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Shining a Light on Shadow IT: A New Way of Working for “Business” and “Technology” Teams Brandon Bichler, Partner, Elixirr Partners LLP
Today’s 3 key themes
Copyright © 2015 AppDynamics. All rights reserved. 2
Today, business executives recognise that technology is a core competency, but
there is still a major disconnect between the “business” and “IT”
The way we work must change to address this new reality… IT must focus more on enabling the business to innovate and
deliver a compelling customer experience
For decades, IT teams have been in a vicious loop, keeping up with
business demands for technology while controlling architectural integrity
First of all, what do I mean by “Shadow IT”?
Copyright © 2015 AppDynamics. All rights reserved. 3
Shadow IT refers to information-technology systems and solutions built and used inside organizations without explicit organizational approval. It is also used to describe solutions specified and deployed by departments other than the IT department.
Copyright © 2015 AppDynamics. All rights reserved. 4
Poll 1: Shadow IT
1. Do you have a significant amount of “shadow IT”, or technology teams working outside of the CIO’s organisation in your company?
1 Lots 2 A little 3 None 4 Don’t Know
2. What visibility do you have in terms of what these “shadow IT” teams are working on?
1 Good visibility 2 Limited visibility 3 No visibility 4 Don’t Know
Copyright © 2015 AppDynamics. All rights reserved. 5
Company’s IT spend controlled by CIO Gartner research, 2015
90%
2000
20%
2020
For decades, IT leaders have been caught in a vicious loop of ‘control’
Business taking IT decisions and initiatives into their own hands
The vicious cycle of Control
IT slow to respond to emerging business
needs
IT resources consumed by managing complexity
Changing customer behaviour drives the need
for rapid technological innovation
Copyright © 2015 AppDynamics. All rights reserved. 6
Poll 2: The Role of the CIO
3. Who does your CIO report in to?
1 CEO 4 CDO (Chief Digital Officer) 2 CFO 5 CTO 3 COO 6 Other / Don’t Know
4. How often does your CIO present to the executive board?
1 Monthly 4 Never 2 Quarterly 5 Don’t Know 3 Annually
In the past, IT has often been viewed as a back office function or something to be outsourced
66%
Only 40% of CIOs present to the Board of Directors more than once a year
MIT, 2014
1% Less than 1% of all US board directors have direct technology experience
PWC, 2015
Copyright © 2015 AppDynamics. All rights reserved. 7
‘The common [mindset] is that IT spending is a “tax” required to “keep
the lights on”’
McKinsey & Company, 2014
2000-2013, the worldwide IT outsourcing market grew by 66%
Gartner, 2013
40%
More recently, business executives have realized that technology is a core competency for success
Copyright © 2015 AppDynamics. All rights reserved. 8
“In the future BBVA will be a software company”
Francisco González Chairman and CEO, BBVA
“I originally joined the auto industry because it was the ultimate industrial product… now the car has become the ultimate technology product”
Mark Fields CEO, Ford
Copyright © 2015 AppDynamics. All rights reserved. 9
They have been bombarded with startups who are eating their lunch; and the press are piling on…
Industry Disruptors Companies Disrupted
Mobile Handsets Motorola, Nokia, RIM, mobile operators
Taxis All local taxi companies globally
Advertising Broadcast & print media, big brands
Music Music retailers, distributors, labels
Entertainment Movie retailers, content creators
Hospitality All major hotel chains globally
And the rate of technology change is exponentially faster than the speed at which most businesses run
Copyright © 2015 AppDynamics. All rights reserved. 10
Technology Change
Business Change
Time
Prog
ress
The Opportunity Gap
Top 10 Strategic Technology Trends 2016
1. Device “Mesh”
2. Ambient User Experience
3. 3D Printing Materials
4. Information of Everything
5. Advanced Machine Learning
6. Autonomous Agents & Things
7. Adaptive Security Architecture
8. Advanced Customer Architecture
9. Mesh App & Service Architecture
10. IoT Architecture & Platforms Gartner research, 2015
But at the end of the day, business leaders are racing to better serve customers
Everywhere
Telepathic
Uncomplicated
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Quality Price
Simplicity
Immediacy Novelty
Customers
Service Convenience
Personalisation
Consistent Consumer Priorities
New Consumer Expectations
Copyright © 2015 AppDynamics. All rights reserved. 12
Poll 3: Innovation and Priorities
5. Is innovation a top priority at your company?
1 Yes 2 No
6. What are the top tech-enabled business priorities?
(Text all that apply separately) 1 Better Serving Customers via New Business Models 2 Lowering the Cost to Serve Customers 3 Creating a Better Digital Customer Experience (Mobile / Web) 4 Understanding Customers via Big Data / Analytics 5 Connecting Customers via the Internet of Things 6 Making Customer Interactions Safer via Security 7 Other 8 Don’t Know
Most IT teams are not set up to help the business drive the innovation agenda
Copyright © 2015 AppDynamics. All rights reserved. 13
TRADITIONAL IT FOCUS: “DELIVER TO REQUIREMENTS”
Demand
Business requirements collection and portfolio mgt (Projects &
Change Requests)
Operate
Develop
Projects & Development
Roll out
Business
Strategic / Tactical Requirements
Day-to-day operations
Solution & Roadmap
Recommendation
IT Operations Application Support
Local Service Desks
Defects & Service Requests
Local support
Escalation of requirements
Power Users
End Users
Process Champions
Process Owners
Business Management
Site Coordinators
Decision, Priority Budget, Release Plan
Requirements Recommendation
Governance Committees
Image Source: Global Company’s IT Operating Model
We’ve developed “DevOps” to move faster, but we have not closed the gap between ‘business’ and ‘IT’
Copyright © 2015 AppDynamics. All rights reserved. 14
CURRENT IT FOCUS: “LEAN, AGILE DEVELOPMENT AND OPERATIONS”
DevOps Demand
Business requirements collection and portfolio mgt (Projects &
Change Requests)
Business
Strategic / Tactical Requirements
Day-to-day operations
Solution & Roadmap
Recommendation
Defects & Service Requests
Local support
Escalation of requirements
Power Users
End Users
Process Champions
Process Owners
Business Management
Site Coordinators
Decision, Priority Budget, Release Plan
Requirements Recommendation
Governance Committees
ContinuousCustomer
Feedback & Optimization
Collaborative Development
Continuous Release and Deployment
ContinuousMonitoring
ContinuousBusiness Planning
ContinuousTesting
Operate Develop/ Test
Deploy
Steer
DevOpsContinuous Feedback
Image Source: IBM
To address this gap, many companies have adopted a “two-speed” approach to IT
Copyright © 2015 AppDynamics. All rights reserved. 15
“Two-speed IT”
Rapid iterations
Develop Build Test Deploy
Systems of Record
Slower iterations
Develop Build Test Deploy
Slower iterations
Systems of Engagement
Production
Production
API Catalog
Image Source: IBM
And this “two-speed” or “bi-modal” approach has been strongly advocated by analysts and consultants
Copyright © 2015 AppDynamics. All rights reserved. 16
45% of IT departments have a fast mode of operation, and by 2017 75% will be bimodal
Gartner research, 2014
“You need to become bimodal because one mode can’t answer the complex
needs of the organisation” Mary Mesaglio, Research VP, Gartner, 2015
“A 2 speed architecture allows companies to preserve transactional technologies
they have come to rely on while exploring innovative consumer facing models” (sic.)
McKinsey & Company, 2015
Copyright © 2015 AppDynamics. All rights reserved. 17
Poll 4: Two-Speed IT
7. Is your company discussing or adopting two-speed / bi-modal IT?
1 Yes 2 No 3 Don’t Know
8. Two-speed / bi-modal IT is the right operating model for enterprise IT. Do you agree?
1 Agree 2 Somewhat Agree 3 Neutral 4 Somewhat Disagree 5 Disagree
Copyright © 2015 AppDynamics. All rights reserved. 18
To support the business in closing the gap, a new operating model for business and IT is required
Establish and maintain a ‘platform for innovation’
Support business and
internal / external tech teams with
experiments and pilots
Draw insights on where to improve
solutions and customer
experience
Gain visibility of how new technology is being exploited
The virtuous cycle of
Enabling
Copyright © 2015 AppDynamics. All rights reserved. 19
Establish and maintain a ‘platform for innovation’
INNOVATION SCOUTING
Identify and understand the most relevant technologies, innovations and market forces from all over the world that could challenge your
business and operating models and inspire new ideas
IDEA GENERATION
Generate, filter, catalogue and prioritise innovation ideas to be
rapidly prototyped
PROTOTYPE
Design, test and learn in short cycles and by engaging
customers in the process
PILOT
Rapidly assess the viability / feasibility and desirability of
ideas based on further customer testing,
integration design / testing
and business case
LAUNCH “Soft launch” the idea in
production to test the concept and learn from a wider set of customers, then industrialise and integrate successful Run proof of concepts and pilots
before integrating innovations into BAU processes
MERGERS AND ACQUISITIONS
Purchase a start-up outright – Integrate with your existing business or leverage the technology, proposition or IP that you have
acquired
STRATEGIC INVESTMENTS
Invest in start-ups for direct financial gain or to gain insights into the business model and innovation proposition they are building
New products, propositions
and service that deliver a rich
customer experience
CHANGE MANAGEMENT & COMMUNICATIONS Drive engagement in innovation across the org
GOVERNANCE Implement appropriate governance and
KPIs that promote innovation
Copyright © 2015 AppDynamics. All rights reserved. 20
Encourage and support business and internal / external tech teams to experiment
API
Lay
er
Analytics
Customer Experience Design
Systems of Engagement
Data Layer
Infrastructure
Content Management
System
Security
2
6
7
8
1
9
Application and Event Logic
4
5
3
Systems of Engagement Consistent, responsive interfaces across all channels
2
Customer Experience Design Design MVPs that tap into customer emotion and deliver a rich customer experience
1
Application and Event Logic Applications and features supporting customer and business functionality
4
Content Management System Publishing and modification of content including publication governance, verification, forum management etc.
5
Data Layer Secure storage of data (customer data, transactions, performance data, internal data and insights etc.)
7
6
Infrastructure Managing and monitoring the network and processing services supporting the technology
Analytics Analysis and insight of internal and external data to understand trends and provide management information
8 API Layer A set of routines, protocols, and tools enabling internal and external software components to interact
3
CREATE A ‘SAFE SANDBOX’ FOR PILOTS
9 Security Securing the access to and flow of information across systems
Copyright © 2015 AppDynamics. All rights reserved. 21
Gain visibility of how new technology is being exploited
Research
Speed Dating
Hackathons
Partners
Staff Ideas
Customer Ideas
INNOVATION SCOUTING
IDEA GENERATION & QUALIFICATION PILOT PROTOTYPE LAUNCH
Copyright © 2015 AppDynamics. All rights reserved. 22
Draw insights on where to improve solutions and customer experience
Copyright © 2015 AppDynamics. All rights reserved. 23
(Private) Poll 5: Relevance to You
9. Would you recommend this presentation to a colleague?
1 Yes 2 No 10. What is one thing you can do as early as next week to help your business innovate to deliver a better customer experience?
Thank You