Situation Normal,Everything Must     Change
LEF tracks the co-evolution of Business & IT Developing an Outside-In    Operating Model                                  ...
STRATEGY
Tactical      Purchasing Choices        Decisions  (BYOT)       (Oracle vs SAP)Operational  Details     Implementation   (...
Why?         VagueHow?What?When?
Bombard the   hill!        But Why?
ABC Report67% of successfulgenerals bombard      hills                 Is this the                    Why?
Bombarding Hills is on the Slope of Enlightenment?        Is this the           Why?
Possible            where                                       Why?                      Cut off supplyPossible          ...
Why?        Cut off supply           lanes?How,What,When
Why?          VagueNo Map?
How doyou mapbusiness?
Value Chain                              Machine                  Company                  (Machine)                      ...
Nokia          ... but value        chains change ...
LaggardsEarly Adopter                             ... due to                           innovation ...
Its allrandom ...             Hang on ...
Evolve
Evolve
Ubiquity                                            Utility                               Commodity                     Pr...
Ubiquity                                    ion                               etit                              p         ...
Value Chain               Evolution(describes organisation)   (describes change)
What if we combine?
Value Chain                                 Customer                             Fotango                    Image         ...
CustomerValue Chain                     Fotango              Online Image                                                 ...
Lesson 1Needs vs Efficiency
Value Chain                                              Need      Differentiation              Genesis   Custom   Product...
Value Chain                                                       Hidden                           Efficiency              ...
Lesson 2Competition Changes    Everything
Value Chain              Chaotic              Genesis   Custom   Product      Commodity     Evolution                     ...
Value Chain                    Fotango                                    Rare              Online Image              Mani...
Value Chain                                              Linear              Genesis   Custom   Product      Commodity    ...
Value Chain                                                Commonplace                                                Well...
Value Chain                                                 Linear                                 Competition            ...
Lesson 3One size never fits all
Value Chain               AGILE                Strong                                        Weak                         ...
Value Chain                                                  Outsource                                                    ...
Value Chain                  Change                Control +++              ... with a common                consequence ....
Value Chain                       ... only                   somethings are                      suitable                 ...
Lesson 4Efficiency enables Innovation
Value Chain                        Electricity Provision                                             Siemens   A/C Utility...
Value Chain                                      Worth                        Agility                                     ...
Componentisation Herbert Simon
Creative Destruction Joseph Schumpeter
Lesson 5Choice is an illusion
Value Chain                                      Worth                        Agility                                     ...
“Red Queen”                    The need to constantly                 evolve in order to stand still                   rel...
Lesson 6We have inertia
Computing Infrastructure     Past                              Compute                               (Product)NovelArchite...
Novel ArchitecturalPractice               Emerging(Scale Out,            Practice        Good PracticeDistributed Systems)...
Good Practice                 (Scale Out)Co-Evolution               Compute           Compute                (Product)    ...
Good Practice                    (Scale Out)                                    New EstateBut we want the                 ...
Good PracticeBut we dont              (Scale Out) want to re-                              New Estate architect ...       ...
Value Chain                                      Worth                        Agility                                     ...
Lesson 7Inertia Kills
Value Chain                        Vendors have ...                                     Past Success                      ...
Million $2,000                                3%                                                       and the new $1,500 ...
Million$30,000                                                             50%$22,500                    Hang on, this    ...
ITchange is slower!
Value Chain                        Alas, were lulled                        by past state of                         compe...
Value Chain                                              Punctuated                                              Equilibri...
Lesson 8Cycles
Value Chain                        Wonder                                                        e                        ...
Peace                 WarWonder
The Mechanical     Age
The Age of Electricity
UtilityUbiquity           Product                           Cloud is standard                          evolutionary shift ...
Ubiquity                                    ion                               etit                              p         ...
Value Chain                                      Worth                                                                ... ...
Value Chain                                              ... which we have                                                ...
Value Chain                                              ... along with a                                                 ...
“Red Queen”                    The need to constantly                 evolve in order to stand still                   rel...
Situation Normal,Everything Must     Change            ... bought the T-                  Shirt
New organisations form because ...
Good Practice                 (Scale Out)                                 New Estate                                  "Dev...
60%                 View on Open SourceThree forms of 50%organisation in  the wild ... 40% 30% 20% 10% 0%       Nothing   ...
Type                             Traditional       Next Generation                    Organisation       Structure        ...
Value ChainMore cell based              Genesis   Custom   Product      Commodity     Evolution                        Bui...
UbiquityLower adoption barriers                                              p en                                         ...
Value Chain                                      Worth                        Agility                                     ...
90% of largeorganizations use  open source
40%                  We have a formal process for                       Open Technology30%            Traditional20%      ...
Our company deploys an open technology60%            approach as a means of outmaneouvering                          compe...
Value Chain                                    IOS              Genesis   Custom   Product      Commodity     Evolution   ...
Value Chain                                    IOS              Genesis   Custom   Product      Commodity     Evolution   ...
Value Chain                                    Data Centre                                                  Open          ...
Type                             Traditional       Next Generation                    Organisation       Structure        ...
Choose one ...  + Innovation  + Customer  + Efficiency
Supplier           Ecosystem
Innovate
Value Chain                        Innovate                         Hadoop                                                ...
Value Chain                                  Commoditise                                                          EMR     ...
Value Chain                    Innovate                                                           EMR                     ...
Value Chain                    Innovate        Leverage                                          Commoditise              ...
Choose All ... + Innovation  + Customer  + Efficiency
Value Chain                   Electronic Health Care                       Record Systems                                 ...
Value Chain                   Electronic Health Care                       Record Systems                                 ...
Value Chain                                                 ce                                             rf a           ...
Commoditise                                           Recruitment Efficiency                        ... more powerful than ...
Strategic Play                 Uses Open to Compete
Web 2.0            TraditionalStrategic Play                          Uses Open to Compete
Players                                 Doing well ...Strategic Play                 Uses Open to Compete
Type                             Traditional       Next Generation                    Organisation       Structure        ...
CustomerValue Chain                     Fotango                                                                           ...
.... Tend to  UseIT as aweapon
Thinkers                 Doing OK ...Strategic Play                           Uses Open to Compete
Strategic Play                               Believers                                  Whoops ...                 Uses Op...
Strategic Play                 Chancers                  Oh dear ...                            Uses Open to Compete
Type                             Traditional       Next Generation                    Organisation     Structure          ...
Lots of big documents ...                IT STRATEGY
Not so big on ...                    Why?                     Vague
Adapt                                           Doing well ...Strategic Play                   Die                 Oh dear...
What to do?
Need
Value ChainValueChain
Ubiquity                                            Utility                               Commodity                     Pr...
Value Chain                                                            Step 1.                                            ...
Value Chain                                                     Step 2.                                               Find...
Value Chain                                                     Step 3.                                              Break...
Value Chain                                                      Step 4.                                                  ...
Value Chain                                                        Step 5.                                                ...
Value Chain                 Agile, In-House              Genesis   Custom     Product      Commodity     Evolution        ...
Value Chain                                                Leverage,                                              Buy Prod...
Value Chain                                                  Utility,                                                 Outs...
Step 6.Find sharedcomponents
Value Chain                                                                      Step 7.                                  ...
lef.csc.com   @lefep@swardley
Situation Normal Everything Must Change - from innovation to commoditisation in business and strategy
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Situation Normal Everything Must Change - from innovation to commoditisation in business and strategy

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General shortened version of the presentation covering evolution, change, mapping, ecosystems, cloud, economic cycles, commoditisation, componentisation, strategy and open approaches.

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Situation Normal Everything Must Change - from innovation to commoditisation in business and strategy

  1. 1. Situation Normal,Everything Must Change
  2. 2. LEF tracks the co-evolution of Business & IT Developing an Outside-In Operating Model Research-Based Services Visioning, strategy, advice, coaching, executive education, diagnostics, assessments, staff development, training workshops, presentations,The Future of Data & ERP Weapons of Mass events, study tours Discussion 2012 Research 2013 Research Previous Research Leading Edge Forum 01/29/13 01:57 2
  3. 3. STRATEGY
  4. 4. Tactical Purchasing Choices Decisions (BYOT) (Oracle vs SAP)Operational Details Implementation (SLAs) Details (Private vs Public)
  5. 5. Why? VagueHow?What?When?
  6. 6. Bombard the hill! But Why?
  7. 7. ABC Report67% of successfulgenerals bombard hills Is this the Why?
  8. 8. Bombarding Hills is on the Slope of Enlightenment? Is this the Why?
  9. 9. Possible where Why? Cut off supplyPossible lanes? where Possible where
  10. 10. Why? Cut off supply lanes?How,What,When
  11. 11. Why? VagueNo Map?
  12. 12. How doyou mapbusiness?
  13. 13. Value Chain Machine Company (Machine) Standard Pipes Company Nuts & Bolts (Nut & Bolts) Armory System Screw Cutting Lathe Metal Ingots Company (Lathes)
  14. 14. Nokia ... but value chains change ...
  15. 15. LaggardsEarly Adopter ... due to innovation ...
  16. 16. Its allrandom ... Hang on ...
  17. 17. Evolve
  18. 18. Evolve
  19. 19. Ubiquity Utility Commodity Product Service Custom Built Evolution Genesis Certainty
  20. 20. Ubiquity ion etit p C omConsumer Supplier Certainty
  21. 21. Value Chain Evolution(describes organisation) (describes change)
  22. 22. What if we combine?
  23. 23. Value Chain Customer Fotango Image Manipulation Payment Photo Storage Web Site Banking systems Customer Platform Relationship System Development Tools (CRM) Distributed Architecture Compute Data Centre The Company Servers Power
  24. 24. CustomerValue Chain Fotango Online Image Map Payment Manipulation Online Photo Storage Web Site CRM Distributed Platform Architecture Data Centre Compute Power Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  25. 25. Lesson 1Needs vs Efficiency
  26. 26. Value Chain Need Differentiation Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  27. 27. Value Chain Hidden Efficiency Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  28. 28. Lesson 2Competition Changes Everything
  29. 29. Value Chain Chaotic Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  30. 30. Value Chain Fotango Rare Online Image ManipulationUnderstood Poorly Online Photo Storage Differential Competitive Advantage High unit value Distributed Constantly changing Architecture Undefined market Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  31. 31. Value Chain Linear Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  32. 32. Value Chain Commonplace Well Understood Web Site & Operations Efficiency CRM Cost of doing business Volume operations Standardised Defined market Compute Power Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  33. 33. Value Chain Linear Competition Chaotic Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  34. 34. Lesson 3One size never fits all
  35. 35. Value Chain AGILE Strong Weak SIX SIGMA Weak Strong Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  36. 36. Value Chain Outsource SIX SIGMA Weak Strong ... tends to apply single technique ... Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  37. 37. Value Chain Change Control +++ ... with a common consequence ... Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  38. 38. Value Chain ... only somethings are suitable Outsource Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  39. 39. Lesson 4Efficiency enables Innovation
  40. 40. Value Chain Electricity Provision Siemens A/C Utility (Westinghouse) Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  41. 41. Value Chain Worth Agility e fac er Efficiency Int Competition Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  42. 42. Componentisation Herbert Simon
  43. 43. Creative Destruction Joseph Schumpeter
  44. 44. Lesson 5Choice is an illusion
  45. 45. Value Chain Worth Agility e fac er Efficiency Int Competition Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  46. 46. “Red Queen” The need to constantly evolve in order to stand still relative to a surrounding ecosystemProf.Van Valen
  47. 47. Lesson 6We have inertia
  48. 48. Computing Infrastructure Past Compute (Product)NovelArchitectural Emerging Good Practice Best PracticePractice Practice (Scale Up) (Scale Up)(Scale Up) (Scale Up) Evolution
  49. 49. Novel ArchitecturalPractice Emerging(Scale Out, Practice Good PracticeDistributed Systems) (Scale Out) Future Best (Scale Out) Practice (Scale Out) Past Compute Compute (Product) (Utility) Best Practice (Scale Up) Evolution
  50. 50. Good Practice (Scale Out)Co-Evolution Compute Compute (Product) (Utility) Best Practice (Scale Up) Evolution
  51. 51. Good Practice (Scale Out) New EstateBut we want the "DevOps" benefits ... Compute Compute (Product) (Utility) Legacy Estate Best Practice (Scale Up) Evolution
  52. 52. Good PracticeBut we dont (Scale Out) want to re- New Estate architect ... "DevOps" Cost Compute Compute (Product) (Utility) Legacy Estate Best Practice (Scale Up) Evolution
  53. 53. Value Chain Worth Agility Efficiency Despite benefits, Inertia cost creates ... Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  54. 54. Lesson 7Inertia Kills
  55. 55. Value Chain Vendors have ... Past Success Inertia Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  56. 56. Million $2,000 3% and the new $1,500 world is changing slowly ... $1,000 $500 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Analyst Estimates for EC2 Revenue
  57. 57. Million$30,000 50%$22,500 Hang on, this cant be right ...$15,000 $7,500 3% $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Analyst Estimates for EC2 Revenue
  58. 58. ITchange is slower!
  59. 59. Value Chain Alas, were lulled by past state of competition ... Peace Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  60. 60. Value Chain Punctuated Equilibrium Peace War Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  61. 61. Lesson 8Cycles
  62. 62. Value Chain Wonder e fac er Peace Int War Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  63. 63. Peace WarWonder
  64. 64. The Mechanical Age
  65. 65. The Age of Electricity
  66. 66. UtilityUbiquity Product Cloud is standard evolutionary shift ... Certainty
  67. 67. Ubiquity ion etit p C omConsumer ... caused by competition Supplier Certainty
  68. 68. Value Chain Worth ... resulting in standard benefits Agility e fac er Efficiency Int Competition Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  69. 69. Value Chain ... which we have inertia to Inertia Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  70. 70. Value Chain ... along with a change in competition Peace War Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  71. 71. “Red Queen” The need to constantly evolve in order to stand still relative to a surrounding ecosystemProf.Van Valen ... that kills
  72. 72. Situation Normal,Everything Must Change ... bought the T- Shirt
  73. 73. New organisations form because ...
  74. 74. Good Practice (Scale Out) New Estate "DevOps"Co-Evolution Compute Compute (Product) (Utility) Legacy Estate Best Practice (Scale Up) Evolution
  75. 75. 60% View on Open SourceThree forms of 50%organisation in the wild ... 40% 30% 20% 10% 0% Nothing Cost Rely Engaged Weapon Traditional Web 2.0 Next Generation
  76. 76. Type Traditional Next Generation Organisation Structure Departmental Service / Cell Culture Inertia Fluid / GameableCorporate Focus Profit Disruption Strategy / Tactical Open source Cost Reduction Weapon Learning Analysts Ecosystem "Big" Data Used Driven By Resilience N+1 Design For Failure Failure Testing Disaster Recovery Chaos Engines Practice Capacity Scale Up Scale-out Technique Single Mixed Deployment Change Control Continuous Activity Infrastructure Enterprise Class Commodity
  77. 77. Value ChainMore cell based Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  78. 78. UbiquityLower adoption barriers p en O Impact of Open ... Collaboration Certainty
  79. 79. Value Chain Worth Agility e fac er Efficiency Int Open Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  80. 80. 90% of largeorganizations use open source
  81. 81. 40% We have a formal process for Open Technology30% Traditional20% Web 2.010%0% Strongly Strongly Disagree Neutral Agree Disagree Agree
  82. 82. Our company deploys an open technology60% approach as a means of outmaneouvering competitors40% Traditional Web 2.020%0% Strongly Strongly Disagree Neutral Agree Disagree Agree
  83. 83. Value Chain IOS Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  84. 84. Value Chain IOS Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  85. 85. Value Chain Data Centre Open Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  86. 86. Type Traditional Next Generation Organisation Structure Departmental Service / Cell Culture Inertia Fluid / GameableCorporate Focus Profit Disruption Strategy / Tactical Open source Cost Reduction Weapon Learning Analysts Ecosystem "Big" Data Used Driven By Resilience N+1 Design For Failure Failure Testing Disaster Recovery Chaos Engines Practice Capacity Scale Up Scale-out Technique Single Mixed Deployment Change Control Continuous Activity Infrastructure Enterprise Class Commodity
  87. 87. Choose one ... + Innovation + Customer + Efficiency
  88. 88. Supplier Ecosystem
  89. 89. Innovate
  90. 90. Value Chain Innovate Hadoop EC2 Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  91. 91. Value Chain Commoditise EMR EC2 Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  92. 92. Value Chain Innovate EMR EC2 Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  93. 93. Value Chain Innovate Leverage Commoditise Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  94. 94. Choose All ... + Innovation + Customer + Efficiency
  95. 95. Value Chain Electronic Health Care Record Systems Efficiency Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  96. 96. Value Chain Electronic Health Care Record Systems Past Success Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  97. 97. Value Chain ce rf a te In Electronic Health Care Record Systems Open Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  98. 98. Commoditise Recruitment Efficiency ... more powerful than most realise OpenEcosystems Protecting Value Chain Barrier to Entry Standards
  99. 99. Strategic Play Uses Open to Compete
  100. 100. Web 2.0 TraditionalStrategic Play Uses Open to Compete
  101. 101. Players Doing well ...Strategic Play Uses Open to Compete
  102. 102. Type Traditional Next Generation Organisation Structure Departmental Service / Cell ... More Culture Inertia Fluid / Gameable likeCorporate Focus Profit Disruption Strategy / Tactical Open source Cost Reduction Weapon Learning Analysts Ecosystem "Big" Data Used Driven By Resilience N+1 Design For Failure Failure Testing Disaster Recovery Chaos Engines Practice Capacity Scale Up Scale-out Technique Single Mixed Deployment Change Control Continuous Activity Infrastructure Enterprise Class Commodity
  103. 103. CustomerValue Chain Fotango .... Manipulate Online Image Payment Manipulation Open Source, Online Photo Open Data, Storage APIs Web Site CRM Distributed Platform Architecture Data Centre Compute Power Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  104. 104. .... Tend to UseIT as aweapon
  105. 105. Thinkers Doing OK ...Strategic Play Uses Open to Compete
  106. 106. Strategic Play Believers Whoops ... Uses Open to Compete
  107. 107. Strategic Play Chancers Oh dear ... Uses Open to Compete
  108. 108. Type Traditional Next Generation Organisation Structure Departmental Service / Cell Look Like ... Culture Inertia Fluid / GameableCorporate Focus Profit Disruption Strategy / Tactical Open source Cost Reduction Weapon Learning Analysts Ecosystem "Big" Data Used Driven By Resilience N+1 Design For Failure Failure Testing Disaster Recovery Chaos Engines Practice Capacity Scale Up Scale-out Technique Single Mixed Deployment Change Control Continuous Activity Infrastructure Enterprise Class Commodity
  109. 109. Lots of big documents ... IT STRATEGY
  110. 110. Not so big on ... Why? Vague
  111. 111. Adapt Doing well ...Strategic Play Die Oh dear ... Uses Open to Compete
  112. 112. What to do?
  113. 113. Need
  114. 114. Value ChainValueChain
  115. 115. Ubiquity Utility Commodity Product Service Custom Built Evolution Genesis Certainty
  116. 116. Value Chain Step 1. Map Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  117. 117. Value Chain Step 2. Find Inefficiencies Hidden Efficiency Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  118. 118. Value Chain Step 3. Break existing model Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  119. 119. Value Chain Step 4. Treat as units Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  120. 120. Value Chain Step 5. Apply right methods AGILE Strong Weak SIX SIGMA Weak Strong Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  121. 121. Value Chain Agile, In-House Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  122. 122. Value Chain Leverage, Buy Products, Open Source Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  123. 123. Value Chain Utility, Outsource Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  124. 124. Step 6.Find sharedcomponents
  125. 125. Value Chain Step 7. Worth Manipulate the environment (Strategy) Agility e fac er Efficiency Int Open Genesis Custom Product Commodity Evolution Built (+ rental) (+ utility)
  126. 126. lef.csc.com @lefep@swardley

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