IT Success in the 21st Century

IT Business Value, Virtualization & the Cloud

• Gaining Competitive Advantage During Economic Downturns

• Three-Legged Stool of Business Value

• IT Governance

• Project Management vs. System Development Life Cycle

• Quality

• Organizational Change Management

• Trends• Virtualization

• Cloud Computing

Topics

In an October 2009 Gartner Symposium, Dr. Howard Rubin1 said,

“The most opportunistic time for technology investment is during an economic downturn; it is the only area in which investment can change the operating profile of an organization—doing so effectively can create an insurmountable competitive gap. Bad IT economics will put you on the wrong side of this gap and may even be creating advantage for your competitors”

1 Gartner Senior Advisor, Founder Rubin Worldwide, MIT Center for Information Systems Research Associate, howard.rubin@rubinworldwide.com

Gain Competitive Advantage

• Reduce or eliminate capital expenditures• Fewer new projects—only in-progress or mission critical

• System consolidation

• RIF

• Keep the lights on

• Failure to address the internal process issues that may have gotten us here in the first place

Typical Downturn Response

To gain competitive advantage during an economic downturn, smart executives invest in IT if they have the confidence in the IT organization to deliver that which is promised:

• Quality products that meet or exceed customer expectations

• On time delivery

• Well managed budgets

Investment = Executive Confidence

• For IT organizations to be successful today and tomorrow, they must evolve into values-based cultures that drive high performance, low turnover, and increased productivity without impeding creativity and innovation.

• The organization must embrace defined, managed, measurable, repeatable and reusable practices that form the blueprint for their overall systems delivery strategy.

Formula for IT Success

Three-Legged Stool

Shareholder Value IT Business Value

• Traditionally, board-level executives defer all key IT decisions to the company’s IT professionals

• The truth is that many board-level executives don’t understand IT well enough to manage IT effectively

• IT professionals don’t understand business initiatives well enough to decide how to invest in them

• Deferring key decisions to the IT staff often leads to disconnects between the board’s strategic goals and real business initiatives and the investments IT makes

• Frustration exists at all levels.

Why IT Governance

• IT governance is a business-driven function which focuses on the investment and prioritization of IT systems, their performance, risk management and enhancing a company’s competitiveness

• All companies have some sort of IT governance

• IT governance includes: well defined and documented processes for work uptake, decision making, budgeting and estimating resources, approvals, IT value realization, project reporting and change management

• Many IT governance committees are comprised of the senior most leaders from all strategic areas of the business, not just IT leaders

IT Governance Defined

Weill and Ross2 assert that effective IT governance answers three questions:

1. What decisions must be made?

2. Who should make these decisions?

3. How will we make and monitor these decisions?

To further explain the first question, they say:

“Every enterprise must address five interrelated IT decisions: IT principles, IT architecture, IT infrastructure, business application needs, and IT investment and prioritization.”

2 Peter Weill, Director of the MIT Sloan School of Management Center for Information Systems Research (CISR) in Cambridge Massachusetts and Jean W. Ross, Principal Research Scientist

Effective IT Governance

• Executives ask: “How much will the project cost?”

• IT responds with a SWAG or ROM and ROI calculation based on guesstimates and/or very limited investigation

• Executives are impressed with the projected derived business value and ROI and approves the project.

• Problem: Actual requirements have not been elicited

Ineffective IT Governance

The root cause of many modern day systems development project overruns, failures and rework are directly attributable to poor requirements. Look at these study conclusions published over a 13 year period beginning in 1995:

“Requirements problems have been proven to contribute to 20-25% of all project failures. The average project overran its budget 189% and its schedule by 222%”—Chaos Report/The Standish Group 1995

“Requirements Errors account for 70% to 85% of rework”—Liffingwell, 1997

“Poor requirements account for 71% of project failures”—Grady, 1999

“Between 40 and 60 per cent of all software defects can be attributed to bad requirements”—Abbott, 2001

“Only 34% of projects expected to finish on time; 52% had proposed functionality; 82% had time overruns; 43% had budget overruns”—The Chaos Chronicles/ The Standish Group 2004

“Flawed Requirements Trigger 70% of Project Failures”—Infotech Research, 2005

“Gaps in the Technical Requirements accounted for more than 70% of program problems” —United States Government Accountability Office, 2008

Importance of Good Requirements

“Investment opportunities cannot be estimated accurately until the requirements are known.”

Effective IT Principle

An effective approach to governance includes performing some requirements elicitation and analysis before submitting the final project proposal/request. This is tricky because it requires investment.

• Much confusion exists over the difference between a project management method and the SDLC

• In terms of importance to a project, the SDLC and a project management method are co-equals which complement each other

• Neither can stand on its own to deliver high value to the business

• Throughout the life cycle both of these methods work together to achieve business goals, drive the value equation and progress organizational maturity

• Though their activities differ greatly, they interrelate and harmonize to produce superior results

Project Management vs. SDLC

• A project management method provides detailed instructions for the discipline of planning, organizing, controlling, reporting and managing project resources to successfully complete project goals and objectives

• It includes all of the activities for managing a project

• A project is temporal in nature

• It has a defined beginning and end

• The project management method begins with project inception and closes when its product is delivered

• When a project is over, the project manager moves onto something new

Project Management

• Project management is often expressed in terms of the constraints of scope, time and cost

• This is also known as the project management triangle

• Each side of the triangle represents a constraint

• No side can be changed without affecting the others

• At one time, “quality” or “performance” was considered a component of scope. The model has since been refined to delineate quality as a fourth constraint

Project Management Expressed

• Time is the period available to complete a project

• Cost is the project’s budget

• Scope is what must be done to complete the project's deliverables

• The three constraints often compete with each other:• Scope creep means increased time and higher cost

• A tight time frame may mean higher costs and less scope

• A tight budget may mean less time and reduced scope

• Quality may be at risk if there are changes to any of the constraints.

Project Management Constraints

• The SDLC provides a framework that describes the activities performed during each phase of a systems development project

• The SDLC is about quality, consistency and product delivery. It is about the realization of a product’s requirements

• Products are of a more permanent nature than a project because products continue to exist long after the projects that delivered them have closed. Therefore, the SDLC’s framework provides guidelines for supporting the product post production

• Guidelines include practices for knowledge transfer, training, document turnover, maintenance and on-going support

• When a product is to be retired, the project management method takes over to sunset the system. It is a full circle in a system’s life cycle.

System Development Life Cycle

A major focus of any SDLC is software, but when you think of all the projects that are undertaken in an IT organization, every project team has a responsibility to:

• Elicit and analyze requirements

• Develop systems specifications

• Define success metrics

• Produce clear, consistent and unambiguous artifacts

• Deliver products that comply with the highest quality standards that meet or exceed customer expectations

• Transfer knowledge to operational support and maintenance personnel, sometimes to outsourced, off-shore locations

• Train end users and support resources

• Offer post deployment support and maintenance

Consistent reusable processes and practices across the entire IT organization are critical for an organization’s absolute success

It’s “Systems” and not “Software”

• The SDLC is expressed in terms of quality, consistency and product delivery

• Quality, consistency and product delivery are the outputs of a defined, managed, measurable, repeatable and reusable set of processes and practices

• Processes, practices and techniques form the core framework of the SDLC

• Where a project is defined by its constraints, the SDLC is defined by its freedoms and empowerment

• The SDLC empowers a project team to choose from among several approved pathways to deliver the highest quality products possible in the shortest amount of time and at the lowest possible cost

SDLC Expressed

• Scope is a project constraint that SDLC processes liberate by managing scope creep

• Consistency of process helps keep the cost constraint under control by practicing repeatable, measurable and defined algorithms

• The schedule constraint is complemented by the SDLC’s timely delivery of a quality product that meets or exceeds customers’ expectations

• If we manage scope creep effectively and are consistent in our ability to repeat and improve our processes, not only will we deliver a product on time, there may even be enough wiggle room in the schedule to address lower priority items or deliver the product ahead of the due date

SDLC Mitigates Project Constraints

Triangles Compared

Project Management Triangle SDLC Triangle

Process Groups Compared

Project Management Process Groups

SDLC Process Groups

Quality is everyone’s responsibility. Everyone means all stakeholders and project team members. Quality is not the responsibility of or owned by a single group or department. Everyone means everyone! Every person in an organization contributes to the achievement of quality in the following ways:

• Process Quality: the achievement of quality in the activities in which any person is involved

• Product Quality: the contribution to the overall achievement of quality in each artifact being produced

Who Owns Quality?

• Quality Control focuses on the product or deliverable, is reactive and emphasizes testing of products to uncover defects after the fact, in other words, after the product is built.

• Quality Assurance focuses on the process, is proactive, attempts to improve and stabilize production and associated processes to avoid or at least minimize issues that lead to defects in the first place.

Quality Control ≠ Quality Assurance

• The Balanced Scorecard Collaborative published the following statistics:• 90% of all companies fail to execute strategy successfully

• Only 5% of the workforce understands their company strategy

• The Gartner Group said, “$75 billion spent annually on failed IT projects and poor management is the culprit.”

• An 11 year study by Kotter and Heskett demonstrates the correlation between change adaptive companies to their revenues and stock value. The results of the study revealed:

Revenues Net Income Stock Price

Change adaptive companies 602% up 756% up 901% up

S&P Index 265% up

Companies not adaptive to change 166% up 1% up 74% up

• Shareholder value of companies practicing sound organizational change management principles outpaced the S&P Index over the 11 year period by 340%

Why have an Organizational Change Management Strategy?

• Virtualization—of servers, applications, client systems, storage and networks—has been one of the hottest topics in IT for the past several years.

• Adoption of server virtualization has reached over 90% of organizations overall, with early adoption coming from enterprise organizations, and more recent adoption becoming widespread in smaller businesses.

• Server virtualization is a top priority for mid-size businesses in 2011.

• Server virtualization offers immediate benefits to organizations of all sizes, although the benefits may differ between large and small.

Virtualization

• Virtualization is defined as an abstraction or separation of compute resources away from the hardware or software layer running below them.

• Virtualization can be implemented at many layers of the computing "stack" and across different computing resources, including servers, desktops, applications, storage, and networking.

• Server virtualization, the focus of this discussion, is abstracting the computing operating system away from the underlying server hardware.

• The virtualization software layer that runs on the server hardware is called a Virtual Machine Manager (VMM) or hypervisor.

• It manages all of the hardware resources and creates a platform on which individual Virtual Machines (VMs) can be run.

• Each VM "looks and feels" like a complete, separate copy of the operating system to the applications being run and to the users of those applications.

What is Virtualization

Top Reasons Why Businesses Buy

Server virtualization is one of those rare IT solutions that has actually delivered on its promise. According to users who have implemented virtualization, the actual benefits achieved match those described in the marketing literature, including:

• Increased utilization of resources;

• Reduced space, power and cooling;

• Reduced TCO and increased ROI of servers;

• Improved IT agility and reduced provisioning time; and

• Improved disaster recovery and availability.

Benefits Achieved

1. It’s not just for large enterprises.

2. It’s not just for consolidation.

3. It should be viewed as part of an overall virtual infrastructure.

4. It’s a key enabler for private/public/hybrid cloud.

5. Management is critical to achieve the full benefits.

6. Virtualization and the vendor landscape are changing constantly.

7. Consider your desktop plans as part of your decision process.

8. Get help from those with experience.

9. Start with the low-hanging fruit.

10. Think strategically even as you act tactically.

10 Things You Need to Know

• Put simply, cloud computing is a service that hosts your business’s Web applications on a provider’s infrastructure, the “cloud.”

• Recognized by Gartner as one of the top 10 strategic technologies of 2010, cloud computing is being embraced by organizations of all sizes and across all industries.

• For all the interest—and investments made—in cloud computing, vendors and consumers can’t pin down a single definition of this rapidly evolving space.

• Cloud computing is just like the weather; it blows this way and that, and no one really knows exactly where it’s going or what the cloud will cover.

• In general, everyone agrees that cloud computing delivers scalable and elastic IT resources as a service via Internet technologies

• It should make IT provisioning faster, more efficient, and more cost effective with on-demand resources, pay-as-you-go or subscription pricing, and scalability beyond what most enterprise networks are capable of internally.

• Forrester Research Inc. described cloud computing as “enterprise technology packaged to fit the needs of small businesses and startups.” Moreover, the research institution said the technology “has the potential to completely upend IT as we know it.”

Cloud Computing

• Cloud computing offers many benefits, some similar to those of other IT-hosting services and some completely unique.

• It allows for significant cost savings as well as an affordable, redundant disaster-recovery solution.

• Beyond that, companies that jump into the cloud will experience unparalleled provisioning speeds; the easy collaboration that comes with no organizational boundaries limiting developers; and an environment that enables technical innovations.

• Because cloud-computing providers tend to be either major Web presences or established hosting vendors, they already have high performing, extremely reliable networks in place. Their services give users access to the type of low-latency, highly available network-leading Web services on which companies rely.

• An additional benefit of cloud computing is reliable disaster recovery; even if a server in the cloud fails, the provider’s redundant network will keep users’ Web applications available.

Benefits of Cloud Computing

Cloud computing providers include:

• Amazon.com: Amazon.com’s flagship Amazon EC2 (Elastic Compute Cloud) includes Amazon.com’s S3 (Simple Storage Service) and is in beta.

• GoGrid: Currently in beta, GoGrid is a ServePath company and offers pre-pay monthly plans as well as a pay-as-you-go billing model.

• Google: The Google App Engine is a free preview release with size limitations.

• Joyent Inc.: Joyent Accelerator is a production service priced by the amount of RAM to which users subscribe.

• Layered Technologies: GridLayer, which is based on 3tera Inc.’s AppLogic OS, includes Virtual Private Data Center packages.

• Mosso: Mosso is a Rackspace company and offers The Hosting Cloud as a single monthly package.

• erremark: Enterprise Cloud was launched in June 2008

• Xcalibre: FlexiScale is a pay-as-you-go production service based in the U.K.

• It’s important to note that several additional vendors, including IBM, Dell and 3tera sell the software, hardware and services necessary for an enterprise to build its own cloud

Major Cloud Providers

There are three different classes of cloud computing: public clouds, private clouds, and hybrid clouds. They all share the same basic features—the differences are in who is allowed access to the different clouds.

Types of Clouds

• Public cloud computing is the most widely adopted class as well as the most thoroughly understood—it's often considered the standard model of cloud computing.

• In a public cloud, a service provider makes IT resources, such as collaboration, CRM or payroll applications, storage capacity, or server compute cycles, available to any customer via the Internet.

• A few public cloud offerings have already become such an ingrained part of the business community, such as Cisco's WebEx meeting space and Salesforce.com's Sales Cloud

• Many of their users aren't even aware that they're accessing applications in a cloud environment.

• In a public cloud, IT services are easy to set up via browser-based UIs, inexpensive with zero hardware and software costs, and can scale up or down depending on how much capacity you need at that moment.

• For many enterprise organizations, these benefits come with certain risks: no control over the resources in the cloud, the security of confidential data, network performance issues, and interoperability.

Public Clouds

• Private clouds mitigate the concerns of public clouds, with the security of an internal network.

• The customer owns all of the equipment powering the cloud environment (often a very large data center)

• The customer has complete control over the IT resources as well as the data and is responsible for securing it.

• Enterprise IT resources are consolidated and pooled so users across the company can have self-service access and increased scalability.

• Like a public cloud, a private cloud makes provisioning an automated service request rather than a manual task processed by IT.

• Unlike a public cloud, setting up shop in a private cloud requires expertise with network integration as well as with sophisticated virtualization and cloud platform technologies; you'll have to run your own hardware, storage, networking, hypervisor, and cloud software.

Private Clouds

• Hybrid clouds use a combination of internal resources, which stay under the control of the customer, and external resources delivered by a cloud service provider.

• Like the private model, a hybrid cloud lets an organization continue to use their existing data center equipment and keep sensitive data secured on the organization's own network.

• Like the public cloud, a hybrid model lets an organization take advantage of a cloud's almost unlimited scalability. It's a way to solve some of the trust issues of the public cloud while getting the public cloud's benefits.

Hybrid Clouds

• Whether private, public, or hybrid, every model of cloud computing allows organizations to use—and pay for—only the IT services, including application hosting, SaaS, infrastructure as a service (IaaS), and platform as a service (PaaS), employees actually need.

• Companies are increasingly turning to cloud computing as a way to cut costs as well as to modernize the way they deliver IT resources to users.

• The 2009, Aberdeen Research “Business Adoption of Cloud Computing” said:

“For  businesses of all sizes, cloud computing can deliver operational efficiencies while establishing the building blocks for the next major wave of IT innovation and business architectures.”

Cloud Conclusions

1. Large enterprises are building their own private clouds.

2. Cloud computing will shift the skills needed by IT workers.

3. IT departments will shrink as users go directly to the cloud for IT resources.

4. Concerns about information security will abate as CIOs “get” the cloud paradigm.

5. Professional services will be bundled with commodity cloud services.

6. SMBs, as well as large enterprises, will be run on the cloud.

7. Cloud-computing resources will become more customizable.

8. Large enterprises will become part-time cloud-computing vendors.

9. Cloud computing will unleash innovation.

10.The browser will be all the desktop software you need.

10 Cloud Trends to Watch