Situation Normal, Everything Must Change

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In today’s computing world, it can often feel like we are drowning in wave after wave of new trends. This sea of concepts are simply the evolution of our industry from a product to a service based economy. Using the example of cloud computing, this talk will examine the evolution of technology, the management challenges this brings, why the modern firm needs both order and chaos and how it’s always a case of “situation normal, everything must change”.

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Situation Normal, Everything Must Change

  1. 1. A summary of my Hosting Con Keynote ... Situation Normal, Everything Must ChangeLeading Edge Forum March 2011
  2. 2. The LEF focuses on six key interrelated researchdomains 1 2 3 Business/IT Business/IT Relationship The Consumerization of Co-evolution Management IT How are business and How can Enterprise IT How are consumer IT changing each other? add more value to the technologies and the organization? Internet affecting both the firm and central IT? 4 5 6 Organizing IT for the The Changing Nature of Business Future Work Sustainability What will the retained How will management, How can IT be used central IT function employees and the to help make firms look like? culture of the firm need more to change? environmentally ... this is what I do at the LEF ... friendly? Leading Edge Forum March 2011
  3. 3. +... in practice, this generally evolves explaining complex situations with kitten pictures ...
  4. 4. Evolution Benefits & Risk Management Tactics Leadership... and this is what we covered at Hosting Con.
  5. 5. Starting with diffusion ... Everett RogersRate of adoption 1960s Geoffrey A. Moore Crossing the Chasm Time
  6. 6. Total Adoption Diffusion Curve Everett Rogers Diffusion of Innovations, 1962 Cumulative ... and diffusion curves ... Time
  7. 7. Total Adoption Telephony + Mature ... we can hint Evolution at a pattern of evolution ... Time
  8. 8. Ubiquity ... by abolishing Utility Service time, we can clearly see that pattern. Now, we have ... Commodity Product Service Custom built Innovation Certainty
  9. 9. ... correlation, dataUbiquity and ... Certainty
  10. 10. Ubiquity Demand (user competition) io n at it is o d ... causation. m m Co Improvement (supply competition) Certainty
  11. 11. Ubiquity We looked at Utility Services of Amazon EC2 some examples ... Commodity Hardware Services Tymshare, 1966 Products IBM 650, 1954 Custom Built LEO, 1946 Innovation of Z3, 1941 Certainty
  12. 12. Ubiquity Software ... as a Utility Platform Service Infrastructure ... as a ... and what Product cloud really is ... Certainty
  13. 13. Ubiquity Attitude Technology Factors Concept Suitability How NOT when ... ... and why we cant say when things will change only how (hint ... we abolished time). Certainty
  14. 14. IT is a mass of activites andUbiquity N. Carr they are all evolving ... Cost of Doing Business Competitive Advantage P. Strassmann Certainty
  15. 15. Ubiquity ... which creates common benefits ... efficiency Economies of scale (volume operations) Focus on core (outsource) consumption Pay per use (utility) Agility (Self Service) Opportunity Innovation (creative destruction, componentisation) Certainty
  16. 16. Ubiquity ... but also rash assumptions ... NB CLOUD ≠ reduced budget ... you end up doing more William Stanley Jevons, 1865 Certainty
  17. 17. ... standard Joseph A. SchumpeterUbiquity (1883 - 1950) consequences ... + Efficiency (not reduced budgets) Accelerated Innovation + Agility Herbert A. Simon (1916 - 2001) Certainty
  18. 18. ... and newUbiquity Software Platform opportunities. Infrastructure Accelerated Innovation Big Data Mash-ups Certainty
  19. 19. Ubiquity Transition Confusion Governance Trust Security Transparency Outsourcing Suitability Disruption Competition Lock-in Relationships Second Source Skills Control Political Capital Investment Evolution also carries standard risks ... Certainty
  20. 20. ... but then again youUbiquity Market have no choice ... Pay per use ure Focus on core ss Pre Prof. Van Valen Economies of scale “Red Queen Hypothesis” Speed to market The need to constantly evolve in order to stand still relative to a You surrounding ecosystem Transition Costs Vs Operational Disadvantage Certainty
  21. 21. ... Cloud really isnt that complex ... DANGER!Complexity DANGER!
  22. 22. Ubiquity Disruptive to Existing Vendors Effect make originate outside competitive ecosystem + Efficiency (not reduced budgets) ... and in general it Accelerated means ... Innovation + Agility Reduced Barriers to Entry in other industries Certainty
  23. 23. Payroll Electricity Accounts Of course,Ubiquity Infrastructure organisations are a CRM mass of activities ... HR systems ERP Web Portal Search Engines Enterprise 2.0 Information market VRM Certainty
  24. 24. Frequency ... you can use this to plot a shape for an organisation ... a profile ... Innovation Custom built Product Commodity
  25. 25. Frequency Dynamic Repeatable Deviation Standard Uncertain Known Emergent Predictable Serendipity Procedural Worth CODB Chaotic Linear ... the extremes of which have Innovation different properties. Custom built Product Commodity
  26. 26. Evolution in effect creates aFrequency virtuous circle ... Commoditisation User & Supply Competition Innovation Creative Destruction Componentisation Innovation Custom built Product Commodity
  27. 27. H. Pixii, 1832 National Grid, ‘30sTuring ‘36 PowerEdge, ‘02 IBM 650, ‘54 Z3 ‘41 Amazon EC2 ‘06 Siebel SIS ’94 DBM ’80s Customer Salesforce ’02 (10.6%)Centric ‘70s ... which we all MyDex ‘08 experience ...VRM ‘06 Innovation Custom built Product Commodity
  28. 28. ... which begs the question ... Who cares?
  29. 29. Chaotic Transition Linear Lists Siebel SIS ’94 Customer DBM ’80s Salesforce ’02Centric ‘70s Well, as an activity evolves, its characteristics change ... Innovation Custom built Product Commodity
  30. 30. Frequency 6 Sigma ... which is why one size management methods dont work ... Reduce Reduce Deviation Deviation Innovation Custom built Product Commodity
  31. 31. ... ditto ...Frequency Agile Encourages Deviation Encourages Deviation Innovation Custom built Product Commodity
  32. 32. ... this creates the "innovation paradox" i.e. there are no magic bullets ... VSSurvival Tomorrow Survival Today Innovation Paradox Survival today requires ‘coherence, coordination and stability’. Survival tomorrow requires the replacement of these erstwhile virtues. Salaman & StoreyInnovation Custom built Product Commodity
  33. 33. ... but were in competition so its ok, as long as we all promise to ... We suck Same here
  34. 34. Unfortunately newUbiquity patterns are developing which exploit this link ... +Innovation tion uc n str io de isat ti ve ent ea p o n cr com Joseph A. Schumpeter Herbert A. Simon (1883 - 1950) (1916 - 2001) Certainty
  35. 35. ... they work like this ... Commoditise Undifferentiated to Utility Services Innovate Worth ∝ 1 Certainty Leverage Adoption (Ecosystem) Innovation Custom built Product Commodity
  36. 36. Innovate Leverage to identify future patterns ... and exploit Commoditiseecosystems to better manage the "innovation paradox"... enable next wave
  37. 37. CRM Ideas ... we see this App Exchange pattern with major cloud services ... Acquisition APIs & Platform Salesforce
  38. 38. ... but cloud isnt just about new patterns. UtilityAs competition crosses a Service boundary it is almost always disruptive ... Always disruptive A B Sometimes disruptive Innovation Custom built Product Commodity
  39. 39. ... because past success "Success is a lousy teacher"creates inertia barriers Bill Gates to change ... Personal Success AMZN not encumbered by Organisation previous business models in Institutional Markets infrastructure Innovation Custom built Product Commodity
  40. 40. ... and in this disruptive phase, new tactical games are also being played. Core (CRM) ILC Barrier to Entry Social CRM differential Innovation Custom built Product Commodity
  41. 41. Ubiquity Outsourcing Risks Pricing Competition Second Sourcing Marketplace However, since consumers have concerns over outsourcing risks which can only be solved through functioning markets ... Certainty
  42. 42. Common Reference Models Semantic Interop. Open APIs & Data Formats... and these marketsrequire some basics to operate ... Many Providers
  43. 43. ... open source isincreasingly being used as a tactical weapon between companies ... Infrastructure aims to create a competitive marketplace with a larger ecosystem Innovation Custom built Product Commodity
  44. 44. ... and to create higher order revenue streams. Wheres the money? BrokerExchange Here ... Assurance Innovation Custom built Product Commodity
  45. 45. Broker Exchange AssuranceSmart moves arebeing made ... seeCloud Foundry ... Innovation Custom built Product Commodity
  46. 46. Steve Jobs Jeff Bezos Creative DisruptiveLeadership Leadership ... which leads to the question of leadership ...Innovation Custom built Product Commodity
  47. 47. ... even when factorsare in place & benefitsare clear, its not only Factors vendor inertia which slows the change ... + Efficiency Vendors Success + Innovation + Agility Innovation Custom built Product Commodity
  48. 48. Transition Disruption ... but customer inertia Outsourcing through perceived risks ...Innovation Custom built Product Commodity
  49. 49. ... so activities often Pressurebuild up behind these barriers until breached by an organisation not encumbered by Cluster previous models initiating a flood of Resistancedisruption, a state of war, ... disruption / war Innovation Custom built Product Commodity
  50. 50. Creative Leadership Disruptive Leadership disruption / war margin / peace growth / build ... one of three states:- Build (creative leadership), Peace (margin), Innovation Custom built War Product (disruptive Commodity leadership)
  51. 51. ... each with different characteristics i.e. those inertia barriers are beneficial in the state of Peace ... MarginInnovation Custom built Product Commodity
  52. 52. ... and the largest examples of these state changes can be seen as K-Waves ... Margin Disruption Growth
  53. 53. "War" CEO "Peace" CEO"Build" ... this leads some to talk about "Peacetime" vs "Wartime" CEO.Innovation Custom built Product Commodity
  54. 54. So we used theseconcepts to look at the hosting industry ... "War" Innovation Custom built Product Commodity
  55. 55. My customers will never leave me ... ... and why the shift of state to war was so dangerous ...http://www.flickr.com/photos/21734563@N04/2179722280/
  56. 56. Ubiquity Demand (user competition) io n at it is o d ... why the shift m m was inevitable ... Co Improvement (supply competition) Certainty
  57. 57. Feature Differentiation ... along with the most common forms of tactical error ...Innovation Custom built Product Commodity
  58. 58. ... and why alliances matter ...Innovation Custom built Product Commodity
  59. 59. ... you see, we dont live in a world of ... Situation Normal, Everything Stays the Same.Leading Edge Forum March 2011
  60. 60. ... but ... Situation Normal, Everything Must ChangeLeading Edge Forum March 2011
  61. 61. Evolution + Consultants = Bad [3]Enterprise Cloud = The path to doom [19]The problem with perspective [52]What is innovation? [68] Finally we examinedWhy transparency matters [101] some common questions ...What is consumerization? [124]I need more innovation, wait ... moreefficiency ... wait ...more innovation ... [145]What methods work ... [195]Organising around Evolution [265]Pub Quiz [302]
  62. 62. Evolution + Consultants = Bad [3]Enterprise Cloud = The path to doom [19]The problem with perspective [52]What is innovation? [68] ... everyone seemedWhy transparency matters [101] to like this one ...What is consumerization? [124]I need more innovation, wait ... moreefficiency ... wait ...more innovation ... [145]What methods work ... [195]Organising around Evolution [265]Pub Quiz [302]
  63. 63. If you werent there, you missed it ... theres novideo, book or whitepaper but theres always next year. Summary ...As Tim OReilly would say - "the future is already here it is just not evenly distributed" ...
  64. 64. ... that includes management practices ...We suck We dont
  65. 65. ... which is good for me because Im an arms dealer in organisational tactics and management weaponry aka organisational warfare. lef.csc.com swardley@csc.com twitter : @swardley ... and this presentation is just the basics. Leading Edge Forum March 2011

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