Faisal Hoque turns IT-Business alignment on it's head when he says "Alignment is the lowest and most passive stage; at the alignment stage, IT plays a support role; IT is always trying to catch up with what the business wants to do. Synchronization is the next stage. IT plays more of an active role by influencing how the business should operate: how the company goes to market, manages its supply chain or improves efficiency, or introduces a new product. The highest stage of maturity is convergence. Here IT and business are the same; there's no distinction between the two." He goes on to add that "The most critical thing we've learned in creating these three categories is that alignment is a reflection of management maturity."
I don't quite agree that alignment in itself is limiting or fundamentally flawed or that convergence is the absolute nirvana. Ultimately, whatever be the relationship it needs to maximize or help shareholder value. Businesses first need to define the ideal relationship between IT and business given the unique context of the environment in which they operate. How does one determine this ideal ? To frame the problem more closely let us narrow the context. For argument sake, assume that the biggest value driver in a given business (say the Soft drinks business) happens to be branding.
Note: We define 'biggest value driver' to be the value driver that delivers the highest shareholder value for a dollar spent on that value driver.
We all agree that ad campaigns are a big and successful branding driver in the soft drinks business. Anyone who disagrees only needs to watch TV for a day or better still, check out Coca Cola's ad spend for the year 2000. In case you are lazy or like this article too much (he he )to click out it was $2 billion.
Advertising campaigns : One of the ways IT can be used to support ad campaigns is through campaign management software. Here's one definition I managed to dig out: "A type of marketing automation software that optimizes the process for organizations to develop and deploy multiple-channel marketing campaigns to target groups or individuals and track the effect of those campaigns, by customer segment, over time." IT is optimizing business processes, tracking and monitoring the results. Seems like IT is adding value by supporting the business, 'aligning' rather than 'converging'. The value adding branding processes are clearly distinct from IT itself. I do not mean that it is impossible to have an IT solution that 'converges' with branding business processes, but clearly the right approach is contextual.
If we step back and look at the bigger picture of IT investments in general, they are of three types a). Keep the fires burning type maintenance work b). Keep the IT aligned with changing business needs -enhancements etc c). Transformational initiatives that are strategic and designed to take the business to a different plane altogether. If convergence has a chance it is only in bucket (c) and we know bucket (c) type work has a high failure rate.
I also believe that alignment > synchronization > convergence is a maturity continuum of increasing difficulty. Many organizations spend a good portion of their budgets chasing alignment and fall woefully short. What chance does convergence have then ? Talk of flying when you can't even crawl. Convergence can wait. We have a long way to go before we can converge! Innovation IT strategy
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It will look like this: IT and Business : Alignment or Convergence ?
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Check out this UN report on ageing population demographics in industrialized nations.
Almost a third of the population would be over 65 in some of these countries. The market is still nascent and companies like CAST (Center for Aging Services Technologies ) are attempting to build an ecosystem to cater to this future market. Majd Alwan the CEO of CAST says "The end game is to prove that technologies would allow seniors to have a better aging experience in a place they call home." I do believe that India based health care providers would get a fair share of this emerging market by playing the role of catalysts. The value prop: Open heart surgery in India + Visit to the Taj + Get a free (thanks to the money saved on the surgery) state of the art cardio robot implant that will give your an hour advance warning of heart trouble. Till the time policy makers get their act together, companies like CAST should seriously look at the possibility of India based providers as a part of their ecosystem.
Innovation Life
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It will look like this: Fortune at the top of the pyramid: The old man goldmine
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Abhijit brings up an interesting thought on the possibility of scaling without a database:
"Again, SQL is wonderful for queries, especially dynamic queries. This could be countered with using either XPath style queries or a search engine like Lucene, or even a combination of the two. I consider a database is necessary today because of two reasons - along with the main content we serve a lot of related content and data integrity…..However, I am not able to find replacements for relating content and data integrity. Of course of this can be moved to the software, by building a domain model, but not all."
Here are some other reasons I can think of:
-RDBMS's have a huge legacy base built over the last couple of decades. OK OK. Mainframes were the legacy when RDBMS's came along. Right ? The crucial difference is that RDBMS's came along at pretty much the time PC's caught on. PC's were a huge inflexion point and RDBMS's played the ideal foil and piggybacked along just fine. By the time the web came and scalability got a whole new angle attached to it, RDBMS's had a good ten years to mature and were ready for the challenge. Takeway: I do not see another inflexion point that would expose an RDBMS weakness to the point that warrants another change.
- Google has proved that you can scale with a commodity database with the right kind of infrastructural support and architecture. Yes. They use MySql.
- "Nobody ever got fired for buying IBM" and so the adage goes. The same holds true for Oracle as well.
-Storage as a category has got too many interesting innovations happening already. The dollars have plenty of other more exciting options with a clearer ROI payoff.Innovation Products
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Everybody is talking of Web 2.0 and Enterprise 2.0. O'Reilly's web 2.0 meme map got me thinking on one for the services business. Maybe I should call it Outsourcing 2.0 or Software Services 2.0! My two cents worth:
Blue : Drivers
Orange : Core competencies
Grey : Themes
What do you think ?
Innovation Strategy Web2.0
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Sharad brings out his top five reasons why R&D (product development and related areas) has blossomed slowly. Here are some other reasons I can think of:
Software engineering mindset: The local market for talent is heavily biased towards software engineering. Take the average manager or developer and he will live and breathe software engineering, quality and processes. Nothing wrong with that. But a true product company typically has a computer science core comprised of algorithm savvy programmers. If critical product development is to get outsourced, you need computer scientists. Sadly, the local market has few such people. If you don't believe me, trying interviewing a six year experienced technical lead and ask him what a binary search is. The candidate would likely take offence, not because the question is too easy, but because he is above it in spite of not knowing the answer. He might even respond that he has left behind algorithms in engineering school.
Multi site, concurrent development expertise: To have product development outsourced across the value spectrum (not just low end work) you need to have multi site concurrent development enabled. The offshore developers need to live and breathe the same code base. Regular services delivery models are good at executing tightly coupled, single site development engagements.
Long gestation period and attrition: To add innovative value to a product requires intimate knowledge of the context, be it code or the domain. It takes time and investment to see the returns come. Most companies are unwilling to spend the time and effort and seek quick results. The high attrition in offshore labor markets only make the case worse.
Seeds of failure and the peak of success: It is commonly accepted that captive centers make sense only with scale accompanying it and when the work is strategic enough. As the product outsourcer's share of the business grows, both qualitatively and quantitatively, the case for outsourcing actually becomes weaker. The seeds of failure lie in the peak of success.
The technology lag factor: Products are not static. They need to evolve constantly in tune with market demands and need to aggressively look at incorporating new technologies to stay on the leading edge. Services companies typically absorb technology with a lag factor. There is a certain amount of derived demand for a skill set that needs to manifest before budgets get released for investment in the skill set. The classic utilization mindset. Makes perfect sense in the services world, but it does not help lead the innovation race.
IP concerns: This is a no brainer. Exposing precious source code to someone over whom you have no direct control is not easy and it is not just about the code. The minute you outsource product development and start sharing schedules you are exposing product release timelines, details about how behind you are on schedule, what features and in and what are out. These can be very sensitive.
Innovation Outsourcing Products
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Business Week brings up PC recycling as a way to bridge the digital divide. We also have more radical approaches like the Simputer innovation. Both approaches have their pros and cons like anything else, but I tend to favor reuse and "value engineered" innovation over radical innovation when it comes to bridging the digital divide. Here's why:
The stupendous importance of the platform: Making a radical innovation like a new platform succeed in the face of an existing, proven and mature option is a staggering task. Just ask any company that Microsoft has vanquished to know why.
Ecosystem versus devices: The question really is not access to devices but access to the ecosystem where there is information.The idea should be to find the path of least resistance to get the underprivilegded into the information rich ecosystem. An outdated PC with a local language version of Windows running just IE running would provide a much easier entry point than new devices or software.
Leveragability of the learning curve: Why bridge one divide to create another ? Why make a 'digital illiterate' learn a new device only to find that he is handicapped when it comes to what the rest of the world is doing ?
The human factor: Which CEO would not want to get rid of "junk" PC's for a noble cause ? Knowing that your junk can irrevocably and surely change someone's like for the better is a strong incentive. Meanwhile try selling a new, untested and radical innovation to the same CEO he will ask for a business plan.
Think local when it comes into innovation: Innovation should be value engineered with the objective of reducing the cost of entry by leveraging local strengths. The wind up laptop is a good example. I will say take a PC and find a way to use a gobar gas plant to run it before taking it to an Indian village. The example is extreme but the message is clear, think local when it comes to innovation.
Digital divide Innovation
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