When we shop online, our order triggers a series of cascading events. It has an effect on both internal and external systems. We start with the order itself and then move to inventory management, which is then followed by sourcing, production, billing and partner systems for delivery - while not excluding CRM via web and mobile channels. The IT supply-chain to support this task is complex, especially today, when cloud services are available on nearly all devices.
A number of on premise and cloud-based services are employed on platforms such as Microsoft Azure, Amazon Web Services, Box, SAP, Salesforce, etc. Such systems interact with internal System of Record applications which ensure our orders are fulfilled timely and accurately. The first set of systems, constantly under pressure to respond to unpredictable growth, is agile, market-focused and innovative in outlook. The second set of internal systems (e.g. ERP, MES, CRM, HRM) that cloud-based platforms interact with is comprised of more traditional technologies that enterprises have steadily invested in over the years - focusing on stability, efficiency and predictability.
We have found ourselves at a crossroad of sorts, which demands that both systems work together, collaboratively and effectively. It is understood and accepted that this is no easy task - though it is one that IT must address in a timely manner to effectively support their business.
In other words, a new Operating Model is needed for IT in the New Age. The new model should be designed to adapt to an unpredictable future, while continuing to support enterprise with traditional services.
We have found ourselves at a crossroad of sorts, which demands that both systems work together, collaboratively and effectively
The New Model: Bringing it all together
For most IT organizations, there is pressure to manage IT as a business and not as a cost center. This has a ripple effect across multiple dimensions in an enterprise - extending from technology, processes and services to people and governance. As aggregators of services, the new operating model should touch every part of the enterprise, changing the very definition of a stakeholder. A careful enterprise-wide evaluation of needs, expectations and risks across stakeholders is critical to the adoption of a new operating model. The evaluation will help focus on the building blocks -- such as the need for dynamic sourcing of infrastructure, the IT market place, market demands, operating models, the demands of innovation, fulfilment fabric, a holistic view of the IT landscape, single bill for IT and governance that regulates infrastructure acquisition (See Figure 1: Building Blocks of a New & Effective Operating Model) -- that go into the creation of the new operating model.
Figure 1: Building Blocks of a New & Effective Operating Model
Why is a New IT Operating Model Urgently Required?
Consumerization of IT
Hybrid environments have become a pervasive reality in enterprises. Apps are affordable, easily available and can be found on almost all modern devices. The relationship between IT providers and their buyers has changed. Traditional IT value chains - acquisition, implementation/set up, integration, licensing, refresh and support - are becoming less commonplace. Today, IT is morphing itself from a functional service to a counsel/advisory service.
Revenues are up, product options are increasing, product life cycles are shrinking and the geos where these organizations operate are proliferating. In such an environment, winners are defined by their speed and agility. Industries are beginning to lean on KPIs to highlight performance and to ensure they’re moving in the right direction. This requires the acquisition and processing of data on markets, customers, partners, events, processes and systems in real-time, linking them to KPIs.
New regulations and mandates within industries relating to capital, risk, trading, service levels, security, asset management, stakeholder interests, operating models, governance, etc. are setting new standards and expectations in compliance. Support to meet these expectations is possible when both IT systems, traditional and new, work in collaboration.
Models: The Old and the New
The most acute difference between the two models – the traditional and the new -- is the idea that traditional model work to fulfil needs in silos. It is a technology-centric model. Alternatively, the new model works to aggregate needs and fulfil them as a service. It is an advisory model.
What should the Model look like?
IT has a difficult task here. It needs to support both the systems (that have differing clock speeds). For example, when an enterprise expands to new markets, its data-driven needs (acquisition, storage, analysis) are unpredictable but can be effectively managed by leveraging elastic cloud-based services. However, the growth in data has a concurrent impact on traditional systems (such as CRM or HRM) which may not be able to scale as quickly as cloud services can. Keeping the two in sync and making them work together is the challenge.
Enterprises can begin the process of addressing both seamlessly only when they have a comprehensive enterprise-wide view of business needs and user expectations as well as an understanding of the underlying triggers such as business outcomes, demand patterns, business velocity etc. and influencers such as security and compliance, regulations, data and audit requirements, and cost economics.
With the near-complete adoption of Cloud, the impact of the Internet of Things and technologies such as social and analytics, the New Age IT Operating Model making its way into the enterprise is inevitable.
Figure 2 : The functional depiction of the New Age