Fusion 2015 Full Presentation Text

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Enriching the Customer Experience
“Staying Relevant in the Face of Changing Expectations”

Several apologies are due.  The first regards my tardiness.  I had intended to publish this immediately following my Fusion 2015 breakout session.  Good intentions, road to hell and all that.  Work got in the way.  I ended up with a promotion in the intervening months, so there’s that.

The second apology is due for the length.  This is one mean wall of text, but when you transcribe and copy edit 25 minutes of speechifying, length happens.  The precis is below; the full text is below the fold.

Finally- many many thanks are due to Mark Myers, one of the Practice Directors at Datalink, for sketching out the concept I eventually finished here.  He came up with the outline and some great analogies which, after a serious research project, put more books on my shelf and a lot of meat on the bones of this talk.  Without his thoughts on how to deliver this it would never have gotten done.  The man’s an analogy factory, so if he ever comes to speak, listen.  The precis below is almost word for word how he laid this out…

To stay relevant, Corporate IT services must be as easy to obtain as downloading an application and support the job at hand, from application development to basic collaboration.  In this discussion I will talk about maintaining relevance by transforming from a technology focused utility to services oriented IT. First, I examine some parallels in history, because we have been here before and there are lessons to be learned from heavy industry. Next, I explore some real world examples of how that problem has been tackled head on by my customers. Finally, I discuss some of the key questions IT needs to ask to start down the right path, right now.

Enriching the Customer Experience
“Staying Relevant in the Face of Changing Expectations”

Moderator: Steve Cretney, CIO, Colony Brands
Peter Kraatz, Senior Manager of Cloud Services Management, Datalink

You are all IT executives facing a changing landscape that presents a singular challenge: Your “users’” or rather your customers’ expectations have evolved, advanced and in many cases outpaced the speed at which IT is accustomed to moving. Whether it’s Jim in Marketing or Sally in Operations, their expectations have been irrevocably altered by their experiences outside the enterprise with mobile devices, applications and ubiquitous access to the Internet. This availability of what we used to call “IT services” outside of the data center construct has created a dichotomy of sorts. On the one hand consumers are able to obtain services outside the enterprise whenever they want them, wherever they are for immediate productivity to accomplish the task at hand. On the other hand, acquiring necessary tools to do the job at work is not always a turn-key process, has multiple layers of approvals and is often seen as slow, burdensome and overly bureaucratic.

The reasons for this are complicated and not entirely at the feet of IT but the fact remains that to meet the needs of the business and remain relevant, corporate IT departments must transform to being services driven, not technology focused. We need to change our perspective on those consuming IT services from “users” to “customers.” Survey after survey shows us that the customer is willing to forego many features, functionality and even stability if they can acquire resources more quickly, without pain and with transparent costs. This doesn’t mean IT has to compete with AWS or Azure but it does mean IT has to have an answer when demand comes-a-calling. And it’s not just Amazon; it’s Dropbox, Office365 and Yammer.

To stay relevant, Corporate IT services must be as easy to obtain as downloading an application and support the job at hand, from application development to basic collaboration.

In this discussion I will focus on maintaining relevance by transforming from a technology focused utility to services oriented IT. First, I want to examine some parallels in history, because we have been here before and there are lessons to be learned from heavy industry. Next, I will explore some real world examples of how that problem has been tackled head on by my customers. Finally, I will address some of the key things IT needs to do to start down the right path, right now.

First, let’s take a trip down memory lane and explore a key historical parallel, the railroads…

Historical Parallels: Complex Drivers and Outcomes

In the 1800s the railroads were some of the biggest companies in the United States. Railroad companies focused on being the best railroad companies – they invested in tracks, depots, cars, and engines. Through WWII they dominated the passenger and freight landscape in the United States. Before the automobile, the railways controlled nearly 100% of all passenger traffic. In 1956, Eisenhower’s “National Interstate and Defense Highways Act” was passed and just a year later, the rails only accounted for a third of the passenger traffic in the United States. Even the light rails could not compete with the flexibility of the automobile.

The ridership fall-off started long before the Interstate Highway System was envisioned and by 1960 ridership, including those commuter lines, was down over 80% from their peak ridership. The losses, financially, were staggering. The industry was in turmoil as mergers, cuts in service and outright bankruptcy loomed. It’s easy to point at the obvious cause and effect: Obsolescence. Cars and planes are more efficient, trains are just slow to adapt because of the massive infrastructure and operations investment.

The obvious cause is easy, but that would be an incorrect assessment.

Certainly the loss of ridership was important but the totality of causes for the decline were complex and spanned the gamut of labor relations, poor/declining service levels (deferred maintenance), outmoded roles and rule sets (who needs a stoker on a diesel engine?), major customer losses (USPS shifting to air and truck shipping), inefficient networks (many spurs were redundant at completion because of ceaseless expansion pressure), and fragmentation of service delivery across carriers. There was a good business to be made here in haulage but the railroads couldn’t see it. They were too busy introducing new packaging for the same old product to a consumer who had already moved on. They were great “railroad companies” but their business was not railroads.

Many of the great railroad companies merged or closed their doors. None had invested in the business that would define them in the latter part of the 20th century. The focus of the railroad companies was the railroads, not their real customers. So, just as ridership changed and moved toward other modes of transportation, so IT consumers will move away from internal IT and towards other providers for the IT services they need if internal IT does not transform, identify who the real customer is and strive to maintain relevance to that market.

The cloud and application stores for mobile applications are having the same impact on IT consumers as the internal combustion engine had on railroads. That said, this is not a new change and we’ve had a decades of notice because it’s not just “The Internet” that is changing demand patterns, but the people themselves. When I ran an IT department for a theme park in the late 1990s, the most common question was “what is an e-mail?” or “how do I load a printer?” The most common answer was, of course, “is it turned on?” When Marketing came to me for assistance with data conversions and intellectual property handling, I had to help. This was the business reaching out to IT to help RUN THE BUSINESS in a tangible and meaningful way. The VP put an end to my activities because “this isn’t why we have IT; you should be focusing on fixing the cash registers and telephones.” I put an end to my tenure there because, to me, this is EXACTLY the point of IT.

I had already saved the business $250,000 in one year, with spare time that was otherwise wasted on my team- a few hours per week and less than $500 in materials invested. Meanwhile, the poor point of sale system and awful telephony was not something that could be fixed. The vendor selection process took place without the customers in mind- the cashiers, food and beverage managers, and the ticket call center. Fixation on “checking the network again” was not going to save or produce one thin dime. A hanging curve ball like that is rarely pitched from the business to IT. It needed to be hit. Hard.

IT departments whose focus is technology and not the business will meet the same fate as the railroads. Railroad passengers still traveled, but they wanted to arrive faster and wanted more control of their trips. Meanwhile, all that freight was just dying for attention. Internal IT’s behavior needs to become that of an enabler to its consumers. Today’s IT consumers are used to getting services at their fingertips, like downloading applications, when they need the application, no matter when they need it or where they are. The railroad’s real business was hauling freight, not people. Our businesses are in a similar situation: we had better understand them or face redundancy.

Lest you think this historical parallel is all hyperbole, I’m going to share with you some real world examples of client situations we see pretty regularly that reflect this as reality, not fiction.

Real World Examples

Many of my clients do not have a close relationship with their customers, whether internal or external to the enterprise. By extension, many of them do not understand the nature of the business that funds their activities. Sure, everyone knows in healthcare EPIC is the big kahuna application, Gateway is the front of house face for many hospitality businesses and SAP is a staple in (insert almost anything here).

That technology centric/application centric point of view is part of the problem. A hospital is not EPIC and a theme park is not Gateway. The business and the work that needs to be done are merely facilitated by those applications. The type of business dictates the application estate in play, not the other way around. Here’s an example, an easy one to put everyone’s frame of mind in the right place for our discussion: McDonalds.

McDonalds is easy because everyone knows what kind of business is McDonalds. I happen to know for a fact that the IT folks at McDonalds have a pretty good idea of the business of McDonalds. So what is it? Most audiences say hamburgers. McDonalds does make a lot of hamburgers but the business depends on real estate and intellectual property (systems). They buy the land, build the store and lease it back to the franchisees, then charge for the use of the equipment and processes so optimally devised they built a $90BN enterprise. McDonalds can carry the note and charge 40% or more over the cost of it. This is far more profitable than the franchisee’s ~25% or so on the production of fast food (these numbers are ballpark figures). That’s not to say that the French fries are unimportant but they do need a kitchen in which to be prepared and a method to prepare them. Failing to understand the relative importance of the fries versus the kitchen is a critical gap. IT tends to focus on the fries, the raw output. They don’t think about how the fries come to be in the first place, the work that needs to be done.

Here are a few examples of this gap between IT and the business my consulting teams have encountered and continue to encounter.

Example 1 – Disconnected and Undefined Terms
One of our clients was a storage team for a telecommunications company. They were experiencing 400% growth in storage demand unexpectedly. The storage team had planned for 10% new growth because the company set a goal to increase market share by 10%. “Where did the 400% come from?” they asked us…

We simply changed the conversation a bit with the business units and asked “what are you doing to increase market share?” and “what does 10% more market share mean to you?” Two key factors came to light:
• 10% more required twice the number of customers, since they only had 10% before!
How IT leadership did not know the market position of their organization is a mystery. The counterargument was comical: “well that’s actually 100%! We were lied to!” No, IT, you didn’t understand the language.
• New features incorporated to acquire new customers doubled the amount of data per customer. IT gets a “limited pass” on this one, but the math is obvious: Doubling the customers with double the data per customer explained the 400% growth.

IT did not understand what business strategies meant to IT services. The business doesn’t talk in terms of TiB, speeds or processors. They talk business. It’s our job to learn the lingua franca, not theirs to learn ours. We need to be aligned with the business in their language to stay relevant.

Example 2 – Inefficiency
After numerous complaints about “slow responsiveness” a pharmaceutical company assessed the workflow from order to deployment of core infrastructure resources (Compute, Storage, Network). On average, these requests were taking 3-4 weeks to complete. Redesigning the workflows for provisioning those resources resulted in getting them delivered in a MAXIMUM of 3 days from receiving the request and in 3 HOURS on average for simple requests. How could that radical an improvement be affected?

• Most IT shops have developed quasi-formal workflows over time, driven by a combination of company policies and personal habits, including this one. In this case they had never been explored and nobody really understood why work required so much time to complete today.
• The workflows that have developed over time are rarely efficient so that what is considered the “way we do it” typically needs to be refined – but that doesn’t mean there aren’t good reasons for those “ways.” Many times “unnecessary” steps are included to mitigate other common problems down the line, problems that may not be extant today but were common in the past. That’s exactly what happened here. Some of those steps were actually relevant, 10 years ago!
• Now that the workflows are understood and documented, they are the foundation to automation later on, when the business decides it requires even FASTER turnover.

The inefficiency of the process wasn’t the only issue. There was no communication as to WHY some approvals were needed, for example (budget, security and compliance if you’re playing the home game). Clearly defining how those things work and the approval gates driven by outside factors will reduce time to fulfill requests AND improve the relationship. How? Because they are rules to which both IT and the Business must accede. That shared “pain” makes us more relevant, sympathetic actors.

Example 3 – The Case of the Missing Catalog
All the efficient workflows in the world, though, won’t control client satisfaction or improve perceptions if the business doesn’t know what services IT actually offers, what those services cost, how they will perform and the limits on their use.

My team just completed a project at a multinational marketing company. They were perplexed by the rocketing cost of their backup environment, which they provided back to their clients “as a service.” Growth, performance, demand and reliability against client expectations were all out of synch and it was costing them dearly. They thought it had something to do with the hundreds of thousands of pieces of tape media they were storing indefinitely. My first reaction was “you think?”

We discovered there was no actual catalog of services for the customer detailing SLAs, specifications, costs, limitations and the like. We built that catalog with all of those details and a unit cost model per backed up GB, per month. The simple implementation of this catalog both saves money and improves client satisfaction. Why?

• Customers were just “setup” when on-boarded after a few insufficient questions about their size. No matching between service requirements and the services provisioned was done, so nearly everyone was mismatched to their actual business needs.
• Because there was no business language definition of what “backup” meant, many customers were using it as their disaster recovery strategy or backing up multiple times per day, just to be safe. This meant a typical client was backing up 10x the data they needed to and still not receiving a proper disaster recovery service. Other clients could never backup because of contention issues.
• Without any SLAs, every backup and restore request was “top priority.” By matching service levels to pricing, my customer could cease calling for a fire drill every time a request came in. Today, the staff can handle most requests during business hours and the Tier-1 clients have appropriate coverage when they need it.

Ultimately, this client is adding a new role within IT to address these issues before they arise. The best title I can give for the job is “Product Manager.” This role is responsible for capturing new client requirements that fundamentally change the services delivered and how they are shown in the catalog. In this way, they’re conducting their own internal market research.

Again, it’s up to us to learn the language of the business and translate our “speeds and feeds” into a meaningful “product” they can consume. The catalog fills that role. The catalog then becomes the foundation for a consumer facing portal, behind which automation can speed workflow completion. All of this means we can now spend more time getting to know what the business means when they say “10% more next year.” This improves the relationship because our entire team understands what the business units really do and what their projects REALLY mean to IT.
Next Steps: Question Everything

Socrates has long been attributed to the quote, rightly or wrongly: “the unexamined life is not worth living.” The way I have always interpreted this was to use the Socratic Method of asking questions not just to obtain a simple answer but to come to a more fundamental understanding of the matter at hand.

So to quote both South Park and Glenn Beck…”I’m just asking questions here.” More specifically, these are questions that my consultants use as they triangulate on the root causes of client issues.

Business/IT Alignment
o Do you have instances when IT was not aligned to business needs?
o How did you detect the misalignment?
o What mechanisms did you put in place to prevent the misalignment from reoccurring?
o Do you have someone assigned to or do you meet regularly with business units?
Each question drills a little deeper into the relative maturity of the client’s interaction with the business. The response to the first question can expose fundamental problems that don’t need much further study, too. For example, if the client tells me “no, we are always in lock step with the business” I know the road will be hard going. That’s an answer only the deluded or mendacious could give.

I hear it far too often.

Efficiency
o What are your most frequent requests?
o Does everyone know the steps, including approvals?
o Do you have documented work flows?
o Have any workflows been automated?
You might sense a pattern here; each question continues to probe deeper than the last. Again, the first question tells an important story. If my client does not know where their team spends the most time they have no idea what constitutes a complex issue, what areas are ripe for automation or what services are better sourced by an outside entity.

Services Catalogs
o Do you have a service catalog?
o Was it developed by IT or did you develop it in conjunction with business units?
o How is it maintained?
o Has it been automated into a Self-Service Portal?

More Advanced Stuff
o Do you have a self-service portal? If yes, what is the tool?
o How is the portal user interface organized: requestor-centric of IT-centric
o Have you automated any provisioning activities?
o Did you start with documented workflows or did the automation come based on how the person automating the provisioning did it?

Conclusion

To stay relevant and change the perception of IT as a business roadblock and to “IT as a Service Provider” or “IT as an App Store,” IT needs to be aligned with business units/consumers, understand the business, streamline the delivery of services and do so in a way that is both transparent and consumable. Portals, catalogs, automation, and some new roles help in this transformation. Ultimately, IT must transform to be a broker of IT services because we already know that the customers are going outside the lines for some resources. That doesn’t have to be a bad thing, so long as they are inclined to work with us and leverage our expertise. Our experience and expertise IS our relevance and we can help the business make good choices.

This means IT needs to take command of its role and allow that not all resource and services need to be delivered in house or by the same internal staff. Some of those services need to be delivered by external providers. Providing “all” services internally is a fool’s errand in any event. The landscape changes far too quickly to keep up, staff up and maintain expectations for service quality, reliability and cost.

I’ve discussed historically how we’ve seen this loss of relevance impact the country’s biggest industry. I’ve also explored a few examples of my customers who have what appear to be tactical problems that are just symptomatic of larger issues keeping up with the business. Finally, I’m leaving you with a few questions to begin that process of introspection and improve perceptions the business has of us in IT, right now. The Socratic Method is a powerful tool for my consultants, I hope it serves you well, too.

Follow-Up Questions and Discussion Notes
Things that were discussed at length following the talk:
• Services Catalog(s)
You mentioned service catalogs. This seems to make services standardized and inflexible but users HATE standards and they want custom solutions. How do you address that objection?
– You design the catalog WITH them, not in spite of them or around them.

• Accommodating Demands on a Limited Budget and Tool Set
You discussed how the IT consumer’s sophistication has matured but the typical customer still doesn’t appreciate just how things work, how complicated they are and the demands of the real business they support. It’s hard to make things simple. Are you suggesting “being all things to all people?” This seems like an unattainable goal on a limited budget and with limited tools. How do you propose accommodating those demands?
– This is where the concept of IT as a service Broker comes in (and it works).

• New Roles(s) in IT: Marketing and Product Management
The buzz words around “engaging the business” aren’t new, but the idea of a Product Management function within IT is, and it’s not intuitive where to start. How do you go about filling that role?
– Marketing. Hire someone from marketing with a minimal IT background. It does sound like an unholy alliance but it will work.

• Change is a journey, not a destination
The changes you talk about in your “next steps” discussion seem to oversimplify the challenge. Isn’t there more to it than that? I realize you can’t provide an exhaustive list in 20 minutes, or even a 20 page list, but aren’t you leaving something out?
– Yes, of course. The unfortunate reality is that the only constant is change and this idea of IT having to reinvent itself is now just a regular business cycle, not a passing fad. This is an ongoing enterprise, not unlike a 12-step program. Sure, there are things you need to do to stay well, but you’re never done getting better. Those roles, different approaches and so forth that were discussed will help manage that change.

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About Peter

Peter is a Geocacher, competitive cribbage player, surfer, amateur magician, golfer and star watcher (the astronomical kind). In his day job for Datalink, Peter is a Senior Manager with their Cloud Service Management Practice helping customers build, manage and improve their legacy IT and Private Cloud infrastructures through Automation, Orchestration and clean living. We’re not so sure on the clean living.

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