It Ceo View 2010 09 17

A Business Leader’s Discussion of Technology

Using Technology to Transform Business

Giving you the ability to compete and win

September 16, 2010

2

What is Your Comfort Level with Technology?

1

When you think about technology, which picture best describes your feelings?

32

SurfingDrowning Treading Water

3

Class Objectives

As a business leader, this will:

• Highlight areas you need to be thinking about

• Improve the quality of your conversations

• Help you make better decisions.

This is a high level / top down discussion

• It could lead to 1,000 sub-topics and hours of conversation.

• It is meant to whet your appetite, not quench your thirst.

• Social Media

• Cloud Computing

• Business Intelligence

• Software as a Service

• Voice over IP

• Virtualization

• Sourcing Options

• Open Systems

• ERP

The way we think about technology is changing

1969 Today

Capabili

tyC

ost

Contr

ol

Today there is more

computing power in an

I-Phone then there was in

the Apollo 11 space ship.

An item purchased in

1969 for $250, would

cost $1,486.23 in 2010

based on consumer price

index. An inflation of

494.5%

In 1969 Data Processing

security consisted of

concrete block buildings

and steel gates. Security

is much more complex

today.

Difference

5

Improvements in capacity, capability, quality, speed, and convenience

Radio, video and the

16GB will store about

4,000 songs.

Cassettes

8 TracksAlbums and 45’s

CDs

Transistor Radios Smaller Radios

BoomBoxes

Ipod Nano

Advances in communications

Advances in Transportation

Advances in Healthcare

The devices being introduced into the

healthcare industry are truly amazing, but the

storage and management of data is still in

the dark ages.

Regulations have been passed (e.g. ARRA,

HITECH) that will influence the evolution of

the healthcare technology industry.

1) Business Focus

Factors that influences a company’s success or failure

Technology is an enabler

supporting all aspects of business

Business

Leadership

Right Products

and Services

Superior Customer

Experience

Motivated and Dedicated

Employees

Financial Stability

/ ROI

Risk Management &

Control information

Business Focus Priorities and Concerns

Leadership Team

Public Image and

Sales & Marketing

11

Business Focus Which companies effectively use technology?

12

Business Focus Technology as a People Enabler

Customer

Centric

Focus

Leadership Team

Providing the

Mission, vision,

strategy, plan, and

principles.

Employees

Are your greatest

asset and they

need to be

“Engaged” and

“Enabled”.

Technology

Provides the tools

that enables your

people.Right Products

and Services

Financial Stability

and ROI

Agility and the Ability

to compete and win

Your biggest challenge is acquiring, motivating, retaining, and enabling the right people.

• Technology improves productivity and allows you to do more with less

• Technology provides standards and quality

• Technology handles mundane activities that improves job satisfaction

• Employees want to work with the latest tools that increases their expertise and skills.

Effective processes

and procedures

Business Focus Technology as a Product or Service

Movie DeliveryInstant Photography

Electronic BooksFull Function Phones

Epic Corporate BattlesPersonal ComputersWord Processing

Vs.

Vs.

Vs.

Vs.

Vs.Vs.Vs.

Business Focus Technology as a Product or Service

Causes for Divergence

Commodity Trends………………e.g. – I-Phone4

Government Regulations……….e.g. – Banking Reform Package

Business Trends…………………e.g. – Management Structure (e.g. centralized vs. de-centralized)

New Standards………………….e.g. - Ethernet, TCP/IP, FDDI, Broadband, 2G, 3G, 4G

Technology Advances………….e.g. - (Records, 8-Track, Cassette, MP4, CD, IPOD), Digital Photography

Continuity

The Creative Destruction Process

Bleeding Edge

Leading Edge

Hardware Superstores

Vs.

15

Business Focus The gears of business and the impact of IT

Leadership

Technology

People

LeadershipPeople

Technology

Utopia

Running at optimal performanceSub-standard

In significant need of repair

Business Focus Evolving or Regressing

5) Systems age

and become

more complex

with greater

redundancy.

6) IT costs

continue to

increase,

leaving less

money for

modernization

and other

needs.

3) Projects

are formed

to address

business

short term

focus.

1) Technology

and competition

keep advancing.

2) Company lacks

vision and plan for

evolving systems.

4) Solutions have

limited shelf life

and build upon

older concepts

and

technologies.

1) Technology

and competition

keep advancing.

5) Systems provide

greater business

value and agility with

reduced complexity

and redundancy.

6) IT costs

are reduced

leaving more

money to

further grow

and simplify

your systems.

4) Implemented

solutions satisfy

business needs

while evolving

systems in a

positive direction.

2) Company integrates

strategy and planning

into ongoing

management routines.

3) Projects

are formed

to address

immediate

and long

range goals.

Downward Spiral Upward Spiral

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Business Focus Striving for Optimal Performance

Measuring “Optimal Performance”

• Business Value – Does it meet business needs

• Efficiency – Work performed relative to cost

• Quality – Up time and number/severity of defects

• Risk – Impact if certain events occur

• Flexibility / responsiveness – Ease of change

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Business Focus Business Value

Company A

Company B

Two

companies in

the same

industry of

similar size

and annual

revenue.

Both allocate

the same

percent of the

corporate

budget to

technology.

But they get

dramatically

different

business value.

Why and what is

the impact?

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Business Focus Section Recap

America has been able to compete on a global scale because of her people, ingenuity

and productivity.

How well are you served by your current technology?

Are you prepared to compete on a global scale?

Have you done things during the downturn that will allow you to prosper in the future?

What obstacles have been in your way?

2. Current State of Technology

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FROM

Centralized with a limited

number of components

People using computers

to handle routine

processes

TO

Distributed with

thousands of intelligent

components

Computers communicating

with computers with people

overseeing.

Current State of Technology Entering a new era

1950’s 1960’s 1970’s 1980’s 1990’s 2000’s 2010’s

Personal Computers

Mainframes

Internet

SensorsEras of IT Development

22

Current State of Technology Building Blocks of Evolution

New Development

Architectural Concepts

(SOA, Java)

Each era builds on advances

from the previous era.

Advances in

Telecommunications

(Fiber, Wireless, 3G/4G,

SIP (VoIP))

Advances in

Messaging – (ESB

hardware and software,

Unified Communications)

Advances in

Data Management

Advances in

Business Intelligence

Intelligent Devices

(with smart chips)

Cheap Sensors1950’s 1960’s 1970’s 1980’s 1990’s 2000’s 2010’s

Personal Computers

Mainframes

Internet

SensorsEras of IT Development

1950’s 1960’s 1970’s 1980’s 1990’s 2000’s 2010’s

Personal Computers

Mainframes

Internet

SensorsEras of IT Development

Current State of Technology Proliferating older concepts

If you put $2,000 worth of repairs into a $600 car, you still have a $600 car.

If you make an expensive upgrade, at some point you will have to convert to a new car and it may not be

compatible. System conversions are very expensive and introduce risk.

Disclaimer – If you’re not planning on being in business in a couple of years, you can disregard this slide.

Antiquated architectural concepts and technologies

Aging computer

systems are a lot like

antiquated cars.

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Current State of Technology Looking Forward

• System of Systems – Technology will be viewed as systems consisting of

interconnected systems. This will result in a massive increase in interconnections

• Data Tsunami – Massive growth of data (projected at nearly 50% per year, a

significant % in Healthcare).

• Business Intelligence - More data and more automation needs greater advances in

how to interpret the data.

• Business Process Management - More emphasis is needed on adapting technology to

the business (business process workflow management).

• Customer expectations – Customers demand for accuracy will increase while

tolerance will decrease.

• Virtual Workplace - advances make it easier to work anywhere (increasing flexibility &

reducing office expenses).

• Increased Telecom Traffic – High Resolution capabilities will continue to tax already

stressed networks.

• Government Regulation - Errors will occur and some will be blown out of proportion,

This will result in government’s desire for increased regulation.

Current State of Technology Section Recap

If technology is like a fast moving train, when do you get on?

Doing nothing is more expensive than doing the wrong thing.

The best time to act was 5 years ago. The next best time is now.

3. Internal View

Things you need to know to improve success

Technology and your business Business Acumen

SIZE / COMPLEXITY

Basic desktop

packages will do

No need

for technology

Technology supports

business (e.g. ERP)

Technology runs the

business

(e.g. Banking,

Insurance)

The business is

technology (RIM)

QUESTIONS TO ASK

What type of business is it? (e.g. Service,

Distribution, Communication, Manufacturing)

What is your company’s mission, and objectives?

How is your competition using technology?

IMPORTANCE OF TECHNOLOGY

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Technology and your business Capabilities by business function

• Desktop Publishing

• Social Media SEO

• Business Intelligence

• Blog, Tweet

• Websites (Dreamhost, GoDaddy)

Marketing Sales

• Customer Relationship Mgmt

(ACT, MS CRM, Salesforce,

Microsoft Dynamics)

• Email Marketing (Constant

Contact)

Human Resources

• HRIS

• Application Tracking

• Online Training

• Intranet sites

• Document Mgmt

Customer Service

• Interactive Web-sites

• VRUs

• CRM

• Customer Interaction Tracking

Business Systems

• ERP Options (SAP Oracle,

Microsoft)

• Quickbooks, Peachtree

• Audit Control – SymSoft, SAP

ControlPanelGRC

Analytics

• Business Intelligence (IBM

Cognos)

Document Archival

• Enterprise Content Mgmt (EZ

Publish, Durpal, Joomla)\

• Microsoft SharePoint

Workplace Automation

• Go to Meeting

• Dimdim

Mobile Devices

• Voice over IP

• IPhone or Blackberry

• Business Communication Mgmt

General Business Solutions

These products have become commodities, providing great benefit at a limited investment.

Many are offered as “Software as a Service” (SaaS), eliminating in-house IT costs.

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Technology and your business Options and Decisions

In-House Option Platform as a service Software as a service

Consists of facilities

(building, power, cooling,

security), computers

(hardware, operating

systems, data storage),

telecommunications,

and people.

Your company retains responsibility for

purchased or in-house developed applications

Your company uses

a 3rd party service

provider for some

or all of the

Infrastructure layer.

Consists of the

business specific

software

Your company retains

responsibility for

acquiring, maintaining

and operating

Your company uses a

3rd party service

Provider for both the

application as well as

all infrastructure

components.

The service provider

Normally charges

for usage (referred

to as “Pay by

the Drink”).

Application Layer

Infrastructure Layer

In-house vs. Cloud Options

Cloud Option

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Technology and your business Options and Decisions

1) Buy vs Build – Prevailing wisdom is to buy not build (Unless software is your business, or you

need customization to differentiate your company from your competition).

2) Extent of Customization – Do you adapt the software to your business or adapt your business

to the software. Most sophisticated software packages include a great deal of flexibility

(reports, screens, data elements) without significantly code changes.

3) Standardization - Policies and procedures should be implemented to ensure quality and

consistency in the IT operation and development functions. (Diversity is great in your

employees, but is a drawback with your technology).

4) Balance between Business and Technology – Allowing business areas to make technology

decisions provides flexibility but can create ongoing support nightmares and high costs.

5) Sourcing Options – Making the wrong sourcing options (e.g. full time employees, contractors,

out sourcing, third party vendors) can be extremely expensive if the wrong decisions are

made. Careful analysis and due diligence is recommended.

6) Governance – Having a formal governance body and process is strongly recommended

especially in in the areas of project funding and architecture. This places decision making

where it belongs with key business leaders.

7) Virtualization – Virtualization can have significant long term benefits, but can be difficult to

implement and enforce. Products like VM Ware and power VM allow better utilization of

computer resources (processors, data storage)

3131

Technology and your business Pitfalls and Challenges

1. Security / The criminal element – Criminals through-out the world are trying to penetrate your

firewalls (intrusion control) or steal data that leaves your organization (encryption). This can have

catastrophic impact on your company.

2. Disasters and Business Continuity Disaster Recovery – What would be the consequence and how

long could your business operate if your systems / data were unavailable? Does your disaster

recovery plan protect against a devastating regional disaster? Are your backups maintained in a

different part of the country?

3. Managing disparate patchwork of hardware / software - Most systems are made up of a variety of

in-house developed and purchased hardware and software components from a variety of different

vendors and eras. This results in a significant amount of complexity and redundancy, that is

extremely expensive to enhance or maintain and presents considerable risk.

4. Performance / latency – Many things can impact performance (e.g. placement of data, amount of

data transmitted, telecommunication). Are you performing stress / volume tests to ensure service

level agreements are maintained?

5. Project Scope Creep – Lots of enhancements make sense, but are you willing to jeopardize critical

project budgets and timeframes. Success is dependent on strict project management and change

management processes.

6. Experienced Resources - Are your people educated on the more efficient technologies and

procedures? Are they moving your company forward or vested in the status quo.

7. Proliferating use of older antiquated architectural concepts and technologies – Older concepts and

technologies are slower and more costly. Begin migrating away from them as soon as possible.

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Technology and your business Building in Quality

Quality is a measurement of “Dependability” and “Defects” (number and severity)

Availability % Downtime per yearDowntime per

week90% ("one nine") 36.5 days 16.8 hours

95% 18.25 days 8.4 hours

98% 7.30 days 3.36 hours

99% ("two nines") 3.65 days 1.68 hours

99.9% ("three nines") 8.76 hours 10.1 minutes

99.99% ("four nines") 52.6 minutes 1.01 minutes

99.999% ("five nines") 5.26 minutes 6.05 seconds

99.9999% ("six nines") 31.5 seconds 0.605 seconds

Dependability Number of Defects/ Incidents

• Quality has significant impact on corporate success (corporate image and customer satisfaction)

• It involves “Application Development” processes (project management, Quality Assurance, and change management)

as well as the ongoing “Operational” processes (incident tracking, system monitoring).

• Quality Assurance is complex and requires individuals with a quality control mindset. In includes testing as well as a

“Clean-Room” approach. It is considerably cheaper to identify and correct defects early in the development life cycle.

• Begin by building a dedicated QA team and implementing ITIL operating procedures. If you need more accurate

results, you might consider “System Monitoring” tools, “Mirrowing and Redundancy”, and Six Sigma.

Sigma

levelDPMO

Percent

defective

Percentage

yield1 691,462 69.00000% 31.00000%

2 308,538 31.00000% 69.00000%

3 66,807 6.70000% 93.30000%

4 6,210 0.62000% 99.38000%

5 233 0.02300% 99.97700%

6 3.4 0.00034% 99.99966%

Warning: This is an area you could use professional help

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Technology and your business The role of the IT Department

Roles of IT

• Tactical Manager - (keeping the ship afloat)

• Strategist - (understanding the business and how technology can help)

• Educator and Diplomat

• Industry Knowledgeable

• Technology Expert

• Business Process Expert

• Facilitator - requirements definition (JADs)

• Change Agent – (People Change Management)

Questions you should be asking

• What is your relationship with your CIO/CTO?

• Do they have a seat at the table?

• Are IT activities aligned with the business plan?

• Do they have the skills needed to move the company forward?

• Was your IT staff built around your current hardware / software products?

• If 75% of CEO’s mind is focused outward, what % should the IT department be?

• What percent of your IT staff is forward focused and are they adequately educated?

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Things to consider

• Cost

• Knowledge and Experience

• Access to “Think Tank” information

• Motive – Are they pushing their propriety solution

• Customer Base

• Who is conducting / facilitating all these entities?

Careful “due diligence”

is suggested

Audit Firms Big Name IT

Consulting Firms

Solution

Providers

Internal

Staff

Managed Services &

Point SolutionsTechnology

Research

Technology and your business Where are you getting guidance?

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Technology and your business Need for a Strategy and Plan

People are your greatest assets and one of your biggest expenses. They will carry your company

into the future (either in a positive or negative way).

If you have a vision and plan and effectively communicate it, you will be amazed at the results.

Think big, start small, act now

WithoutWith

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Corporate Focus Closing Words of Wisdom

• Technology is critical to your success and it has become an exceptional bargain.

• Doing nothing is more expensive than doing the wrong thing. Your competition is

evolving and if you aren’t you’re losing ground.

• There are still many pitfalls and you want to avoid them.

• Having a vision, strategy and plan is of utmost importance.

• Don’t keep building upon older infrastructure.

• Simplify then automate.

• Make sure you have the right technology expertise.

• Give IT a seat at the table.

What are

your

challenges &

concerns?

Appendices

39

Appendix Richard Hissrich Profile

Selected Accomplishments:

– Developed the processes and procedures that allowed a financial institution to implement release management.

This resulted allowed the company to handle higher volumes of annual application change with lower

development costs.

– Planned and helped manage the Year-2000 Readiness test, which was largest and most complex testing effort

conducted by this financial company. This resulted in an almost flawless transition into the new century.

– Helped manage the evolution of a limited focus testing department into an enterprise quality assurance

organization supporting corporate-wide testing. This resulted in improved application quality and a reduction in

overall testing costs.

– Helped develop a 5 year technology modernization plan including a target state definition, a roadmap for

implementation, governance processes, and an education program. This resulted in increased business

functionality, reduced risk and ongoing incremental progress toward the desired target state.

Richard Hissrich is the owner and president of RH Consulting, Inc. Mr. Hissrich has over 35

years of IT experience with fortune 500 companies in the financial, manufacturing and

technology consulting industries. He held a wide variety of leadership and strategic planning

positions aimed at addressing company’s highest priority focus areas (e.g., modernization

planning, business/technology strategy, quality assurance, testing, sourcing options, release

management, development methodology, expense reduction). Rich is a member of the Institute

of Management Consultants (IMC) and the Healthcare Information Management Systems

Society (HIMSS).