On the Strategic Value of IT

The kernel for this snowball was Metric 2.0‘s question in a recent comment on one of my posts.

Does IT have strategic value? I shall resist the temptation to quote Paul Strassmann or Nicholas Carr, or even to rebut them.

My thoughts on this are simple:

  • First, you can no longer separate information and communication from the enabling technology. IT, or ICT, can therefore be deemed as not having strategic value in any industry or sector where information or communications have no strategic value. [I shall desist from the temptation to try and find such an industry or sector, it would be nothing more than an academic exercise full of sound and fury, signifying nothing]. As long as information has strategic value, ICT will have strategic value.
  • Second, there is no doubt that commoditisation of ICT is increasing, and the speed of that commoditisation is also increasing. But the commoditisation of ICT does not mean a consequent loss of strategic value. All it means is that ICT will gently shift from being a With object to a Because Of object. Chris Messina has a good post on this, working off Doc‘s snowballs. [Yes I have linked to this post before, it’s good enough for me to do it again.]
  • Third, no matter which way I try and interpret the word “strategic” I come up with the same answer. Is ICT important or essential in relation to a plan of action for a given business? Usually. Is ICT essential to the effective conduct of a business? Usually. Is ICT useful in destroying the effective potential of a competitor? Usually.

Enough blather. If a business has a strategy, it is very likely that ICT will form an integral part of that strategy, on a Because Of rather than With basis.

Businesses don’t always have visible or perceptible or for that matter even tacit strategies. Many are happy to operate in a market at the whim of their competitors. In such environments it is arguable that ICT has no strategic value. Neither does anything else, for that matter.

I am more than happy to accept that ICT does not always deliver the strategic value required of it. Again, neither do many other things. Why? That’s a whole different ball game.  But part of the reason is blame cultures, part of the reason is poor expectation management, part of the reason is silo-ed approaches within the business, part of the reason is ICT people acting hoity-toity, part of the reason is the lack of worthwhile and implementable standards, part of the reason is a vendor-dominated market, part of the reason is a surfeit of “big whatever” consultants, part of the reason is Conway’s Law, part of the reason is lack of adequate numbers of skilled resources, part of the reason is organisational politics, part of the reason is just bad execution.
In summary:

  • Information and Communication have strategic value
  • Where a firm has a strategy, ICT will have strategic value, on a Because Of basis
  • This strategic value is not necessarily easy to extract; history does not show ICT in a good light
  • But things are getting better as a result of the Web and opensource and Moore and Metcalfe and Gilder

A sideways look at the effects of the Scoble announcement

From Alexa’s Movers and Shakers:

8. up 1,100% ~ Weekly Traffic Rank: 6,726 (was 82,338)

(No description)
www.podtech.netSite info

9. up 260% ~ Weekly Traffic Rank: 3,089 (was 13,507)

(No description)
www.scobleizer.wordpress.comSite info
And if you’re bored, go visit John Sadowski’s site, it was an unusual entry in the top 10 so it got my attention. The mere presence of that site on the Top 10 Movers list bears out one of Hugh Macleod’s axioms.

Four Pillars: An open source essay worth reading

It’s not that often that I am by myself in a strange city away from the usual attractions and distractions of life, and one of the things that lets me do is catch up on my reading. [Yes, I know I read a lot and don’t sleep much, but I mean a different type of reading, more like StumbleUpon meets The Big Library in the Sky].

You may know the kind of reading I mean. When you go through your indecipherable notes listing the things you wanted to catch up on when you had the time. And that’s what I was doing, researching some of my pet subject areas, when I came across Paul Graham’s site. And I found some really great stuff there.

Here’s a small sample of excerpts from an essay entitled What Business Can Learn From Open Source: Each quotation is shown in bold and italicised. My comments intersperse the quotes.
A recent survey found 52% of companies are replacing Windows servers with Linux servers. [1]

More significant, I think, is which 52% they are. At this point, anyone proposing to run Windows on servers should be prepared to explain what they know about servers that Google, Yahoo, and Amazon don’t.

My suspicion is that the 48% are all Not-Invented-Here IT departments, and that this number is dropping. It may actually be lower than 48% already, but there’s still a tendency NOT to claim you run Linux, for fear of being considered radical, insecure, pinko, UnAmerican, whatever. So what do we know that Google, Amazon and Yahoo don’t? Probably that our jobs are less secure than theirs, so we act out our secrets and lies.
Like open source, blogging is something people do themselves, for free, because they enjoy it. Like open source hackers, bloggers compete with people working for money, and often win. The method of ensuring quality is also the same: Darwinian. Companies ensure quality through rules to prevent employees from screwing up. But you don’t need that when the audience can communicate with one another. People just produce whatever they want; the good stuff spreads, and the bad gets ignored. And in both cases, feedback from the audience improves the best work.

Paul makes the Good Snowballs Can’t Be Suppressed point a whole lot more elegantly than I did. And touches on the Covenants versus Contracts bit as well.

….the business world was so surprised by one lesson from open source: that people working for love often surpass those working for money. Users don’t switch from Explorer to Firefox because they want to hack the source. They switch because it’s a better browser.

Key point. It’s all about better. As the saying goes, first you need a good doctor, and if he or she is cheap then that is also good. You don’t need a cheap doctor.

As in software, when professionals produce such crap, it’s not surprising if amateurs can do better. Live by the channel, die by the channel: if you depend on an oligopoly, you sink into bad habits that are hard to overcome when you suddenly get competition. [4]

Protectionism Produces Poop.

And finally, a longer extract:

To me the most demoralizing aspect of the traditional office is that you’re supposed to be there at certain times. There are usually a few people in a company who really have to, but the reason most employees work fixed hours is that the company can’t measure their productivity.

The basic idea behind office hours is that if you can’t make people work, you can at least prevent them from having fun. If employees have to be in the building a certain number of hours a day, and are forbidden to do non-work things while there, then they must be working. In theory. In practice they spend a lot of their time in a no-man’s land, where they’re neither working nor having fun.

If you could measure how much work people did, many companies wouldn’t need any fixed workday. You could just say: this is what you have to do. Do it whenever you like, wherever you like. If your work requires you to talk to other people in the company, then you may need to be here a certain amount. Otherwise we don’t care.

I want to meet this guy. Anybody know him and can set it up, please do. And if he is in the Bay Area, please let him know I’m here till Friday 23rd. Just in case.

Paul makes one other important point. Bloggers are writers. To some people, the word “blogger” conjures up something cheap and nasty, and organisational DNA kicks into immunity overdrive. Much like the effect of the word Wiki.

So I salute a writer who’s been around for a while, but who’s only just come to my notice. I shall be linking to your essays, Paul. Thanks for sharing your thoughts.

Four Pillars: Thinking about enterprise architecture

This morning’s Wall Street Journal had an article headlined “It’s Not Easy Being Lean”, and reading it, I formed the kernel of this particular snowball.

In the article, a steel company called Nucor is characterised as having just three layers of management between the CEO and the hourly workers on the factory floor. And Toyota, one of the poster children for Lean, is mentioned as having at least ten layers. Separately, at least anecdotally, Google is rumoured to have a relatively flat management structure, with executives sometimes having forty or fifty direct reports. Why is this? Why does this work in some organisations and not in others?

Because layers by themselves are meaningless, it’s the level of empowerment and cohesion that matters.

What’s all this got to do with enterprise architecture? Let me posit a few “laws”:

  • 1. An enterprise IT department is a window into the soul of the enterprise itself.
  • 2. An enterprise’s IT strategy is a reflection of its business strategy.
  • 3. An enterprise’s IT architecture is a reflection of its organisation structure.
  • 4. Centralisation versus decentralisation, global versus regional, many-layered versus not-many-layered, these are all red herrings. What matters is High Cohesion and Loose Coupling, with its consequent empowerment, lack of duplication and consistency.
  • 5. These statements hold true regardless of the perceived quality of the organisation or of its IT department, in-house or outsourced. You cannot game the system.

Leadership, as per Max Depree, one of my favourite authors, is about three things:

  • Providing strategy and vision.
  • Saying Thank You.
  • And in between, being a servant and a debtor to your people. 

A firm “organises” to achieve a finite number of things:

  • Aligning execution to the objectives and strategy
  • Allocating resources accordingly
  • Using active feedback and feedforward loops to refine the allocation process in response to market stimuli
  • Having a sensible mechanism for escalation and conflict resolution

Enterprise systems and applications architectures enshrine what happens in the organisation. If there are independent fiefdoms then there will be duplicated systems. If there are meaningless control processes then there will be meaningless feedback loops. If decisions are pushed from pillar to post then the information related to those decisions will do the same. If there is no perceptible organisational strategy then you won’t find an IT strategy either. If rules are regularly broken then standards will not be adhered to either. If departments don’t collaborate then silo-ed systems are guaranteed. And so on and so forth.

If the enterprise needs investment, so will its infrastructure. If the enterprise is resilient and adaptable then this will show in its systems and application architecture. It is what it is.

So my advice is, leave other people’s best practices where they work best. In other people’s companies. Do the right thing. Do it the right way. Your systems will reflect your values whether you like it or not.

Flight School Air: Some early thoughts

I’ve been at Release 1.0’s Flight School 06 with Sean for the last couple of days. You can read his early comments here. It was another classic Esther Dyson session, she (along with her team) has this uncanny ability to spot something important going on and then bringing together all the movers and shakers into one room quickly and easily. My thanks to Esther and team.

I don’t have a pilot’s licence, don’t own a plane, and have never invested in anything remotely to do with planes or aviation. Yet I could not stay away, because of a number of things:

One, affordable aviation, even shorthaul aviation, changes lives. I know my life has changed as a result of the availability of passenger aviation. And I believe that this mode of transport, as it becomes more affordable and more ubiquitous, can make a real difference to people’s lives everywhere. Releasing time, increasing productivity, providing timely healthcare, simplifying the process of infrastructural regeneration, allowing people to sample different lands and cultures more easily, increasing our leisure options, the list is endless.

Two, the air taxi business has a number of characteristics in common with the way the World Wide Web started, commonalities that intrigue me and excite me. I feel I am watching something important happening. More of this later.

Three, there’s real money to be made. These are amorphous times for this industry, and we need changes aplenty. Changes to the way we insure passengers, pilots and aircraft. Changes to the way we provide this segment of the aviation industry access to capital markets. Changes to the communications, navigation and surveillance systems we use for doing all this. Changes to the way yield is predicted and managed. Changes to the way we signal our interest and have our demand aggregated. Even changes to the participants themselves as they buy and sell and take over and merge and list and go private. These are heady times.

Four, much of it is about IT, yes Information Technology. Air taxis, as a concept, will serve to bring aviation into the digital world. [An aside: Have you ever been tempted to look over the shoulder of an airline assistant while your booking is being checked or amended? It is incredibly saddening to watch the hybrid greek gobbledygook double-dutch they enter into the green screens, and the machiavellian sequences of meaningless keystrokes they enter as punctuation and even screen navigation]

Five, have you ever met a child who wanted to be a lawyer? A pilot? I rest my case.

Another aside. I was sitting on the porch of the hotel in my wicker rocking chair watching the sunset over the bay, and the table next to me was taken by a set of raucous holidaymakers obviously enjoying themselves. They consisted of three generations of one family. And they were talking about how things had stayed constant at the hotel while much around it had changed. And in this nostalgic vein, someone asked the paterfamilias how things were in comparison to how he expected things to be, forty years after his children were born.

The first thing he said was that he really expected to see flying cars by the time the 21st century came along, as in the Jetsons, that the absence of flying cars was the single biggest disappointment he had had.

So why do I think there are commonalities between the World Wide Web and the air taxi business?

  • 1. The infrastructure is largely there as a result of people providing for the public good, even if defence and aerospace and academia helped make it happen.
  • 2. The operating model was that everything happened at the heart of the network, with hubs and spokes and satellites as needed.
  • 3. The people who made iteration 1 happen were infected with a sense of wonder, a sense of adventure.
  • 4. Access to the first iteration was privileged.
  • 5. All control processes were built on a very Taylorist Assembly line basis.
  • 6. It was all very capital-intensive.
  • 7. It needed a lot of collaborative cobbled-together standards and agreements to make it work.
  • 8. The whole space was surrounded by regulatory and labour implications.
  • 9. And as with the Web, the incumbents under attack were conspicuous in their absence, they had other things to worry about, a classic Innovator’s Dilemma a la Christensen in the making.

Sure, there are material differences.

  • 1. Safety and security have life and death consequences in this space.
  • 2. The regulators are more open to the changes required, and even broadly supportive.
  • 3. Unlike the incumbent telcos ten years ago, incumbent airlines are largely losing money hand over fist.
  • 4. The incumbent does not think he owns the infrastructure.
  • 5. We have all learnt from Web 1.0

I’ll post something more detailed once I’ve had a chance to gather my thoughts and to get feedback. I’ll leave you with this thought:

Watching aviation become passenger- and craft-centric, seeing the implications for communications, navigation and surveillance, understanding the nature of software and hardware and communications innovations that will happen, extending all this to new relationships and conversations and transactions, putting all this together is really exciting. It’s a market crying out for Web 2.0 models and processes. And even dreaming about how customers can co-create when you give them access to these tools is uplifting.

And this time around, we have the chance to get identity and authentication and permissioning and real-time intention and attention aggregation right. Because this time we have the learning of the past, and a compelling incentive. Getting it wrong kills people.

More later.