Your IT Department Can't Ignore Disruption
by Glenn Gruber
Ness AVP Travel Technologies and Mobile Solutions
“If you don’t like change, you’re going to like irrelevance even less”.
General Eric Shinseki, Former Chief of Staff, U.S. Army, now Secretary of Veterans Affairs
Managing change is hard. Many companies and even whole industries have been blindsided by new entrants who are empowered by technology and changing consumer behavior, and not bound by old business models and processes. What’s more troubling is that these incumbents don’t fully comprehend the extent they need to transform their technology operations to compete in the future. It is a transformation from an IT organization to a software engineering team and from business as usual to an organization that is agile and aligned with the business.
Many companies are making the shift from developing software in-house to ones that create customer facing software in the cloud and on mobile devices. It's not always an easy transition to make, but those who fail to do it, could be doomed to irrelevance because the market is changing and you have to make that adjustment before it's too late and you end up like General Shinseki's quote.
Most conversations around innovation and disruption tend to be focused on technology companies. But digital is driving disruption in our most traditional industries:
This disruptions aren’t simply in the conversion from analog to digital, but in the changes in business models and business process that the digital transformation enables. Cloud and mobile are fundamentally changing the way that consumers are accessing the products and services they purchase. As a result, increasingly, software will be at the center of how you differentiate your company from competition and engage with your customers.
Worse yet, cloud and mobile have also conspired to make it faster, easier and cheaper for new entrants to come on the scene. A decade ago, a company had to raise at least $10M to bring a concept to market. Today, modest Angel funding and a credit card can allow companies to build better, more scalable products for at least an order of magnitude less in terms of cost and time to market.
Perhaps Marc Andreesen said it most succinctly: “Software is Eating the World”.
The problem is that too many companies are set up to be feasted upon.
The Stakes are Raised
When you’re competing with companies who are nimble and starting from a clean slate, being bound by the past is crippling.
So if software is the key to tomorrow, the simple answer is to invest in technology. But unfortunately that transformation isn’t quite so simple.
Building customer-facing (e.g. revenue generating) systems is a very different activity than building internal IT applications. The stakes are far higher with the cost of failure measured in customer attrition, lost revenue, falling profits and damaged reputation. Application resiliency is paramount.
The skills required to build ‘commercial-grade’ software are different than those that reside in many IT organizations. That’s because software products are NOT simply a different type of IT project.
In an article about the Informationweek 500 rankings, Vail Resorts CIO Robert Urwiler summed it up well: “It's incredibly rewarding to work on customer apps, but IT can't pretend that it's the same as building internal IT systems. I don't know that every CIO will be able to make the transition, and it frankly creates a different kind of IT organization.”
So there are significant implications both in terms of the type of transformation that’s required in your team and on the software development partners that you engage. How you manage that transformation and selection of partners is critical to success.
How Do I Know If I'm Ready?
So if you want to compete in the future, you have to do an honest assessment of your organization and ecosystem:
- How tight is your software engineering process? This is a multi-faceted question and speaks of perspective. Does your process match the business anymore? Historically Waterfall processes, requirements gathering and 2-3 year project plans were de jure. But today’s business moves much faster than Waterfall can react to. Agile processes are much better suited to adapting to changing requirements and has the added benefit of providing much more transparency over progress, as well as better alignment and collaboration with the business.
Some may feel that they may follow best practices. But that’s because best practices to them means best practices they’ve seen in their own experiences, not necessarily best in class. Also some may look at how they compare versus competitors in their own industry. But even if you do well in that comparison, you might not do well against a software company, which could very well be your new competition. Start by looking at key productivity metrics like velocity (e.g., Story points delivered, not LOC), defects, rework and schedule variance. Only by looking at hard metrics, can you assess how well you're (or how poorly) you're doing. If you don’t have metrics, it likely means your engineering process hasn’t been optimized.
- Assess your team. Forrester Research has done some great work on building high-performance teams (subscription required). In software development, the biggest pejorative is calling someone a "code monkey." It’s the moral equivalent of the interchangeable factory worker – you can write code, but there is no implication of expertise or artistry. The premise behind Forrester’s Jeffrey Hammond report is that software, often looked at as a algorithmic process (i.e., paint by numbers) is actually a heuristic process and requires creativity to truly excel. So do you have the people with the right characteristics who can propel you to excellence in the future or do you need to change the team up to get you where you need to be? It's a crucial question.
- Evaluate your partners. Just as you look inward, you also have to look at the external partners who contribute to the software development activities. Many companies have used the traditional ITO mega-firms to build software, as they just expanded from other services they may have started with such as infrastructure management. But software engineering for external customers and internal IT are different animals. And the resources they have and the models they use aren’t necessarily well aligned to commercial grade software engineering. They may be able to provide armies of people, but they aren’t the elite special forces types. You may want to consider engaging boutique firms that focus on software engineering for these kinds of activities. Remember to focus on the right tool for the right job.
Former NFL General Manager Michael Lombardi, who is currently an analyst for the NFL Network, once said “Don’t confuse hope for a plan”. Conflating these terms is what causes many franchises and companies to fail. Football teams may hope that rookies improve or that there will be fewer injuries, but things rarely work out the way you hope because everyone tends to overrate the talent they have or fails to factor in outside events
That's why assuming that things will change radically without radical change is more often than not delusional. You need a plan. And it starts with an honest assessment of your talent and devising a concrete plan on what changes you will make that will lead you to success.
If you can put a plan in place to change the way you do business, you will be in a better position to manage the change and deal with whatever unknowns come your way. But doing nothing simply dooms you to irrelevance. The world is changing whether you acknowledge it or not. You might as well try and control it as best you can.
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