How to avert a storm in your cloud

The closer IT expenditure is to the front line of genuine business need, the better the return on investment should be.  So the positives arising from the growth in shadow IT – spend on digital applications and services by business teams rather than the IT function – are huge.   Estimates suggest that shadow IT expenditure now accounts for over 30% of total spend and 55% of digital spend.  And a key driver of this growth is the increasing prevalence of cloud solutions which can be deployed by a business team with minimal support from IT.

But the full scale of benefits will only be realised if risks created by business owners’ unfamiliarity with technology solution governance and inefficiencies generated by distributed decision-making are identified and managed.  The traditional IT-led approach to solution governance, based on large ERP or CRM implementations, will not work for Shadow IT solutions – it is over-engineered for the rapid evolution demanded by business teams.  A new model is required – one that is business-led and balances the need of business functions for speed and flexibility with the assurance that IT teams can provide.

So what risks does business ownership of IT solutions create?  Operational risk increases in direct proportion to any gap between the knowledge managers need for effective supervision and the knowledge they actually have.  The increasing digital divide between senior managers and their younger, junior tech-savvy colleagues is one such example.  And as cloud offerings enable solutions to be deployed by functional teams without IT oversight, the need for digital understanding among senior managers is increasing.  Research by the Harvard Business Review Analytics Services concluded “Digital acumen is essential for business leaders in today’s hyper-competitive, technology enabled world. But most companies lack the knowledge and skills needed to succeed in the digital aspects of their business.”

With high risk activities – such as proprietary trading in investment banks – these knowledge gaps can be catastrophic.  But most cloud solution deployments will not come into this category.  A more relevant analogy can be found in the recent history of data and reporting solutions.  These are often owned and deployed by business functions – marketing, finance, risk, compliance, operations and HR – in which case multiple reporting solutions are typically being licensed when one would do, generating inefficiency and excess maintenance costs.

Alternatively the deployment may be centrally owned (by IT) with space in the enterprise data warehouse made available to different functions to do with as they would wish.  This typically results in multiple ungoverned cottage industries with no documentation of which marts are being used for what purpose and what would happen if they were removed (and probably multiple versions of the truth as well).

This is the type of trap that business-owned, cloud based applications will fall into if there is a lack of management understanding of how such solutions should be governed.  Governance has always created tension between business functions and IT teams, with the former seeing the controls IT teams introduce as being over-engineered and a brake on rapid progression.  In the absence of IT involvement, the risk – as we have seen with reporting and analytics solutions – is that such disciplines are ignored.

Obviously a balance is required.  With digital implementations, there need to be good enough levels of governance.  Our experience with delivering data management and reporting solutions over the past fifteen years has given us relevant insights into what this looks like.  As one client put it, ‘you provide enough governance to keep IT happy and not so much as to delay delivery’.

So with that in mind, herewith our primer for business leaders on good enough governance.

  1. Ownership

Every cloud solution should have an owner who maintains a business case for the solution’s continued use as part of their accountability to whoever the budget holder is.  Unlike traditional implementations where most of the investment is sunk up front, the rental model for cloud solutions requires a living business case with quantifiable improvements in KPIs the solution is delivering tracked against ongoing and forecast costs (including potential spikes).  Such an approach facilitates the solution being swapped out should a new one that will generate greater value become available.

  1. Monitoring

The business case requires the determination or inference of linkages between the operational metrics that the solution can impact and the strategic goals and financial objectives of the organisation.  These metrics and the hypothesised linkages need to be tracked so both the operational efficacy of the solution and its strategic relevance can be tracked.  Hence the second component is the creation of a dashboard to support the living business case.  The dashboard also needs to track compliance related metrics and cover change request progress.

  1. Responsibilities

Effective governance requires a sequence in solution deployment of requirement documentation, solution design, delivery, test, release and support, with the same process applying for subsequent changes requests.  In the traditional model, these activities are performed by different teams.  Cloud solutions typically follow a DevOps model whereby these activities are carried out in rapid sequence by a single business team.  Either way, all stages need to be completed so both processes for how changes will be managed and who will be responsible need to be defined.

  1. Oversight

The governance committee needs to have both business and IT representation – IT teams’ experience of solution design and demand management being particularly important to success.  The governance committee needs to meet on a regularly scheduled basis – monthly or quarterly – and focus on organisational (e.g. responsibilities), security and the commercial model (to avoid the risk of unbudgeted spikes in costs).

  1. Documentation

There are two facets to the knowledge that needs to be captured in documentation – explicit and tacit.  The former includes the business requirements the solution is meeting, process maps for the processes that the solution enables, and the underlying policies and procedures.  It should provide all the information required for someone new to operate the solution from scratch under normal conditions.  Tacit knowledge covers what to do in abnormal conditions, when problems arise and the process isn’t running smoothly – e.g. who to contact if an important feed is not available, fixes for when the solution doesn’t run as it should, answers to common questions about the outputs generated.  Tacit knowledge is typically captured as FAQs and answers.  The basic principle should be that a solution SME can’t progress to a new role unless all the necessary knowledge that their replacement will need has been codified and documented.

  1. Integration

Cloud solutions don’t stand in isolation.  Typically they require data inputs of some form and generate data outputs.  Where does this data come from, how is static data in the solution maintained, what happens with the outputs?   All integration points need to be included in the documentation.

  1. Compliance

Cloud solutions need to comply with the organisation’s security policies for access control and data protection.  Equally the organisation’s security policies need to evolve to reflect the new cloud-based world – relying on firewalls to lock data in a chamber with one door in and one door out is no longer feasible.  Cloud enables and encourages collaborative working practices and the inter-connectivity of system to system processes – data is moving all over the place  – and security policies need to evolve to reflect this new reality while still effectively mitigating risk.  And the more integrated a cloud solution is, the greater the risk that it opens a gate to other parts of the IT estate, hence controlling access or levels of access is critical.  Any data that resides in the solution also needs to be secured (e.g. via encryption or tokenisation) and where that data is hosted needs to comply with data protection legislation and organisational policy.

The rise of cloud requires IT teams to operate differently to how they have historically.  Control is no longer an option, collaboration will become the norm.  In turn, business owners of cloud solutions need to make the IT function their friend.  That will require compromises on both sides – less governance than IT are used to applying, more than business solution owners would like.  We believe that addressing the seven factors above will provide the ‘good-enough’ governance required to mitigate operational risk without inhibiting agility and slowing progress to a halt.

 

With thanks to my colleagues Manoj Bhatt, Mark Howard, Andrea Pesoli and Venkatesh Ramawamy for their contributions to this piece.

Digital vision in 7 simple steps

Recently, I read (and posted to LinkedIn) two articles that both highlighted a) the need for organisations to have a digital vision outlining how digital technologies will reshape the business environment they operate in and b) the absence of such visions in most organisations with an ad hoc approach typically being taken.

Both articles begged the question – how do you go about generating a digital vision for your organisation?

So here’s a seven step guide:

Step 1 – Agree the purpose and focus for your digital vision

There is no point developing a digital vision unless it is going to help shape the long term direction and investments that need to be made.  Hence our recommendation would be that the focus should be on how the markets currently served will differ in 10-20 years, how emerging digital forces will or could reshape them, and what successful participants in those new digital landscapes will look like.

Step 2 – Catalogue the problems you solve

The father of modern marketing, Theodore Levitt, used to teach: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”  Or as Clayton Christensen has put it, “Customers want to hire a product to do a job.”

So as the starting point, rather than use current offerings directly, use them indirectly – create a list of the customer problems you solve or the jobs you enable customers to perform to uncover the fundamental needs that you are meeting.  Generate a long list of problems solved encompassing all segments served then cluster to create a manageable number of higher level ones.

Step 3 – Brainstorm how digital technologies can better solve these problems

There are multiple emerging digital forces that will have a very significant impact over the next ten years.  These include new data sources, analytics and artificial intelligence, biometrics, mobile and wearables, social interactions, cloud and usage-based models, and augmented or virtual reality.  For the groupings defined in Step 2, look at how each of these technologies could enable customers to do those jobs cheaper, with better performance or quality, with greater customisation, more conveniently, more responsively, more securely or more pleasurably.

Step 4 – Broaden and deepen

Step 3 should deliver a series of ideas, but a bigger transformation risk or opportunity may be missed.  Hence there is a need to widen and lengthen your perspective.  Firstly, by considering the offerings supplied by other companies that are bought in conjunction with yours – what jobs do they enable customers to perform?  This enables a more holistic, higher level view of the problems customers want solved.  Secondly, by considering the upstream dependencies and downstream impacts of what you are doing to provide a more value-chain or societal definition of the problems you are part of solving.

Step 5 – Brainstorm digital solutions to these larger problems

Repeat Step 3, but using the more holistic customer and societal problems defined in Step 4.

Step 6 – Draft the vision

From Steps 3 and 5, a series of themes will emerge.  Take these themes and use them to describe how the future will be different.

Step 7 – Start again with a different group (without sharing findings)

No one group has a monopoly on imagination or insight into how events will unfold.  Hence future-gazing is an ideal task for crowd sourcing.  So the more groups that are put through the process the better, so long as each group is not influenced by previous sessions – the wisdom of crowds only works when people decide independently and are not biased by what others think.  The outputs from all the different sessions provide the inputs for the senior team to pull together the organisation’s vision, informed by the richest sources of insight that the organisation can muster.

If you would like help in facilitating this process in your organisation, please leave a reply below or get in contact by email.

My Digital Shoes

The rules for sustained business success haven’t changed in more than a hundred years.

Earlier this year, at a conference, I was chatting with a (much younger) consultant from another firm and I ventured a comment on the possibilities provided by emerging digital technologies. He looked at me with mild disdain as if to say

“What could you – a middle-aged man (true) who couldn’t get out of a bean bag chair if he sat in one (true), wouldn’t know one end of Shoreditch from the other (also true) and chooses to dress in suit, tie and black Oxfords (true again) – possibly know about digital?” 

Flawed inductive reasoning on his part – let’s call the final score from our conversation 3-1 – but increasingly prevalent.  And I spent the remainder of the day chuntering to anyone who would listen about unlearnt lessons from the dot.com era.

Still, this encounter did lead me to start questioning whether I needed to update my business wardrobe in some way to create a more digital first impression.  The full digital uniform encompasses both geek chic (jeans and t-shirt because I don’t have anything else) and la mode du marketing (jeans and t-shirt because I don’t want to be seen as a suit).  Neither really ‘me’ – fine for the weekend, but I would feel distinctly underdressed in a client meeting.  Slightly less extreme is the dress-like-an-architect option to underscore modernism combined with creativity – white or pale open-necked shirt, beige chinos and moccasins.  But for that look to work it needs understated colours and I have never grown out of a child-like love of bright, prime colours.

Fortunately, as is so often the case, help came in long-remembered words from my mother, who combined early adoption of consumer technology with a strongly traditional view of human behaviour.  And in the context of the latter, one of her maxims was that you could always tell a gentleman by his watch and his shoes – attention to the finishing touches was all important.

Now the first part of following maternal wisdom for establishing my digiman credentials was easy: Apple Watch, job done.  But I was struggling with the second part until I came across Barker’s Creative Collection and the shoes (pictured above) in particular.  Of course Brogue shoes have been around for a long time (Wikipedia suggests since the beginning of the 19th century) and what I like about this collection is that it realises a traditional concept in new and exciting ways.

Similarly, the rules for sustained business success are the same now as they were a hundred years ago – you need to create value for customers by providing financial benefits:

  • a better price
  • indirect savings – savings on other costs

Or deliver functional benefits in the form of:

  • a better quality product
  • greater convenience
  • a faster speed of response
  • a wider choice

Or, tend to emotional needs by providing:

  • greater security and lower risk
  • a feel-good factor

All of which needs to be done in parallel with creating value for employees, partners and suppliers (in similar forms to the above) and in such a way that there is profit for shareholders  – a complicated balancing act but one that has been in existence since the birth of the joint-stock company.

While these general principles remain the same, how specifically they are achieved advances with every iteration of invention and innovation.   And the emergence of new digital solutions – developments in robotic automation, artificial intelligence and analytics techniques, cloud-based solutions, social collaboration tools and the proliferation of new data sources – creates a raft of vibrant possibilities for how traditional business goals can be achieved.

Classical concept, exciting realisation – what better metaphor for that could there be than a pair of tri-tone blue suede brogues?  Anyway that is my excuse and I am sticking to it!

What do you think? Leave a reply below or contact me by email.

Broaching the final frontier of unstructured data – the contents of our heads

When asked what we want, most of us struggle to break free from the chains of practicality. This default mental setting provides a defence against disappointment, but also a limit to progress.

For example, if you ask marketers what customer insights they would like, the likely response is a better version – more complete, accurate, timely, granular – of what they already have. But if asked for an idealised list – no constraints – then the list would look very different. The dream for any marketer would be to know at any given moment what each customer wants to feel or be, what they think they need to do or own to achieve that objective, how they plan to act so as to make it happen, how much they are prepared to spend, how far are they prepared to search or travel, etc. Think of the type of insights you would get if you had sensors reading the thoughts, perceptions, hopes, fears, ideals and ideas in every potential customer’s head.

Far fetched? Less than you might think thanks to digital technology.

We already have a sensor semi-permanently attached to our fingertips in the form of a smartphone; and increasingly ones attached to our wrists or faces in the form of smart watches and smart glasses.  (As a result mobile operators will take an increasing share of the customer insight value chain from traditional market research techniques, possibly even creating the next giant of the analytics industry in the process if one of the leaders successfully emulates what Tesco achieved.)

Equally, via social media people have the opportunity to express their happiness and frustration (and other emotions) as they are experiencing them while sharing what they are experiencing via photos or live streaming.

Finally, there is gamification.  Social gaming sites provide a real live environment for testing ideas with target customer groups to yield instinctive responses (those that dictate purchase behaviour for many products) rather than the considered responses that survey-based research typically yields.  Gamification techniques can also be used within surveys to increase both response levels and quality.

How gamification can help businesses glean insights from the final frontier of unstructured data – the contents of our heads – is the subject of a further article on insight advantage… coming soon.

What do you think? Leave a reply below or contact me by email.

An ugly word, but the source of all human progress

‘Datafication’ is a newly invented word, and like many of that ilk it is painful on the ear and embarrassing on the tongue. But for all its ugliness, what it describes – the creation of data through the extraction of measurable features from the unstructured information that surrounds us and quantifying, classifying or categorising them – is arguably the single biggest contributor to human progress.  Datafication has delivered the numeral system, maps and double-entry book-keeping; underpins the scientific method, statistical inference and ratio visualisations; without which the world we live in would be far less advanced.

“So what?”, you may say. These things were happening long before a few neurons got overexcited and the word datafication was born. Why is it important?

The simple answer is that in the digital age the rate of datafication is accelerating.  The ability to capture information from the world around us via digital technology, quantify it and pattern match it with other data is unprecedented. These new forms of data will become an increasingly important source as we seek to predict rather than simply understand. As any data scientist will tell you, the broader and more complete the set of data a model is based on, the more accurate it will be.

Even something as abstract as human behaviour can be quantified; how is covered in my latest article on insight advantage.

In this article, I use the example of someone being interviewed regarding a crime, but the same principles apply in different situations, for example to identify genuine buyers who need help in making their purchase decision from browsers who have no intention of buying and where sales effort will be wasted or shoplifters who need to be encouraged to leave. More obviously the same applies with on-line behaviour. And the organisations that are best able to collect and analyse this diffuse information about customer behaviours will be the ones that end up with insight advantage.

What are your thoughts? Leave a reply below or contact me by email.

Data: exhaust rather than oil but key to turbocharging performance

My likening data to a by-product of combustion rather than its fuel may seem strange, especially as I have argued that superior data-driven insight is the most sustainable source of competitive advantage in the knowledge economy.

Analogies can help our thinking in two ways – firstly grabbing attention to change a mind set; secondly changing the way we think to support behaviour changes. In the context of the latter, analogies are a staple for therapists – as anyone who has recently visited a physio or other therapist will probably remember. And given the continuing need for organisations to change – whether by continuous improvement or more radical transformation – analogies of the second type are a valuable enabler in business.

Data as the new oil fits into the first type of analogy. It’s memorable, signals value (both fuel and lubricant to the global economy) with some eco-friendly overtones (the age of oil is over). So it stands out. But does it help beyond that?  Not really.  There may appear to be some mileage in the refining idea. But crude oil is refined into multiple different products – jet fuel at the top end of the quality spectrum and bitumen at the bottom with petrol, diesel, gas, lubricants, marine fuel and liquified gas coming somewhere in between – all of which are then sold to different types of customers. Outside organisations that specialise in data monetisation, the data as oil analogy doesn’t really stretch into anything that has practical application.

A far more useful analogy is seeing data as digital exhaust. Automotive exhaust was originally collected and treated in catalytic converters to meet emission controls. Similarly data in organisations has traditionally been collected to meet regulatory requirements – financial reporting, compliance, etc. Catalytic converters were replaced by turbochargers which didn’t just ensure that regulatory requirements were met, they recycled exhaust emissions to improve performance.  And turbocharging technology has developed to such a level that a small car can achieve 60 mpg driving across a town while emitting cleaner air than it takes in.

In the case of digital exhaust, the turbocharger age is just beginning.  The organisations who achieve superior performance will be the ones that recycle data most effectively to reduce costs while providing a superior experience to customers (and other stakeholders), differentiating them from competitors and driving growth in revenues and investment returns.

Read my article describing how businesses can build a data turbocharger to enable insight advantage can be found here:

What are your views? Leave  a reply below or contact me by email
photo credit: TURBO R via photopin (license)

Blending Kipling with stakeholders to gain Insight Advantage

Rudyard Kipling is an unlikely candidate as a guru of Insight Advantage. But as a Nobel Laureate for Literature, he understood the role curiosity plays in firing the imagination. Both curiosity and imagination are as important now as when Kipling was at his creative peak and wrote “I keep six honest serving-men” – essentially his recipe for creativity.

In our white paper on How to Improve Business Performance with POST-Digital Capabilities, Elliot Howard, John Batchelor and I outlined the importance of customer curiosity, a term first coined by Elliot. We wrote:

“Customer curiosity extends beyond simple customer centricity, it incorporates constant focus on improving insights into customers so that why they behave as they do is as well understood as the more easily identified what, where, when and how elements of behaviour. It requires a culture of experimentation. Experiments create new data and new insights. And ultimately customer curiosity is about creating an increasingly rich data profile for each customer.”

In essence, customer curiosity boils down to asking questions – more importantly, asking the right questions. And while customers are the most important stakeholder group a business has, they are not the only one. Insight Advantage stems from curiosity about each stakeholder group – how they can be better served and gain created as a result.

The second article in my series on Insight Advantage describes how you can blend Kipling’s honest serving-men with stakeholder theory to identify the questions that you should be asking, rather than simply asking the ones that you know can be readily answered.

What do you think? Leave a comment below or contact me by email.