What we should really be watching: Information Technology
- In the last of his story request pieces, Brian Sommer rips the lid off arcane IT departments. What he finds is not pretty.
Is data an asset or a liability? For decades, the conventional wisdom was that data is an asset. The more of it you possessed, the richer your firm was. It's time to rethink that idea.
Today it is easy to accumulate vast amounts of information. Televisions have the ability to capture conversations in the homes of their users. Employers can peruse and capture social media postings by their employees. They can even monitor employee desk time, a decidedly creepy idea. Marketers can embed any number of tracking technologies on their websites. Insurance companies can capture data about driving habits and locations of its insured customers. Much of this information is sold to third parties without anyone even realizing it.
Since it is so easy to capture information and so cheap to store it, businesses have an opportunity to grab all the data they want. But the question they should ask is: “Is this always a good idea?”
Data is an interesting kind of asset and quite different from physical assets. With physical assets, the more you accumulate, even of an identical item, the more valuable the combined worth. But with data, more copies of the same information are worthless. To make matters worse, the more copies of information you have allowed to proliferate or accumulate, the greater your risk that someone may gain unauthorized access to this information.
Information often has a short useful life. For some datatypes we need to think of them in terms of half-life. The value of today’s local newspaper may be $1.50 but in just a day or two its value approaches zero. The same goes for much of the available data.
IT organizations need a different discipline when it comes to thinking of information. They need to draw two columns (Asset/Liability) around every type of information to decide such things as:
- At what point does this data shift from being an asset to liability?
- What is the firm’s liability should this information be breached or stolen by a third party?
- What is the useful life of this data?
- When should data be purged?
- What if a customer/supplier/stakeholder realizes we have this information? Would this awareness hurt our brand, sales, reputation?
- What if a customer/supplier/etc. discovers that our firm sold their information to a third party? How would this impact our relationship, supply chain, sales, reputation?
Businesses need a set of enforceable policies and regimens regarding the acquisition, storage, sale, reuse and disposal of all data assets. Every data asset needs a sunset plan – does your firm have one?
Cue the hubris! – About a year ago, I shared with an audience full of outsourcing industry executives some key stats about the size and scale of Amazon’s cloud capabilities. One of the things I mentioned to them was this incredible comment from an outstanding article by Quartz:
Today the cloud market has many players. Yet if Amazon’s entire public cloud were a single computer, it would have five times more capacity than those of its next biggest 14 competitors—including Google—combined.
I highly recommend any IT professional to read this Quartz article.
Why am I telling you this? Creating compute capability is no longer something that is the exclusive purview of IT professionals. Specialists have arrived who create not only an abundance of compute capability but also deliver it at exceptionally low cost. For software companies, hardware makers, outsourcers, resellers, integrators, IT shops, etc. to think that they can deliver the volume, scale and low-cost IT compute capacity that firms like Amazon can do is sheer hubris. (Editor's note: we are about to succumb to the allure of real time managed compete with a big AWS partner - we eat our own dogfood!!)
I continue to see hubris among mid to large size IT shops where individuals want to build their own private clouds, and maintain or grow their existing data centers. Yet when I show executives the kinds of security standards, safeguards, data protection standards utilized in some of the public compute/utility solutions, there is no way for many firms to deliver a like for like capability for anywhere close to the same price points.
IT’s ability to deliver compute capacity has moved to the utility model and change is required.
Some applications, functions and data may belong behind a firewall within the four walls of a company’s own data center. I get this. The task for many IT leaders is to segment which of those applications and data types belong in public clouds, private clouds or some other compute environment.
There’s a bigger business question that remains. If compute capability is becoming a utility, then how many utility plants/companies does the industry really need? Which firms will emerge as the leaders? Remember, markets tend toward standardization.
The utility computing providers are predominately focused on delivering ever lower cost or improved capability at the same price. This race to the bottom is perilous for competitors who lack the scale and the process excellence disciplines to create ever lower cost solutions. For those firms who choose to provide their own private cloud solution, they must offer something at a fair but not necessarily the lowest cost basis that delivers either enhanced levels of service or business critical innovation. Just as not every retailer can have the low price focus of Walmart, some choose to have the customer intimacy of a Nordstrom while another group will try to deliver innovative solutions to its customers (think Intel). IT shops must choose whether they are going to be customer intimate, process excellent or innovators. In business, firms can generally do one of these things well and be passable on the other two but not all three at once. Amazon is staking out the low-cost leadership ground for utility compute services. Which role will your IT group adopt going forward?
The utility model provides significant change management challenges for IT shops. What will an IT shop look like from a skill, people and other related technologies when the utility model kicks in big time? This will be an interesting phenomenon to observe.
Can IT lead businesses into the digital economy? – There’s a whole new business world out there and it bears little resemblance to the old industrial age businesses we are so familiar with. Brick-and-mortar firms have been having a tough time competing with all new digital native organizations. Old-school firms have systems and technologies that were originally created to manage data and business events predominately within the four walls of the enterprise. Their systems were not structured for smart phones and the Internet but rather for dumb terminals and flat files.
Whether you look at your IT budget or the stats from large numbers of IT shops, an amazing amount of IT headcount and costs are allocated to data center operations. Another significant block of time goes to the care, maintenance and feeding of the existing applications software portfolio. Whether it’s IT’s budget or its headcount, the focus of many IT shops is on maintaining the status quo and not creating a digital economy version of the company and its capabilities.
To successfully lead a business into the digital economy will require:
- new skills in areas such as sensor technology, master data management, analytics, statistics, etc.
- strategy, vision and leadership capabilities that will simultaneously inspire IT and non-IT employees.
- cosmopolitan viewpoints. Is the IT organization full of intellectually curious and acutely aware individuals?
A few IT organizations will make the transition. Many will not unless they acquire plenty of external help. This type of change is genuinely transformational. It is not incremental. It can’t be completed on a catch as catch can or part-time basis. It must become the single most important IT organization objective. Let’s see how many companies have the IT leadership capable of achieving that degree of change.
When does dark data get its day? – Dark data refers to all of the information companies currently collect but with which they do nothing. The darkest of all dark data, in my opinion, is all that airplane flight survey data that people provide to the airlines after they take a trip. Seriously, how many of us have told the airlines that: their seats are too narrow, the rows are too close together, the seats shouldn’t recline, the audio-visual system didn’t work, the Wi-Fi that was promised on the plane didn’t materialize, etc.? But do the airlines ever do anything with this information? No. This is dark data.
There is dark data in almost every firm and in every industry. You’ll hear people talk about how they’ll get to it someday but for right now they just have to let the data continue to amass with no one ever looking at it. Dark data could help companies identify fraud or revenue enhancement opportunities if only someone looked at that information. Dark data needs to be examined by companies long before they start tackling externally driven big data initiatives.
If not data center management, then what? – If cloud and utility computing become commonplace, what does an IT department do when data center management is not a material part of their mandate?
Defining and delivering competitive advantage must reassert itself as the core mission of information technology departments. No longer can IT organizations see themselves as a computing service delivery mechanism.
To deliver competitive advantage, IT organizations need to be far more aware of the operational aspects of their businesses as well as the competitive landscape with which their firm competes in. There are a few examples today but they are rare.
Delivering competitive advantage often requires individuals who can anticipate market and business executive needs. Instead of reacting to requests that originate from within the business, IT leaders must be the ones bringing all new ideas and opportunities before the executive committee. These must be opportunities which, when correctly implemented, can materially alter the competitive standing of the firm within its industry.
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