All Posts in Shadow IT

|In: Career Management|Last Updated:

Last week I promised you organizational solutions this week to trends hitting IT, like Cloud 3.0, increasing levels of shadow IT, and the so-called “digital enterprise.” But it’s my birthday tomorrow, and as Leslie Gore didn’t quite say back in the days of my youth, it’s my party and I’ll lie if I want to.

I will get to organizational solutions. Just not this week. Be patient.

Anyway, there are two more trends we have to deal with before we get to solutions, and unlike last week’s trends, you aren’t going to read much about these any place but here. Which either means you should be glad you’re reading this, or they aren’t real because if they were, someone else would be writing about them too.

The return of Excellence

Forget Tom Peters. As regular visitors to this space know, business processes, practices and functions can be optimized in exactly six dimensions of analysis that trade off among one another:

  • Fixed cost — the cost of turning the lights on before any work gets done.
  • Incremental cost — the cost of processing one more item.
  • Cycle time — how much time elapses processing one item from start to finish.
  • Throughput — how much work the function churns out in a unit of time … its capacity, in other words.
  • Quality — the absence of defects.
  • Excellence — flexibility and the ability to tailor to individual needs and outcomes.

Excellence in this restricted sense is going to be increasingly important for business success. Why? Wealth stratification.

The wealthiest segments of society are becoming wealthier, controlling an increasingly disproportionate share of the world’s total assets. As is by now well-known, the wealthiest 85 people on earth control as much wealth as the poorest 3,500,000,000. As is also well-known, and is more important from a business planning perspective, in the United States 95% of the economic recovery since 2009 went into the coffers of the wealthiest 3,000,000 citizens. Meanwhile, the poorest 270,000,000 became poorer.

This isn’t a we-gotta-do-something-about-this!” column, although doing something about this would probably be a good idea.

This is a there-must-be-a-way-to-take-advantage-of-this column.

There is.

If fewer and fewer people own more and more wealth, the two safest business strategies are to either find goods and services that will appeal to the wealthy, or to sell necessities more cheaply to everyone else.

The world of business has concentrated on “more cheaply” for decades. It’s a well-worn subject and most of the big opportunities were mined out long ago. This has generally translated to capital investments (increased fixed costs) that pay off in low incremental costs (scalable mass production), along with a focus on quality, mostly because high defect rates result in a lot of returns and customers who take their business elsewhere.

Excellence has been a casualty of this relentless focus on incremental cost and high quality, because the more a company tailors, customizes, and adds features and functionality, the more each item costs and the harder it is to prevent defects.

Luxuries — the growth market

Now imagine you’re unimaginably wealthy. (Try to parse that sentence. Go ahead. I dare you!) The question: What are you going to spend your wealth on? Politicians? Sure, go ahead, but once you own a few the enjoyment will pall. After that?

The short phrase is, on luxuries, so if you want to make a profit from the wealthy becoming wealthier, you either create ThePoliticanExchange.com or you sell luxuries nobody else can provide.

Start here: Luxury is comparative, not absolute. What this means: If you live in a neighborhood where most people drive a Toyota, or a Chevy, or a Dodge, if you drive a Lexus you’re the one with a luxury car.

But if you live in a gated community where one neighbor drives a Bentley, another a Maserati, and Mercedes and BMWs are commonplace, your Lexus is just basic transportation.

Luxury is comparative, not absolute. If anyone can have one it isn’t luxury no matter how good it is.

The logical consequence: Uniqueness will be an increasingly important characteristic of successful products and services.

Which is why traditional business processes will increasingly give way to business practices — the domain in which skills, expertise, and judgment trump process standardization, and tailored outcomes trump product simplification.

How about your applications portfolio. Will it support practices that focus on excellence?

Heck, look at your applications methodologies. Do they support the creation of excellent software?

Probably not, because for the most part, tailoring and customization aren’t considered best practice.

Quite the opposite — according to most business theorists, excellence is bad.

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|In: Career Management|Last Updated:

Are you tired of the phrase “perfect storm”?

Me too. But tired or not, one is hitting IT right now. Several interconnected trends are affecting the business world in ways that will … and should … radically redefine IT’s role. Among them:

Cloud 3.0

Cloud 1.0 was playing with cheap or free stuff, notably but not limited to Amazon Web Services. Because Cloud 1.0 services were cheap or free, the IT pundit class concluded Cloud computing was going to be dramatically more economical than owned infrastructure.

Cloud 2.0 consists of (present tense because it’s going strong) important but standalone systems. Salesforce is an example. While Salesforce is integratable, most Salesforce implementations were and are standalone “islands of automation” to use a quaint phrase from a bygone era. Cloud 2.0 wasn’t/isn’t cheap or free.

Cloud 3.0 is serious enterprise-class computing that makes use of Cloud services and architecture. By serious, I mean it has the same characteristics as projects IT is accustomed to dealing with. Cloud 3.0 provides systems that are integrated into the rest of the applications and information portfolio; they make use of the enterprise directory service for identity management; and they’re subjected to the same rigorous software quality assurance and change control protocols as systems that run on owned infrastructure.

IT could ignore Cloud 1.0 and Cloud 2.0. Cloud 3.0? IT will be neck-deep in Cloud 3.0 projects whether it takes the lead or is dragged into them, kicking and screaming.

Shadow IT

Shadow IT isn’t so much a second, separate trend as it is the flip side of the Cloud coin.

Gartner has famously predicted that by 2017, marketing departments will have bigger IT budgets than IT departments and marketing isn’t the only department outside IT that buys information technology independently. Sales is an obvious example, routinely signing contracts with Salesforce.com without asking IT’s permission first (see Cloud 2.0, above).

Here’s what’s rarely mentioned: Companies have invested large amounts of time, effort, and political capital developing IT governance processes. Depending who you ask and after how much beer, this is either because companies want to gain maximum business advantage from their investments in information technology, or because business executives don’t trust IT do anything other than play with the latest and greatest shiny ball unless the rest of the business supervises it closely.

So here’s the question: Given that Marketing doesn’t, in most companies, have a strong reputation for tight cost discipline, does anyone really think CEOs are going to give Marketing, or any other department for that matter, a free rein when it comes to its non-IT IT spending?

Me neither.

The digital enterprise

Okay, okay. Yes, this is one of those so-visionary-it-might-be hallucination buzzphrases. Except that, shorn of its buzzphrasey trendiness there’s a lot of current reality behind it. In particular, there’s the rise of smart products that don’t keep their smarts to themselves — products that constantly collect data and communicate it to what I sure hope we soon stop calling “big data” repositories through what I hope even more we stop calling “the Internet of things.”

From IT’s perspective, this is a big, big deal, because …

Back in the day, most companies that sold technology products kept internal IT and product-development IT separate. Merge them and either the company would soon consist of nothing but cobbler’s children as product development sucked all of the priority out of internal support projects, or products would become second-rate as internal priorities had the opposite impact.

That worked when product IT and internal IT had no technological point of contact.

But smart products that send data to internal databases for use in customer support and marketing analytics are seriously smudging the line separating internal and external IT.

Politically, CIOs might win biggest by sitting this dance out, watching product development, marketing, and customer service duke it out in the silo wars, then riding in as the white knight that can pull it all together. After all, most business executives value solutions much more than they value prevention.

Another reason to wait on the sidelines: The most obvious organizational solution for all this — a dramatic expansion of central IT — would look like empire building should you propose it.

But waiting on the sidelines is the opposite of leadership.

Fortunately, there’s a better solution. Unfortunately, we’re out of space for this week.

So stay tuned.

* * *

Six years ago I published one of the most important columns I ever wrote — “The portal,” describing a better way to think about personal computers, although if I wrote it today I’d add tablets and smartphones.

And eighteen years ago, in InfoWorld’s “IS Survival Guide,” I took my first shot at the difference between productivity and effectiveness.

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