Business Continuity in an Outsourced Environment: Enabling business outcomes and expanding sourcing options Marnix Gillis IBM Distinguished Engineer 32 nd Regional Conference 2013 International Business Machines Corporation 1 Abstract With the growing success of cloud, most of the consultant companies agree that the job of a CIO is evolving from (business) manager of an IT department to a function of a "broker of services", supporting new (and existing) business systems. The choice and mix of delivery models has an impact on the CIO's retained organization, but also declares the switch that (some) providers make to "enabling business outcomes" rather than delivering infrastructure services. This presentation will describe both trends in the sourcing industry. 2013 International Business Machines Corporation 2 1
Trends: Cloud, Mobile, Analytics, and Social are fueling the hyper-growth of business as-a-service economies Embracing New Technologies, Adopting New Business Models Bring Your Own IT Large existing IT infrastructures with a globalized workforce, 3 rd party services, and a growing customer base Exploding and Interconnected Digital Universe 30 billion RFID tags (products, passports, buildings, animals) 1 billion workers will be remote or mobile Social Business Mobility 1 trillion connected objects (cars, appliances, cameras) 1B Mobile Internet users 30% growth of 3G devices Cloud / Virtualization 33% of all new business software spending will be Software as a Service 2013 International Business Machines Corporation 3 These trends increase pressure on CIOs and their teams to deliver transformative business value Increased expectations 68% Of senior management rank technology as critical to business success Increased risk 40% Of Fortune 500 and popular websites contain a vulnerability Budgetary constraints 71% Of the average IT budget is dedicated to ongoing operations. Desired Outcomes: Create new business models Manage business innovation from strategy to execution Deliver robust business analytics Align applications with business processes and platforms Improve application flexibility Align technology with business strategy Improve infrastructure efficiencies Create a more flexible infrastructure with delivery options, like cloud computing 2013 International Business Machines Corporation 5 2
Forward-thinking leaders are forging strategic partnerships for financial value, business growth and innovation 2/3 59% CEOs partner with CIOs partner to change external providers to the mix of skills, expertise drive innovation. and capabilities. 60% Of CIOs view cloud computing as critical to their plans Cost-cutters Reduce cost of operations Increase efficiency and effectiveness across value chain Achieve faster time to market Drive front office effectiveness Better anticipate and respond to disruptive forces Proactively manage security, risk and compliance Share risks and rewards based on business outcomes Growth-seekers Streamline Innovators Improve Transform Source: IBM Studies 2013 International Business Machines Corporation 6 Enterprises should determine the best mix of delivery models based on a set of attributes. Traditional IT Managed Services Cloud: Private Cloud: Multi-tenancy Design Control Security Self-Service Service Levels Delivery Infrastructure Resources Service Mgmt Custom Complete Custom Low Custom On-Site Dedicated In-house Manual Standard Shared Standard High Standard Remote Shared Partner Automated Cost Structure Capex Opex Assumes a typical deployment 2013 International Business Machines Corporation 8 3
A mix of sourcing models gives CIOs the opportunity to gain operational & capital expense savings while maintaining application differentiation Traditional On-Premises Infrastructure as a Service Platform as a Service Software as a Service Applications Applications Applications Applications Data Data Data Data Runtime Runtime Runtime Runtime Middleware Middleware Middleware Middleware O/S O/S O/S O/S Virtualization Virtualization Virtualization Virtualization Servers Servers Servers Servers Storage Storage Storage Storage Networking Networking Networking Networking Vendor Manages (in Cloud) Client Manages Standardization; OPEX savings; faster time to value 2013 International Business Machines Corporation 9 Sourcing services from a variety of delivery models, with increased granularity, results in an IT infrastructure that is dynamic, virtual, potentially providing higher business continuity, but complex Public Hybrid Private Enterprise Smartphones, tablets & other mobile devices Employees Customers Other service providers Traditional data center Desktops Business Partners 2013 International Business Machines Corporation 10 4
Sourcing granularity to the extreme Glasbergen cartoon 2013 International Business Machines Corporation 11 Changes in IT demands, new sourcing models and increasing complexity requires the role of the CIO to evolve 2011 2015 <2000 2005 CIO as application implementer 2006 2010 CIO as head of virtualization and standardization Early SaaS and cloud adoption Acceleration of virtualization and standardization Less staff, multiple suppliers CIO as service integrator or broker of services Widespread SaaS and cloud adoption Highly standardized and virtualized, delivered as a service Even less staff, many more suppliers and new modes of delivery Expansive, on-premise applications Highly customized, with dedicated hardware Internal staff and external trusted advisor 2013 International Business Machines Corporation 12 5
Do not underestimate the impact on governance and the retained organization. Two examples: integrated service management processes Cloud or external service standardized interfaces for integrated business processes Non standard interface In House 2013 International Business Machines Corporation 15 A structured approach is required to assess client requirements and make thoughtful decisions on a sourcing service delivery strategy Bringing together diverse (non-functional) requirements hybrid availability benefits Decisions performance shared Multi-tenant Deployment models accountability migration location economics Shared flexibility ownership outcomes Fixed vs. Variable costs planning security management governance Business Design..into a methodology using tools and best practices Outcomes Economics Accountability Strategic Decisions Service Levels Considerations Availability Security Performance Deployment Flexibility Shared Location Source: IBV Analysis 2013 International Business Machines Corporation 16 6
CIOs have to create and deliver an integrated, interconnected, dynamic multi-sourcing strategy 1 Consider your business and IT needs, and the processes and services required to support them 2 Use a disciplined approach to make the right decisions using best-practice tools and methodologies 3 Deliver an integrated multisourcing strategy spanning your enterprise Business Service Management Infrastructure Application Process Service Delivery Considerations Business Design Service Levels Deployment Choices Outcomes Accountability Economics Performance Security Resilience Sourcing Traditional IT Managed Services Cloud Services Integrated Service Delivery Platform Flexibility Shared Location 2013 International Business Machines Corporation 17 Does TOGAF help? It certainly does, but relationships might change... * IBM Research modeling and estimating infrastructure impact 2013 International Business Machines Corporation 18 7
A shift is taking place from delivering IT outcomes to delivering business outcomes Business outcomes Increase business revenue Reduce business cost Business process availability Align with enterprise s business outcomes IT Value Is Dead. Long Live Business Value. Business outcomes from technology investments are all that really matter. The CIO s challenge is finding new ways to prove IT s worth. Source: CIO.com, Stephanie Overby, May 12, 2011 Value IT outcomes Reduce IT cost Top 10 Business Priorities 2014 Manage IT cost 1980 1990 2000 2010 2020 Increasing enterprise growth Improving Operations Attracting and retaining new customers Source: Gartner, 2011 CIO Survey 1 2 3 2013 International Business Machines Corporation 19 Sourcing market is undergoing profound changes Desired Outcomes New Relationship Models Expanded Scope Cost savings business value Generic industry context Task driven broad capability access Vendor strategic partner CIO C-suite and business LOB Industrialized approach client centricity Horizontal vertical integration (infra, apps, bus proc) Single service integrated value chain Traditional IT all delivery models (traditional IT, mgd service, cloud) But to deliver business outcomes, relationships with service providers must evolve to be more strategic What capabilities do you need to acquire? What do SLAs look like and are they related to business outcome? ( BLA s?) What is the governance model and who needs to participate? Should partner relationships be horizontal or vertical? How do you move from a vendor to a strategic relationship? What are the essential control points? 2013 International Business Machines Corporation 21 8
This implies that not only the CIOs but also their Service Providers have indepth industry knowledge becomes a selection criteria The value is delivering business outcomes based on technology, market, and industry best practices and insights - across infrastructure, application and business processes Deep technological expertise and rich market/ industry insights Platform built on proven processes and tools for standardization and automation Best of breed technologies analytics, cloud, social and mobile Business model innovation Application and Business Process optimization and innovation Infrastructure optimization and innovation Service integration enabling a transparent, agile value chain Integrated Service Management Bringing together asset-based offerings and standardized solutions to deliver predictable, business-value outcomes Using industry best practices, proven processes and tools and close client partnerships Outcomes that are tied to client-defined value: Achieving faster time to market Expanding globally Anticipating and responding to disruptive technological changes and market forces Strengthening the organization s culture of innovation Seeking new business models and developing new markets 2013 International Business Machines Corporation 22 Service Providers are not necessarily the ones we know today: agile, scalable, and consumable business as-a-service will shift the business services market 2 real life examples GM Telco: building solutions to enable millions of unbanked subscribers to purchase goods via mobile devices MM Telco: experimenting by enabling facebook app developers to support in-app purchases for telco subscribers Telco Back-office Network BSS OSS Externalize Payment Location User Std API Std API Std API GM Telco MM Telco Core Externalization Define services to be exposed (User, Location, Payment) Map APIs to back-office applications Expose API (internally or externally) API Management Define usage and access policies to ensure security and scalability Manage interaction between apps and back-office Manage metering, throttling, security, and translation Service Integration Define workflow to interact with Telco APIs Integration effort to stitch together APIs in apps Deploy and publish apps Telcos are opening up core payment capabilities to capture value in the online payment market 2013 International Business Machines Corporation 23 9
Get started by integrating preferred business outcomes into your IT and by extension - sourcing strategy 1 Consider your business and IT needs, and the processes and services required to support them 2 Look beyond your organization s borders to maximize value derived from your sourcing strategy 3 Establish shared responsibility for your sourcing strategy and governance across Business and IT services Not too much different from the ideal world today, with some extra attention points 2013 International Business Machines Corporation 24 Questions? 2013 International Business Machines Corporation 25 10