Showing posts with label Outsourcing. Show all posts
Showing posts with label Outsourcing. Show all posts

June 11, 2017

The Cloud Pays Off

So for those of you who thought the cloud only pays if your a consumer of technology who is looking for scalability and flexible pricing models, think again. 

Bloomberg has an interesting article on how Adobe is growing their revenue by billions switching their apps to to the cloud. 

Instead of customers paying a one time purchase price for Creative Suite or Acrobat, now customers must pay for Creative Cloud or Document Cloud subscription fees that may sound small in the beginning, but really add up over time. 

And more than that, Adobe doesn't have to worry about wowing customers with the next upgrade in order to get them to make another purchase, because as long as their products are competitive, the customers will keep paying their subscriptions fees money month after money month.

What's better than making a sale to a customer?  Selling to them in a cloud subscription model that keeps paying and paying and paying. 

No wonder it's better to have your head and technology in the cloud--it's a true rainmaker! ;-)

(Source Photo: Andy Blumenthal)
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December 18, 2015

You're Getting Milked

If you have a pulse and have been to the stores or even shopping online lately (hey, it's the holidays so of course you have), you know that prices are on the rise.

And this is amazing, because--

Major factors point to pricing that should be driven down:

- Commodities--which are the basic raw materials from agriculture to oil and gas and metals and mining--are at a more than 16-year low!

- Manufacturing has moved to low cost sourcing countries (China, India, Vietnam, Africa, etc.)

- Technology continues to benefit us in terms of cost-efficiencies from the transformation to robotics and automation.

Yet, we keep on seeing prices move ever higher:

Just a few examples...

- "Housing market is on fire" with existing home prices exceeding the pre-recession peak!

- "Car prices at records highs - and rising"

- "Food prices are sky high"--it's not your imagination.

- Fashion "prices rising so fast"

- Health care spending is "again accelerating"

- "College costs are so high and rising."

Forget the B.S. of the basket of inflation stats your being feed...you know that your bills are going up, while your income is stagnant.

The real question is why is the middle class always getting milked--whose interest does it serve? ;-)

(Source Photo: Andy Blumenthal)
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March 15, 2014

U.S. To Give Up U.S.?

This is just ridiculous already...I mean why do we even bother to try, if as a nation we are just resigned to give up.

1. Russia takes Crimea and the U.S. has "no options," instead of considering a variety of meaningful options--will Putin stop with Crimea, Georgia, Chechnya if there is virtually nothing standing in his way?

2. Syrian civil war goes on for almost 3 years and takes 150,000 lives and the U.S. has "few options," while Russia, Iran, Hezbollah, Saudi Arabia seem to have and be exploiting lots of options.

3. "U.S. to give up Web oversight" since other governments have complained over our "unique influence"--well darn it, we invented the Internet, why shouldn't we capitalize on it?

4. Serious "deficit reduction is dead" even though the national deficit continues to grow and threaten the national security of this country, but there are few acknowledged options for politicians that want to get re/elected, except to continue the runaway gravy train.

5. Space exploration to other planets--NASA shelves it--"Space, the final frontier...to boldly go where no man has gone before," but we're not really going!

6. Defense cuts threaten U.S. military as the "U.S. faces a more volatile, more unpredictable world," and even as China ramps up its military budget by 12.2%.

7. Despite the potentially catastrophic impact that a serious cyber attack would have on the U.S. national security and economy, "the U.S. military is not prepared for cyber warfare"-why are we waiting for the proverbial lights to go out?

8. Outsourcing jobs outside the U.S. has already become cliche--with top U.S. Corporations sending more than 2.4 million American jobs overseas between 2002-2011--as our own labor force participation is now at a 30-year low!

I don't understand what has happened to our national resolve to succeed, to lead, to be a good example in the world.

Why are we in global retreat--instead of steadfastly protecting and growing our national strategic interests in every domain?

We are innovators, entrepreneurs, skilled in every worldly affair, and lovers of freedom and human rights for all, yet we have become gun shy, afraid, and reticent to be ourselves and do what we do best--which is to do what's right, what needs to be done, and to be global leaders in progress toward the future.

If we can't do this, if we have just given up, if we have become ostriches with our heads in the sand--then we haven't just given up on this or that or the other thing--but we have given up on being the U.S. of A.

(Source Photo: Andy Blumenthal)
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January 4, 2014

10 Ways To Improve Federal Technology

While it's good to improve government services through advances in information technology, we also need to do better with what we have, which is our own valuable IT human capital. 

In the Wall Street Journal today, the "health-site woes" are spurring a push for changes to federal technology, including the possibility of a "federal unit dedicated to big tech projects." 

Whether or not we carve our a separate big tech project unit, we can do so much to improve success in all our agencies by valuing our people and motivating them to succeed.

As democracy and capitalism have taught us, we need people to be free to innovate and reward them appropriately.

While the grass may look greener in Silicon Valley, our challenge is to utilize all our resources in whatever part of the country they reside, whether they be government or private sector workers.

Ultimately, like most things, this is a human challenge, and not just a technology issue. 

Hence, I developed the above comic strip to demonstrate 10 Ways to Improve Federal Technology, so we can all succeed together. ;-)

(Source Cartoon [click here to enlarge]: Andy Blumenthal)
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November 8, 2013

Cloud Kool-Aid

We've all drunk the Kool-Aid and believe in using the cloud.

And with almost 1 million active apps alone in the Apple Store it is no wonder why.

The cloud can create amazing opportunities for shared services and cost efficiencies.

The problem is that many are using the cloud at the edge.

They are taking the cloud to mean that they in government are simply service brokers, rather than accountable service providers.

In the service broker model, CIOs and leaders look for the best, cost effective service to use.

However, in NOT recognizing that they are the ultimate service providers for their customers, they are trying to outsource accountability and effectiveness.

Take for example, the recent failures of Healthcare.gov, there were at least 55 major contractors involved, but no major end-to-end testing done by HHS.

We can't outsource accountability--even though the cloud and outsourcing is tempting many to do just that.

Secretary Sebelius has said that the buck stops with her, but in the 3 1/2 years leading up to the rollout relied on the big technology cloud in the sky to provide the solution.

Moreover, while Sebelius as the business owner is talking responsibility for the mission failures of the site, isn't it the CIO who should be addressing the technology issues as well?

IT contractors and cloud providers play a vital role in helping the government develop and maintain our technology, but at the end of the day, we in the government are responsible to our mission users.

The relationship is one of partners in problem solving and IT product and service provision, rather than service brokers moving data from one cloud provider to the next, where a buck can simply be saved regardless of whether mission results, stability and security are at risk.

In fact, Bloomberg BusinessWeek outlines the 3 successful principles used in the creation of consumerfinance.gov by the new CFPB, and it includes: "Have in-house strategy, design, and tech"!

Some in government say we cannot attract good IT people.

Maybe true, if we continue to freeze salaries, cut benefits, furlough employees, and take away the zest and responsibility for technology solutions from our own very talented technologists.

Government must be a place where we can attract technology talent, so we can identify requirements with our customers, work with partners on solutions, and tailors COTS, GOTS, open source solutions and cloud services to our mission needs.

When Sebelius was asked on The Hill about whether Healthcare.gov crashed, she said it never crashed, which was technically incorrect as the site was down.

The cloud is great source for IT provision, but the pendulum is swinging too far and fast, and it will by necessity come back towards the center, where it belongs as an opportunity, not a compliance mandate.

Hopefully, this will happen before too many CIOs gut the technology know-how they do have and the accountability they should provide.

(Source Photo: Andy Blumenthal)
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June 29, 2013

Back To The Computer Stone Age

According to Charles Kenny in Bloomberg BusinessWeek (20 June 2013), the Internet is quite a big disappointment--because it "failed to generate much in the way of economic growth."

While on one hand, the author seems to see the impact that the Internet has had--"it sparks uprisings, makes shopping easier, help people find their soul mates, and enables government to collect troves of useful data on potential terrorists;" on the other hand, he pooh-poohs all this and says it hasn't generated prosperity. 


And in a sense, don't the facts seem to support Kenny: GDP is still in the 2-3% range, labor productivity growth is even lower, and unemployment is still elevated at over 7%?


The problem is that the author is making false correlations between our economic conditions and the rise of the Internet, which already Jack Welch pronounced in 2000 as "the single most important event in the U.S. economy since the industrial revolution." 


Kenny seems to think that not only aren't there that many economic benefits to the Internet, but whatever there is we basically squander by becoming Facebook and Youtube junkies.


It's a shame that Bloomberg BusinessWeek decided to publish such a ridiculous article as its "Opening Remarks," blaming the failure of the Internet for economic challenges that have been brewing for decades--with high-levels of debt, low levels of savings, hefty entitlement programs based on empty national trust funds, the global outsourcing of our manufacturing base, elevated political polarization in Washington, and various economic jolts based on runaway technology, real estate, and commodity bubbles.


It's concerning that the author, someone with a masters in International Economics, wouldn't address, let alone mention, any of these other critical factors affecting our national economy--just the Internet! 


Kenny adds insult to injury in his diatribe, when he says that the Internet's "biggest impact" is the delivery of "a form of entertainment more addictive than watching reruns of Friends."


Maybe that's the biggest impact for him, but I think most of us could no longer live seriously without the Internet--whether in how we keep in touch, share, collaborate, inform, innovate, compute, buy and sell, and even entertain (yes, were entitled to some downtime as well). 


Maybe some would like to forget all the benefits of technology and send us back to the Stone Age before computing, but I have a feeling that not only would our economy be a lot worse than it is now, but so would we. :-)


(Source Photo: Andy Blumenthal)



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June 15, 2013

IT Departments, Here To Stay

InformationWeek asks "Will IT Departments Disappear By 2020?"

This question comes from Forrester Research which sees the commoditization of IT as eroding the base for the traditional IT function and roles.


As we move to cloud computing--apps and infrastructure, as well as continue the trend for outsourcing IT such as help desk, desk support, and more what will be left for the CIO and his or her team to do?


The article answers this question with another major trend--that of consumerization--"differentiating value and visibility among consumers and employees."


This is where IT can be highly strategic in serving those needs in the business that are truly unique and that enable them to be high performing and even outperform in the marketplace.


These ideas of commoditization and consumerization are anchored in Lawrence and Lorsch's business studies of integration and differentiation of organizations, where organizations need to find their ideal state for integration of subsystems--such as through cloud computing, data center integration, and shared services--and for differentiation, where organizations differentiate themselves to address the unique value they bring to their customers.


So even with commoditization of IT and integration of services, the IT function in organizations will not be going away, no more so than HR or Finance functions went away with Enterprise Resource Planning (ERP) solutions. 


The CIO and IT function will be able to leverage base enterprise services as commodities, but they will be expected more than ever to focus on and provide strategic solutions for their customers and give their organizations the real technology competitive advantage they are looking for and desperately need. 


This is what distinguishes a real CIO--one that provides strategic leadership in being user-centric and coming up with customer-oriented solutions that are not available anyplace else--from those managers that only help to keep the IT lights on. 


If you are not differentiating, you are not really engaging--so get out there with your customers and roll up your CIO sleeves. ;-)


(Source Photo: Andy Blumenthal)

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May 11, 2013

Factory Floor Servitude

As a kid, I was all too familiar with factory settings--my dad worked in one. 

Dad is an incredibly persistent hard worker who went to the factory every day--tuna sandwich in tow--worked hard and was the voice of reason in advancing the business--and worked his way up to manage the place.  My dad is a modern-day success story!


He worked in everything figuring out how to design products, make them, sell them, and ensure the business stayed afloat. A lot of people depended on him in the factory to keep production humming, put bread on their tables, and most importantly to be treated fairly and like human beings. 


My dad never became arrogant as he advanced himself, he always believed that we only have what the Almighty above grants to us. 


What a contrast between the way my dad managed a factory and the decrepit working conditions that led to the factory collapse two weeks ago in Bangladesh that has now left at least 1,038 dead. 


The collapse has raised ethical questions again about the horrific working conditions in factories overseas--where low wages and hazardous conditions is the rule--low wages lead to growing outsourcing and hence, a $18 billion garment industry in Bangladesh that has tripled in size between 2005 and 2010 and is expected to triple again by 2020. 


The average monthly pay in 2009--$47!


By 2010, Bangladesh had 5,000 garment factories--2nd only to China.


Now most of the factories are gone from the U.S. moving overseas to the cheapest providers, with jobs in manufacturing decreasing almost in half from nearly 20 million in the U.S. in 1979 to less than 12 million in 2010.


Bloomberg BusinessWeek (9 May 2010) chronicles the ten years of stagnant wages and horrible working conditions there--verbal abuse, sexual abuse, physical punishment and humiliations for not meeting quotas (like having to forcibly stand on tables for hours and undress in front of workers), rare bathroom breaks to filthy and overflowing toilets, and much more. 


When the Savar building developed cracks on April 23, one man begged his wife not to go to work the next day, but when she called in and asked for the day off, she was told she would be docked a whole months salary if she didn't show up--she went to work and the building collapsed on April 24--leaving her buried under the rubble. Eventually, when the rescuers could not free her, they chopped off her legs!


Cheap labor means cheap goods--that's a draw for us getting more branded goods for less. In a large sense, our insatiable demand fuels the cruel, servile conditions overseas. 


This is also a broken market, where people sell their labor just to provide subsistence living for their families, while big corporations increase profits, investors smile all the way to the bank, and we get our boatloads of stuff cheap, cheap, cheap. 


There is nothing wrong with making money or saving money--it's an incentive-based system, but the only measure of success is not money. 


We need global standards of ethical conduct in the labor market, and this should be part of every organization's financial reporting, disclosure, and audit requirements.


People and organizations should not just be penalized for cooking the books or insider-trading, but for how they treat their people. 


Those organizations and leaders that balance making money with treating people decently have a leg up on those that don't--not that they will necessarily do better in the marketplace (maybe they won't), but that they make their money with their integrity intact and that's something money cannot buy. ;-)


(Source Photo: here with attribution to Ronn "Blue" Aldaman)



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April 17, 2012

Let's Come Clean About The Cloud

An article in Federal Times (16 April 2011) states that "Experts See Little Return For Agencies' Cloud Investments."

The question is were the savings really achievable to begin and how do you know whether we are getting to the target if we don't have an accurate baseline to being with. 

From an enterprise architecture perspective, we need to have a common criteria for where we are and where we are going.

The notion that cloud was going to save $5 billion a year as the former federal CIO stated seems to now be in doubt  as the article states that "last year agencies reported their projected saving would be far less..."

Again in yet another article in the same issue of Federal Times, it states that the Army's "original estimate of $100 million per year [savings in moving email to the DISA private cloud] was [also] 'overstated.'"

If we don't know where we are really trying to go, then as they say any road will get us there. 

So are we moving to cloud computing today only to be moving back tomorrow because of potentially soft assumptions and the desire to believe so badly. 

For example, what are our assumptions in determining our current in-house costs for email--are these costs distinctly broken out from other enterprise IT costs to begin? Is it too easy to claim savings when we are coming up with your own cost figures for the as-is?

If we do not mandate that proclaimed cost-savings are to be returned to the Treasury, how can we  ensure that we are not just caught up in the prevailing groupthink and rush to action. 

This situation is reminiscent of the pendulum swinging between outsourcing and in-sourcing and the savings that each is claimed to yield depending on the policy at the time. 

I think it is great that there is momentum for improved technology and cost-savings. However, if we don't match that enthusiasm with the transparency and accuracy in reporting numbers, then we have exactly what happens with what the papers are reporting now and we undermine our own credibility.  

While cloud computing or other such initiatives may indeed be the way go, we've got to keep sight of the process by which we make decisions and not get caught up in hype or speculation. 

(Source Photo: here with attribution to Opensourceway)

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November 3, 2011

Cloud, Not A Slam Dunk


Interesting article in Nextgov about the deep skepticism of cloud computing by the Corporate IT Pros.

The vast majority of IT practitioners questioned did not "believe so-called infrastructure-as-a-service providers protect e-mail, documents and other business data.”

So while many business people think that Cloud Computing is more or less safe, the IT community is not so sure.

Of 1,018 professional surveyed (of which about 60% were from IT)--only 1/3 of the IT professionals thought the cloud was secure versus 50% of the business compliance supervisors.

Cloud is not a slam dunk and we need to evaluate every implementation very carefully.

(Source Photo: here)

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July 22, 2011

When The Cheapest Task Is Too Expensive

TaskRabbit is a new way to get odd jobs done by simply posting them online for others to bid on and perform them.

Browsing the list of tasks out there now, I see everything from driver for a day to laundry, matching paint colors to organizing a library, picking up items from the store to installing a t.v.--I suppose if you need it (and it's legal), you can post it. :-)

The service is available in LA, San Francisco, Orange Country, Boston, and NY--so far.

Basically, the way it works:
  1. You, the "Sender", go online and name and describe the task, including when and where you want it done as well as the maximum you are willing to pay.
  2. "Runners" are alerted and bid the minimum that they are willing to accept to do the job.
  3. You review the bids and select one.
  4. The runner performs the work.
  5. You review, rate, and reimburse for the work.
Wired (August 2011) calls TaskRabbit the "eBay for real world labor," although there are other competitors out there such as AirRun and Zaarly.

In TaskRabbit, "Customers pay by credit card, and the runner's share gets deposited into a TaskRabbit account, with checks cut every Friday."

"TaskRabbit takes 12-30% cut of each transaction."

97% of tasks get a bid from at least one runner and 75% of tasks get completed.

If you want to become a Runner-- you apply through a 3-step process that includes an application form, video interview, and a federal criminal background check.

Gaming mechanics is used to rank top runners, display their experience level and average customer reviews, and provide them a progress bar to show points needed to get to the next level.

TaskRabbit fills an important niche in our society that is increasingly time-presured, convenience-oriented, and service-based and where more and more people hire themselves out as consultants, freelancers, and Guy/Gal Fridays.

While I can see the benefits to people who need to get work done and for people looking for work, there is something about this process where we bid out our labor by the individual task--like in the video where we need someone to pick up dog food--that it can get a little degrading and meaningless. No longer are we hiring people for their knowledge, skills and abilities for long-term contributions and growth prospects, but rather we are tasking out the smallest and most mundane of tasks to the lowest bidder.

Harvard Business Review (July-August 2011) in an article called "The Age of Hyperspecialization" wrote of the new social challenges with companies such as TopCoders that crowdsources out IT work to 300,000 freelance developers in more than 200 countries, such as: "the possibility of exploitation as work quickly finds the cheapest takers, and the opportunity for deception when workers can't see the larger purpose to which they are contributing."

Crowdsourcing or outsourcing these everyday tasks can bring speed and quality to what we are looking for, but the true cost comes in terms of "digital sweatshops" and potentially "dull and meaningless" work.

Is this level of economic efficiency going to cost us all more in the end?

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April 16, 2010

Breaking Down Organizational Bottlenecks

Improving organizational performance is often grounded in identifying bottlenecks (constraints) and fixing them, so that the firm runs better, faster, cheaper than before and at an advantage to it’s competitors.

Enterprise architecture helps us to locate the bottlenecks through an understanding of our business processes, information flows, and systems and then facilitates our reengineering these though business process improvement and the introduction of new technologies.

Harvard Business School (HBS) put out a working paper in February 2010 called “The Strategic Use of Architectural Knowledge by Entrepreneurial firms,” by Carliss Baldwin that describes how “an entrepreneurial firm can use architectural knowledge to unseat a larger incumbent.”

The premise is that knowledge is a firm’s most critical resource, “including knowledge about how to assemble resources to pursue an opportunity.”

We can architecturally disassemble and assemble our resources and processes whereby we—“isolate the bottlenecks” and then “alleviate the bottlenecks.”

This process is grounded in modularity theory, where we use architectural knowledge to modularize (or breakdown) a complex system into its functional components as well as address how these components are related (through their interfaces).

Once we decompose the firms business, data, and systems into its modular components, we can then “remodularize” (or assemble) them into strategically more effective systems for doing business.

Moreover, the paper suggests that the firm “insources bottleneck components and outsources non-bottleneck components,” so as to focus resources (and innovation) on the trouble spots—the areas that are potentially a source of competitive advantage.

Fixing bottlenecks can produce valuable differentiators for a company that we would not want shared with those outside the organization and made available to competitors.

In my opinion, bottleneck functions can also be outsourced, whereby we decide to “let the experts handle it,” when the functions are not strategic in nature. For example, many companies outsource things like payroll and basic call center functions, and it enable the organization to focus its energy and efforts on its core mission.

The notion that enterprise architecture itself is a strategic differentiator for organizations that know how to wield the architecture knowledge is critically important. Through decomposition and assembly of processes and enabling technologies, we can create stronger organizations that not only reduce bottlenecks, but also drive improved decision-making in terms of what to invest in and how to source those investments.

While many organizations treat architecture as a compliance only mechanism and reap little to no benefits from it, those that understand EA’s strategic significance can use the knowledge gained to their organization’s competitive advantage.


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March 7, 2010

A Turning Point for the Government Cloud

Los Angeles is moving to the cloud, according to Public CIO Magazine March 2010, and “they are the first government of its scale to chose Gmail for the enterprise.”

“It turned out that Washington D.C., was using Gmail for disaster recovery and giving employees the option to use it as their primary e-mail.” But LA is implementing Gmail for more than 30,000 city employees (including police and fire departments) as well as planning to move to Google Apps productivity suite for everything from “calendar, word processing, document collaboration, Web site support, video and chat capabilities, data archiving, disaster recovery and virus protection. “

CTO Randi Levin is leading the charge on the move to cloud computing, and is taking on concerns about cost, data rights, and security.

  • On Cost: “The city estimated $5.5 million in hard savings form the Google adoption, and an additional $20 million savings in soft costs due to factors like better productivity.”
  • On Data Rights: Nondisclosure agreement with Google includes that the data belong to the city “in perpetuity,” so “if the city wants to switch to another vendor after the contract ends, the city will be able to recall its archived data.”
  • On Security: “Google is building a segregated ‘government cloud,” which will be located on the continental U.S. and the exact location will remain unknown to those outside Google. The data will be “sharded”—“shredded into multiple pieces and stored on different servers. Finally, Google will be responsible for “unlimited” damages if there’s a breach of their servers.

LA conducted an request for proposal for software-as-a-service (SaaS) or a hosted solution and received responses for 10 vendors including Google, Microsoft, and Yahoo. Google was selected by an Intradepartmental group of IT managers and a five year contract issued for $17 million.

Currently (since January), LA is conducting a Gmail pilot with about 10% of its city employees, and implementation for the city is slated for mid-June.

Additionally, LA is looking into the possibility of either outsourcing or putting under public-private partnership the city’s servers.

And the interest in government cloud isn’t limited to LA; it is catching on with Google Apps pilots or implementations in places like Orlando, Florida and within 12 federal agencies.

Everyone is afraid to be the first in with a major cloud computing implementation, but LA is moving out and setting the standard that we will all soon be following. It’s not about Google per se, but about realizing the efficiencies and productivity enhancement that cloud computing provides.


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June 26, 2009

The Cloud is a Natural Evolution of IT


Cloud computing is bringing us closer than ever to providing IT as utility, where users no longer need to know or care about how the IT services are provided, and only want to know that they are reliably there—just like turning on the light.
This rent-an-IT model of cloud computing can apply to any portion of an organization’s IT architecture, as follows:
  • Service architecture—for application systems, there is “software as a service” (SaaS) such as Google Apps suite for office-productivity or Salesforce.com for customer relationship management. And for developing those systems, there is “platform as a service” (PaaS) such as Google Apps Engine (GAE) or the Defense Information Systems Agency (DISA) Rapid Access Computing Environment (RACE).
  • Information architecture—for storing the data used in systems, there is “storage as a service” such as Amazon’s Simple Storage Service (S3).
  • Technology architecture—for hosting systems, there is “infrastructure as a service” such as Amazon’s Elastic Compute Cloud (EC2)
The big advantage to using hosted IT or cloud computing is that it provides on-demand information technology—again like your electricity usage; the juice is there when you need it. Additionally, by outsourcing to specialist IT providers, you can generally get more efficiency, economy, and agility in providing IT your organization.
Of course, there are challenges that include ownership, security, privacy, and a cultural shift from a vertical (stovepiped) to horizontal (enterprise and common services) mindset.
From my perspective, cloud computing is a natural evolution in our IT service provision:
  1. At first, we did everything in-house, ourselves—with our own employees, equipment, and facilities. This was generally very expensive in terms of finding and maintaining employees with the right skill sets, and developing and maintaining all our own systems and technology infrastructure, securing it, patching it, upgrading it, and so on.
  2. So then came, the hiring of contractors to support our in-house staff; this helped alleviate some of the hiring and training issues on the organization. But it wasn’t enough to make us cost-efficient, especially since we were still managing all our own systems and technologies for our organization as a stovepipe.
  3. Next, we moved to a managed services model, where we out-sourced vast chunks of our IT—from our helpdesk to desktop support, from data centers to applications development, and even to security and more. But apparently that didn’t go far enough, because we were still buying, building, and maintaining our own IT instances for our organization, but now employing call centers and data centers in far-flung places.
  4. And finally, the realization has emerged that we do not need to provide IT services either with our own or contracted staff, but rather we can rely on IT cloud providers who will manage our information technology and that of tens, hundreds, and thousands of others and provide it seamlessly over the Internet, so that we all benefit from a more scalable and unified service provision model.
The cloud computing model takes the CIO/CTO and their staffs out of the fire-fighting mode of IT management and into the drivers seat for managing IT strategically, innovatively, and with a focus on the specific mission needs of their organization.

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October 14, 2008

The Enlightened Enterprise and the Total CIO

The Total CIO is responsible for the strategy, operations, and governance of everything IT.

The strategy ensures that we are doing the right things and doing them the right way. It’s the CIO’s vision, goals, and objectives for developing IT solutions that meet business requirements.

The operations is providing for core IT functions like voice and data communications, information, applications, infrastructure, security, and so forth,

The governance is how we make decisions about IT. Through good governance we enhance visibility of IT requirements and projects, enable better communication and vetting, share risks, and prioritize, authorize, and control IT investments.

Architecture and Governance Magazine, Volume 4, Issue 2, has a good article titled “Bringing IT Governance from Theory to Action.” (by Davin Gellego and Jon Borg-Breen)

The problem is complexity:

“Even as technology has simplified and become almost invisible to most audiences, the complexity of maintaining technology is reaching a breaking point for information technology organizations…little time is invested between the lines of business and IT to communicate corporate goals and how technology can support these goals. The mandate is simply ‘do more with less.’”

The solution is governance:

Lines of business and IT can no longer work in their respective vacuums. This new interconnectedness means that what affects one now affects all. If problems are no longer confined to one functional area, solutions can’t be either. IT governance defines accountability and decision making and simplifies the challenges of consolidation, outsourcing, and increased visibility—ensuring IT expenditures deliver real business value.

The traditional organizational paradigm was silos. Everyone works for their particular unit, division, line of business and so on. Each is functionally and organizationally independent. Each develops their own strategy, products and services, customer base, and so on. Each has their own profit and loss statement. Working with other divisions, conducting joint product development, sharing information or ideas, cross-selling, and other collaborative efforts are discouraged, shunned, minimized, and looked at with suspicion. It’s every line of business or man for themselves. A unit that is not “producing” gets disciplined, downsized, reorganized, spun off, or otherwise eliminated. A division head that isn’t meeting their targets is toast! (Interestingly enough, people traditionally work in a “division”—that very word connotes separation, distinctiveness, and divisiveness.)

The enlightened paradigm is cross-functional. Everyone works for the enterprise. Each unit of the enterprise is part of a functional whole. The whole is greater than the sum of the parts. Collaboration, integrated product teams, working groups, information sharing, cross selling, corporate brand, interoperability, standards, component re-use, and other unifying activities are encouraged, taught, mandated, recognized, and rewarded. Performance measures take into account not only how your division is doing, but how it is contributing to overall mission of the organization. The goals of each individual and unit are aligned to the enterprise.

In the enlightened enterprise, The CIO is not running “the IT division,” but rather is providing IT services and solutions to the enterprise. In this paradigm, the CIO requires a structured and mature governance process, so that all stakeholders have a voice at the table and can influence the decision process and ensure more successful project delivery. IT governance provides for a consistent, collaborative decision process. Governance bring business and IT subject matter experts together to communicate, make visible, align, share risks, vet, prioritize, and issue decisions.

“The most successful enterprises engage in both business and IT in investment decisions. IT governance strengthens and clarifies the connection between corporate goals and IT initiatives. And with both business and IT aware of the strategic benefits of a given initiative, the initiative has a far greater chance of company-wide adoption and success.”

In the enlightened enterprise, “no line of business or IT department is an island. What affects one, affects all.” And in this environment, it is The Total CIO who can reach out across the enterprise bringing a unifying IT strategy, a sound, reliable, secure, and cost-effective operations platform, and a governance process to communicate, make visible, share risks, and make better decisions through the participation of all the pertinent IT stakeholders.


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August 29, 2008

SOA Liberates Productivity

Harvard Business Review (HBR), June 2008, has a wonderful article (by Ric Merrifield, Jack Calhoun, and Dennis Stevens) on how SOA is “the next revolution in productivity.”

SOA defined:

“It is becoming possible to design many business activities as Lego-like software components that can be easily put together and taken apart…service-oriented architecture [is] a relatively new way of designing and deploying the software that supports a business activity.”

With SOA, business activities can be accessed via the Internet through web services. Rather than build proprietary, redundant business services, our organizations can re-use standardized services, developed internally or outsourced, as components that plug and play into our enterprise.

“Virtually all large companies suffer from an enormous duplication of activities; they continue to create and perform hundreds of non-core tasks that would ideally be outsourced; and they are spending exorbitant amounts on IT projects in order to support redundant and nonstrategic operations and to update core processes.”

How does this differ from other quality improvement initiatives?

Prior quality improvement efforts like Total Quality Management (TQM) and Six Sigma have focused on reducing waste and defects and eliminating unnecessary tasks and integrating disparate ones.

“For the most part, however, reengineering has involved recasting processes and the information systems that support them in a proprietary, rather than a standardized, form—that is, customized for individual organizations. Such designs make it difficult and expensive for business to share, consolidate, and change processes.”

Now with the Internet and web services, we can access standardized services that can be shared and re-used throughout disparate business units in the same enterprise and across organizations globally.

The result is business units and organizations that can simply plug and play to make use of needed services, eliminating proprietary processes and redundant systems and enabling outsourcing of noncore mission functions and activities and easier upgrades to new superior services as they come online.

What are some of the issues holding SOA back?

Firstly, many people do not truly understand SOA, what it is, what benefits are possible, and what the challenges are to doing it right.

Second, SOA is viewed by many executives as yet another hype or bubble that will cost the enterprise lots of money, but fail to provide the promised return. So, they are wading into SOA only enough to “deploy it in a limited fashion,” but without first rethinking the design of their business.” However, to really reap the benefits of SOA, organizations need to transform from “collections of proprietary operations into a collection of standard plug-and-play activities,” and this requires redesigning not only IT systems, but operations.

In designing SOA-based processes, the unit of analysis and reengineering is no longer the task (as in Frederick Taylor time and motion studies of the late nineteenth century) or the department, or even the division. “In the age of the Internet and SOA, the unit of analysis is not a company’s way of conducting its operations at all; it is the primary purpose or desired outcome of each activity no matter how that activity is accomplished.”

Where are we today with SOA implementation?

“Unfortunately, few companies are using SOA to create more productive and focused organizations or to slash costs by purging duplicative operations and technologies. They are not revisiting the fundamental design of their operations.”

To overcome the obstacles in reaching SOA enabled organizations, we need a strong dose of enterprise architecture to identify and decompose our performance outcomes we are driving toward, the business processes to achieve these, the information required to perform these, and the systems that can serve them up.

According to HBR, our business model activities can be categorized into the following for SOA implementation:

  • Primary (I would call this core mission)—those that should be kept in-house and are “top priority of programs to improve operations and technology” (i.e. through business process improvement, reengineering, and the introduction of new technology).
  • Shared—those that “can be shared with other divisions” (i.e. through common solutions).
  • Shifted—those that “can be transferred to customers, suppliers, or operational specialists” (i.e. outsourced).
  • Automated---those that can be “automated so they can be turned into web services.”

All but the primary activities are ripe for SOA-based enhancements. And according to HBR, only about 20% of activities are primary, so that leaves plenty of room for a SOA plug-and-play.

The idea is to cease defining our noncore mission processes and activities as proprietary, requiring elaborate and expensive customized solutions for these. Instead, we should use standardized “swapped, bought, or sold” services. Then, we can truly focus our business process reengineering and IT investments on our organization’s core mission activities—working to to differentiate ourselves and develop unsurpassed competitive advantage.


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June 13, 2008

What Goes Around Comes Around and Enterprise Architecture

As an enterprise architect, I have always wondered about the trend of outsourcing our manufacturing jobs out of country-- where as a nation we erode our manufacturing base and ship this capability to China, India, Mexico, and other countries where labor is plentiful and cheap.

Yes, in the short term we are taking advantage of the lower costs of manufacturing in other countries, but long term, I always questioned the viability of this strategy thinking that surely every nation needs to maintain a core of critical manufacturing and service capabilities and infrastructure to guarantee self-sufficiency, protect itself from eventual global disruptions, and ensure the continuity of its existence.

I believe that some day (and maybe relatively soon), we will regret the near-sightedness of our decisions to move production abroad for the sake of the dollar today.

Interestingly enough, I read in the Wall Street Journal today, 13 June 2008, that “stung by soaring transport coasts, factories bring jobs home again.”

“The rising costs of shipping everything from industrial-pump parts to lawn mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send even more work oversees.”

I thought to myself—Hallelujah!

No, I am not happy that oil prices are soaring and that inflation is looming everywhere, but I am cautiously relieved that perhaps, we as a nation will wake up in time to secure our economic interests at home and not send our entire manufacturing base and capabilities out of country.

Ironically (da!), the further we move our factories away, the more it costs now to ship the goods back home.

“The movement of factories to low-cost countries further and further away has been a bitter-sweet three-decade long story for the U.S. economy, knocking workers out of good-paying manufacturing jobs even as it drove down the price of goods for consumers. But after exploding over the past 10 years that march has been slowing. The cost of shipping a standard 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel…In the world of triple-digit oil prices, distance costs money.”

The other thought that always kept coming to mind was that as we continue to move manufacturing abroad, the increasing demand for labor would drive the cost of labor up, and eat away at the cost differential making the overseas move a moot point.

Again, I read today in the Journal the story I always felt was bound to be told and to continue to unfold: “The cost of doing business in China in particular has grown steadily as workers there demand higher wages and the government enforces tougher environmental and other controls. China’s currency has also appreciated against the dollar…increasing the cost of products in the U.S.”

One problem with trying to bring the jobs back home…

“Much of the basic infrastructure needed to support many industries—such as suppliers who specialize in producing parts or repairing machines—has dwindled or disappeared.”

What goes around, comes around. The jobs (some) are coming home (although net-net, we’re still losing manufacturing jobs). As a country, we‘ve benefited in the short-term from outsourcing, but in the long-term, I believe we’ll have done ourselves a good deal of harm.

Does this sound unfamiliar?

Think national deficit—big time. Think gargantuan problems with social security, Medicare, health care, and so on.

All too often, we behave with short-sightedness and like infants, the desire for immediate gratification. But as enterprise architects, I believe we need to think long term and often defer gratification for long-term competitiveness, self-sufficiency, and survival.


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