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Monthly Archives: June 2012

Make IT the Hot New Product

Author: W. Eric Ledyard

 In today’s business world, technology adoption is a much stronger competitive differentiator than it has been in the past. It offers many opportunities for companies to grow their top-line revenue if they’re savvy enough to leverage the power that new cloud technology enablers offer.

 Recently, Kotaro Oka, one of our newest Accelerate members based in Japan, and I were having a discussion on VMware Accelerate's views of the IT world and what our primary objectives are when working with organizations. There was a little bit of a language barrier, but because of that, I may have heard the best description ever spoken back to me.

 After explaining that most vendors of IT products and services are focused on saving companies money and reducing costs, I then told him that our mission was to change the way IT is perceived within organizations – moving IT from a cost center to a competitive differentiator. I gave him examples and lessons learned that we have seen at our existing customers as well as information garnered from McKinsey around the fact that IT spend represents typically around 4 percent of an organization’s total annual financials. And, if you focus on just cost savings, you are shaving off a percentage of only that 4 percent of the pie. The real impact is made when you leverage IT to affect the top-line revenue of the organization.

 As I was relaying this message to Kotaro, he responded: “What you are really doing is making IT the hot new product.”

 His understanding of what the Accelerate team is trying to accomplish had never been so eloquently stated before to me, and a choir of angels should have accompanied it. Immediately, my mind started processing how much easier it would be for a CIO or CTO to sell the investment needed to fund a cloud IT project if they approached it as though it was the “next big thing” for the company. I started thinking of projects that I have seen with millions and millions of dollars thrown at them because of the promise of creating market buzz or showing that the company was forward thinking and ahead of its competition.

 But those same companies continue to have issues trying to get a few hundred thousand dollars’ of IT budget to support projects that would have far more impact to the business overall. Typically the CIO doesn’t position the project correctly to internal stakeholders, or design the proposed solution using technologies that would lend themselves to differentiation. In many cases, IT projects are seen merely as a cost burden because they are not designed or perceived as offering company-wide innovations.

 At the same time, many of these companies compete against technology-savvy upstarts, whose core competitive advantage is their ability to build a company from the ground up taking advantage of modern technology. This allows them to have a much higher level of business agility, and take business away from other companies in droves because they utilize technology enablers that their consumer base wants to use because it makes their lives better (e.g., applications for mobile devices that allow them to access their accounts while on the go).

 Meanwhile, CIOs of larger, more established companies are constrained by their legacy applications and technology infrastructure and are unable to keep up competitively. To compound issues, most of their traditional IT organization is so focused on cutting costs and doing more with less that they are unable to proactively focus on projects that would drive top-line revenue and allow the company to grow through the use of cloud technologies.

 As I pondered Kotaro’s statement, I imagined how a CIO could present the same technology enabler up to company executives for approval and have it perceived in two entirely different ways. And, because of the difference in approach, would fail in the first presentation and be successful with the other. In the first example, a CIO would approach the board of directors and executive team within the company with a list of products that you wanted to buy and a price tag of a few hundred thousand dollars and a weak business plan that showed a TCO reduction over three to five years. In this world, I imagine the executives perceiving this as “just another IT spend request” and denying it because they need to cut costs and this technology solution wasn’t needed at this time.

 In the second example, I imagined what it would be like for the CIO to present the proposed technology enablers “as a product” rather than a cost. In this example, as a CIO, you would create a brand around the IT project, you would do some legwork to quantify the impact the product could have on the company, you would compare your product to that of your competitors and you would discuss how you would use the product to drive top-line revenue and competitive differentiation.

 In much the same way that you would do this if you were in R&D or Product Development, as CIO, you would speak in the language of: “If  the company invested $10 million in this product, and it will drive $100 million in new/additional revenue over the next three years, why wouldn’t the company do this?”

 For most companies, that proposition would be quickly decided upon. The only difference is, “the product” in this example would be the new IT project that will utilize cloud technologies and provide all of the benefits necessary to the company to keep its current customers happy while also attracting new customers and allowing it to enter or create new markets.

 My career in IT leadership happened in a time when the industry was mostly focused on cutting costs and squeezing more out of IT with less budget because the technologies we needed to drive true innovation through IT had not been invented yet. While writing this blog, I find myself being envious of today’s modern CIO/CTO and thinking of how much easier they have it than we did.

 With this latest cloud technology shift and all of these incredible technology enablers finally making it into existence,  savvy CIOs have a much easier time getting the rest of the business to get behind them to accomplish their goals just by changing the way they think about what they are doing as an IT organization. Because the technology enablers are there, if you are truly running your IT environment “as a service” and IT is “the hot new product,” the sky is the limit for getting things funded and done. The first big step is that shift in perception.

 VMware Accelerate can help you change the way IT is perceived within your company. Check us out at www.vmware.com/accelerate or reach out to us today at: accelerate@vmware.com for more information.

Why You Can Rely on Vendors to Help Create Your IT Strategy

Author: Curtis Springstead

Stefan Dietrich’s post of 5/18/12 on Forbes.com makes some very salient points, but also holds on to some well worn myths about vendor supplied advice. If you have developed true partnerships with a limited set of vendors, you can gain a lot of valuable input as the CTO that makes your IT strategy stronger and your work easier. In my experience, the belief that the internal IT organization has the resources to independently understand and solve all business and technology issues has led to more failures than the use of well adopted vendor expertise.

In his opening, Dietrich hits on the real issue that it is “…tempting to think that vendors can be good sources for your IT strategy, relegating the CTO role to a sideshow.” However, firms following this path are destined to regret that approach. If as a CTO you think you can occupy that seat very long simply channeling vendor decks as your IT strategy, you best keep your resume handy as your tenure will be short. Dietrich’s caution that believing “…strategy itself, just like engineering, is something that can be purchased as (or with) a product…” further acknowledges that CTOs must take an active role in the process. In addition, most documented vendor strategies are hardly actionable by themselves, particularly with the heterogeneous landscapes in most IT architectures.

The VMware Accelerate Advisory Services team believes that technology is a tool to enable realization of business goals. In our customer engagements, we insist on getting the business context first, which candidly is not always well known at the IT level due to communication issues between IT and the business. Since we strive to establish long-term partnerships at senior levels with our customers, we are compelled to keep them from solutions that, while carrying our VMware brand, may not meet their need or perform at their level of need.

Can we recommend any solution on the market? Not really, more because we are experts in many but not all products, rather than we have a particular bias. In my experience, I have found few consultants who have a broad, independent knowledge of all the solutions in any domain. We often recommend complementary products demonstrated to fill gaps not addressed in VMware’s product line, yet are consistent with our vision.

During the nearly 20 years I spent at a major systems integrator, we were often hired to create architectures and strategies because we were one of the few “technology agnostic” vendors—a badge we wore proudly. However, as we filled the columns of our evaluation documents with vendor names, customers frequently asked, “Don’t you already know the two or three I need to look at?” Of course we did, but we wanted to be open-minded and consider all options – they simply wanted to save the time and money by cutting to the chase, which is the reason we were hired. Based on this experience, I am quite comfortable in my role as an expert advisor in the particular domains VMware addresses and the approach they propose.

I found Dietrich’s statement that “…vendors simply can’t separate their ‘vision’ from their product…” could be compared with asking me to step away from my experience in my engagements. Having spent time at services and products vendors, I can assure you that the vision was created in collaboration with customers to address the problem as we understood it and to guide the product development. I would counter Dietrich by asking, “Why I would separate myself from the investments made to create what we believe will be the best overall solution and therefore drive our firm’s success?”

When we create our strategies as part of a VMware Accelerate engagement, we capture the needs of the business and IT as input to the recommended approach; an approach composed of people, process and technology changes. We do base our strategies on the VMware vision for the solution to the need because we have direct experience on the success of those strategies at other enterprise and industry-specific organizations. As the CTO, this is where you start to earn your title—your need to ask some simple questions. Does the solution seem overly complicated? Are the justifications for certain decisions weak when you poke at them? Does it conflict with what you are seeing in the broader market for this issue?

The inevitable discussion of vendor-integrated products versus best- of- breed is highlighted when Dietrich questions the option of following a single vendor or your team taking a known vendor path. He offers no consideration that while it may not be optimal for each aspect of your needs, following a single vendor may be the best solution overall for your company. For example, the cost of integration as he accurately points out earlier in his post, can be substantial and recurring as the various component players move at different rates and in different directions. When he suggests that technology solutions may need to vary by division, I recall my days running internal IT and the challenges of maintaining extra skill sets, dealing with integration issues and vendor finger pointing. However my real concern was to not be an impediment to business change. Will I be seen as the technology visionary when I can’t simply merge those formerly “unique“ business units?

In summary, I agree with Dietrich at the headline level, which most readers will likely take away from his post – don’t rely on a vendor to create your IT strategy. Embrace the needs of your business—not by the way of wants, but by needs—so you can drive a solution that meets those needs. Understand that no outside vendor, service or product, comes without some bias, even if simply based on their experience.

My advice? Consider all proposed vendor solutions, and take into account the impact to your business and IT, and balance the costs and benefits of previous investments with the costs to maintain the proposed solution. Leverage those biases to assemble the best IT solution that will drive your business transformation.

Curtis Springstead is a business solutions strategist for VMware Accelerate Advisory Services.

Learn more about VMware Accelerate Advisory Services at vmware.com/go/accelerate or contact us at accelerate@vmware.com

Comparative KPI Context – Keeping It Real

Author: Craig Stanley (@benchmarkguru)

 In the world of benchmarking, we have the concept of metrics and key performance indicators (KPI), but a fundamental problem is that by themselves, most if not all of these are completely meaningless. For a metric to have meaning, it must be taken in context within other metrics to produce a clear picture.

 Let’s take an auto race, for example. If my only KPI is the speed I’m traveling, and I have no idea my direction, then my speed is meaningless in the context of my overall goal, which is to win the race. Let’s say I’m traveling 100 mph and my competitors are traveling 80 mph. On the basis of that KPI alone, I’m performing 20 percent better than my peers, so I’m better, right? Well, not if I’m traveling west and the race direction is east. Similarly, if we only tracked sales volume without the context of profitability, then we could be losing money on every sale, and improving our volume just helps us lose money faster.

 The basic concept here is that we need at least two pieces of information to make the information relevant. The same problem was documented in quantum physics with the Heisenberg uncertainty principle, which states we can never be sure where an object is because both its momentum and precise location can never be known at the same time. But in benchmarking, we can know at least two conjunctive metrics.

 In benchmarking total cost of ownership (TCO), we have to address the same issues. If I compare my costs with peers and only look at my TCO for a virtual machine, server, desktop, and so forth, then all I know is what my spend is in relation to peers. I have no insight into why my costs are higher or lower than peers. Do I have a lower TCO because I am more cost-effective, or because I have older systems, fewer resources, no maintenance expense, and a lower quality of service? Conversely, if I spend more than peers, am I providing a better quality of service than they are, or am I just more expensive? Without measuring and comparing the complementary KPIs, these questions can’t really be answered.

 So where to start? I suggest starting with a couple of the major KPIs, and evaluate what other processes and KPIs could impact or contribute to that result. I’ve mentioned one, which is looking at TCO within the context of service delivery and/or quality of service. Another type I like to compare is resource productivity against results productivity. In VMware’s Accelerate Benchmarking, I compare the virtual machine managed per administrator (resource productivity) with the time to provision a virtual machine (results productivity). This helps place productivity within the context of results.

 For example, if I am supporting 1,500 virtual machines per administrator full-time equivalent (FTE) and my provisioning time is less than eight hours, then I’m probably providing the needed quality of service at that level of productivity—so I’m doing well. But if my provisioning time is more than a few days, then a problem exists, and I need to understand why. Again, if I only looked at the provisioning time KPI alone, then I only know it takes a long time; I still don’t know why. But within the context of the VM:Admin ratio, I have more information that may suggest that my support level is too dense for the tools, people and processes I have in place. It gives me a place to start looking, and it is likely the key driver of results productivity.

 There are many more comparative KPIs that help provide context within a benchmarking analysis. Finding and correlating these will unlock a treasure trove of hidden information to help you better understand the environment and identify new insights. These insights will draw focus toward improving efficiency, becoming more agile and delivering a higher quality of service to the IT organization and the business, all of which lead to differentiation and competitive advantage.

 Craig Stanley is the Benchmarking Practice Lead for VMware Accelerate Advisory Services. You can follow him on Twitter @benchmarkguru.

 Learn more about VMware Accelerate Advisory Services at vmware.com/go/accelerate or contact us at accelerate@vmware.com