adiscretionary objective. It is a fundamentalpriority to embrace the new digital world.Addressing the snowball effect of the IT‘complexification’ requires courage,maturity and resilience.Because the fragmentation of businessprocesses partially reflects the silomentality of an organization; ITdepartments have a historical mission todrive the simplification of the businessoperating model by removing systems andtherefore barriers.
Keynote speech – CIO CITY – Brussels, 3 June 2013Daniel Lebeau – Group CIO at GlaxoSmithKlinePage 4 of 5Experiencing “less is more” frees an ITorganisation. It improves quality andefficiency. It builds a strong foundation.5. How to simplify?Portfolio simplification is a bit of a holygrail: a lot of promise but ever-so-hard toachieve. Because the complexity of the ITlandscape is a vicious circle we see, monthafter month, the number of applicationsincreasing.The number of applications is the entropyof the IT landscape; literally the measure ofdisorder. And we know that in Physics,entropy never decreases without energy.So the question is: “How to decrease thenumber of applications? How to movefrom a vicious to a virtual circle?”The managerial energy needed to simplifythe complexity landscape is articulatedaround 5 tools: measurement, objectives,methods, funding and changemanagement. Guess what: no surprise!a) A precise monthly measurement of thenumber of applicationsb) A clear objective of -1% applicationsper quarter impacting the bonus of keyIT leadersc) A portfolio analysis of all applicationsper process and sub-process toidentify opportunitiesd) Funding mechanism to decommissionapplications which are old and poorlyused and to upgrade applicationswhich are old and massively usede) A continuous change management notonly within IT but within the businessto clearly articulate why we decreasethe number of applicationsWith the right focus and energy, it ispossible to simplify the IT landscape.6. Strategic IT leadersSuccess, however, at the end, is related tothe strategic vision of the IT leaders.During their career, IT leaders should stackfive distinctive competencies:a) the mindset to serveb) the discipline to deliverc) the ‘savviness’ to reengineerd) the empathy to engage and, lastbut not leaste) the focus to strategizeThis ability of the IT leader to strategize is akey differentiator which is fed from variousingredients: the frequent reference tohistorical learning, the appetite to learnmassively outside the box, theconsciousness to filter noise and stayfocused on the big tickets, the mentalmind to project over time and pleasure inpracticing what Socrates called the “Art ofThinking”, a mix of induction anddeduction.
Keynote speech – CIO CITY – Brussels, 3 June 2013Daniel Lebeau – Group CIO at GlaxoSmithKlinePage 5 of 5It’s because you are strategic that you willhave started to simplify your old digitalworld, understanding that “less is more”.It’s because you are strategic that you willunderstand the paradox of investing bothin the old and the new digital world, thatyou devote your daily time to old problemsand your free time to new promises.It’s because you are strategic and have thehistorical background of IT that you cannavigate between wrong promises, inflatedillusions and the right disruptionsLadies and gentleman, this was my “ode to simplification”. A rocky and difficult journey. Butone that is so rewarding and so important given all the disruptive technologies waiting infront of us.