We've all been in organizations where the first reaction to a downturn is cost-cutting and a myopic focus on keeping the lights on.  Sometimes, that is your only option, but for many organizations, a current-term batten down the hatches approach stifles innovation and talent, and inevitably drives the best and brightest out the door -- with their creative ideas! 

In a recent post on her Harvard Business Discussion Leader blog, Tammy Erickson calls for a different approach, one that recognizes the unpredictability of the current business climate and emphasizes investing in collaboration, improvisation, and yes -- people:

"A lot of senior managers are now readying their team for Recession 2008. Most are thinking in ways that are completely understandable -- and in my view -- very likely to be dangerously wrong. Most standard wisdom advises caution and control -- review your costs, tighten your approval criteria, pull key decisions and sign offs up to higher levels, make sure everyone in the organization is as fully busy as possible, narrow the business scope.

That approach might work, if the nature of the recessionary environment were known or easy to predict. But it’s not. Rather than trying to tighten control and hunker down, I’d suggest that you think about ways to make your team better able to improvise given whatever comes along. Four things will help your organization become more spontaneous, innovative and reflexive:

(1) Increase your firm’s “collaborative capacity” through relationships, trust, and knowledge exchange. Don’t cut out meetings, intensify the competition among internal teams, or reduce investments in learning. (For more, see our November 2007 HBR article “Eight Ways to Build Collaborative Teams”).

(2) Articulate a compelling “innovation intent” -- something that, in the language of complexity theory, will serve as a “strange attractor” to rally your team around goals that are intriguing, complex and important. Don’t narrow the focus to the mundane or over-specify the way teams should approach their challenges. Keep them engaged.

(3) Ensure that your team has regular on-going exposure to disruptive insights through diversity and external forays. Don’t cut travel or fall back on the old “tried and true” team. Bring in new people and new ideas and take them seriously. Get outside your business sphere.

(4) Provide everyone in your organization with some specific tools to help with innovative thought processes -- teach people how to brainstorm, use scenario analysis, or create ideas through attribute reduction. Don’t cut training -- invest in your people. Teach your employees how to be a business innovator so they can improvise in motion."

Makes sense to me.  Seems like you'd want to give your organization a fighting chance, and innovation takes innovators...

Posted by brendamichelson in business • creativity • innovation • leadership | Permalink | Comments (2) | TrackBacks (0)

This morning’s dismal US Jobs Report and the ensuing analysis  laden with the “R-word” reminded me of a conversation the SOA Consortium community-of-practice had on our December 4, 2007 call that I had been meaning to post over on SOA Consortium Insights.  During that call, I asked our members the following:

“What does the ensuing (or on-going) economic downturn mean for SOA in 2008? Will the economic downturn and associated budget cutbacks drive organizations to, or away from, SOA in 2008?”

We had a good discussion, the results of which are here.  I'm curious, what does this community think?  Will SOA be employed as a strategy to cope with, and prosper in, tumultuous times?.  Or, will SOA be seen as a budget line to cut?  Let me know, via a comment or trackback, here or there.

[Disclosure: The SOA Consortium is a client of my company, Elemental Links]

Posted by brendamichelson in SOA • business | Permalink | Comments (0) | TrackBacks (0)

Continuing on my business-IT integration theme, I want to share some excerpts from a BusinessWeek article, entitled IT's Star Turn.  I found the article via Ben Worthen's BizTech blog.  The article, written by Jeneanne Rae of Peer Insight talks about the importance, and yet dearth, of IT participation in corporate innovation.  Following the excerpts, I have a few questions.  The emphasis is mine.

First, the opportunity: the shift to a services economy, the innovation edge, and the tie to information technology:

"The fundamental shift of the U.S. economy from one based on industry to one based on services has been covered in this column and elsewhere. While some companies—and indeed industries—still resist the trend, the innovators have recognized that the production of value lies in the creation of services, and have adapted accordingly.

Even product-based companies have shifted their focus from the production of physical goods to the delivery of device-enabled services products. But here's the related innovation trend that no one is talking about: Increasingly, those services are being driven by scalable technologies. The information technology departments once seen as back-room cost centers are becoming key players in the execution of innovation, and hence, the creation of value in the new marketplace."

Next, the absence of information technology personnel in the innovation discussion:

"Where is IT in the innovation conversation? With IT being so essential to the innovation equation, and with so much riding on the IT department's ability to build and maintain the systems that will drive customer delight, you'd think there would be more talk about the role of IT in innovation strategy.

But let me ask, how engaged are chief information officers in innovation initiatives? Are members of your IT department full-time members of innovation project teams? Or do they exhibit a "call me when you need me" approach? Or worse still, a "Put your request in the queue, I'll get to it when I can" attitude?

Based on my research, the majority of IT departments sit on the sidelines of innovation discussions when they should be central players. Systems consultants as well as corporate representatives say that, typically, IT departments are tactical rather than strategic, reactive rather that proactive, and isolated rather than integrated. Few in the IT ranks speak "business model," which is unfortunate given that so much customer and shareholder value is dependent on IT solutions to facilitate critical network connections.

...many corporate innovation executives I know no longer consult their IT departments. Despite the risk of exposing new business strategies to potentially untrustworthy third parties during the "fuzzy front end" stage, they simply go outside. "You get tired of hearing, 'no, we can't do that' all the time," said one practitioner at a Peer Insight forum recently."

Lastly, a prescription, or continuation of the Business-IT Integration theme:

"In order to support the robust innovation pipelines that many corporations aim to build, we have to rethink how we integrate IT into our organizations, particularly as it relates to driving innovation. Start with the IT leadership team, where more executive bench strength will be needed. IT managers should be well-versed on managing cross-functional initiatives, and should understand the company's business end-to-end. These managers will need to guide innovation teams in regular technology road mapping and system architecting sessions. Interaction design and rapid prototyping of customer touchpoints will be the standard, not the exception. Iteration and user testing of new software concepts will be a core capability. Likewise, IT must be engaged and mentored by business managers as the opportunities to learn and collaborate go both ways."

Questions:

1. How does IT participate in Innovation at your company?  Are IT personnel at the Innovation table?  If so, which roles?  CIO, CTO, Chief Architect, Business Relationship Manager, other?

2. Are technology capabilities/advancements input to Business Innovation Ideation?  (how's that for a management buzzword?)

3. How integrated are business and IT at your company? 

(a) IT is an order taker

(b) IT aligns with business (IT takes and supports business lead)

(c) IT and Business are integrated: collaborate on Innovation, Strategy, Architecture and/or Portfolio Planning?

Posted by brendamichelson in Business-IT Integration • business • business driven architecture • leadership | Permalink | Comments (0) | TrackBacks (0)

Last week, at BPM Think Tank I shared some of the SOA Consortium (and my) views on the complementary relationship of BPM and SOA. I purposely kept the conversation away from technology and standards. Instead, I focused on the changing role of IT (value generation), the problems BPM and SOA solve (instantiating business scenarios which are comprised of processes, activities, services and events), the changing role of enterprise architecture (business architecture as first class citizen), the importance of business and IT collaboration on enterprise strategy and enterprise architecture, and the need for IT professionals, particularly architects, to gain business smarts.

On Monday, I read an article in the online WSJ, What's Next for IT, that echoed many of these themes, and provided some additional insights into the question Phil Gilbert posed "How are organizations injecting business smarts into IT professionals?"

The article is an excerpt of an interview between WSJ editor Francesca Donner and three CIO's -- Meg McCarthy of Aetna Inc., Frank Modruson of Accenture Ltd. and Steve Squeri of American Express Co.

While the entire article is worth the read, I wanted to excerpt some of the excerpt, particulary on the topics I mentioned above. My categorization has caused some selections to be ordered differently than the article.

On the changing role of IT: "Strategic" and "At the Table"

THE WALL STREET JOURNAL: Analysts have written that IT departments are becoming more strategy- and business-oriented. Do you agree?

MS. MCCARTHY: I totally agree. At Aetna, the IT organization is critical to enabling the implementation of our business strategy. I report to the chairman of our company and I am a member of the executive committee. In that capacity, I participate in all of the key business conversations/decisions that impact the company strategy and the technology strategy.

MR. SQUERI: I believe that over the next 10 years, the CIO will get more involved in the overall business strategy of the company and see their role expand in importance. The CIO will be increasingly called upon not only to translate business strategies into capabilities but to become even more forward-looking to determine what capabilities the business will need in the future.

The days of tech leaders as relationship managers and "order takers" will go by the wayside and they will be called upon to create and drive technology strategies that drive business capabilities.

On bridging the Business-IT divide... "Business-IT Integration" (my term)

MR. SQUERI: I agree that technology organizations are getting closer to the business. It's a must.

This doesn't happen overnight, though. We need to help the business better understand technology. We need to help our technology employees better understand the business strategies.

One way we are doing this is by moving people across the organization, from the business to tech and vice versa. Alignment with our senior leaders helps build the connection at all levels within the organization -- we're all at the table together.

MS. MCCARTHY: Steve's note is very consistent with some of the strategies we are employing [at Aetna] to bring greater alignment with our business partners.

Transitioning people from the business into IT and rotating IT people to the business brings a greater understanding to the broader organization.

MR. SQUERI: For businesses that leverage information or use technology as a competitive advantage, it is important that business leaders know how to leverage the technology groups to enable their strategies. This means that just as technology groups are learning to translate business strategies into technology capabilities, business leaders will have to think about their strategies in terms of long-term capabilities.

The only way that can really take place is by deepening the working relationship and ensuring that IT has a seat at the table.

MS. MCCARTHY: Our current CEO and chairman has a technology background which has been invaluable to our business at Aetna. He encourages all our non-IT leaders to have a good working understanding of technology and to understand the systems that enable their business areas. He also has the business leaders report on all the "systems" projects/programs for their business areas -- a recognition that this work is not just systems work but business and systems work.

I would encourage all non-IT managers to get an orientation to their systems organization. I would also encourage non-IT leaders to spend time with their IT partners, particularly the architecture team during their strategic planning process. Have the architecture team look out three years and identify technologies that could be applied to the business to improve productivity or increase revenue. Working together on these things can generate creativity on both sides.

On SOA, Service Definition and Business Process, "Bi-directional Business-IT Understanding"

MS. MCCARTHY: ...The other important aspect associated with Steve's comment and his business background is the focus that most of us have on building a services-oriented architecture.

The analogy that I'll use here is Legos. In a services architecture, we build discrete services that are individually tested and certified, versus a more traditional programming method. These services can be used and reused very efficiently, i.e., the Lego concept of taking Legos apart and reusing them to build something new. The promise of this approach is significantly reduced costs and speed to market. The ability of the IT organization to do this work efficiently is a function of how well we work with our business partners to define our business processes at the right level...

... The big challenges for most companies will be the continued work on building an adaptable architecture that provides for seamless interoperability with other companies, i.e., ease of communications and transaction processing with business partners and customers.

The CIO in this work will be an important strategic partner who can educate and vision with their business partners. [As CIOs] we need to understand the business, the technologies that are evolving and work closely with our business partners to identify opportunities for the company and our customers to exploit these technologies to achieve market leadership and competitive advantage.

On Next Generation Technology Leaders:

MR. SQUERI: I believe that finding the right talent is a key priority and challenge we're facing.

We all talked about the need to align technology and business strategies. Part of getting there is bringing in and developing people with technical, business and management skills. Our technology leaders need all of these skills to be successful and make our businesses successful.

Posted by brendamichelson in BPM • Business-IT Integration • SOA • business • enterprise architecture • general IT • leadership | Permalink | Comments (0) | TrackBacks (0)

Having left my corporate budget responsibilities behind, I hadn't really thought of this.  Today's WSJ has an article on SaaS adoption.  One of the driving factors in large organizations is accounting.  Not, providing accounting services, but how software expense is accounted for:

"Early on, that attracted mostly small businesses that weren't previously using any software at all and could easily justify trying this new approach. But larger companies stayed away, having invested in the late 1990s in traditional software from the likes of Oracle and SAP AG.

Now that's changing, partly because of an accounting quirk. Companies are starting to get rid of their old software at a time when capital-expenditure budgets are tight. Traditional software and the hardware to run it are considered a capital expenditure. But Web-based services are typically sold as a subscription, which means corporate buyers can account for them as a maintenance expense, which falls into a different bucket.

As a result, companies are turning to start-ups such as Ketera, LucidEra Inc. and Workday Inc. that are offering Web-based services for tasks like controlling spending and managing employees. Meanwhile, a handful of older software-as-a-service companies such as Taleo Corp. and RightNow Technologies Inc. have gone public; another, NetSuite Inc., is widely expected to try to do so.

Big software makers like SAP and Oracle are themselves ramping up efforts in the area. Google Inc. is even getting involved, with Web-based word-processing and spreadsheet services for businesses. Research firm Gartner Inc. calculates the world-wide market for software as a service will grow to $19.3 billion by 2011 from $6.3 billion last year."

I don't know about everyone else, but I always found getting capital to be a battle.  But maintenance, well you have to keep the ship afloat.  Interesting to consider if you find yourself in the bootstrapping phase of architecture and/or technology adoption.

Posted by brendamichelson in business • technology trends | Permalink | Comments (1) | TrackBacks (0)

Nice to see this article (free access)  in today's WSJ on the increasing role of the CIO in business strategy.  Here's some quick excerpts, emphasis is mine:

"Other CIOs are going through similar transformations. The computing systems they manage have long been seen as an essential resource but also an operating cost to be controlled. Now, technology is increasingly being recognized as a vital tool in corporate strategy -- and CIOs are helping to wield it. Web sites, for example, have evolved at many companies from the equivalent of corporate brochures to huge direct-sales channels that must be skillfully designed and tightly managed.

According to recent CIO polls from research firm Gartner Inc., 50% of CIOs surveyed said they now have duties outside of core technology, such as helping to craft corporate strategy. That is up from about 20% three years ago, says Mark McDonald, a Gartner analyst.

"Companies are requiring CIOs to be more thoughtful about strategy," says Reynold Lewke, a partner in the Palo Alto, Calif., office of recruiting firm Egon Zehnder International who leads the firm's CIO practice. "Many CIOs have become business partners."

In recognition of this job shift, more CIOs are now reporting to top executives such as chief executives, chief financial officers and chief operating officers than to other parts of an organization. Last year, 74% of CIOs surveyed reported to a CEO, chief financial officer or operating chief, up from 69% in 2003, according to Gartner."

...

"For Louie Ehrlich, CIO for one of Chevron Corp.'s business units that oversees the energy company's refining, marketing and lubricants business, the shift in his job was mirrored in his changing job title. While the 48-year-old previously spent a lot of time integrating Chevron's far-flung tech operations, he took on a more strategic role when he helped lay out a five-year technology road map for the business in 2004. It went beyond tech, such as improvements in the San Ramon, Calif., company's supply chain and improving the reliability of its refineries.

Last September, to reflect how his job had spilled beyond tech support, Chevron gave Mr. Ehrlich the additional title of vice president of strategy and services. He has now ratcheted back his supervision of tech systems to just 10% of his time, instead delegating those responsibilities to a subordinate.

"The CIO title is misused, frankly," says Mr. Ehrlich. If all a CIO does is oversee tech systems, "they should be named a tech manager. A CIO should be enabling a business to grow.""

So, I'm thinking, if CIOs are indeed business strategists, and enterprise architects are key advisors to CIOs, doesn't that make an even stronger case for business-driven architects?  And if so, what are architects doing to (a) up their business IQ, and (b) get key architectural strategies (SOA, EDA, BPM, etc) understood and adopted in a business context? 

What is the relationship between business strategy and enterprise architecture in your organization? Is it direct and bi-directional? Or indirect, through a separate IT strategy function?  Or non-existent?

Update: 2/20/2007 at 3:21 pm

Just saw a couple of related articles in Computerworld.

Posted by brendamichelson in business • leadership • strategy | Permalink | Comments (0) | TrackBacks (0)

In the January 2007 issue of BPTrends, David S. Frankel of SAP, points out commonalities in leading IT and business thinking regarding loose coupling, orchestration, and eroding silos.  Besides doing a nice job summarizing leading business thinking, David provides an honest look at the current state of SOA adoption:

The preponderance of IT trade press articles and analyst reports leave the impression that SOA, IT’s key initiative of the decade, is spreading very quickly. However, the reality is somewhat different. Many businesses are holding back on making the large IT investments that SOA requires, and IT spending is not ramping up at a pace that compares with previous IT waves. Big upsurges of IT investment occurred in the past when business people could see that the outlays would enable them to reconstruct their businesses in compelling ways.

(emphasis is mine)

and, offers insights on restarting a business-driven SOA conversation:

...the similarity of this thinking to that of IT thought leaders presents an opportunity for IT to work its way back to the mainstream of the strategic business conversation.

Re-establishing Confidence
This is a situation where some humility could help our IT community. We must acknowledge that we have created our own set of rigid silos, and that we have a lot of work to do to remedy the situation. SOA is simply the IT version of the move to evolve to more flexible organizational forms. But if we claim that IT can make the full transition to SOA quickly, or even that we have solved all the problems inherent in such a transformation, it will not take savvy business executives long to recognize the emptiness of such claims.

In an atmosphere where IT approaches the business with candor, we can start a new conversation. We can point out to business executives that if they want to break down organizational silos, arrange the business as a set of loosely coupled assets, and combine and recombine those assets dynamically, then IT must organize its systems that way as well.

What we can offer the business is a partnership entailing a coordinated, at times wrenching, longterm process of change on both sides of the house. If we manage this partnership well, there are ample gains within reach in the short term, and profound advances in the offing for the long term. IT is going to have to act like a mature business unit in order for such a partnership to work. We must recognize that our part of the transition requires more than just “air dropping” an SOA package into picture. We have to take enterprise architecture extremely seriously; the “top gun” mentality that too often prevails in IT is a characteristic of immaturity.

Conversation Pieces
A successful start to the conversation should allow us to begin drawing more connections beyond the basic correspondence of the two camps’ thinking about silos, loosely coupled assets, and dynamically composing assets.

If you get a chance, read David's article, particularly the section on "What Business Thought Leaders are Saying".  I'd also second David's acknowledgment of Jeff Pendleton in bringing forward the business research and business-IT thinking ties.  I've also had the pleasure of conversing with Jeff on this topic.

Another good (related) resource is Hagel and Brown's The Only Sustainable Edge.

Posted by brendamichelson in SOA • business • business driven architecture | Permalink | Comments (3) | TrackBacks (0)