Making Elephants Agile Lessons from the Cloudy Battlefield ... · Cloudy Battlefield of...

Making Elephants Agile—Lessons from the

Cloudy Battlefield of Capabilities Dr. Stefan A. Deutscher Global Topic Leader for IT Infrastructure Operations

Dublin, September 9th, 2014

20140909_MakingElephantAgile_IVI-Fall-Summit-SDeutscher-BCG-v007a.pptx 2

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Quiz 1: What is able to ....

… remain stable under 9 tons of load ? … accelerate from 0 to 100 km/h in 3 seconds?

An elephant (of course) !

Evolution 1.0

Source: BCG

A cheetah (did you really know that) ?



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Quiz 2: So, then … what is stable under 9 tons of load and

can accelerate from 0 to 100 km/h in less than three seconds?

Evolution 2.0

Source: BCG

Right! A cheetaphant (of course, you knew that)



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Quiz 3: What did we talk about at the last Autumn summit? Hint: We don't mean our (admittedly also interesting) big data presentation

IVI in a world where every company is a

Technology companyRalf Dreischmeier, Global IT Practice Leader

Dublin, September 24th, 2013

130924 Where every company is a technology company v1.2-PL-SD-BER (abridged).pptx 2

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Every company is becoming a Technology company Three ways in which Technology is driving value

Size of

impact

Nature of impact

• Reduction of unit cost

of Technology services

• Commoditisation and

externalisation of

Technology

Cost reduction • Enhancement of

business processes

• Improved efficiency,

automation and agility

Business

transformation

• Enablement of new ecosystems

and new business models

• High innovation leading to

creation of new products and

services

Business model

innovation

1

2

3

• Focus on Tech cost/operations

• Improvement in agility

• Drawing on individual, commodity

services

• Focus on business strategy

• Drawing on full capabilities as part

of wider transformation

• New business products / services

Source: BCG experience, cloud analysis

Value x 5-10

Value x 5-10

Value x 1-∞

Source: BCG Analysis



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Sandwich position between leaders and nascent players has

put new demands on the global operations organization

New business requirements have led to service disruptions

and performance challenges

Challenger Nascent

Industry sanitized

New opportunities

Coming from ... ... going to

Services Running mature services Data and business process services

Key facts Few mainframes, high operational

maturity and stability

1,000's of servers, less operational maturity,

Very high traffic internet domain, globally

Organization Primarily siloed organization Higher need for cross-silo collaboration

Capabilities "Stable, stable, stable" IT services "Fast, Fast, Fast" business services

Our client's situation

Note: Sanitized Source: BCG project example

Leader

Industry sanitized

Industry sanitized

?

Our Client



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But situation extends beyond that client: External market

pressure on companies is mounting — three key trends

Source: BCG, expert interviews, press research

Value chain is shifting towards direct customer interaction

• <examples of traditional partners reaching out directly>

• <sanitized>

•

Suppliers and customers are redefining their demand

• Traditional business becomes more and more a commodity

• Both customers and suppliers focusing more on value-add attributes

• New requirements on both sides

Key market players are demonstrating different speed of innovation

• Suppliers push the innovation by implementing new technologies

• Selected customers are trying to innovate; most of them act as

followers

• Regulators try to shape the market by introducing new standards

Observations and examples

Shifting

value chain

Changing

demand

Unbalanced

innovation

The bigger picture: Typical situation

Service offering and agility of companies needs to be adapted

to the changing environment – while staying stable

Key trends

http://portals-eur.bcg.com/sites/my_visual_services/my_pl/Lizenzbilder/Project phases and activities/Q+A, Problem - Solution/Fotolia_40889726_S.jpg



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Conventional wisdom has a magic triangle for this problem Cost, speed, stability

What they said

Pick any two … right?

Stability Speed

Cost

Source: H. L. Mencken; BCG analysis

Remember: For every complex problem there is an answer

that is clear, simple, and wrong

Just (re)do it right …



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We therefore performed a global IT Operations benchmark for

operation-related steps of the value chain across key players

Source: BCG, project experience

Demand management

Test Decomission Deploy Build

Change

Databases

Database management systems

Operating systems

Infrastructure IT

Infrastructure facilities

Underpinning contracts & services

Applications

Run

Focus on

IT operations

Focus on impact of

IT operations

What we did

Key player industries

• Financial service providers (esp.,

stock exchanges, MFT / HFT)

• Energy exchanges + distribution

players

• Travel Service companies

• Web giants

• Logistics companies

• IT Service providers



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Five clear archetypes emerge from the first 14 analyzed

benchmark companies1 – overview of characteristics

Key findings: Identified archetypes

Business

archetypes

TTSCs Traditionals Web giants Traditionals TBD

With ecosystem With ecosystem With ecosystem Without ecosystem Tech-driven

Peers Peer 3 Peer 7 Peer 4 Peer 6 Peer 5 Peer 10 Peer 13 Peer 8 Peer 9 Peer 1 Peer 2 Peer 12 Peer 11 Peer 14

A Speed of IT Development of differentiating services

B Governance

model

Centralization

Process maturity

Sourcing model

C

Organi-

zational

agility

Organizational agility index

• Role of IT

• Span of control/ number of layers

n/a n/a n/a

• Interaction culture

• Failure tolerance

• Skill management

• Solution delivery

D Service

provisioning

Provisioning of differentiating services

Provisioning of supporting services

Deployment n/a

E Customer

centricity

Customer environment

Measurement n/a

1

Traditionals

with ecosystem

Companies of the real

economy with a low level of

digitalization of the value

chain which operate in

complex environments with

multiple customer, partner

and competitor patterns and

use IT to support their core

businesses

2

Web giant

with ecosystem

Global companies of the

digital economy with a

comprehensive product and

service offering which

operate in complex

environments with multiple

customer, partner and

competitor patterns

3 Web giant

without ecosystem

Multinational companies of

the digital economy with a

limited product or service

offering which operate in

homogenous environments

with stable customer,

partner and competitor

patterns

4

Tech-driven

traditionals

Companies of the real

economy with an average

level of digitalization of the

value chain which

recognized emerging

importance of the technology

as the business enabler and

leverage on it

5

1. And where supported by the following companies we added to the benchmark Source: BCG

2 3 4

5 1

Traditional Travel

Service companies

Peers which operate in the

market for traditional travel

services providing software

and IT solutions to travel

agencies, corporations,

individual travelers, airlines,

hotels, car rental, railway,

cruise and tour operator

companies



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... define their customers from a business view and align service provisioning and speed

of IT by customer type (e.g., end-customers and those directly interacting with them vs.

internal and support functions not immediately impacting customers)

Benchmark unveils five key dimensions of relevance to

counter the main "speed and stability" challenge

1. Subject to particular starting situation 2. Could be some form of cloud or just any other highly automated environment – your mileage will vary Source: BCG

... provision, operate and maintain an IT environment designed for (often different)

speed requirements of business needs, e.g. an industrial speed IT or digital speed IT

... establish appropriate management structure, processes and sourcing model to

enable and sustain business value contribution of IT at the required speed (e.g.,

centralized vs. federated, in-house vs. outsourced)

... establish the appropriate organizational pre-conditions for adaptation to a changing

environment or speed requirements of business (specifically: leadership, team setting,

team members and organizational structure)

... provide customers/the business with the needed IT services at appropriate cost,

service level, and speed (e.g., standard vs. custom-made) and the appropriate

development and deployment mechanisms (e.g., traditional test-deploy vs. agile)

Key dimension

Speed

of IT A

Org.

agility C

Governance

model B

Key findings: Key dimensions

Customer

centricity E

Service

provisioning D

These form part of, and should be addressed as, a whole in a well-

designed sequence1, isolated fixes will not "move the needle"

The capability of the IT organization to ...



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When moving to automated platforms or cloud, several

capabilities need to be enhanced or built up

Managing IT like a

business

Managing the

IT budget

Managing IT for

business value

Managing the

IT capability

IT Leadership and Governance ITG

BPM Business Process Management

BP Business Planning

SP Strategic Planning

DSM Demand and Supply

Management

CFP Capacity Forecasting and

Planning

RM Risk Management

AA Accounting and Allocation

ODP Organisation Design and

Planning

SRC Sourcing

IM Innovation Management

SAI Service Analytics and

Intelligence

FF Funding and Financing

BGM Budget Management

PPP Portfolio Planning and

Prioritisation

BOP Budget Oversight and

Performance Analysis

EAM Enterprise Architecture

Management

TIM Technical Infrastructure

Management

PAM People Asset Management

RAM Relationship Asset

Management

RDE Research, Development and

Engineering

SD Solutions Delivery

SRP Service Provisioning

UTM User Training Management

UED User Experience Design

PPM Program and Project

Management

SUM Supplier Management

CAM Capability Assessment and

Management

TCO Total Cost of Ownership

BAR Benefits Assessment and

Realisation

PM Portfolio Management

KM Knowledge Management

Significant Impact

Some Impact

Source: Innovation Value Institute; BCG global IT benchmarking of top companies; Cloud Computing research

Key findings: Capabilities



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Example: Capability levels for migration to Cloud of large entity Private vs. Public cloud

Managing IT Like a Business The others: Managing the

IT Capability, the budget, for business value

1

2

3

4

5

1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 1 9 3 4 5 6 7 8 2 10 11 1 2 3 4 5 6

IT-CMF critical processes

SRC - Sourcing

CBB

EAM – Enterprise Architecture TIM- Technical Infrastructure SRP- Service Provisioning CP

Key: Private

Public 1 Initial

2 Basic

3 Intermediate

4 Advanced

5 Optimising

Increasing

business

value

This assessment concentrates on the critical processes for

Cloud Implementation

Source: BCG Client example

Key findings: Capabilities

e.g. TIM



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Top performing companies move applications into production

in a 1 week to 1 month timeframe (this was 2008/2009)

Project

(business)

Place order

Vendor

Production

•Service mgmnt.

•Operations

Application

operations

Production demand

1 day

2-20 days

Installation

Application installation Application test, stress

tests

4-8h 1-2 days

1-2 days 1-2 days

Server arrival

Configuration

testing

Application ready for

production

Key success factor

OS image

industrialized

Install procedure and

dependencies documented

Test scenarios documented

Tests indicators embedded within

application Key

Standard hardware

Limited number of vendors

Pre-command (stock?)

Total duration: 8 to 29 days1

Backup before

production

4-8 h

Testers

recruiting

(business)2

1. Depending on application complexity / server complexity 2. If needed Note: Not showing the design, operate, or deprovision/decommission steps Source : BCG benchmark

That won't do today, but there are still many companies in

2014 which take that long – or longer

Key findings: Platform – Example TIM

Example



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The Technical Infrastructure Management (TIM) CC of the

IT-CMF covers the whole infrastructure life cycle (for now)

Decom-

missioning

Operation and

Maintenance

Deployment

Continuous

Improvement

Build

Designing, planning, and testing

models, prototypes, and concepts for

later deployment, e.g. OS images,

policies, configurations, patches

Setting up and distributing

physical components (e.g.,

PCs, servers, routers) or virtual

entities (e.g., patches, updates,

configurations), ready for

operation

Retiring physical

assets and virtual

entities

Operating, maintaining, and

supporting physical components and

virtual entities

Ongoing activity to

optimize processes of all

lifecycle phases

Category Service tower

Decentra-

lized IT

PC management

Peripherals

management

Mobile device

management

Decentralized

server

management

Network

LAN/RAS

management

MAN/WAN

management

Voice management

Back-end/

data center

Server management

Storage

management

Overarch-

ing

activities

Asset management

Security

management Source: IVI; BCG , TIM WG Stage 4 Submission 2010-01-26




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Business agility increasingly demands for continuous

delivery capability – and firms may appoint a new CIO to get it

The IVI IT-CMF framework can help you assess where you

stand – and get to where business needs you to be


For this ... ... you need that1 , in minutes not days

1. Ability to provision and deprovision infrastructure (physical or virtual) in minutes Source: "Continuous delivery" Jez Humble & David Farley, 2010; BCG project experience



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