… is that the contributors to this blog have for the past nine months or more been analyzing and opining upon the issues about Enterprise 2.0 takeup and implementation that are highlighted by this article in today’s ZDNet by Dennis Howlett.
Notwithstanding a substantial amount over the past two years of online and offline "press" about the Web 2.0 and Enterprise 2.0 phenomena and the increasingly participative and interactive online environment (first for consumers and now increasingly apparent as "the" future for the workplace), decision-making about enterprise software in general continues to warily circle the issues involved with implementing community-based collaboration or more broadly defined, "social computing".
You’ll note that in the article (excerpt below) Dennis checks in with FASTForward’s Jevon Macdonald, who is of the opinion that Microsoft Sharepoint may well be the safe, "default" implementation of choice. Certainly Sharepoint has developed some key alliances over the past year that seem designed to support that point of view.
Here’s a You Tube video (also featured in Dennis’ article .. thanks for the pointer, Dennis) that presents a wide range of views on the question "Enterprise 2.0 - Hype or Happening?"
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Enterprise 2.0 - Hype or Happening ?
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In the ZDNet article Dennis (and Jevon) make a key point about value propositions. That said, getting an enterprise IT shop to listen seriously to the value proposition of a small startup is a key challenge in and of itself, regardless of how good it is.
I also believe (even after a decade or more of general agreement that functional stovepipes and silos are not helpful) that a large number of enterprises do not really know how to come to grips with regular and continuous flows of information across functional boundaries and throughout the organization. And it’s quite likely they won’t be able to come to grips with using such flows effectively (in any practical sense) until the architecture of their IT systems enables it and supports it, and the management learns, and practices with, using these flows to feed effective collaboration.
…as you know it. Right now I’m falling over startup vendors vying for attention in the so-called ’social software’ space. The fact enterprise people hate the term doesn’t seem to bother those who are bypassing IT as they sell into the marketing departments of companies at departmental budget prices. But there is a battle brewing on two fronts.
First, we have the mega vendors who think they ‘own’ the enterprise but have little clue what they’re doing when it comes to providing community style collaborative software. As Barry Libert, chairman of Mzinga said to me: “Does Microsoft have a relationship with me? Do any of the ‘monster’ vendors?” Second, we have the startups who are largely making their money by selling social media style solutions to marketers. While the two solution sets may look the same from the outside, they are being bought in fundamentally different ways and are setting up a tension that today is barely felt but which will have a disruptive effect on the software buying patterns of the future.
It is particularly appropriate that Phil Wainewright has penned an article dubbed Enter the socialprise as this plays directly to the themes I am currently exploring.
He says:
But enterprise computing is still designed for the old, stovepipe model in which every transaction took place within the same firm. There’s no connection with the social automation that’s happening between individuals.
[ Snip … ]
I then spoke to another Irregular, Jevon MacDonald who has been working in the so-called Enterprise 2.0 (aka socialprise) space for some time. He said that where the startups fail but where the incumbents succeed is in identifying a specific value proposition within specific industries.
His view is that Sharepoint will be a ‘big winner in the next five years.’ If the amount of noise being made by Microsoft is indicative, then it should be a winner. But…he also says: “Sharepoint deployments are horrendous and I really don’t know why people put up with them.”
David went on to write, “Activities enables line of business workers to plan their tasks and create high level structure in the collaborative nature of an Activity while still using all your existing tools (email, instant messaging, word processing, spreadsheets, etc.). Activity templates allow your business to captures best practices and repeated tasks for easy discovery.” Their Connections 2.0 brings introduces the concept of flexible entry types, eliminating the need to stay within predefined entry types in a task. This allows the flexibility to adapt to the things that come up in the process of completing an activity. The article has a series of screen shots that illustrate the concept.
I first got involved with this concept in my initial knowledge management efforts in the early 90s supporting insurance underwriting. The old IT system required underwriters and claim agents to upgrade the core application for the benefit of central office. Few bothered. When the new system was designed with underwriters and claims agents and was built to support their work process it received rave reviews form the users.
There are now many new enterprise 2.0 products that are designed to enable the tools to fit the work, rather than the reverse. Here is another approach to the same goal. It is nice to see this approach mature.
IBM has also added a visualization tool — Atlas — to their Lotus Mail & Connections platform. The IBM Atlas site said: “Atlas for Lotus Connections is a social networking application that allows users to visualize their current network of contacts and see how they can extend that network to tap into valuable resources and trusted experts across an entire organization. By mining information from the different components of Lotus Connections, Atlas compiles and displays information that will help people better understand professional networks and who they can reach out to for information.”
Mike Gotta said that Atlas may only be available as part of an IBM consulting engagement and not a standalone tool so you should check if you are interested. Regardless, it is step in the right direction.
I have a sister-in-law who just turned 50 who has been until recently remarkably (and determinedly) resistant to online activities. She has basically not ever used the Internet for anything but email, and even that sparingly. Part of her reluctance and resistance is lack of familiarity (beginner’s embarrassment) and the other equally strong aspect has been her clear sense of how online can encroach on or steal time from what many will call "real life".
That there are forms of emergent social isolation and alienation, and addictive behaviours, that have developed as the online world has grwon and spread is irrefutable … just as the number(s) and types (s) of connections and interactions have multiplied and led to interesting behaviours and outcomes.
Back to my sister in law. She is also a very good cook (let’s say amateur gourmet chef) and a talented amateur photographer. As she has grown in her capabilities with a digital camera, she has also gotten more familiar with online environments. Bit by bit, her attitude has been changing. Recently she discovered StumbleUpon, and has almost become an evangelist, taking time out from conversations to show people who visit the interesting things that one can stumble upon just by clicking once. It was also interesting to see her and her girlfriends’ initial reaction to finding people they knew on Facebook.
Slowly and surely, more and more people will use services and tools on the Internet as it weaves its way into and throughout our lives. And as that happens, people will notice more and more the smooth sides and sharp edges of ways this spreading and weaving will impact the ways we live and work .. as will whatever the Cloud becomes.
"2008 is the year that sees Microsoft’s ambitions challenged" is a line halfway through the movie posted below. Eerily prescient, no?
What also seems certain is that even if Microsoft does not acquire Yahoo !, other acquisitions and mergers (and the concomitant convergence and integration) are sure to happen over the next decade
Maybe EPIC 2015 (originally released as EPIC 2014 in 2004 by Robin Sloan and Matt Thompson) does not seem so weird or impossible today ?
It won’t be a surprise to most of the FASTForward blog readers, as I think there’s probably a unanimous consensus amongst analysts and pundits who write on this blog that social computing in an enterprise setting and the related architectures of hardware and software is an important and massive shift that will affect knowledge work and organizational structures.
And it’s now clear that Forrester, Gartner, Jupiter, McKinsey, Deloitte Touche, Watson Wyatt, Ernst & Young, IBM, Microsoft, Oracle, Sun … all the major ‘brand name’ providers of advice and technology to enterprises … are taking the emergence of Enterprise 2.0 very seriously.
Forrester published a report, “Top Enterprise Web 2.0 Predictions For 2008” ($775, about $100 per page), which concludes that blogs, wikis, and social networking will further gain importance in 2008 as enterprises look to Web 2.0 tools to solve long-standing worker problems.
Not a big revelation.
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UPDATE:
Huh ? 42% "Not on our agenda" and 32% "Not a priority" translates into Forrester’s "Web 2.0 will be a 2008 priority" ?
Did that non sequitur get your attention ? It did mine.
The next section of the short ZDNet piece states:
Forrester expects at least half of the 42 percent of enterprises that say Web 2.0 is not on their agenda to make it a priority by year’s end. Here’s why:
First, the IT shops that began experimenting with enterprise Web 2.0 tools for their own use in 2007 — for tasks like help desk ticket resolution, standards and documentation tracking and IT project management — will begin rolling out these tools more broadly to lines of business as they pass IT muster.
Second, CIOs will concede that they cannot quell passionate employees’ use of consumer-oriented or SaaS Web 2.0 tools and will mitigate risk by deploying enterprise-class tools in their stead.
Finally, for IT departments aspiring to be more relevant to the business, enterprise Web 2.0 tools will be a high-impact, low-cost method to show leadership and innovation.
2008 will no doubt be a telling year in the corporate social media and Web 2.0 space. And if this CIO Insight story is any indication, the race will again pit David v. Goliath. But what’s different this time around? Will the Web 2.0 shakeout be any different than all the other enterprise software battles?
What happens in 2008?
Here’s some thoughts:
The incumbent enterprise software vendors have the edge in total dollars spent in 2008 as they give away what Web 2.0 functionality they have.
Pure-play social media and Web 2.0 vendors get out of the gate faster because their platforms are easier to stitch together — the gap shortens in late 2008 as acquisitions are made.
Bigger vendors will provide the underlying architecture and deep integration to existing apps.
Enterprises will learn that mixing and matching Web 2.0 technologies with existing apps provides real value - advantage upstarts.
Pure-play social media vendors will quickly evolve their alliance strategies — the lines of coexistence or competition will be blurred.
Enterprise software vendors will go wide while smaller vendors go deep. In other words, the small guys will do one or two things really well and the big boys will do a lot of stuff kind of well.
Vertical expertise will take precedence very soon. Advantage: enterprise software vendors.
Bigger vendors will sneak web 2.0 inside the enterprise. You’ll get the content repository from IBM — and it’ll include publishing and subscription capabilities, AKA blog and RSS.
Pure-plays will rely more heavily on 3rd-party services..similar to the early enterprise portal days and all those clunky content gadgets.
But don’t count out the current crop of social media upstarts so fast, though. They can still can put their best enterprise foot forward when they have to. Below is Awareness Networks’ (formerly iUpload) passage marketing to the deer-in-the-headlight IT decision-maker.
..if a corporation deploys separate tools for each form of social media (e.g., blogs, wikis, discussion groups, etc.) they will create disparate islands of information that later will have to be somehow integrated. A common approach to all forms of social media allows an organization to employ the most appropriate form of social media for each business need with the assurance of knowing that the content is re-purposable to any other form. In this mode, a user can generate content in one participation style (e.g., a blog) that later appears in another participation style (e.g., a wiki or a discussion group) . This maximizes the value of the user-generated content and avoids any silos of information.
Read a full transcript of the discussion.The notion of a world wide web that anticipates a user’s needs, and adds a more human touch to mere surfing and searching, has long been a desire and goal. Yet how closer are we to a more “semantic” web? Will such improvements cross over into how enterprises manage semantic data and content?
I saw one recent article where [the semantic web] was called Web 3.0, and I thought, “Oh, my Lord, we haven’t even decided that we are all in agreement on the notion of Web 2.0.”
[But] there is activity at the World Wide Web Consortium that’s been going on for a few years now to define various underlying standards and specifications, things like OWL and Sparql and the whole RDF and Ontologies, and so forth.
So, what is the Semantic Web? Well, to a great degree, it refers to some super-magical metadata description and policy layer that can somehow enable universal interoperability on a machine-to-machine basis, etc. It more or less makes the meanings manifest throughout the Web through some self-description capability.
You can look at semantic interoperability as being the global oceanic concern. Wouldn’t be great if every single application, data base, or file that was ever posted by anybody anywhere on the Internet somehow, magically is able to declare its full structure, behavior, and expectations?
Then you can look at semantic interoperability in a well-contained way as being specific to a particular application environment within an intranet or within a B2B environment. … The whole notion of a “semantic Web,” to the extent that we can all agree on a definition, won’t really come to the fore until there is substantial deployment inside of enterprises.
Conceivably, the enterprise information integration (EII) vendors are providing a core piece of infrastructure that could be used to realize this notion of a Semantic Web, a way of harmonizing and providing a logical unified view of heterogeneous data sources.
Red Hat, one of the leading open source players, is very geared to SOA and building an SOA suite. Now, they are acquiring an EII vendor, which itself is very SOA focused. So, you’ve got SOA; you’ve got open source; you’ve got this notion of a semantic layer, and so forth. To me, it’s like, you’ve stirred it all together in the broth here.
That sounds like the beginnings of a Semantic Web that conceivably could be universal or “unversalizable,” because as I said, it’s open source first and foremost.
If we build on this, it does solve a lot of key problems. You end up dealing with universal semantics, how that relates to B2B domains, and how that relates to the enterprise domains.
As I’m deploying and building SOAs out there in my client base, semantic mediation ultimately is a key problem we’re looking to solve.
The average developer is still focused on the functionality of the business solution that they’re providing. They know that they may have data in two different formats and they view it in a point-to-point fashion. They do what they have to do to make it work, and then go back to focusing on the functionality, not really seeing the broader semantic issues that come up when you take that approach.
One thing that’s going to happen with the influence of something like Google, which is having a ton of a push in the business right now, is that ultimately these guys are exposing APIs as services. … They’re coming to the realization that the developers that leverage these APIs need to have a shared semantic understanding out on the Web. Once that starts to emerge, you’re going to see a push down on the enterprise, if that becomes the de-facto standard that Google is driving.
In fact, they may be in a unique position to create the first semantic clearing house for all these APIs and applications that are out there, and they are certainly willing to participate in that, as long as they can get the hits, and, therefore, get the advertising revenue that’s driving the model.
[Google] is in the API business and they are in the services business. When you’re in for a penny, you’re in for a pound. … You start providing access to services, and rudimentary on-demand governance systems to account for the services and test for rogue services, and all those sorts of things. Then you ultimately get into semantics, security, and lots of other different areas they probably didn’t anticipate that they’d get into, but will be pushed into, based on the model they are moving into.
… Perhaps Google or others need to come into the market with a gateway appliance that would allow for policy, privilege, and governance. This would allow certain information from inside the organization that has been indexed in an appliance, say from Google, to then be accessed outside. Who is going to be in the best position to manage that gateway of content on a finely-grained basis? Google.
The Markham, Ontario-based DataMirror provides real-time data capture and delivery across a broad range of data sources — including IBM’s own DB2, Oracle, Sybase and Microsoft SQL Server — and allows altered data from such sources to be fed into the popular IBM Information Server. The goal: real-time integration and delivery of data deltas across a variety of sources to then reach a variety of applications and services.
The approximately $161 million acquisition, if approved, will thereby extend the reach of IBM’s Information Server and give businesses faster access to data for making business decisions, responding to market demands, and rapidly identifying new business opportunities. The acquisition continues a fast-paced (for IBM) buying spree, almost as active as Oracle’s over the past several years, although IBM tends to buy smaller companies that augment its strategies, rather than buy its way into new businesses wholesale.
Data and access to data is the lifeblood of any agile big businesses. According to IBM, the DataMirror technology captures data changes as soon as they occur and delivers the changes and new data either to other business processes or the enterprise service bus (ESB). This makes it an integral part of an SOA strategy.
IBM Information Server currently processes data from DB2 databases, but what DataMirror brings to the party is its technology works with a wide variety of other databases, sitting on top of the other processes, and can capture the data without slowing the performance of those operations.
So the inclusion of the DataMirror technology into its “Information on Demand portfolio” will allow Big Blue to cast a bigger umbrella over more types of real-time data for distribution and processes-updating capabilities. That means a more comprehensive SOA infrastructure capabilities set that spans data services with transactional and presentation services.
IBM said the acquisition will move their information-on-demand strategy closer to the master data management “holy grail” of providing one view of the customer — the total and correct view.
This acquisition also therefore further amplifies the vision that management of meta data about data (aka master data management) is the keystone of the future for enterprise software infrastructure vendors. By making data free yet coordinated, IBM can position it’s Information Server and IBM’s Dynamic Warehousing offerings as the best-of-breed data management environments for gathering, distributing, and also analyzing real-time business activities. The value continues to move up an abstraction from the core RDBs.
As an example of how the real-time capture and delivery can aid business development, DataMirror pointed to a telecom application, in which a client company can detect when customers are running low on pre-purchased minutes, allowing the company to contact the customers in advance about purchasing more time, thereby increasing sales and preventing customers from experiencing a loss of service.
You have to wonder whether IBM will also extend what DataMirror does into open source databases — from mySQL to Ingres to perhaps even SaaS applications and/or repositories. Such a move could allow IBM to become the all-data-for-all-purposes-oriented leader (more “open” than Microsoft or Oracle) — while still protecting its DB2 franchise (for now). Being inclusive at the data management level is more important than protecting an installed base, right?
Among the other benefits of the combined platform will be:
Dynamic data warehousing
Real-time analytics
Faster disaster recovery
Production and e-business integration
Real-time event detection
DataMirror currently has about 2,200 customers, about 60 percent of whom are also IBM customers, as well as 15,000 licenses. The company and its 220 employees will be integrated into IBM’s Information and Platform Solutions business unit, and IBM said it intends to retain DataMirror’s Toronto-area development center focused on heterogeneous data capture.
The acquisition requires approval from DataMirror’s stockholders, as well as regulators, and the deal is expected to close in the late third quarter of this year.
Information technology is now entering an unprecedented era of rapidly expanding development productivity. This is because of two unassailable facts: The number and types of people who can actively participate in software development are expanding, while — at the same time — we’re seeing a rapid compression in the effort, cost and risk of taking applications and services from concept into full production.
Put these trends together and we enter a fertile new era of diverse applications and services creation, one that offers developers more choice on how to build, and offers architects more choice of how to deploy (including broader use of web services and hosting to the “cloud”). The trends auspiciously portend less risk for businesses, both for entrepreneurs and enterprises alike, to innovative in ways that more easily bring applications to markets via the Internet.
The entrepreneurs are groking this all just fine, while the enterprises are quickly recognizing that they face new upside benefits as they adopt so-called Enterprise 2.0 approaches. Such development process improvements as “application lifecycle management 2.0“, open source development communities such as Eclipse, and a widening embrace of Agile development practices are quelling enterprise IT leaders’ fears of development project misfires.
In the mostly consumer-facing Web 2.0 arena, the ongoing mash-up of the definitions of developer and entrepreneur among start-ups allows for a flowering of innovation with relatively low up-front costs. If an application or service doesn’t work in gaining wide use and appeal, these innovators keep on changing it until it does. Google is a prime example of this tinker-to-success mentality.
Other accelerants to the ease-of-development trends are the wide embrace of open source tools, preference for rich Internet applications (RIAs) approaches (highlighted by the recent Microsoft Silverlight unveilings), and openly available APIs for myriad ecommerce and social networking Web services from the likes of Google, Amazon, Yahoo!, Salesforce.com, and Microsoft.
I’m also seeing a variety of new automated development workflows and requirements gathering approaches that bring non-developers increasingly into the act of defining, adjusting and implementing applications. These folks are not coders, but they are keen on business transformation via re-engineered business processes. The more tools that close the gap between process efficiency knowledge and the implementation of such productivity enhancements via IT, the more that talented non-developers will deeply exploit IT for their business goals.
A prime example of such tools and approaches is One Team Technologies, a Chicago-based start-up that walks non-geeks through a series of menus and choices — selecting new options based on the roles and choices of the creators — to design database-driven, potentially mission-critical applications. I think venture capitalists ought to use this technology and approach to incubate even more innovative start-ups, and create more business process-focused applications that can be delivered quickly to dynamic enterprises and markets.
And while this trend toward design automation and inclusion of more non-coders into development makes sense for start-ups and Web 2.0 greenfield innovators, the fruits of this broadening portfolio of possibilities will soon benefit SMBs and enterprises as they embrace software as a service (SaaS) and on-demand delivery of applications and integration services. SaaS also accelerates the ability to mash-up and use the services provided from communities of functional interest and from vertical industry niches. That is to say that those hosting organizations interested in proving on-demand applications will increasingly provide the tooling to create and adapt applications all the more appealing to more businesses.
The road from application service innovation to full production, as I mentioned, is already rapidly compressing. A great example of this compression effect comes from Bungee Labs’ Bungee Connect offering, which debuted at Web 2.0 Expo. Another way of describing Bungee Connect is software development and deployment as a service (SDDS). Bungee Connect combines the virtues of online web application development with a near-real-time test and debug capability and with a click-to-host service that — now here’s the rub — costs the developer next to nothing to get into full production.
Here’s an offering that recognizes that new business models that vastly expand the universe of web services players is what the web is all about. The Bungee Connect service began allowing beta use access on May 1. Developers may register to participate in the early-access beta program.
Bungee Connect gives developers WSYWIG, drag-and-drop, rich Ajax interface creation tools online. Those familiar with scripting and web applications development can begin creating web applications from a library of Bungee functions, or create their own services, or mash-up ones from a core of providers: Amazon, Google, Salesforce.com, Yahoo!, Real Networks, Windows Live, PayPal, and eBay.
The cost for the use of the tools, testing, and then hosting is free, and the subscription cost for the at-scale hosting only kicks in based on the use of the application by end users. Low use means low costs, and high use means a predictable measure of the proceeds goes to the development and hosting service. The hosting business stays with Bungee as the grid services provider while the applications ramp up into a sustainable business. Bungee collects rent — so to speak — based on use of the underlying infrastructure. Pay as you grow.
The net effect of these trends and examples is that the time, cost and risk of going from design to full production are deeply compressed. We are entering a period on unmatched applications, services, and media creativity.
Services oriented architectures (SOAs) are not only forcing a new way of looking at how to construct applications and composite services — SOA is now changing the meaning of what custom applications are and how they will be acquired. And this change has significant ramifications for IT developers, architects and operators as they seek a new balance between “packaged” and “custom” applications.
As more applications are broken down into modular component services, and as more services are newly created specifically for use and reuse in composited business services, the old 80-20 rule needs to make way for a new 80-20 rule.
The old 80-20 rule for development (and there are variations) holds that 80 percent of the time and effort of engineering an application goes into the 20 percent requiring the most customization. Perhaps that’s why we have the 90-10 rule, too, which hold that 90 percent of the execution time of a computer program is spent executing 10 percent of the code!
SOA skews the formula by making more elements of an application’s stated requirements readily available as a service. As those services are acquired from many sources, including more specialized ones (from third-party developers or vendors), a funny thing happens.
At first the amount of needed customization is high — maybe 80 percent (a perversion of the old rule) — either because there are not many services available, or because the services are too general and not specific to a specialized vertical industry or niche function.
Then, over time, with investment, the balance shifts toward the 50-50 point, and reuse forms a majority of a composite applications or business process, even for highly specialized applications. These composited functions then become business-focused service frameworks, to then be reused and adjusted. Those architects that gain experience within business niches and verticals to create such frameworks can make significant reuse of the services.
They, and their employers, enjoy tipping points where the majority of their development comes from existing services. The higher they can drive the percentage of reuse, the more scale and productivity they gain. They become the go-to organization for cost-efficient applications in a specific industry, or for specialized business processes.
These organizations benefit from the new 80-20 rule of SOA: The last 20 percent of customization soon takes only 50 percent of the total time to value. The difference from 80 percent is huge in terms of who does SOA best for specialized business processes. And it makes the decision all the more difficult over how to best exploit SOA: internally, or via third parties, integrators, or vendors.
It used to be that the large packaged applications vendors, like SAP, Oracle and Microsoft, used similar logic to make their vast suites of applications must-haves for enterprises. They exploited reusable objects and components to create commodity-level business functional suites that were soon deemed best bought and loaded, and not made, company by company, across the globe.
But with SOA the same efficiencies of scale and reuse can be brought to much more specific and customized applications. And those applications, if implemented as web services, can be ripped up, shifted, mashed adjusted and changed rapidly, if you know enough about them. The flexible orchestration of loosely coupled services means that development teams can better meet business’s changing needs.
A big question for me is which development teams will be benefiting most from the new 80-20 rule SOA activities? After attending the recent IBM Innovate conference in May, it’s clear that specialization in SOA-related business processes via services frameworks will change the nature of custom application development. IBM and its services divisions are banking that the emerging middle ground between packaged applications and good-old customization opens up a new category they and their partners can quickly dominate with such offerings as WebSphere Business Services Fabric.
If IT departments inside of enterprises and their developer corps can not produce such flexible, efficient services-driven business processes, their business executives will evaluate alternatives as they seek agility. Such a market, in essence, forces a race to SOA proficiency and economy. That race is now getting under way, pitting traditional application providers, internal custom developers, vertical application packagers, and systems integrators against one another. Read the rest of this entry »
Nice piece in the The New York Times today about how IBM is again re-inventing itself as the “blended IT provider.” Those are my words. IBM is seeking the means to blend talents, technologies, locations, approaches, people-process, and — above all — applications and services.
After attending a few IBM conferences over the past two months, I have a pretty good sense of what the new IBM is all about. I think they have a strong and correct vision, that success nonetheless depends on extremely good global execution across many disciplines, that time is short, and that it will be quite hard for nearly any other IT provider to emulate IBM if it succeeds and develops a sizable lead in crucial markets like health care.
What The Times story did not address is the essential role that SOA and code reuse will play in this vision and its execution. IBM and most large IT providers (and users!) recognize: They can not just throw more people at the problem (even if they could get them). Enterprises need to rush to find the right blend of wetware and flexible software services, and then aggressively reuse the software.
As IT solutions become highly customized and depend increasingly on deep knowledge of industry verticals and individual companies — “people as solution” just won’t scale. Any and all technology options should be on the table. Costs should be managed for long term ROI. Locations of the assorted workers and the IT itself should be as flexible as possible, but not remote nor onsite as default.
Once these productivity adjustments are in full swing, the deciding factors for success will be about how smartly software components and networked application and data services are defined, exploited, leveraged and extended. The 80-20 rule will have great bearing on the efficiencies. In my interpretation for this blog, the 80-20 rule holds that 80 percent of the cost and labor comes from the 20 percent of the applications requiring the most customization. And that’s true even if 80 percent of the applications are crafted from past services, shrink-wrapped precedents and stock components.
In highly customized development, however, reuse percentages start out low — due to the high degree of specific requirements and unique characteristics of the tasks at hand. For vertical industry custom development, it may be the 50-50 rule (half reuse and half fully custom) at best for some time. Costs will be high. But those IT providers and outsourcers willing to get in first and learn, that share the knowledge acquisitions risk with the clients will gain significant long-term advantage.
That’s because those IT providers that can boost the percentage of reuse closer to 80 percent — even on highly vertical and specific custom projects — to be blunt, win. As IBM, SAP, Oracle, Microsoft and HP roll up their sleeves and get their people deeply into these business-specific accounts, they will come away from each encounter richer. They will be richer in understanding the business, the industry, the problems and discrete solutions — but they will also be richer by walking away with components and services germane to that business problem/solution set, ones that will be easily reused in the next accounts (anywhere on Earth).
The providers can also apply these components to creating on-demand applications and SaaS services for the potentially larger SMB markets that they may wish to serve, in highly virtualized and account-specific fashion. That recurring revenue may make up for the investment period in sharing risk inside those larger vertical industries. Lessons learned on-demand can be applied back to the larger enterprises. And so on.
The growing library of code and services assets that blossoms for these early-in blended IT providers will assuage the need to scale the people over time. Expertise and experience on a granular, “long tail” basis coupled with highly efficient general computing fabric will be the next differentiating advantage in IT and outsourcing. Reuse will solve both the people problem and the business model problem. This, incidentally, has SOA written all over it. Grid and utility computing with myriad hosting options also supports this vision quite well. Get it?
Lastly, who controls and owns the libraries of business execution knowledge is a huge issue. Individual companies should and will want to own their business logic, even patent or protect it legally. They may want their blended IT provider to help them develop and create this intellectual property, and remain assured that the client always owns it. None of this “my IP” popping up in China somewhere business, either.
There will be tension between what the blended IT provider owns and what they client business owns. Knowing where the demarcation point is that separates the provider’s intellectual property from the client’s will be an area for especially careful consideration — as early in the project as possible. IT providers and clients will need to partner more than tussle. IBM gets this and is already doing “play nice” vendor dance. There are still some steps to learn here for Oracle, Microsoft and SAP.
These boundary and ownership issues will be worked out such that the businesses can keep the business logic and innovation jewels (and compete well by them for a long time), while also allowing the IT provider to take away enough knowledge and code assets to make its initially costly, people-laden work worth the slog. An amenable bridging of these concerns will ultimately lower costs and speed of execution for all.
In those areas — large and varied they will be — where ownership and control are hard to agree upon … open source licenses on the services and applications within the boundary zone of ownership makes great sense. It will be hard to draw a fine line between client assets and provider assets, so install a mutually beneficial grey area of open source “ownership” between them. That’s why developments like GPL v3 are so important. Open source will apply to applications, components, and services far more importantly than platforms and runtimes in the future.
In this “blended IT provider” environment, the providers that can be trusted to leave the jewels alone may end up getting the better spoils of general reuse efficiency. And therefore become the low-cost, high-productivity provider in myriad specialized field (what makes you special?), and energize their own global partner ecologies, to boot.
Yes, there is indeed a new brass ring in the global IT business, and IBM has its eye on it.
This site is a companion blog to the FASTforward conference and summit series and is sponsored by FAST. The blog, like the conference series, aims to drive and deepen conversation about how today’s companies can use technology to place users in control of information, and is home to ongoing discussion about the user revolution and Enterprise 2.0 opportunities and challenges. More info here...
