Make IT matter! The Governance of Innovation Stockholm January 31, 2006 ViNT - Institute for the Analysis of New Technology

Process oriented learning IT-organization Architecture Governance Economy HR management Organization ViNT & IT Governance: 1995

10 jaar ViNT ViNT & IT Governance: 2000 IT’s new role Business Process Market Static Dynamic StaticDynamic “Optimize” Produce “Mobilize” Change “Analyse” Learn “Catalize” Inspire Experiment

Two Questions Before We Begin What is your name, who do you work for and what is your role in the organisation? What is difficult about IT-Governance?

Interaction

YES NO Interaction YES NO Heineken is the best beer in the world

Simple message Two kinds of IT: - IT that does not matter - IT that does matter Is IT differentiating in view of the competition? IT-Governance is before anything else, the wisdom to make the difference Huge differences in the objectives for IT-Governance

Nicholas Carr “And as for IT-spurred industry transformations, most of the ones that are going to happen likely already happened”

IT is essential to business Ubiquitous Integral to modern business processes Dominant capital expense for most companies Prerequisite to survival Can, in right circumstances, boost productivity... but is it essential to business strategy?

Two types of technology Proprietary: can be owned, actually or effectively, by a single firm (e.g., patents, secrets, exclusive licenses) Infrastructural: is shared broadly by all firms in an industry or region (e.g., rail, telegraph, telephone, electricity, IT)

Evolution of Infrastructural technology UbiquityAdvantage potential Proprietary Advantages Diminishing Advantages Weak Advantages time

New imperatives Spend less Follow, don’t lead Innovate when risks are low Focus more on vulnerabilities than on opportunities

YES NO IT does provide competetive advantage to my organization Statement 1 YES NO

George Forrester Colony “Partly right, and therefore totally wrong”

Technology advances in storms

VoIP Blog RFID Ajax The Technology Iceberg Generic Infrastructure Important but non-differentiating Innovative Game changers IT does matter IT doesn’t matter * * *

Iceberg management Shared IT-infrastructure Application specific IT IT-Governance / Portfolio management Time Constitution for IT Determine where IT does and doesn’t matter Actively evolve IT into infrastructure Drive adoption of new technology

The Technology Iceberg IT does matter IT doesn’t matter Make IT work Make IT simple Make IT efficient & reliable

The Technology Iceberg Focus - Below the waterline Reliability, simplicity, efficiency New Technology Operational goals Strategic goals Rationalisation infrastructure Innovative infrastructure Access Ownership ConnectivityFunctionality Generic infrastructure Proprietary infrastructure Outsourcing Do it yourself Software as productSoftware as service Information Technology as Utility

The Technology Iceberg Focus - Below the waterline Spend less Follow, don’t lead Innovate when risks are low Focus more on vulnerabilities than on opportunities

Buy/build dynamic Time Functionality Customer demand Suppliers offering

Buy/build dynamic Time Functionality Supply meets Demand Pro active Destruction of Systems Pro-actieve destructie Customer demand Suppliers offering

Buy/build dynamic Time Functionality New Demand creates a new wave Customer demand Suppliers offering

Buy/build dynamic Time Functionality Onderhoud door leveranciers Maintenance by Customer Organization Customer demand Suppliers offering

Buy/build dynamic Time Functionality Onderhoud door leveranciers Maintenace by Service Provider Customer demand Suppliers offering

Towards an IT Utility Share infrastructure Buy/Build Dynamic through Application Portfolio Management Reduce (hide) Complexity Re-centralize Decission Making Automate IT ! VirtualizationAutomationStandardization

Statement 2 YES NO The best proof of effective Application Portfolio Management is the number of applications that are taken OUT of production YES NO

IT does matter IT doesn’t matter Make IT simple Make IT efficient & reliable IT-Governance / Portfolio management Service Oriented Architecture Utility Computing Buy/Build Dynamic Standardize, Virtualize, Automate

Focus - Above the waterline Make IT simple Make innovation happen: break the fixation on technology Make sense out of all hypes

Production Distribution Consumption Calculation Business process automation Lifestyle > 75% citizens less than 30 seconds from web services at all times Pervasive wireless communication and computation Smart devices in a smart world The always-on connected society From Logic to Lifestyle

Hype Cycle Key Issue: How to get P2P VoIP from “Top of the hype” towards the “Plateau of productivity” without getting stuck in the “Trough of Disillusionment”

Speed of adoption TIME Number of Adopters Number of Adopters Innovators Early adopters Early adopters Early majority Early majority Late majority Late majority Laggards 2,5% 13,5 34% 16%

Early and mature market TIME Number of Adopters Number of Adopters Innovators Early adopters Early adopters Early majority Early majority Late majority Late majority Laggards 2,5% 13,5 34% 16% Infliction point Technology is “good enough” and fulfills basic demands High Technology More technology and higher performance Consumer Commodity Users want convenience, easy of use, reliability and low costs

Fixation on Technology “The Swiss pocket knife syndrom” It can do everything, but it is not very good at anything

Evolution of focus TIME Culumative Number of Adopters Culumative Number of Adopters Technology - Make it work Needs - What benefits and opportunities Use - How is it used Costs - Convenience, simplicity, reliability

Human Centric Design & Consumer Driven Innovation Product Business Case Technology Marketing Experience

Human Centric Design & Consumer Driven Innovation Product Business Case Technology Marketing Experience Technology : Not the technology, but the need in the social domain is the starting point Man is master over his tools New technology emerges from specialization in tools Diversity, not convergence Marketing : Understand the client and his needs Positioning of products Why do people buy/use products Demands change during life-cycle Experience : Interaction between user and product Make people use the product Reduce external complexity Positive customer experiences delivers needed references

Statement 3 YES NO YES NO To successfully innovate, an organisation must break through the focus on technology

IT does matter IT doesn’t matter IT-Governance / Portfolio management Service Oriented Architecture Utility Computing Buy/Build Dynamic Standardize, Virtualize, Automate Focus on the task, not on the tool Break Technological Fixation Evolve technology and shift focus Make IT simple Focus on the vulnerabilities Evolve towards utility computing Pro-active system destruction Make IT efficient and reliable To make IT matter you must Govern IT