Creating a Digital Enterprise – Part 2: Three Disrupters driving IT Transformation

The first of the three disrupters driving IT transformation is Consumerization

Consumerization of IT

We are in an era of massive decentralization of technology resources as the control and manipulation of information moves from the IT Department to individual users. In "Digital Disruption: "Unleashing the Next Wave of Innovation", James McQuivey looks at the four major factors necessary for massive disruption. 

1.      The computer.

2.      An internet connection. 

3.      A programming language in SDK.

4.      A friction-free platform for ecommerce

What this means is that how we look at applications in the enterprise, how we buy enterprise technology, and how we deploy enterprise systems, are all changing simultaneously. There are more sources of innovation available in more places in the world than ever before. And the era in which organizations could exclusively depend on their internal IT resources as a source of competitive advantage is coming to an end. It wasn't that long ago that complex enterprise systems were the exclusive domain of a limited number of vendors, who delivered a sophisticated and expensive solutions to a limited number of large customers.

That's all changed. Software as a Service companies, or SaaS companies, like Salesforce and Workday, Hub Spot and Basecamp, have totally revolutionized the market for enterprise-scale solutions by allowing business executives to take ownership of IT. By standardizing and commoditizing solutions that were previously custom, these SaaS solutions have radically reduced the cost and complexity of core business systems. The responsibility for keeping the software updated has also moved from the customer to the provider.

Business people assume that enterprise solutions can be delivered as seamlessly and as simply as the latest app on their phone. It just isn't the case. It certainly isn't this simple, but that is the assumption. As organizations increasingly confront information management challenges that begin with paper and end somewhere in the cloud, their risk of information chaos intensifies.

Mobile and cloud computing

Cloud and mobile are the second disrupter driving IT transformation. These two technologies change everything. They change our expectations of where we can work, when we can work, with whom we can work and on what devices we can work. It seems like only yesterday that the iPhone first appeared. Believe it or not, it's been less than a 8 years, a blink of an eye in technology time. The iPhone was introduced in June 2007 to fairly widespread snickering among serious technology types.

Blogger Mark Flores had this take on the initial rollout, "The initial reaction from competitors ...was either shock or laughter. RIM didn't think it was possible to have such a device without it being a power hog. Microsoft's Steve Ballmer laughed at it for not having a physical keyboard. “Well, a lot has changed. We now find ourselves in a world where there are more tablets and smartphones sold than PCs. Where people are more likely to own a cell phone than any of the essential consumer electronics. Where customers expect to use a mobile device to interact with enterprise information and processes.

Where employees have been unchained from their desks and expect to use multiple devices and locations to interact with corporate systems that we once thought of as locked down and company confidential. Where less than 1/2 of the devices accessing the Internet run on Windows. The complementary steroid to mobile is the Cloud. That is, information and software services stored online. There is a clear lack of knowledge about the Cloud among senior executives and a crying need for business-centric, not technology-centric, education.

Most senior executives have the sense that the Cloud is something that must be part of their business equation and a belief that this will lead to a dramatic reduction in IT costs. One of the CIOs told me that this is how the Cloud is being sold to the business. In the Cloud, all is wonderful, everything is cheaper, there are no problems and it's a mature technology. Everybody's doing it. We are now seeing the Cloud move into the mainstream. Cloud has passed the tipping point and is now used basically everywhere that matters.

For example,

·        Software as a Service adoption has grown from 13% in 2011 to 72% in 2014.

·        Infrastructure as a Service adoption has grown from 11% in 2011 to 56% in 2014. 

·        Platform as a Service adoption has grown from 7% in 2011 to 41% in 2014. 

Here's how Geoffrey Moore puts it, "SaaS frees us all from the tyranny of the product release business model. Yes, with SaaS there is some level of ongoing disruption that you must cope with both within IT and within your user base, but please, do not even mention that in the same breath with the kind of burden that the product release model imposes.

Instead, thank your lucky stars you are getting innovation that you are paying for when you are paying for it. It is current, and so are you." The challenge, of course, in all this is that mobile and Cloud technologies increase the volume, variety and velocity of information in our organizations. Cloud and mobile heighten information chaos in the short term. And that explosive growth in the volume, variety and velocity of information is at the core of our third major disrupter, which we'll talk about next.

The Internet of Things

Finally, let's look at disrupter number 3, the Internet of Things. The Internet of Things is the impact that sensors and network devices will have as they allow buildings and infrastructure to swap information. According to International Data Corporation, there will be 212 billion connected things by the end of 2020, all emitting and receiving data. Intelligence systems will be installed and collecting data from all of these things. IDC forecasts that this will be an 8.9 trillion dollar market by 2020.

According to the Harvard Business Review, "The Internet of Things has the power to profoundly change operations-- that's where much of the coverage of this burgeoning network has focused. “But companies should also be preparing for profound shifts in their competitive strategies as the Internet of Things takes off." "It will change the category you compete in, the products and services you sell, how you market them, and even the talent you acquire." So our three disrupters, Consumerization, Cloud and Mobile, and the Internet of Things create enormous opportunities for organizations, but they also create the potential for different kinds of information chaos, which we'll explore in the next chapter of this article.

Cheers

DC*