Industry Evolution & Impact on Enterprise ITStrategy, Operating Model & Organizational Development

Tom Fountain

Global CIO, Bunge Ltd.

Agenda

• IT Vision & Strategy

• Industry Evolution

• Impact on Enterprise IT

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IT Vision: “Smart Operations” – Converting Intelligence into Recognized Business Value

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Integration Intelligence Optimization Orchestration• Customer• Partner• Supplier• Internal

• Data• Information• Knowledge

“Select an Optimal Business Response from among Valid Alternatives”

• Customer• Partner• Supplier• Internal

• Identify Alternatives• Trade-Offs w/Constraints• Select Optimal Response

“Develop insight into the past, present, and future behaviors of Business Assets”

“Acquire timely and complete information upon which we can act”

“Manage the Actions of Internal and External Assets to Deliver Value”

Trading Crushing/Refining LogisticsOrig. / Distrib.

“Run Plants with Optimal Balance of Production, Maintenance, Capital Expansion, and Safety”

“Identify Pricing Mis-Alignment and Exploit with Risk-Adjusted Strategies”

“Comprehend Market Conditions and Exploit with Aggregation, Scale, and Global Reach

“Match Supply / Demand with a Balanced View of Transportation Options, Market Pricing, and Operational Risk ”

Sense Analyze / Optimize Respond

Smart Operations

“Smart Operations” – The Optimized Execution of Managed Business Processes Enabled by Value Chain Integration and Business Intelligence

IT Mission: “Improve the Speed, Cost, and Quality of Business Decisions, Transactions, and Processes” (IT v2.0)

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Time

IT V

alu

e to

th

e B

usi

nes

s

Operations (Service Level Achievement)

Cost (Total Cost of Ownership)

Business Value (Return on Investment)

Innovation & Growth(New Products, IT-enabled Services, New Business Models, etc )

IT v1.0

IT v2.0

Expand the IT Mission through People, Process, & Technology Transformation

Current IT Position

Future IT Position

Enterprise Architecture: Mapping Core / Context

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IT Must Re-Think Core v Context, Delivery Model, Architecture, Integration

Infrastructure

Applications

Process / Data

Integration / Collaboration

Core Systems & Services• Built or Bought & Integrated by

Enterprise IT• Elements may be Cloud-based

Context Systems & Services• Bought & Integrated by

Enterprise IT• Often Cloud-hosted

Enterprise IT: Owns the Stack• Alignment with Business• Architecture Design• Sourcing• Integration• Performance Mgmt• Efficiency

Agenda

• IT Vision & Strategy

• Industry Evolution

• Impact on Enterprise IT

6

Evolution of the IT Industry

7New Choices, New Players, and New Challenges

Client/Server

Web

Time

Cloud-based(Public, Semi-Private)

Integrated Stacks(Single vendor – HW/SW)

Best-of-Breed(Multi-vendor,

Layer-by-layer)

Mainframe

Relationship with the Technology Provider

Relationship with the Service Provider

Over Time…• We left a Single Vendor model to unleash

innovation / competition

• Best-of-Breed drove the build-out of a world-scale industry

• Complexity of competing standards, integration challenges, expertise development, etc led to late / failed programs, high IT costs, and frustrated customers

• Cloud-based Service Providers enter the mix to deal with complexity, scale, and flexibility shortcomings of Best-of-Breed

• Integrated stacks make a comeback as multi-layer integration / optimization provides new price/performance opportunities and helps with operational complexity

Today

Pros & Cons of these New Paradigms

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As Usual One Size Does not Fit All…

Best-of-Breed

Cloud-based

Integrated Stacks

Pros Cons

• Accumulated Experience• Vendor Competition• Innovation on a layer basis• Open Standards

• Scale Economics• Variably priced services• Low Upfront Investments• Best-of-Breed Offerings at

the Service Level

• Breakthrough Price / Performance

• Single Vendor responsibility• Eliminates layer integration

challenges

• Mismatched pace of change across layers• Multi-vendor integration complexity• Multi-vendor management complexity

• Security / Privacy• Integration with Legacy• Maturity of Offerings• Lack of Pricing, Management, Tech

Standards

• Potential Vendor Lock-in• Potential Alignment Issues with Vendor

Strategy

Best Use Situation (?)

• Broad Deployment• Need Low Cost / unit• Manageable integration• Negotiable Savings• e.g. Web Servers

• Context System• Modest Security (or less)• Standard Functionality• Highly Variable workload• e.g. HR, AP/AR

• High Strategic Business Value (Core)

• High Performance / Security• High Reliability• Slower Pace of Customer

Change• e.g. High Performance BI

Vendor Offerings – Integrated Stacks

9Cloud-like Characteristics in your own Datacenter

A Future View of the World??...Mix/Match Your Optimal Set

10An Ecosystem of Capabilities within a Robust Operating Framework

Infrastructure (IaaS / Private)

App Services (ASaaS / Private)

Applications (SaaS / Private)

Data (DaaS / Private)

Models (MaaS / Private)

Analytical Svcs (BIaaS / Private)

Environment Mgmt Svcs

OptimizationSimulationReporting

LogisticsWeatherFinancialEconometric Commodity

CreditEconomic Companies RegulatoryMarkets

HRISCRMERP

CollaborationECMBPMB2B

NetworkStorageServers

Model-BuildingAnalysis

Engagement Security Mgmt ToolsPricing

GIS

Trading Finance Legal

EAI IAMPortalSearch

Integration

Business Execution Svcs (XaaS / Private)Partner Performance MgmtBusiness Process Mgmt Business Activity Monitoring

Agenda

• IT Vision & Strategy

• Industry Evolution

• Impact on Enterprise IT

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Opportunities

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Organizational Development

1. Positions IT to meet with greater speed, driving improved IT Value Proposition and improved staff morale

2. Expanded Career Development opportunities through deeper business partnering

3. IT becomes the lead cross-functional integrator in the company

Enterprise Strategy

1. Re-Architect the IT Operating Model and cost structure for maximum business alignment

2. Source deep and usable expertise / intelligence for critical business problems from a larger ecosystem

3. Capture Scale benefits for cost sensitive operations (large or small)

Financial Management

1. Highly variable cost structure to maximize flexibility with smaller upfront investments (for cloud-based services)

2. Improved price/performance drives unit cost productivity

3. Expanded ecosystem of potential suppliers improves competition

A Transformational Opportunity…IT must be prepared in all areas

Technology Strategy

1. Position workloads to optimize alignment with a company’s specific price and performance needs

2. Capture scale for a full range of workload sizes

3. Services-based solutions increases flexibility and minimizes upfront investments (smaller throw-away cost)

Risks & Challenges

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Organizational Development

1. Ability to develop necessary Staff Skills: Architecture, Solution Integration, Partner Mgmt, and Business Analysis

2. Change Management around Staff shifts to Solution Integration and Deployment v. Development

3. Further loss of Technological expertise base within a company

Enterprise Strategy

1. Re-positioning IT as a Value Creator, prepared to lead key business focused programs

2. Industry / Vendor / Customer confusion and lack of alignment on standards will delay solution deployment

3. Emergence of de facto proprietary solutions will inhibit choice and integration / Fear of vendor lock-in

Financial Management

1. Lack of industry standards / controls for pricing and consumption management

2. Cost Modeling / Forecasting for consumption-based external services

3. Insufficient cost structure visibility to accurately trigger workload re-positioning

New Classes of Risk for IT including “Services” Integration & Strategy Alignment

Technology Strategy

1. Cloud – Security & Integration…Integrated Stacks – loss of open standards and granular “control”

2. Poor Architecture choices limits flexibility to re-position workloads

3. Improper Sequencing of the build-out limits value creation and increases probability of throw-away

Strategies & Actions

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Organizational Development

1. Baseline your staff’s skills and competencies…aggressively develop the required capabilities

2. Understand staff motivations and how to retain your key talent up front

3. Aggressively market both imports and exports of staff with business functions

Enterprise Strategy

1. Plan, synchronize, and actively manage the key disciplines (People, Process, Technology, Services, & Financials)

2. Use multi-generational plans to highlight longer term dependencies and optimize sequencing

3. Maintain a deep understanding of the Industry, Players, Standards, Products, and Services

Financial Management

1. Understand IT cost structure at a detailed level to match up with new Product and Service offerings

2. Educate yourself about emerging pricing models for products and services (Cloud, Virtualization, etc)

3. Understand business cost drivers, local profit margins, and cost/value thresholds of a satisfied customer

A Proactive, Highly Business Aligned, & Industry-savvy Strategy Maximizes Probability of Success

Technology Strategy

1. Understand and document your Enterprise Risk appetite

2. Understand and document your Enterprise price/performance requirements

3. Actively seek out and understand industry players strategy

Q & A

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Help Me Think Smarter about the Future…

Questions Please…