IT Operational Excellence

When IT departments are tuned to run their best, they achieve more, spend less and drive success back into the organisations they support.

IT operational excellence is an approach that helps to ensure IT departments run efficiently and deliver great service. Without an operational excellence philosophy, IT departments lack vision and strategy, are slow to adapt and are more likely to be bogged down by trivial issues.

Achieving IT operational excellence isn't about implementing one particular framework. It is a mindset geared towards continuous improvement and performance that incorporates multiple principles designed to align team goals around delivering value to the customer.

IBRS can help organisations achieve IT operational excellence by revealing the most effective ways to leverage resources and identify the most valuable activities and differentiators in a given IT team.

Conclusion: Organisations which reach outside to acquire application systems solutions need to manage their risks well and be commercially astute while selecting the right vendor. To select the right vendor the tender document needs to be complete, reviewed thoroughly to avoid mistakes and based on an awareness of what the market will offer. Premature release could lead to the wrong vendor being selected.

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This month’s IT news has been especially interesting with a lot of discussion around vendor transformation, in particular, vendor restructures, business unit purchases and sales and market expansion. Vendors have also been discussing changes to their strategic focuses, business priorities and service offerings. These developments clearly reflect recent trends and growth forecasts in business demands for IT outsourcing with vendors rebalancing their offerings in an effort to cater to these demands. While this is nothing new the number of vendors making significant internal changes across so many areas has never been so visible indicating shifts in IT priorities and strategic focuses for businesses in general. These are issues that will be fascinating to observe as they unfold.

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Conclusion: It is tempting for the Executive when the IT Department’s processes are failing or systems are not being implemented on time to direct the CIO to engage an external provider. Whilst the need to act might be urgent CIOs must avoid making hasty decisions which could lead to the types of mistakes, set out below, occurring.

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Conclusion: Along with many benefits, mobile devices bring new challenges in securing access to the organisation’s data and applications. The real issue is not with technology, but in striking a balance between security and the mobile user experience.

A common mistake is touse typical desktop management practices and tightly control the mobile device. This often results in a compromised user experience, leading to high levels of user dissatisfaction. As employees, and contractors, increasing expect to use their personal devices (BYOD) for work, Organisations will find this approach is unacceptable.

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Conclusion: While there’s surprising level of interest inside some IT departments to build their own data centre within an office complex, the arguments against this strategy are overwhelming. The few organisations that can financially justify building their own data centre are those organisations that prefer spending Capex to Opex, have the Capex to spend and, ideally, can distribute this cost to others. While the idea of an on-premises data centre can be driven by a misplaced belief in control, there are many risks that come with this strategy that most CIOs should not be interested in managing, and there are costs that most CIOs would not want to pay.

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This month, there has been a lot of discussion around mobile technologies and BYOD practices. What’s especially interesting is a shift in focus from actual technology adoption and reasons for growth in this area, to the need for systems and solutions that can support the adoption of these devices, including device management systems and applications, company protocols as well as user identification and control tools. This indicates a broader perspective of a growth area that goes down several levels to management solutions and company practices which does not typically happen in the industry. It also indicates this could be an emerging area for vendors supplying outsourced support systems, and device management services.

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Conclusion: Based on their exposure to consumer technology (iPhone/iPad) Business Executives and Managers are demanding mobile solutions for their knowledge workers and field service staff. Rather than rush to a solution for one group’s needs (which may create a siloed solution and a barrier to further projects) define an enterprise mobility strategy that enables current and future mobility project to be quickly and effectively built.

A mobility strategy can be built in less than three months and must start with use cases. This leads to device selection, which must focus on user experience rather than the IT organisation’s concerns.

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Conclusion: Increasingly, organisations are recognising that they can benefit from a so-called software product line approach. The transition from an IT organisation that operates entirely in project delivery mode to a product development organisation that introduces a product line governance process is a significant undertaking. The process involves the designers of business information services as well as Enterprise Architects and other domain experts. Achieving the benefits of a product line approach (systematic reuse of shared assets) requires the adoption of a dedicated product line engineering methodology to guide product management, design, development, and operations, and it also requires knowing where to draw the boundary between product development and the delivery of professional services.

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Conclusion: One of the functions of a board1 is to minimise business risks to the shareholders. As signing a major contract with a managed services provider involves significant risks such as the failure to deliver critical IT services, boards need to be convinced the risks2 are known and can be minimised by vigilant management.

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October has seen a significant rise in IT outsourcing deals many of which are more interesting than usual and with a more noticeable engagement of smaller, very specialised IT service providers. This move confirms last year’s forecasts regarding the need for more focused services in light of a rise in the types of divergent technologies being deployed by companies, as well as system consolidation and the need for customisation. This month has also seen a lot of significant industry forecasts and the publication of interesting research results as the end of the year becomes closer.

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Conclusion: The cost of Flash Memory, a high-speed alternative to disk storage, has declined to the point that it is now economical to use in a broad set of cases. This has spawned a large number of Flash based products, often from start-ups, that offer an adjunct, or alterative to, Disk. The different approaches, and the conflicting technology claims, make product selection complex. When coupled with a high capital price, technology risks, and the viability of start-ups, purchasing Flash products carries a high risk for the next few years.

IT organisations should only purchase Flash devices tactically when a sufficiently strong benefit justifies the risk. Over the next five years the cost of Flash will decline by a factor of 10, and the technology and vendors will mature, making it suitable for mainstream use.

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Conclusion: Based on conversations, interviews and meetings with Australian clients, IBRS has compiled a list of the top six mistakes that are probably impacting your architecture practice right now.

Astute CIOs and business executives will take steps to avoid these common mistakes which we see repeated in many organisations.

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While there were no new projects or tenders announced this month, outsourcing deals are finally becoming a little more significant, with the Royal Adelaide Hospital network deal being especially interesting. The forecasts for outsourcing are currently excellent and there are grounds for optimism in the future.

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Conclusion: For the last 20 years an organisation’s applications and data have been largely accessed from a Windows desktop. While the Windows desktop will remain an important access platform, IT organisations will be expected to also enable access via mobile device and to support Software as a Service (SaaS) applications.

The first step is to shift paradigms from “delivering a standardised desktop” to “enabling access from a range of devices and form factors using multiple delivery methods”. The second step is to choose between a best-of-breed or integrated platform strategy for the management platform.

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Conclusion: CIOs need to decide if they will invest in the practice of enterprise architecture and if so, how to approach it. Many CIOs choose to invest in enterprise architecture for the wrong reasons: because other organisations are doing it or because a consultant says it is “best practice”. Instead CIOs should consider which enterprise architecture functions would provide specific benefits, given the functions that are already provided in the organisation.

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Conclusion: Australian enterprises seem to be slow in adopting social media and related enterprise collaboration tools. Survey evidence indicates that corporate Australia is not as interested in the social and collaborative technologies as counterparts in other regions.

Taking a steady and progressive strategy implementation of social and collaboration is probably an advantage. Being an early adopter with such technology may be an opportunity for some enterprises but not for a mid-sized or larger organisation. However, waiting too long, or crafting an even better strategy may mean wasting opportunities.

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There were only a few deals this month with one very interesting contract between Perpetual and Fujitsu which came through towards the end of the month. This contract is a complete, infrastructure agreement, which used to be quite common but now really stands out in the current environment where customers prefer to outsource to multiple, smaller vendors. This agreement may indicate that the consolidated, single supplier arrangement could be coming back into popularity.

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In the last four years the mobile device space has undergone a major transformation as Apple redefined the market, first with the iPhone and then the iPad. In that period Apple created a mobile device business with revenues that exceed the total of all Microsoft’s revenues1!

Microsoft, long the dominant desktop software vendor, has struggled in the mobile device market and has fallen out of favour with the consumer and the enterprise for mobile devices. A recent survey2 of the smartphone installed base in the US shows the iPhone has 34% of the market, Android 51% of the market and Windows mobile 4%.

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Conclusion: Direct dependencies between services represent one of the biggest mistakes in the adoption of a service oriented architecture. An event driven approach to service design and service orchestration is essential for increasing agility, for achieving reuse and scalability, and for simplifying application deployment. Complex Event Processing offers a gateway to simplicity in the orchestration of non-trivial service supply chains.

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Conclusion: In the last two years VMware’s desktop vision has undergone a profound transformation from a narrowly focused VDI (a centralised, virtualised desktop) strategy to a broader Dynamic Desktop1 strategy that supports Physical and Virtual desktops and Software as a Server and mobile applications. Despite this change, for the next 18 months VMware will continue to trail Citrix, which has greater desktop experience and had all the elements of a Dynamic Desktop since 2009.

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Conclusion: Governments across Australia have been engaged in Shared Services initiatives for almost a decade. Decisions taken over the last two years to abandon, de-scope or rethink Shared Services by these same Governments demonstrate that the traditional model has not worked and a different perspective is needed. Perhaps knowledge/wisdom can be drawn, not from other government shared services initiatives, but from a completely different business model such as franchising? In franchising it is about having a great product with repeatable and standardised business process, great customer service and a growth strategy.

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Conclusion: In order to optimise spending on Microsoft’s products, licensing should not be viewed as a short-term, tactical activity, but rather a long-term strategic activity. Failure to do so will almost certainly result in licensing surprises in future, and the turmoil and budget overruns associated with such situations.

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Conclusion: Mark Twain said “'I didn't have time to write a short letter, so I wrote a long one instead”. Overly long, complex or imprecise RFTs create headaches for all involved.

Astute CIOs will ensure that the statement of requirements in an RFT remains succinct, clear and unambiguous. Sufficient attention to detail will save you from a variety of headaches later in the tendering process.

Careers and reputations have been tarnished when disgruntled vendors expose the shortcomings of the tender process through the courts.

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While outsourcing deals were a little thin in July there was a lot of discussion around the risks for companies with “BYOD” policies, and the opportunities for service providers to manage solutions. The failure of Peru’s One Laptop per Child initiative (“OLPC”), which has been hampered with problems such as insufficient skills and school resources to make use of the computers, highlights problems that arise when there is a serious mismatch between ideas, strategies and reality. This is a common problem with outsourcing arrangements in general Illustrating that great initiatives and solid implementation plans are not sufficient if external influences, such as the human element, are not taken into consideration.

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Conclusion: IBM’s launch of its PureSystems line of hardware completes the vendor line-up for Integrated Systems. While this does not dramatically change the market it does further solidify our 2009 prediction that IT infrastructure is transitioning to a new procurement and deployment model. However, due to internal barriers adoption rates are modest and this transition will only happen slowly over the next seven years.

On the next major IT infrastructure refresh, especially storage, IT organisations should review their approach to procuring and delivering infrastructure. This may require challenging the established infrastructure dogma in order to accurately evaluate the benefits of Integrated System.

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Conclusion: One of the challenges faced by senior IT and non IT managers is how to encourage right use of IT resources by their staff? One option, favoured by many organisations, is to charge business units for the cost of IT services and make line management accountable for outcomes and astute use of IT resources. Whilst the option is fine in theory, it comes with a price. The effort needed to collect and allocate IT usage costs is not trivial and often leads management to ask whether it is worthwhile.

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Conclusion: For organisations that use digital content distributors, telecoms suppliers, and social media, the Convergence Review is an important stage in how policy and regulation will evolve. The review sought to update the regulations in the sector which has changed rapidly. Although the review did not focus on digital players, there were elements in the digital arena that indicate where change may lead.

It is probably inevitable that more regulation will enter the digital content and distribution sector. The need to impose controls will be to facilitate market competition and foster new ventures. It will also be used to protect individuals. That means that running an unregulated market is not possible if the goals of increasing local content, commerce and technology innovation are to be achieved. Organisations may have a special interest perspective depending on their role within the content, communications, technology development and social media sectors.

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Conclusion: Einstein said that “everything should be made as simple as possible, but not simpler.” This is true in enterprise architecture and project management. CIOs know that simple solutions have many benefits over complex ones. Highly complex projects have high failure rates, like highly complex architectures. However, many CIOs unwittingly encourage and reward complexity. Complexity must be viewed as a primary focus for reducing cost and risk associated with large projects. CIOs should understand some of the key steps that can lead to reduced complexity in projects and systems.

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Conclusion: Microsoft licensing continues to be a major point of confusion and disruption to many IT groups, and procurement managers. Understanding the principles underlying Microsoft’s licensing will go a long way to optimising procurement during negotiations and avoiding licensing errors.

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This month’s deals were fairly thin but tenders and project announcements were up. More interesting this month was the chatter centred around BYOD, and other new technologies that are resulting in diversified environments and management and security vulnerabilities arising because of a lack of planning and experience with these technologies.These types of environments are expected to result in new outsourcing service offerings for vendors to take control of areas like mobile device management

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The topic of Bring Your Own Device (BYOD) has resurfaced this year. While this is an important trend that needs to be examined by IT organisations, be careful to separate the facts from the hype. Here are the four most common myths that I keep hearing.

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Conclusion: As the market for Board Portals rapidly matures, IT organisations are being asked to assist in selecting and implementing a solution. This is a golden opportunity to raise the IT Organisation’s profile with some of the most influential people in the company.

The CIO must ensure that technical staff do not overcomplicate the project and must find an Executive sponsor who can manage the Board members’ requirements and expectations.

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Conclusion: The speed and disruptive effects of consumerisation in the mobile market surprised many organisations that were looking back, not forward. Even mobile providers have not anticipated rates of change and must invest millions to remain competitive.

Over the next three to four years the mobile market will face stark realities in a fully developed and oversupplied market. Providers will have to manage costs, improve service delivery and raise user revenue. That is not an easy set of objectives to achieve. The effect of raising revenues and cost management on users could be disruptive as users seek to maintain price and service levels they have enjoyed for some time. Organisations may have to manage another round of change when it comes.

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Conclusion: When assessing the options at outsourcing contract renewal time, ensure insourcing is included in the evaluation as, despite the changeover cost and risks, it may be the best strategy to pursue.

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The major interest this month has related to revenue growth for IT service providers. Global and Australian figures are high, and the flow-on effects were clear in the news. Service providers have been announcing new service offerings, strengths in different areas, company expansion both locally and globally, and revenue increases and investment in expanding and improving business operations. Overall it seems there will be some interesting times ahead as business growth impacts on outsourcing industry practices and trends.

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CIOs, architects and managers responsible for IT systems often wonder – how did we end up with this mess? There’s no decent documentation. No-one seems to be responsible for the apparent lack of any rational architecture. A lot of stuff is “due to historical reasons”. Of course this would never have happened under your watch, but now it’s your responsibility to make some sense out of it. If your system represents a substantial investment, it stands to reason that you’ll want to understand why it was designed the way it is before you take any radical action to change it.

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Conclusion: In spite of changes over the last decade the Microsoft Windows Server licensing is still rooted in the physical machine era of the ’90s. However, most organisations run the majority of their x86 workloads in virtual machines. Microsoft’s disconnect with the virtualisation realities of the last five years can result in licensing confusion. Organisations that choose the wrong licensing approach will either greatly over-spend on Microsoft licences or, more likely, not be compliant.

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Deals have increased this month, but more importantly, the deals are more interesting! Increased outsourcing in areas that support consumer-orientated functions (as opposed to just infrastructure or business support deals) is especially clear this month.

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As discussed in this month’s research note “Microsoft Licensing + Virtualisation = Licensing Confusion” Microsoft’s Licensing model is based on a physical machine model that is increasingly out of touch with the IT industry.

In the past, when computers did not have the processing power of today’s hardware and operating systems, and software was bound to the physical machine, binding licensing to the physical machine made absolute sense. When organisations wanted to get more computing power, they would buy more machines: which would see Microsoft getting more revenue. Consumption of software (arguably the value of IT in the eyes of users) was closely correlated to the physical machine.

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Conclusion: In spite of some benefits in security, remote access and speed of deployment, VDI has remained a niche product. This has largely been due to the higher complexity and much greater capital cost compared with a Full Desktop. However, as VDI infrastructure innovations continue to close the gap, the adoption of VDI will increase beyond this small base. Due to the risks and costs of switching from a well understood model to a relative unknown model, the adoption will increase at a moderate rate and there never will be a “year of VDI”.

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"Is this the year of VDI? (Part 1)" IBRS, 2012-02-29 00:00:00