It is pretty much common cause that the perennial tension between business and IT is still in place, and nowhere is this more apparent than in the disconnect between the needs of the CEO and CIO.
By way of example, Gartner has compiled a list of the 10 business priorities for the CEO and CIO. They are significantly divergent:
* The CEO's top 10 priorities are customers, improving productivity, cutting costs, market share, creating and maintaining a responsive organisation, technology, strategy, core competencies, innovation and employees.
* The CIO's top 10 are security breaches/business disruption, operating costs/budgets, data protection and privacy, the use of information in products, economic recovery, faster innovation, a single view of the customer, transparency in reporting and risk management.
The one area where both the CEO and CIO are on the same page is innovation: and smart CIOs understand that more rapid innovation is enabled by IT. As a corollary, innovation is hindered by incorrect, ageing or inflexible IT systems.
Coming together
Cloud-based computing, or South African-style software as a service, can help satisfy the requirements of both the CEO and CIO, in effect bridging this divide once and for all.
Traditionally, large corporations such as banks and insurers have sought innovation by acquiring disparate technology systems; but all too soon their competitors achieve parity (think ATMs, Internet and cellphone banking, and other technology-enabled innovation). Along came ERP systems, which ostensibly conferred competitive advantage through observed "best practice". But if everyone is following the same best practice, surely everyone will reach competitive parity over time?
This too has happened.
There is a way to achieve enduring competitive advantage, and it is the hybrid model of cloud-based computing that has emerged in the South African market. Best of all, it satisfies the strategic and tactical requirements of both the CEO and CIO.
It is the combination of:
* Risk-based billing;
* Software as a service; and
* Services-oriented architecture, or SOA.
Smart CIOs understand that more rapid innovation is enabled by IT.
Richard Firth is CEO and chairman of MIP Holdings.
As noted from previous Industry Insights in this series, this approach removes significant risk from the client's side. It ensures the software vendor is brought on-side from a risk perspective, and sharpens the attention significantly, as billing is deferred against delivery of value.
Only once the application has gone live does payment result, rather than software and its support components (such as database) being paid for once, up-front with no identifiable value being seen for months, or years to come. As such, it aligns payment with value delivery.
Recycle
The third component, SOA, is a compelling one. The starting point for SOA is to understand and internalise the principle of re-use. This should be a guiding principle with all business systems, as it significantly reduces risk and time to market - and it cuts costs quite dramatically.
If innovation and resulting competitive advantage is about time to market - and it is to a great extent - then it follows that the faster a company can deliver its supporting applications, the sooner it can deliver new products.
A framework ensures companies are not constantly reinventing the wheel, as each service has components that are re-usable: menu structures, printing architecture, access, security strategies and messaging standards, to name just a few.
This is the technical aspect: the business aspect is addressed by SOA, as this automates business processes in the most elegant and architecturally sound manner, again with re-use as a guiding principle.
There are no holy cows when it comes to SOA, and there can be no dogma. In SOA, a system is not driven by a narrow view of what database is in use, but rather on allowing the business to choose the best application to deliver a specific function. By way of example, no one cares what database Facebook runs on: it just works!
The best decision must be made in terms of the business's requirements: which services can be re-used, which developed from scratch, customised from existing code, or invoked from a third party system, such as general ledger or financials.
The key requirement here is that the application, or service, be SOA-enabled, which again is an architectural design consideration.
This combined approach will satisfy the requirements of both the boardroom and the server room:
* Reduce costs and ensure they remain under control;
* Remove monolithic applications and make them available as a service; and
* Bring new applications to market so quickly that they enable innovation rather than inhibit it.
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