This infographic distills InformationWeek’s 2014 Strategic CIO Survey results into top focus areas. Perhaps not surprisingly, for IT execs, cutting costs ranks at the top of the list. What else keeps your peers awake at night? Speed to market, insufficient budgets, and the skills gap. Scroll through the entire image for a final section of practical advice, and share your thoughts and tips in the comments.
By Reginald Lo
Responsible service provisioning requires an appropriate balance between quality and cost. But this balance cannot be achieved without a clear understanding of the service costs and the relationship between cost and service levels. With this knowledge comes the power to make decisions on where and how to spend to reach the desired balance.
To achieve this, you need to:
- Create a cost model for a service and thereby
- Understand what contributes to costs
- Provide levers and/or options for the business to control costs within acceptable service levels.
The major activities in this approach are:
The availability of the right information, along with processes and procedures for capturing and maintaining the information, is critical to the success of this approach. However, I have found that many of my customers do not have all the information they need and their information processes usually need to be strengthened. Hence, you may want to conduct a pilot first with a small subset of services, identifying the information and process gaps, and creating and executing plans to address the gaps, before applying this approach to a broader set of services.
This approach can be used prior to or in parallel with a cost transparency / show-back / charge-back IT financial management assessment to prepare your IT organization to track and understand service-based costs and help prepare the business for taking a more direct role in making IT cost decisions. It provides the business with levers to control their IT spend.
IT cost modeling is not simple – information may be missing and creative solutions may be required to estimate certain costs; policies need to be established on how to categorize and track costs, and repeatable procedures for creating and maintaining the cost model must be established. However, if IT cost modeling is done well, the benefits of true transparency and effective cost controls can far outweigh the challenges.
Reginald Lo is Director of Service Management Transformation with VMware Accelerate Advisory Services and is based in California.
By Barton Kaplan
We are undoubtedly living in the era of big data. For any doubters, McKinsey estimates that the amount of new data that enterprises around the world stored on disk drives in 2010 equaled 7 exabytes, growing at a compound annual rate of 40 percent.
The opportunities for enterprises to leverage this data abound, at least in theory. In the retail sector alone, McKinsey estimates that big data could raise operating margins by a whopping 60 percent. And in US healthcare, the potential benefits are as much as USD $300B annually. Further, venture capital is flowing to a slew of new startups that are creating tools and algorithms that can parse data at scale.
But the reality inside enterprises paints a different picture. The biggest misconception with big data is that the sheer volume means there is more meaningful insight to be had. But as Nassim Taleb has convincingly shown, as the amount of data goes up, the signal to noise ratio goes down, by as much as 200 times.
This phenomenon is reflected in corporate survey data. In a poll of over 8,000 employees by CEB, only a third indicated that the information they needed to do their jobs was available. And less than half said that corporate sources of information were usable.
Meanwhile, at a time when over 80 percent of employees at the typical organization are now considered knowledge workers, fewer than 40 percent have the combination of analytical skills and judgment needed to use that data to drive better decisions, without which no value can be gained. Data scientists alone can’t make up for a capability gap across the broader employee base.
So how do organizations tackle the myriad information management challenges that big data has exacerbated so they can realize some of the benefits? In my work with companies, the following four tactics have proved effective:
- Elevate the importance of information: One large financial institution put information on par with people, process, and technology as a discrete enabler of business capabilities, leading to a fully funded, five-year information management strategy and roadmap.
- Develop differently for data: At a major insurance company, IT leadership replaced their software development lifecycle with a data-centric development lifecycle for information-intensive projects.
- Make data analysis user-friendly: IT can no longer keep up with business demand for reports and dashboards. Instead of being the bottleneck, work instead to expose corporate data in a secure yet user-friendly manner so employees can quickly and easily generate their own reports. At one organization I worked with, they set up an interface modeled on Amazon’s with the motto “shopping for data.” The result was a 50 percent reduction in support staff time to deliver analytic services.
- Upskill your people: Rather than trying to land a few hard to find, expensive data scientists, focus instead on raising the skill sets of the 8 out of 10 employees in your organization who are considered knowledge workers. This starts with an understanding of the profile of an employee with high “insight IQ.” Try the following quiz to see if you fit the bill.
Barton Kaplan is a business solution strategist with VMware Accelerate Advisory Services and is based in Maryland.
 McKinsey Global Institute, “Big data: The next frontier for innovation, competition, and productivity,” June 2011.
 Nassim Taleb, “Noise and Signal—Nassim Taleb,” Farnam Street Blog, 29 May 2012.
 CEB, Business Outcomes from Big Data, Webinar, March 2014.
 CEB Enterprise Architecture Leadership Council, “Overcoming the Insight Deficit,” 2011.
As businesses depend more and more on technology to drive innovation, IT is being asked to rethink the way it supports the company. How does the business currently understand the role of your IT organization? According to Gartner analyst Leigh McMullen, CIOs need to reposition IT from a process and technology organization to a service-focused organization that promises agility, responsiveness, and innovation.
The front office, in particular, presents an exciting white space for IT to demonstrate a positive impact on business differentiation and effectiveness. IT leaders can make inroads here by forming strong relationships with the lines of business most responsible for the business’ mission or revenue generation, explains McMullen in this video.
Forward-looking CIOs build a foundation for this transformation with more sophisticated automation and other efficiency measures, freeing up bandwidth for them to build the relationships necessary for a service-focused IT strategy. “If your attention is focused on operating the enterprise and keeping the lights on, you’ll never be able to give these new growth opportunities the focus they require,” McMullen says.
How do you carve out time for long-term strategy and transformation? What steps will you take in 2014 to free up more of your attention to focus on innovation and business drivers?
By Enrico Boverino
In my last post, I introduced a banking scenario where my customer was focusing far too much on running at status quo and not enough on evolving the business – and by extension, IT — for continued success. Read on for two software-defined data center (SDDC) approaches that will help the CIO and IT set sail toward supporting innovation and meeting business goals.
Roman philosopher Lucius Annaeus Seneca once said, “If one does not know to which port one is sailing, no wind is favorable.” This quote doesn’t just apply to sailors. It extends to IT organizations and data center strategies as well and underscores just how important it is to set the destination, navigate there, adapt to changing conditions, mitigate risks, and continuously measure improvements to recalculate the ideal route.
Let the software-defined data center (SDDC) be your favorable wind.
When identifying which SDDC approach should fill your sails, different priorities require setting appropriate strategic approaches to meet the objectives. I usually facilitate the conversation with questions like:
- Is your priority as IT to RUN the bank and above all cut costs?
- Is there a strong demand for innovation that can no longer be ignored?
- Do you require a sign of discontinuity to accelerate collaboration of people and consolidation initiatives?
- Is agility, now enabled also by new technologies and cloud services, your main priority to support the bank direction?
Two approaches commonly identified by the outcomes of these questions are:
1. SDDC New Platform (Greenfield)
Create a brand new SDDC platform for new and existing services, built on x86 infrastructure. This means implementing a converged virtualized architecture, which includes compute, network, and storage, and automated through predefined policies, operated proactively with analytics to meet SLAs and managed with granular cost allocation by usage to support budget and investment processes.
This approach also requires the definition and adoption of new processes that go beyond established best practices, which may not be sufficient to operate a completely new environment. Therefore, an optimized organization will be shaped with fewer dedicated silos and more service-oriented tenants that can support business demands at new speeds and generate differentiation in the services delivered. Implementing cloud infrastructure operations centers of excellence and cloud tenant operations is both a transformative and disruptive process. However, there are a few key factors that can help a company achieve a successful outcome and avoid pitfalls. (Download white paper for more information on optimizing the IT operations organization for cloud.)
Recommended steps for a Greenfield strategy:
- Address business urgency with pre-integrated frameworks and simplified business models.
- Introduce innovative technologies that mitigate the risks of pioneering new delivery models.
- Manage changes that the new platform creates on existing processes and organization.
- Establish cloud centers of excellence and tenant operations for convergence.
- Partner with the lines of business (LOB) in co-funding initiatives as driven by business demand.
2. SDDC Build and Replace (Brownfield)
Define a multi-phased approach based on SDDC use cases and management planes (infrastructure, operations, automation, and financials) to develop an actionable roadmap. Within this option, you respect relevant current investments and leverage existing skills to clear current bottlenecks while introducing new SDDC structural elements and functions.
Operations processes will be updated gradually in relation to the SDDC structural elements introduced, which will also deliver efficiencies and quick wins to support the long-term roadmap and goals. Once these are in place, you will continuously improve to reach the complete SDDC model as well as the modernization of all management planes.
Recommended steps for a Brownfield strategy:
- Address platforms and data complexity with a multi-phased value approach via SDDC use cases and management planes.
- Build on top of current systems, mitigating the risks of data migration and decommissioning.
- Establish cloud centers of excellence and tenant operations for convergence (as with Greenfield).
- Gain LoB commitment by sharing transformation plan to pursue swap of current modules.
After clarifying both SDDC models, I work collaboratively with my customers to start to design an actionable roadmap and business justification to pursue one of the two options (or both at the same time). With a plan in place, this actionable roadmap can help you reach your desired destination and achieve results for both IT and the business.
Enrico Boverino is a senior business solution strategist for VMware Accelerate Advisory Services based in Italy. You can follow him on Twitter @eboverino
 VMware white paper: “Organizing for the Cloud.” Kevin Lees, Principal Architect, August 2012.
by Barton Kaplan
Wikipedia defines shadow IT as “systems and solutions built and used in organizations without explicit organizational approval…by departments other than the IT department.” It’s been a sore point for central IT organizations for a long time, and judging from the most recent data, it’s only getting worse.
Gartner predicts that by 2015, 35 percent of technology spending will occur outside the central IT organization. In a US$2.7 trillion industry, that’s a big number. What’s worse, CIOs consistently underestimate how much the business spends on technology. According to best practices firm CEB, business partners spend almost twice as much on technology as IT estimates.
Why is this happening? Recent technology trends compound the prevalence of shadow IT, and putting increased pressure on central IT to keep pace.
- Business partners have become more tech savvy and are much more willing to take on technology-related activities. From technology evaluation to vendor management, some two-thirds of business executives express a willingness to lead.
- With the maturation of cloud and XaaS offerings, it’s easier than ever for the business to go around IT to meet its technology needs. And vendors are targeting these business buyers because they typically purchase more and procure faster than IT departments.
- Across industries, technology is viewed as more critical to enterprise success and competitive differentiation than ever before.
- As business speeds up and third party providers improve their ease of use, central IT is perceived as getting even more slow and bureaucratic.
What’s worse, traditional approaches to managing shadow IT simply don’t work anymore. Historically, central IT has reacted to shadow IT in one of three ways:
- Police – Attempt to root out and shut down shadow IT. The reality in today’s enterprises, however, is that the vast majority of central IT groups simply don’t have the stature to adopt this approach, or the authority to enforce it. Further, much of this spend is business-sanctioned and viewed as essential.
- Ignore – Turning a blind eye to shadow IT isn’t an option either, given the size of the spend and the potential risks to the enterprise of it going completely ungoverned.
- Incorporate – Bringing shadow IT into the central IT organization is actively opposed by the business out of fear that it will result in lost agility and innovation. Fifty percent of business technology spending is on innovation, which is three times the size of IT’s innovation budget.
So what should IT do? First and foremost, central IT organizations need to adjust their mindset. The days when shadow IT meant hiding a server under your desk are long gone. Today’s shadow IT has become much more sophisticated and central to the business.
IT organizations need to accept and advise business partners’ experimentation with technology, not resist it. Progressive practitioners who have had success changing their technology relationships with the business are adopting the following three tactics:
- Distinguish between healthy and unhealthy shadow IT. At one consumer products company, the IT organization differentiated between “shallow” vs. “deep” IT when determining whether a project should be business or IT-led. This more cooperative approach resulted in a 52 percent increase in IT investments directed at new opportunities.
- Change IT’s perspectives on risk. IT’s typical approach to risk is one of mitigation. Less risk is always better. By contrast, business partners look at risk vs. reward tradeoffs. If the reward is great enough, it may be worth the risk. Leading IT organizations are adopting risk management frameworks that capture this more nuanced view of risk.
- Improve business perceptions of IT. IT needs to operate at the speed of business and devote more of its budget to innovation. According to VMware data, customers who are running IT as a service spend 50 percent of their budgets on innovation vs. an industry average of just 30 percent .
Bart Kaplan is a business solution strategist with VMware Accelerate Advisory Services and is based in Maryland.
 Gartner, Inc. “Predicts 2014: Application Development.” Brian Prentice, David Mitchell Smith, Andy Kyte, Nathan Wilson, Gordon Van Huizen, and Van L. Baker, November 19, 2013.
 The New York Times. “Hard Times Could Create a Tech Boom.” Quentin Hardy, November 17, 2012.
 Corporate Executive Board (CEB) webinar: “Getting to Healthier Shadow IT.” January 9, 2014
 VMware “VMware IT Evolution: Today and Tomorrow – Insight from the VMware 2013 Journey to IT as a Service Study.” August 2013.
By Enrico Boverino
While organizing my notes on my flight home after meeting with the CIO of the IT Shared Services organization for a large global bank, the metaphor “selling ice in the Arctic” came to my mind. Like me, some of you may have been subjected to play it out during a job interview, in order to demonstrate your creativity and persuasive skills.
The main topic of my meeting with the CIO was how a software-defined data center (SDDC) could help his IT organization accelerate its ability to modernize the delivery of services while achieving the 3-year cost-saving objectives set forth in the company plan. However, our meeting was not about me (as amazing salesperson) trying to sell a technology solution to someone who didn’t need it, or to persuade him to go against his best interests. My role was to understand my customer’s business needs and the unique challenges the banking industry presents to his IT organization.
Our discussion centered on how technology, processes, and organizations can be managed to achieve business objectives faster and more efficiently. Today’s banking industry is moving past a few challenging years. And while many banks are still executing for cost savings in back-office optimization or making the necessary investments to adhere to new regulations such as SEPA payments or Bank of Italy Continuity Controls, I do see a strong movement to quickly modernize. In fact, many banks are embracing technology innovations to adopt a digital strategy and to create new services to transform from a transaction-centric to a customer-centric model.
This innovation leads to the development of new personalized services such as digital wallets, new online payment processes, and personal finance applications that can be offered as value-add services to the existing online banking experience. These new services also create requirements for dynamic customer front ends that address mobility and new social behaviors. There are examples of banks developing two unique customer experiences that are demography-based—simpler and limited interface for traditional customers; richer and more dynamic interface to attract Generation Y. And of course, there’s the rising demand for more data storage and richer data analysis—mostly related to customer transaction history, spikes of trades, and social data insight.
In the banking industry, innovation can have different meanings to different IT organizations, based on their resources and constraints. And, there are tradeoffs and negotiations on how to fund “RUN the bank” versus “CHANGE the bank” initiatives that shape corresponding IT strategies, as shown below:
RUN the Bank
- Front-to-back office modernization
- Financial transparency of IT services
- Regulatory compliance and operations continuity
- Efficient procedures and selective sourcing
CHANGE the Bank
- Accelerate M&A and geo expansion
- Share commodity functions across bank communities
- Enhance customer experience and grow mobility offerings
- Data consolidation and rich analytics to create new offerings
So how can a software-designed approach enable my customer’s IT organization to deliver on new service requirements and accelerate innovation for his business stakeholders? Today, he manages to distribute budget and resources to support both sides of the bank’s initiatives, but I pointed out that his IT organization remains too anchored to the RUN side, which is slowing the outcomes he could realize from innovation.
In my next blog, I’ll compare an SDDC greenfield approach to a build-and-replace model. While there are different approaches the bank can pursue, creating a new data center platform—an SDDC greenfield strategy—can put the CIO and his IT organization on a fast track toward meeting business objectives.
Enrico Boverino is senior business solution strategist for VMware Accelerate Advisory Services based in Italy. You can follow him on Twitter @eboverino.
by Alex Salicrup
It’s 6:00AM; my alarm clock just went off. Another day started in a hotel bed hundreds of miles away from home and family. As a consultant, I do this half of the week most weeks, working with my customers. And, my team’s experience is very similar to mine.
We meet this morning, all traveling from every corner of the U.S., to discuss several challenges that two of our clients are facing while making the cultural transition from traditional IT to service providers. Both clients are two of the largest, everyday brands we consume worldwide; both strive to achieve similar outcomes.
The mood in our conference room is passionate, yet full of humor and laughter. Sometimes we have tough days, but as innovators, we are always motivated by the answer yet to be formulated—we are IT explorers. We all believe in what we do and have seen the success that each of us uniquely brings to the problem-solving process.
As a strategist, I could likely secure a lucrative position within a major IT department. I receive emails every week for consultant-, director-, even executive-level roles. I pay no attention to them. Yes, I endure long separations from my family and heavy travel. However, it’s difficult for me to contemplate leaving a job environment where I get to collaborate with amazing and motivated individuals and have a positive influence on so many organizations. To me there is no greater satisfaction than seeing my customers increase their skills and develop their capabilities to morph into a culture that uses a lot more of their annual budget innovating rather than reacting.
Why do I use myself as an example? Because I am the outcome of a well-aligned service provider. Because my attitude is likely to mirror any employee’s within your IT organization. All IT professionals would love to forge new routes, develop plans, and create innovative ways to forecast and meet or exceed business needs. No one is satisfied with reacting to repetitive requests and remediation. These tasks still need attention, and there are more effective ways to address them. For many IT organizations, there just isn’t time or in-house experience to change status quo.
Unfortunately, most IT resources are still dedicated to reactive tasks. Many of the IT organizations I work with have tried to move away from this behavior but without the best practices to achieve service-driven ambitions, many stall in spite of their efforts. In the end, I believe the skill to execute is what’s lacking. Few IT organizations systematically tackle transforming their operations by subscribing to a roadmap that embraces the key pillars of a successful service provider.
Three key pillars of a successful service provider include:
- A proactive service culture,
- Robust processes that drive automation as well as using technical tools and,
- The technical skills required to operate the new environment.
Many organizations try, but find it hard to do it on their own. They may be so immersed in their culture that they can’t see the opportunities change will bring. The motivation may also be lacking to get them to the finish line. This can change with the right focus and, possibly, the right help.
In my experience, it’s a fact that IT employees who embrace and subsequently become part of a service-driven culture enjoy their jobs significantly better—and like me, increase their productivity through efficiency. Over time, they find it hard to let go of those opportunities to innovate. Everyone loves it when a plan comes together! They learn new skills that are less tactical and more strategic. And the attrition rate among service-driven IT organizations is much lower than traditional ones.
I partner with clients to understand their goals and act as a shepherd to guide them in developing these results by constructing long-term road maps with game-changing milestones throughout their journey. With the right direction and tools, the short-term wins soon amass to reach the organization’s end-state goals.
Alex Salicrup is an IT transformation strategist with VMware Accelerate Advisory Services.
How can the “old IT” be competitive in a marketplace crowded with external cloud providers? The promise of agility, cost savings, as well as self-service capabilities requires the new IT organization to truly transform to the role of service provider.
In this video, Accelerate transformation strategist Padmaja Vrudhula explains how IT’s new role as service provider elevates the business value the IT organization can bring to the business.
I knew this would be no ordinary customer engagement when the CEO of a global food retailer announced he expected to triple revenue in five years. I also knew an ITaaS model could exploit the cost and operational benefits of a software-defined data center.
But was their existing IT infrastructure capable of meeting his business goal? Simply put—no. Read the story behind our strategic approach and the company’s progress toward an end-to-end transformation in my post on the VMware Consulting blog.
Alex Salicrup is an IT transformation strategist with VMware Accelerate Advisory Services.