Friday, April 10, 2009

The Drivers for Transformation

Let’s face it, everything turns into a legacy pretty much the moment it goes into production. Systems deteriorate or eventually become obsolete due their inability to meet new objectives. The world changes, new problems emerge, new discoveries are made, disaster strikes, people are mortal and new generations bearing new ideas and fresh visions ultimately take over.

But this still leaves the open these questions: what precisely is it that should be changed? And what drives what?

I’m thinking of the old age debate about whether it is technology or the needs and wants of the business discourse that ultimately drive technology. My own view is that technology’s impact on business and business’s impact on technology are dialectic in nature. Oftentimes it is “business” that drives technology (the 1960’s NASA Moon-shot comes to mind), but sometimes it is technology that drives business by opening previously untapped revenue-generation areas. Take the video-game industry; a direct result of the invention of the micro-processor which was spearheaded to meet the requirements of an electronic calculator manufacturer.

The initial driver sometimes kicks up other drivers in a feedback-loop manner. For example, new satellite communication technology encouraged globalization. International broadcasts of sporting events have become common, so that people in Brazil can now watch the same soccer match as people in England. On the other hand, globalization in communications also drove the need for significantly higher bandwidth and for shortened propagation delays than those from satellites. This encouraged development of more bandwidth capable fiber-optics, which led to new uses of that bandwidth, and well, you get the picture.

Business and Technology are but two of the key transformation drivers. I suggest that Competition and the internal dynamics of your company are another two. To me the list of drivers for change can then be narrowed to these four:

Business Drivers. Ultimately, if you are going to justify a new project to remedy problems with an aging infrastructure, or need to introduce a new reporting system, or, frankly, anything that requires a purchase order, you are going to have to justify the results in business terms. Rarely will the business directly request you to change the technology. Do not expect your CEO to come up to you and say, “Hey Joe, here’s a budget for us to move to SOA”. Truth of the matter is that you will be asked to deliver a specific list of business functionalities and capabilities, and you will then be expected to do so with a much reduced budget and tightened timeframes (“need this by yesterday”). Your challenge, should you decide to accept it, is to explain why satisfaction of these requirements merit the necessary funding and patience to launch an IT transformation effort.

Technology Drivers. So, often, it’s not a business requirement that drives change, but rather the pure fact that new technologies emerge with breakthrough functionalities, lower costs, or novel usages, and your refusal to adopt them would rightly place you and your company in the nomination awards list of the International Luddites Association (forget about Googling them; they don’t believe in having a Web site). Still, when the driver is technology alone (not the competition and not the business), it is usually wisest to introduce the change in line with normal replacement lifecycles. Take for instance the recent popularity of flat screen monitors. At first, executives drove their adoption (sign-of-status is a business driver, right?), then the artist-types demanded them with legitimate request to live in a flicker-free world, and soon after, the senior technical staff acquired them (how come those folks at graphic design have those monitors and we don’t?), until they eventually became cheap and prevalent enough to be the natural replacement technology for everyone with an outdated CRT monitor.

Ignore the forces presented by technology drivers at your own peril. Failure to change with the advent of transformational technologies is perhaps one of the biggest reasons that previously secure companies have tumbled down precipitously. The list of examples can be quite long, but suffice to note that Polaroid’s misread of the digital technology, and Wang’s failure to understand the ability of the PC to be used as a word processor show how serious is the need to understand the impact of new technologies on our businesses.

Your Competition. The world would be a much better place without those damn competitors. Alas, they do exist, and they sometimes introduce products and services that challenge your business. Back in the earlier 60s, American Airlines revolutionized the way travel was booked by allowing travel agencies direct access to its central reservations system (SABRE). Competing airlines had no choice but to react, and to react quickly, lest they face the prospect of a quick and painful death. After all, travel agencies using the SABRE system were more likely to book flights in American Airlines than in other competitor. Being the earliest to use automated travel reservations gave AA a tremendous boost in market share and in reduced distribution costs.

Your Organization. That is: you and your organization. You are that competitor who is the first at introducing a new feature or capability. Someone from inside your R&D group may come up with that one game-changing idea that truly deserves support. A new business process is identified that cries out for use within your system to effectively reduce costs now and into the future. Perhaps your company has acquired another concern, or there’s been a merger; or simply process and control inefficiencies are preventing scaling up the system.

Planning for your IT transformation involves assessing the future for each of these drivers. Next week, I'll talk about some techniques useful in prognosticating what's yet to be. . .