Tuesday, May 30, 2017

Transformation at MIT Sloan CIO Symposium 2017

When I attend an event such as the MIT Sloan CIO Symposium, as I did in Cambridge yesterday, I find myself thinking about common threads and touch points. A naive perusal of the agenda might have suggested a somewhat disparate set of emerging strategies and technologies. Digital transformation. AI. Man and Machine. Blockchain. IoT. Cloud.

However, patterns emerged. We’re in such an interesting period of technology adoption and company transformation precisely because things that may at first seem loosely coupled turn out to reinforce each other. Thereby leading to powerful (and possibly unpredictable) outcomes. IoT is about data. AI is, at least in part, about taking interesting actions based on data. Cloud is about infrastructure that can support new applications for better customer experiences and more efficient operations. Blockchain may turn into a mechanism for better connecting organizations and the data they want to share. And so forth. 

We observe similar patters at many levels of technology stacks and throughout technology processes these days. New business imperatives require new types of applications. Delivering and operating these applications require DevOps. Their deployment demands new open hybrid infrastructures based on software-defined infrastructures and container platforms. (Which is why I spend much of my day job at Red Hat involved with platforms like OpenStack and OpenShift.)

That it’s all connected is perhaps the primary theme the event reinforced. In this post, I focus on the “big picture” discussions around digital transformation. I’ll cover specific technologies such as AI in a future piece.

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Digital transformation on two dimensions

Peter Weill, Chairman, MIT Sloan Center for Information Systems Research (CISR) led off the day with some research that will be made public over the next few months. This research identified change associated with digital transformation as taking place on two different dimensions: customer experience (e.g. NPS) and operational efficiency (e.g. cost to income). Companies that transform on both dimensions ("future ready firms”) have a net margin 16 points higher than the industry average.

Weill emphasized that these transformations are not just about technology. “Every one in room is struggling with cultural change question,” he said. As Jeanne Ross, also of CISR put it later in the day “Digital transformation is not about technology. It’s about redesigning your value prop and that means redesigning your company."

Finally, it’s worth noting that these two dimensions mirror the two aspects of IT transformation that we see more broadly. The “bimodal IT” or two-speed IT model has somewhat fallen out of fashion; it’s often seen as an overly rigid model that de-emphasizes the modernization of legacy systems. I don’t really agree although I get the argument.

Nonetheless, the CISR research highlights a key point: Both IT optimization and next-generation infrastructures and applications are important. However, they require different approaches. They both need to be part of an overall strategy connecting the business and the business’ technology. But the specific tactics needed to optimize and to transform are different and can’t be treated as part of a single go-forward motion. 

Four decisions

Ross broke down designing for digital transformation into four decisions.

The first is defining a "vision for improving the lives of customers” because this affects what innovations will pursue.

The second decision is defining  whether you’ll be primarily focused on customer engagement (market driven) or digitized solutions (product driven).

The third decision is defining the digital capabilities will you'll pursue. Ross said that "the operational backbone is the baseline. But you also need a digital services platform that relies on cloud, mobility, and analytics.” Such a platform emphasizes "developing components rapidly and stitching them together.” (The evolution award microservices, DevOps, and container platforms is very much in response to these sorts of requirements.)

Finally, digital transformation is fundamentally about how the business is architected. "Pre-digital we architected for efficiency. In a digital economy, we architect for spped and innovations. This requires empowering and partnering.” (From the vendor side, this also mirrors the shift we see from a historical emphasis on individual products to an emphasis on ecosystems and communities. These are perhaps especially important within open source software but it’s a broader observation.)

Stay tuned for future posts about some of the more technology-oriented discussions at the event.

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