All IT organizations started as a reaction to early stage business demands. As small companies grew, more budget was allocated in response to new capacity needs. Technical silo’s developed around IT functions first, then geographic boundaries. This reactive tech centric culture led to an architecture and operating model vacuum that created many of the challenges our clients face today.
The early stage data center culture was built around smart technologist responding to changing business needs. The VP of Engineering told the server/application/facilities/network security person that “X” capacity was needed. This new “project” would fall into a group of similar projects, and this became the “IT Strategy” for the next budget cycle. IT organizations failed to address more strategic decisions around integrated architecture, the structure of the organization and the most efficient way to deliver services with available budget, capacity and space. This was driven by both cultural norms and the existing skill set of IT leadership, management & subject matter experts.
Without an enterprise architecture in place, IT organizations typically have localized or no architecture. It’s important to note that desktop, application, server and storage architectures should represent an integrated topology to be considered an enterprise architecture. The level of maturity across the architecture may vary, and commonly does depending on defined priorities. The signs that standard architectures are not ready for operational change include lack of standards on hardware, software and administrative practices. In this kind of scenario we typically see excessive vendor support costs, overspending on licensing, IT infrastructure sprawl, IT staffing sprawl, inconsistent service levels, and excessive technical debt. We find that in most of our client engagements the first stage of implementation and change focuses heavily on “internal housekeeping” initiatives that establish the necessary baseline enterprise maturity levels needed for the organization to move quickly and efficiently towards their goals.
The lack of a baseline enterprise architecture prevents the change required to embrace a new IT operating model. The tricky part is that the architecture needed to enable the initial stage of change is simply the baseline architecture that should have previously existed. This means the “new” architecture is really just the “old” architecture and must evolve in support of the emerging IT operating model.
Our offerings assist IT executives across the lifecycle of developing a value driven services model. This includes establishing your overall readiness from an architecture and operations perspective, before partnering with your organization to develop models for IT operations, change, governance and roadmap development.
Digital change continues to accelerate. The value of technology investments are being eaten away by the lack of time IT organizations have to adopt these changes. By leveraging techniques used by successful startups, our services drive focus, prioritization and planned iteration for our clients. Our goal is to simplify change and drive high speed adoption. Resulting in IT “Right Spending” and measurable improvements to the value of IT investments.
In a Harvard Business Review article published in May 2013, author Steve Blank gives his take in “Why the LEAN Startup-Up Changes Everything.” The article describes how lean start-up techniques, in combination with other business trends, can ignite a new entrepreneurial economy. Through the past several decades of, Steve says that we’ve learned at lease three things.
The first, plans rarely survive first contact with customers. In our work with clients, we would say IT plans rarely survive first contact with the business. This is primarily due to a “Technology First Approach” which fails to address Time to Value considerations. Expected business value and the IT operating models needed to deliver that value must precede technology decisions. This puts customer experience at the forefront of IT operations and infrastructure decisions.
Secondly, five year plans are a waste of time. We believe years one and two can be mapped with years three and beyond being driven by strategic themes and technology options. Introducing governance models and change discipline designed to frequently challenge and iterate on specific plans or future themes ensure business realities and IT action are in alignment. The pace at which business needs change and how that influences the rate of technology adoption require a new approach to project planning, budgeting practices and the ongoing evaluation of customer satisfaction.
The third thing we’ve learned is that start-ups are not smaller versions of larger companies. They do not unfold in accordance to master plans. The critical difference there is that existing companies execute a business model, start-ups are looking for one. With the fundamental changes the cloud represents to IT business models, we want to emphasize this point. IT executives leading the charge towards advanced virtualization and private cloud solutions are leaving the old business model behind and “Starting Up” a new one.
Here are the four constraints that commonly restrict this transformation in an enterprise setting.
1. The high cost of getting the solution wrong I.E. The technology stack, operating model, organizational design
2. Excessive Time to Deliver & Time to Value Delivery Lifecycles, see Stop Technical Debt, Start “IT Right Spending”
3. The limited number of people with an appetite for the risks inherent in leading a start-up type initiative
4. The concentration of real expertise in how to lead start-up style enterprise initiatives
By designing our offerings to address points one and two, we help IT organizations launch services customers actually want, far more quickly and cheaply than traditional methods designed to protect and extend the existing IT business model. Our experience based governance models and change practices minimize the risk normally associated with points three and four.
The last twenty years IT management focused on building strategies and tools that formalized execution and efficiency for existing businesses. Skycanvas brings the first set of tools designed specifically for IT executives searching for the right cloud business models. Our services help existing companies deal with the forces of continual disruption. In the 21st century those forces will make people in every kind of organization—start-ups, small businesses, corporations, and government—feel the pressure of rapid change. Our model of lean start-up will help IT organizations meet change head-on, innovate rapidly, and transform IT business value as we know it.
Most organizations still spend almost two-thirds of their IT investments on non-differentiating capabilities, calling into question the benefits of IT-enabled investments. To improve IT’s impact on business performance, IT executives must break the dangerous cycle of incurring technical debt, and take a new “IT Right Investing” approach. We define technical debt as the relationship between the cost of a solution and the business value it delivers over time. The business value delivered is impacted by the technology, IT operations or a combination of both. The longer it takes to realize value, the more technical debt you incur.
In the illustration above, technical debt creation starts with the date of capital outlay and continues until the time the target outcome is achieved. Some amount of technical debt is always assumed, therefore not all technical debt is bad. Stage one is Time to Deliver and describes the time it takes from project kick-off until technical delivery of the hardware or software. Stage two is Time to Value and describes the time it takes for the business to achieve the target value for the investment. Technical debt is typically tech-centric during stage one, and IT operations-centric during stage two.
With organizations that commonly take a “Technology First Approach” there is serious risk with Time to Value related technical debt. By failing to understand the relationship between IT investments and customer outcomes prior to technology spending, IT leaders typically experience budget shortfall, unplanned spending, excessive delays, and long periods of maintaining a partial solution as “all of the pieces” are pulled together.
We recently helped a client that continually found themselves in this kind of scenario. By taking a “Technology First Approach” their most recent six month project turned into a two year fire drill that disrupted other IT & business initiatives, hurt IT credibility and resulted in excessive unplanned spending. Here’s a summary of their story.
The decision to invest in high end physical compute was made to maximize server virtualization footprint and reduce server sprawl. The improvements to virtual server availability would add value across geographies. Many key business units needed more server space. 90% of the planning took place between the server and facilities group.
1. After the servers arrived it was discovered that the power requirements for the new server chassis required an upgrade to data center power, Time to Delivery was impacted as infrastructure sat on the data center floor
2. Security upgrades required for offices international office in Europe to utilize virtualization environment in the application deployment stack, Time to Value impacted as customer outcomes were delayed
3. Performance issues as a result of a parallel project that expanded the Citrix infrastructure, preventing production utilization within the application environment due to a required SAN upgrade... which further impacted Time to Value as a result of IT silo’s failing to collaborate
300% more time
250% more budget
The project goal was central to application delivery, which became clear to the client by the end of the project. Developing goals around this customer driven use case would have led the team to explore security and performance considerations. The initial “goals” to reduce physical footprint and optimize server virtualization were simple technical outcomes that should be viewed as byproducts of making the right IT business decisions.
In addition to the technical debt illustrated above, IT executives must consider the disruptive impact of spending millions of unplanned IT budget dollars in addition to the loss of time from the most talented team members to “fight the fire.” This creates technical debt on other initiatives where time and money were needed.
Here are some common warning signs that may indicate technical debt is higher than it should be in your organization:
• The board and executive team are pushing you to reduce your IT spend by greater than 15%
• Incomplete projects delay implementation of already purchased technology
• "As-Is" architecture makes it difficult to change with evolving business needs
• Parallel integration of different projects started in different areas of the business
• IT expenditure justifications lack defined business outcomes and required operational changes
• Delay of more frequent incremental changes resulting in larger more complex changes due to existing operational practices
Skycanvas can accelerate the transition to “IT Right Spending” by identifying existing technical debt, helping you understand why it’s there, and ensuring that the ongoing risk of Technical Debt is minimized.