A few weeks ago Accenture’s Gavin Michael wrote on this blog about making information the key requirement of IT. In the blog post below he calls for a change in how IT thinks about itself. I have also explored this topic in the article – Moving to IT 2.0 >>
In the latter part of the 19th century, a technological revolution was steadily gathering speed. Following several crucial breakthroughs, such as the telephone and light bulb, electrification started to spread through cities. By the end of the century, many leading firms had set up their own electricity supplies to power their factories, phasing out steam engines. In 1904, the newly patented power plug and socket was being rapidly adopted. The days of firms having to manage their own electricity supplies were drawing to a close. Business leaders could instead focus on new electricity-based process innovations. A new era had dawned.
A century on, a similar revolution is underway. For the past several decades, firms have installed and managed their own server farms to supply computing power for a plethora of business needs. But a range of innovations, loosely termed cloud computing, is promising to render these monolithic internal systems obsolete. Once again, this is freeing businesses to focus on designing new processes and services, fuelled with computing power on tap. The switch from server-centric to service-centric is underway.
Although much of this change is understood as cloud computing, there is a bigger story at play: the fundamental re-creation of enterprise operating model. However defined, the end result is the same: an agile IT function, able to provide faster, cheaper access to computing resources as needed. The case for disconnecting IT architectures and moving to a more agile model is getting stronger by the day. This is being bolstered in particular by the maturing of key supporting technologies, such as Platform as a service and Software as a service.
Pharmaceutical giant Eli Lilly gives one example of the change this can bring. It is using a cloud service to provide computing resources to its global pool of scientists. In one drug discovery process, it paid just US $89 to analyse a complex dataset, something that would have required buying 25 servers internally. Its setup time for such data analysis had dropped from over seven weeks to just three minutes.
This is an early example of the potential, but it highlights a key change: where CIOs were previously constrained by technology architectures, they are now empowered to think first and foremost about the desired business processes or services. Netflix, the movie rental service in the US, gives a compelling example. The firm is steadily transforming its business from a DVD mailing company and into a content streaming one. But rather than building a vast data centre to support this transformation, the firm decided to focus on its core competencies: marketing and recommending compelling content, while relying on the cloud for delivery. Rather than worrying about how to scale up IT capacity, it can instead focus on honing its marketing and service.
Today, the business world is only at the outset of this transformation. But some implications are already clear to see, especially for the iPad generation. Need to support a business function? Find or create an appropriate app or service and make it available to them, to use as needed–on whatever systems they use, wherever they are, and however many there are. Liveops is one early example: a specialist, cloud-based call centre provider that links up a virtual army of some 20,000 home workers. For firms like Coca Cola and Kodak, looking to provide a call centre service to clients, they can simply tap into this resource and scale it up (or down) in line with demand.
All this recasts the CIO as a service orchestrator, rather than a technology supplier that worries about managing server farms. And it allows firms to shift away from simply replicating their old processes in the cloud, to thinking differently about what new business models or processes could be enabled. This creative energy can now be used to find new services that provide a competitive edge, or open up a wholly new niche. Just as the first firms to create electric-powered tools in their factories stole a march on their slower rivals, so too will firms in the disconnected IT era.
Gavin Michael is Chief Technology Innovation Officer at Accenture. Follow Gavin on Twitter @gavinmichael
He started working for Accenture in 2010 and previously worked at Lloyds Banking Group as the Retail Technology Director. At Lloyds he was also a member of the Retail Bank Board. Prior to this role, he served as CIO of Lloyds TSB – UK Retail Banking & General Insurance. In this capacity, Gavin set the information technology strategy and direction for growing the UK Retail Banking Division and drove strong collaboration and alignment of technology with the business.