Make IT matter!The Governance of Innovation

StockholmJanuary 31, 2006

ViNT - Institute for the Analysis of New Technology

Process orientedlearning

IT-organization

Architecture

Governance

Economy HR management

Organization

ViNT & IT Governance: 1995

10 jaar ViNTViNT & IT Governance: 2000IT’s new role

Business Process

Market

Static

Dynamic

Static Dynamic

“Optimize”

Produce

“Mobilize”

Change

“Analyse”

Learn

“Catalize”

InspireExperiment

Two Questions Before We Begin

What is your name, who do you work for and what is your role

in the organisation?

What is difficult about IT-Governance?

Interaction

YESNO

Interaction

YESNOHeineken is the best beer in the world

Simple message

Two kinds of IT:- IT that does not matter- IT that does matter

Is IT differentiating in view of the competition?

IT-Governance is before anything else, the wisdom to make the difference

Huge differences in the objectives for IT-Governance

Nicholas Carr

“And as for IT-spurred industry transformations, most of the ones that are going to

happen likely already happened”

IT is essential to business

Ubiquitous

Integral to modern business processes

Dominant capital expense for most companies

Prerequisite to survival

Can, in right circumstances, boost productivity

. . . but is it essential to

business strategy?

Two types of technology

Proprietary: can be owned, actually or effectively, by a

single firm (e.g., patents, secrets, exclusive licenses)

Infrastructural: is shared broadly by all firms in an

industry or region (e.g., rail, telegraph, telephone, electricity, IT)

Evolution of Infrastructural technology

Ubiquity Advantage potential

ProprietaryAdvantages

DiminishingAdvantages

WeakAdvantages

time

New imperatives

Spend less

Follow, don’t lead

Innovate when risks are low

Focus more on vulnerabilities than on opportunities

YESNOIT does provide

competetive advantage to my organization

Statement 1

YESNO

George Forrester Colony

“Partly right,

and therefore

totally wrong”

Technology advances in storms

1970 1980 1990 2000

Functionality &Absorption

Minicomputer

PC Workstation

Web?????

VoIPBlogRFIDAjax

The Technology Iceberg

GenericInfrastructure

Important but non-differentiating

InnovativeGame changers

IT does

matter

IT doesn’

t matter

**

*

Iceberg management

SharedIT-

infrastructure

Applicationspecific IT

IT-Governance / Portfolio management

Time

Constitution for IT

Determine where IT does and doesn’t matter

Actively evolve IT into infrastructure

Drive adoption of new technology

The Technology Iceberg

IT does

matter

IT doesn’

t matter

Make IT work

Make IT simple

Make IT efficient &reliable

The Technology IcebergFocus - Below the waterline

Spend less

Follow, don’t lead

Innovate when risks are low

Focus more on vulnerabilities than on opportunities

Buy/build dynamic

Time

Functionality

Customer demand

Suppliers offering

Buy/build dynamic

Time

Functionality

Supply meets DemandPro active Destruction of Systems

Pro-actievedestructie

Customer demand

Suppliers offering

Buy/build dynamic

Time

Functionality

New Demand createsa new wave

Customer demand

Suppliers offering

Buy/build dynamic

Time

Functionality

Onderhoud door leveranciers

Maintenance byCustomer Organization

Customer demand

Suppliers offering

Buy/build dynamic

Time

Functionality

Onderhoud door leveranciers

Maintenace byService Provider

Customer demand

Suppliers offering

Towards an IT Utility

Share infrastructure

Buy/Build Dynamic through Application Portfolio Management

Reduce (hide) Complexity

Re-centralize Decission Making

Automate IT !

Virtualization

Automation

Standardization

Statement 2

YESNOThe best proof of effective

Application Portfolio Management is the number of applications that are taken

OUT of production

YESNO

IT does

matter

IT doesn’

t matter

Make IT simple

Make IT efficient &reliable

IT-Governance / Portfolio management

Service Oriented Architecture

Utility ComputingBuy/Build Dynamic

Standardize, Virtualize, Automate

Focus - Above the waterline

Make IT simple

Make innovation happen:break the fixation on technology

Make sense out ofall hypes

1700

1800

1900

2000

1950

1960

1970

1980

1990

2000

2010

Production

Distribution

Consumption

Calculation

Businessprocess

automation

Lifestyle

> 75% citizens less than 30 seconds from web services at all times

Pervasive wireless communication and computation

Smart devices in a smart world

The always-onconnected society

From Logic to Lifestyle

Hype Cycle

Key Issue:

How to get P2P VoIP from

“Top of the hype” towards the

“Plateau of productivity”

without getting stuck in the

“Trough of Disillusionment”

Speed of adoption

TIMETIME

Number of

Adopters

Number of

Adopters

InnovatorsInnovators Early

adopters

Earlyadopters Early

majority

Earlymajority Late

majority

Latemajority

LaggardsLaggards

2,5%2,5%

13,513,5

34%34%

34%34%

16%16%

Early and mature market

TIMETIME

Number of

Adopters

Number of

Adopters

InnovatorsInnovators Early

adopters

Earlyadopters Early

majority

Earlymajority Late

majority

Latemajority

LaggardsLaggards

2,5%2,5%

13,513,5

34%34%

34%34%

16%16%

Infliction point

Technology is “good enough” and fulfills basic

demands

High Technology

More technology and

higher performance

Consumer Commodity

Users want convenience, easy of use, reliability and low costs

Fixation on Technology

“The Swiss pocket knife syndrom”It can do everything,

but it is not very good at anything

Evolution of focus

TIMETIME

Culumative Number

of

Adopters

Culumative Number

of

Adopters

Technology - Make it workTechnology - Make it workNeeds - What benefits and opportunities

Needs - What benefits and opportunities

Use - How is it usedUse - How is it used

Costs - Convenience, simplicity, reliabilityCosts - Convenience, simplicity, reliability

Human Centric Design &Consumer Driven Innovation

Product

Business Case

Technology

Marketing

Experience

Human Centric Design &Consumer Driven Innovation

Product

Business Case

Technology

Marketing

Experience

Technology:

Not the technology, but the need inthe social domain is the starting pointMan is master over his toolsNew technology emerges from specialization in toolsDiversity, not convergence

Marketing:

Understand the client and his needsPositioning of productsWhy do people buy/use productsDemands change during life-cycle

Experience:

Interaction between user and productMake people use the productReduce external complexityPositive customer experiences delivers needed references

Statement 3

YESNO YESNO

To successfully innovate, an

organisation must break through the focus on

technology

IT does

matter

IT doesn’

t matter

IT-Governance / Portfolio management

Service Oriented Architecture

Utility ComputingBuy/Build Dynamic

Standardize, Virtualize, Automate

Focus on the task, not on the tool

Break Technological Fixation

Evolve technology and shift focus

Make IT simple

Focus on the vulnerabilities

Evolve towards utility computing

Pro-active system destruction

Make IT efficient and reliable

To make IT matteryou must Govern IT