CIO Event - HP - Digital Disruption : How can IT play its part?
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Mike Shaw discusses how IT can help businesses facing digital disruption. He outlines how digital disruptors operate using minimum viable products, public experimentation, and continuous innovation. Disruptors use mobile/wearable apps, data science in products, and hybrid/fluid apps. Shaw argues IT needs a "two-speed" model with reliable core IT and more agile fluid IT. Fluid IT focuses on continuous innovation, hybrid apps, data science/big data, and engaging customer experiences across devices. Core and fluid IT must cooperate in areas like service brokering, APIs, continuous delivery, and protecting all data and apps.
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CIO Event - HP - Digital Disruption : How can IT play its part?
- 1. © Copyright 2015 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Digital Disruption : How can IT play its part? Mike Shaw, Director of Strategic Marketing Hewlett Packard
- 4. Happened LaterHappening Books News Music Video Retail Retail banking Health Home automation Smart buildings Transportation Government (smart cities) Farming Insurance Manufacturing Teaching
- 5. BUSINESS MODEL DISRUPTION BUSINESS OPERATIONS DISRUPTION IT DISRUPTION Uber, YouTube, Spotify, SalesForce.com, Autonomous Cars, 3D Parts Printing, Amazon Prime NetFlix, Mobile Banking, Mobile Online Check-in, Google Nest, Drone Deliveries Cloud, SaaS, BYOD, Virtualization Geoffrey Moore’s model of disruption types
- 6. BUSINESS MODEL DISRUPTION BUSINESS OPERATIONS DISRUPTION Attacking an Incumbent Don’t disrupt your ecosystems Disrupt your Business Operations Do it thru Systems of Engagement Uber Spotify SalesForce.co m Amazon.com Airbnb Incumbent Defending
- 7. How do Digital Disruptors operate? Start with Minimum Viable Product Publicly Experiment (and “fail”) Continuously Innovate (Continuously Deliver)
- 8. What weapons do Digital Disruptors use? Valuable front end app – mobile, wearable, smart device Use Data Science in the product Hybrid and fluid “serving” app
- 9. Apps and Data Science are the product Apps and Data Science are the innovation engine Apps and Data Science create the differentiation What a great Opportunity for IT
- 10. Existing, core IT Systems of Record Business can now buy its own IT But, at 180 degrees to this ...
- 11. CORE I.T. • Reliable, compliant, secure • Thinks price/performance • Plans and approvals driven • Long life-cycles FLUID I.T. • Agile and fluid • Measured by innovation and disruption • Thinks continuous innovation • Thinks days, weeks * Gartner, 2015 More than 70% will fail to do both *
- 12. Protect your Assets Protect and secure all your data and apps Service Brokering Service Provider / Service Consumer relationship between Core and Fluid IT. APIs into Systems of Record Hybrid Apps Dev, test, deploy and management of hybrid and fluid “serving” apps Continuous Innovation DevOps for fast, continuous application delivery from Fluid to Core IT Data Science and Big Data Use 100% of the data and data science to digitally disrupt Engaging Customer Experiences on mobiles, wearables and smart devices
- 13. Protect your Assets Protect and secure all your data and apps Service Brokering Service Provider / Service Consumer relationship between Core and Fluid IT. APIs into Systems of Record Hybrid Apps Dev, test, deploy and management of hybrid and fluid “serving” apps Continuous Innovation DevOps for fast, continuous application delivery from Fluid to Core IT Data Science and Big Data Use 100% of the data and data science to digitally disrupt Engaging Customer Experiences on mobiles, wearables and smart devices
- 14. 14 • Getting to the table • Planning in a two-speed world • The Guardian Function • Funding • Technical Debt Cleanup Other Considerations
- 15. 15 The Digitization of Everything and The New Style of IT A new style of product • Minimum Viable Product • Public Experimentation • Continuous Innovation Disruptor’s weapons • Useful Mobile, Wearable, Smart Device apps • Hybrid and Fluid serving app • Data Science as part of the product Two-speed IT : Core and Fluid The 6 co-operation areas • Service Brokering and APIs • Hybrid Applications • Continuous Innovation and DevOps • Mobile, Wearable, Smart Device apps • 100% Big Data and Data Science • Protect 100% of your data
Editor's Notes
- This 30 minute presentation was created for the Digital Transformation conference in London on 22nd October, 2015. Go to „view > notes“ to see the notes for this prezo.
- That is just one way in which digitization is changing the transportation industry. We will soon have driverless cars (there are already driverless trucks in the US). The Times predicts that the first driverless cars will be a joint Chinese/BMW venture that is already in late trials in China. Uber estimates that shared, autonomous cars would take 66% off the streets of London. You don’t have to buy the latest GE locomotive. You can buy it “pay as you go”, like a cloud service. Because GE therefore needs the train to be always running, they have thousands of sensors and a big data analysis system on board that predicts when major components may fail, thus allowing proactive maintenance. The smart city of the future will “traffic shape” – bikes will get priority, trucks will not.
- And it’s happening to retail banking too. Who is that worried looking guy in the bottom left of the slide? It’s James Dimon, CEO of JP Morgan, one of the largest financial institutions in the world. Two months ago, he wrote a letter to shareholders that started, “Silicon Valley is coming”. Let’s look at why he’s so worried and why he said that. Last year, Lloyds Bank, one of the largest banks in the UK made 9,000 people redundant. Why? Because people don’t go to their branches any more – they use internet (web) or mobile banking. So, while making people redundant with one hand, Lloyds Banks is investing billions of pounds into mobile banking with the other. There are now 2,000 FinTech startups – all looking for a slice of the lucrative retail banking business.
- Geoffrey Moore has a model for this disruption that I think it hugely useful to us. He categorizes disruptions into three types. IT disruption is the simplest, least impactful. Often, these disruptions aren’t even experienced by the business or its customers. Examples : use of cloud, SaaS, BYOD and virtualization. Business Operations Disruption is the next most impactful. This is where we don’t change the business model, but we do make operations better. NetFlix hasn’t changed video rental – they have just made it a lot easier to Online check / mobile check-in hasn’t changed the airlines’ business model. they have just made it easier to check-in Mobile banking is great, but you still have an account at your bank, just like we did 100 years ago Business Model Disruption is by far the most disruptive. Uber has changed the “car ride” business YouTube has changed the way video is created, consumed and importantly, how people earn from video (c.f. vloggers who earn $400k a year) 3D parts printing (and arbitrary milling machines and arbitrary task robots) will transform the parts supply chain.. E.g. DHL may become a “parts printer” for everyone and anyone Amazon Prime has changed shopping. You can “buyeverything” from the comfort of your bed!! Airbnb has changed the source of “a room for the night” business model.
- OK – so let’s all “get digitally disrupting” Business Models!!! Not so fast. If you’re an incumbent, like HP or Microsoft or Sony Pictures or Lloyds Bank or Hilton Hotels, you are an incumbent. This means that you have a huge ecosystem around you; around your banking, your hotels, your software. If you disrupt your business model, you’ll screw your ecosystem, and you’ll be left without your existing, incumbent revenues, while you’ll be a startup (no profits) in the disrupted business model. So, if you’re an incumbent under attack, you need to defend by disrupting your business operations. You do this using Systems of Engagement. Taxis should have created a mobile app to find a taxi, to track its progress, and to easily pay for the ride. They didn’t and so Uber could attack them. The banks should make it so easy to do business with them (as a private person and as an SMB) so that people aren’t tempted to move to “AppleBank” or “GoogleBank” or to use P2P lending. However, if you’re not an incumbent, disrupt that business model all you can. Make the distance between you and the incumbents as large as possible. (This is all in Geoffrey Moore’s upcoming book that is “published” on his blog posts on LinkedIn Pulse. Needless to say, he describes it much better than I can )
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- If we look at these digital disruptors they use applications and data science to disrupt. Their customer facing apps deliver value to customers where the customers are. On mobile devices, on wearables and increasingly, on smart devices. Typically their apps are cool – nice to use. But that’s not the main point – the main is that they deliver huge value when and where their customers want it. Spotify is available on every device that moves (including my SmartTV). Uber is on mobile – just where you want it if you need transportation. ApplePay is on your watch. But the value that these customer-facing apps deliver is not actually created on that app. It’s created on a “back-end” app which then serves the customer-facing app. These “serving apps” are hybrid – they are composed of components from a number of suppliers (typically, cool new apps, the makers of which you’ve never heard of, and that may not be in 18 months’ time). These server-based “serving apps” are hybrid and fluid. This is something that is new to conventional IT who are used to owning most of their application’s content; and who are used to using a supplier for many years, not swapping out one and in another between releases. And, and this important, these digital disruptors use data science in their products to deliver value. In the past, we’ve used data science (although not as smart as many of these digital disruptors), but we’ve used it to deliver reports to business managers. This is different – data science is used to deliver value to customers in the product minute after minute – surge pricing in Uber, room pricing recommendations in Airbnb, “what to listen to” recommendations in Spotify; “what to watch next” in NetFlex; precision farming for farming; proactive maintenance for the nextgen locomotives and HP servers; precise risk analysis for peer-to-peer lending.
- Wow – the digitization of everything means that applications and data science ARE the product; they are what delivers innovation; they are what creates differentiation – they are what can Digitally Disrupt – they can KILL incumbents (taxis in San Francisco, EMI records, Blockbuster video, $300m of business to Paris hotels) What an exciting time to be in IT – we have now gone from the “back room cost center”, ignored provided we kept within budget and didn’t cause any downtime problems to a key component of business teams.
- But ... No-one is going to let IT off the hook in looking after the stuff it looks after today ... Our existing Core IT systems, or “Systems of Record” as they are often called, still exist and we have to ensure that they run to good performance and are secure. We also face the “challenge” that the business can now buy its own IT. It can buy whole applications, using, for example, third party development shops. It can buy SaaS or it can buy at the cloud infrastructure level. This means that unless we do something, they will go off and do their own thing.
- IT needs to go in two different directions at the same time. If you look at the personalities, the measures, the supplier relationships, the way apps are developed and the modus operandi of the “digitally disrupting” versus the “Systems of Record managing” teams, they are so different that both tasks simply can’t be done by the same group. In fact, Gartner says that when one IT group tries to do both they will fail over 70% of the time. When they fail, of course, the business now has the choice to do its own thing – bad for the corporation as a whole. And so, Gartner, McKinsey, IDC and most other analyst groups now recommend the formation of two groups – a Core IT group (list the attributes from the slide) and a Fluid IT group (list the attributes from the slide).
- We can’t allow Fluid IT to be completely separate from the rest of IT. It’s mainly about linking with the Systems of Record and the management systems we have in place to manage them. It’s probably a 20 minute discussion in its own right; suffice it to say that customers who’ve not linked the two end up with dead end “cool” assets that cost a lot to bring back into the fold. So, we need Fluid and Core to cooperate. This cooperation breaks down into six areas… 1/ Service Brokering. Fluid IT guys live in a “composable world” – they create value out of components. They need to have a single IT store front where they can go to see what components are on offer, how to use them, experience others have had of using them, etc. One of the providers of these services will be Core IT. The key Core IT service will be a series of APIs onto the Systems of Record that they look after. There will be a series of data center services too, all cloudized and highyl automated. 2/ Fluid IT will create hybrid apps. We need to ensure we have the platforms in place for them to do this; to dev, to test, to deploy and to manage these hybrid (and highly fluid – changing often) apps 3/ Continuous Innovation is how digital disruptors must operate. We need to be able to go thru dev, test and deployment into production quickly and often (it’s called “continuous delivery”). DevOps – the linkage between Dev and Ops – delivers this. DevOps is not optional in a digitally disrupting world; it’s a must. And DevOps has two parts dev (the easy part) and ops (rarely bought into it!) 4/ We need to be able to creeate, test, release and manage mobile, wearable and smart device apps. 5/ We need to have in place a platform that allows Fluid IT’s data scientists to use data science to create digitally disruptive products. Uber, Airbnb, Amazon, YouTube, Spotify and Netflix all use data science inside their products. This platform must make available 100% of the data – machine data, human interaction data and our Systems of Record data 6/ And we need to protect all this – the Fluid IT’s apps, Fluid IT’s data, Core IT’s apps and Core IT’s data – holistically
- That’s the tools we need to put in place. But, there is more to it than that. There are “soft” things we need to get right… The number one question I get when I talk to customer about all this is, “how do I, from Central IT, get to the table? Business IT is doing this stuff without involving, and sometimes, not even involving, us” We need to get out from behind the service desk. We need to have people who are measured and paid in the same way as the business teams. IT planning just got a little more complex. What APIs do we need onto the Systems of Record? What cloud services must Core IT produce for Fluid IT? Who will do what? How do we allocate funding? Smart people like Geoffrey Moore and thinking about these things. Geoffrey Moore’s “types of disruption” model, his “Core/Context” model and Gartner’s Pace Layering models can really help us here We need to a function in place that will ensure that the 2-speed IT setup works; that the processes work; that the teams respect each other and work well together; that planning takes place. Gartner calls “The Guardian Function”. The Guardian Function needs to exist, and it needs to be in neither Core IT or Fluid IT Our digital disruption efforts can’t be funded using the “communist” funding model that we normally use for IT – long-term plans, small changes in fund allocation. We need to have a funding model that is more like that that venture capitalists use .. try, report back, adjust, kill or give more moeny Fluid IT needs to move fast. Very fast at times. They will, in the eyes of a typical Core IT person, “cut corners”. We must allow this – but we can’t allow these “cut corners” to exist forever otherwise we will have a mass of technical debt strangling us from moving forwards at all. We therefore need to have a “technical debt cleanup” plan between Core and Fluid IT, with funding to ensure the cleanup occurs.
- Summary … Digital disruptors don’t do product delivery like “in the old days”. They start with a minimum viable product. They publically experiement. And they continuously innovate (c.f. Spotify releasing new functionality quickly after Apple Music was released). Digital disruptors create “useful” mobile (and wearable and smart device apps). Most are “pretty”, but the key thing is that the add huge value to their customers. They do this thru a smart “serving” app on servers. These apps are hybrid – they take components from a number of different sources, and they are fluid – the components in the app today may well not the components in the app tomorrow. And pretty much all of them use data science to create these useful apps. Great for IT – apps and data science deliver the product innovation and the differentation. But, what is required from our digitally disrupting app dev and data science teams is very different to that that we ask our ouf conventional “central IT” when we ask them to look after our Systems of Record (a requirement which is not going away). They requirements, the behaviours, the knowledge, the tools, the supplier relationships and the measurements on these new teams are so different to conventional IT that we need to create two IT teams – Core IT and Fluid IT. But (and this is very important) these two teams must interface with each other; they must cooperate with each other. In order for this to happen, we need to put 6 things in place. 1/ Service Brokering and APIs onto the Systems of Record 2/ A platform to develop and run these hybrid, fluid apps 3/ Continuous Innovation thru the use of DevOps 4/ The ability to create, test and manage mobile, wearable and smart device-based apps 5/ data science capabitlities to serve our apps which use 100% of the available data 6/ protection for all this lot (including the 25 billion more connected smart devices we’ll have by 2020) – protection of the applications and the data they generate.