An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.
The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The pressures would mean more business begin to seriously look at SaaS, re-negotiating license terms, focusing on rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.
The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.
Let’s for a moment assess this theme from a security perspective - a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.
Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.
Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!
Cisco founded in 1984,is a global technology powerhouse and a very admired corporation. Its seminal breakthrough of the router connecting two different computer networks laid the seed for the internet enabled networking industry.. Today, as we look ahead, Cisco is positioned to lead the evolution of the network to enable a ‘connected future’ which is increasingly "collaborative, video-driven, personalized, and mobile." With more than 7,000 patents, Cisco today is the worldwide leader in networking technologies that are changing how the world works, lives, plays and learns. The company’s commitment to innovation, customers have been key to Cisco’s success over the years—and it helps shape the future of the Internet by creating unprecedented value and opportunity for customers, employees, investors and ecosystem partners. In less than fifteen years since it was started in 1984, Cisco achieved the feat of the most valuable company ever on earth when its market cap soared to 500 +billion dollars during the dot.com boom era. Cisco is one of Fortune's most admired companies, and being a technology bellwether, has successfully managed multiple transitions in its last 25 plus years of existence. In the mid-1990s, for example, Cisco was strictly a router and switch vendor. But over time Cisco has moved from making gear for data networks to providing all kinds of equipment for voice communications and video systems, highlighted by products like Cisco TelePresence. The company has also become much more focused on software to make networks work even better for communicating, collaborating and entertaining. Perhaps more importantly, Cisco has also been able to reinvent its business operations – continuously!
Cisco is also widely credited as the tech company which has done maximum number of acquisitions in the last ten years and it scores as the leader in a number of areas and initiatives. Understanding Cisco’s mind and its style of execution is something that every investor, partner, executives across industry show interest in. Inder Sidhu, Cisco’s Senior Vice President has come out with a lovely book titled “Doing Both” describing Cisco’s strategy for success. Inder Sidhu points out that by pursuing new and existing business models alike- Cisco has positioned itself to be as nimble as it is strong and as flexible as it is precise. That, contends Sidhu helps Cisco when market transitions frequently! It should be noted that this book is not about technology. Instead, it addresses the fundamental dilemma that every business struggles with at some point - making a choice between two equally attractive strategic alternatives. Some of the nature of choices Cisco had to navigate through as brought out in the book include:
• Sustaining and Disruptive Innovation • Existing and New Business Models • Optimization and Reinvention • Satisfied Customers and Gratified Partners • Established and Emerging Countries • Doing Things Right and Doing What Matters • Superstar Performers and Winning Teams • Authoritative Leadership and Democratic Decision Making
This is highly relevant in fast changing industries like High Tech where Cisco operates. Arguably, some may say that with globalization comes heightened competition and therefore the pace of change has substantially increased for every large industry in the world. The book brings how in Cisco’s DNA the philosophy of exerting both choices is built inside and how in its various points in history, Cisco was guided by this approach leading to spectacular business success. The book brings out the various business models that Cisco planned to pursue and executed around Consumer, Video, Services & Collaboration space. As Sidhu shows how Cisco sort of walked the talk and shares details, the reading of the book becomes more interesting and as we reflect on these, realization dawns about the significance of how tough those decisions must have been to even conceive and still more difficult to execute!
The eight principal dilemmas that the book showcases from the prism of Cisco’s decision making and execution of those make a fantastic reading. Among those covered are classic dilemmas like investing in incremental innovation vs breakthrough innovation simultaneously. Some might think that larger organizations are bestowed with the ability to take right decisions and make those decisions work out successfully. In reality, such a proposition is far from being true - swift decision making and flawless execution are not easily achievable inside large enterprises. Just imagine how may stakeholders need to align to create something new or modify something that exists – enormous pressures from different directions would make it hard for such shared objectives and well aligned execution to happen easily.
The strategic insights that the book provides are quite interesting- such as how Cisco manages the partner channel – how they changed the channel strategy, the globalization initiative of Cisco, deputing talents to potential spin-in’s, the fabled Cisco operational committee’s – Discussions centered around these areas provide a very powerful insight into the decision making rythms of the ever successful industry leader.
If we sort of step back from a very absorbing reading pleasure the book extends – (I finished reading the book in less than 24 hours after I got the book – this while attending to other things), I am drawn to the classical innovator’s dilemma paradigm of Clayton Christensen- he has written extensively on what characterizes a sound management framework. In a nutshell he outlines the framework in terms of ability to have a good set of state mechanisms that executives would go through on varying circumstances and then by extension the mechanisms to make right decisions towards an efficient and successful navigation. Seasoned executives are sort of trained to parse through this framework many times to know what could be the most appropriate path to take in a given context. The grind of analysis of known contexts and the audacity to traverse new paths when faced with a new type of context makes radical winners (like Cisco) more special and those are the type of insights that this book brings out.
Inder Sidhu brings out the key tenets of of Cisco's strategy, very well with his theme based discussions . Cisco is an outstanding exemplar of a firm that has been able to combine profits and productivity - today's success - and expansion and adaptation in an uncertain environment leading to tomorrow's growth. This is the core theme of the book: the seamless fusion inside Cisco of highly optimized operations co-existing with truly flexible, innovative and adaptive continuous expansion. This is a tall order – very very few high tech companies have been so consistently successful as Cisco is in pursuing this strategy – in fact examples of companies that could not manage ever evolving transitions abound in the high tech space. Making spin-in acquisitions for talent, new ideas, new lines of business have proven to be a tough task to execute by many business
As a company besotted with growth, Cisco keeps trying multiple options and in the process tries many novel things to keep growing and maintaining the margins. The principles and the thought process behind the acquisitions like Linksys, Scientific Atlanta, Webex make great reading- I particularly liked the discussion about what new things Cisco got out of these acquisitions in terms of learning and practice knowledge besides their products and services – this is very very important to know that such a culture of reverse assimilation is institutionalized inside Cisco. The rest of the book is skillfully presented and interesting. It captures Cisco's multifaceted strategy well and is full of insights into global strategy and execution – It covers significant areas like how Cisco re-jigged its supply chain soon after it had to write off 2 billion dollars in the dot com bust attributed to supply chain build up, Cisco’s globalization efforts including how it scaled up India as the alternate global headquarters outside of San Jose . For example in the case of supply chain, Cisco implemented a rationalization plan that brought 1300 component suppliers down to less than 300 in four years and it reduced the number of contract manufacturers that it worked with from 20 to 4 in the same timeframe. The book shows that today Cisco is able to handle two times the volume that it had during dot com days and more importantly could get this done with half the people! Successful companies need to take tough decisions and execute on those decisions very well and the book shows Cisco is no exception on this. Another important reading in the book is around Cisco’s structure to bring executive teams together to drive new initiatives together and charter areas of growth around new ideas. Inside Cisco, powers have been shifted from traditional business owners –like head of sales, marketing, engineering into councils and boards, populated with executives across the company. These councils and boards complement the traditional hierarchy, providing scale and replicability of a centralized company and the speed and flexibility of a decentralized one. Cisco’s IT absorption in the last ten years is well chronicled and the insights into how it is now trying to push the collaboration framework inside shows the unending zeal with which Cisco keeps pushing new frontiers. A very lucid description of Cisco’s decision making mechanism is covered inside the book. Takeaway : A highly collaborative system can also move fast if properly driven and can yield significant returns.
The book , I think by design avoids picking on how Cisco outbid the competition in a myriad number of areas it competes - understandable as this book is meant to chronicle Cisco’s internal process , systems and decision making mechanism. Some very powerful examples of failed business models pursued by Escada, Harley Davidson amongst others and how Cisco avoided getting trapped like them makes this book a comprehensive read.
I recommend this book as a refreshing and lively read. This is a classic book – one that chronicles the global strategy and high class execution prowess of Cisco , a top technology player in the world! Very rarely, we will see such a well chronicled book on a successful mega corporation come out from executives inside the organization - Sidhu is an exemplary writer – he brings the situation that he writes about right in front of the eyes of the reader and the discussions are centered around very important aspects of running global business. Highly recommended reading for business leaders and practitioners around the world.
Vivek Wadhwa writes,"Patents make a lot of sense in many industries; they are needed to protect the designs of important components or design of physical products. But in software these are just nuclear weapons in an arms race. They don’t foster innovation, they inhibit it. He adds, That’s because things change rapidly in this industry. Speed and technological obsolescence are the only protections that matter. Fledgling startups have to worry more about some big player or patent troll bankrupting them than they do about someone stealing their ideas". A recent Berkley patent survey shows,venture backed business file for more patents as against startups across industries including software. Brad Feld points out to the absurdity behind the idea of patents. Bob Warfield with multiple startup credits and himself a patent holder points out how difficult it is to fight suits against patent trolls. He points to several absurd situations that we all come across in the name of patents while defending genuine progress.
Earlier we covered why patent systems need to be disciplined and went to the extent of saying that its time to abolish patents for atleast software industry. On the other hand some people think that we have reached the dark age of innovation – Physicist Heubner says that rather than growing exponentially, or even keeping pace with population growth, major innovations & scientific advances peaked in 1873 and have been declining ever since. While examining number of patents granted in the US from 1790 to the present. when he plotted the number of US patents granted per decade divided by the country's population, he found the graph peaked in 1915. The global rate of innovation today, which is running at seven "important technological developments" per billion people per year, matches the rate in 1600. Despite far higher standards of education and massive R&D funding "it is more difficult now for people to develop new technology”.
Patents impede innovation and not encourage innovation. Innovation may be the core to success and it is not be mistaken against patents or R&D budgets. As Michael Scrage wrote brilliantly, the simple fact is that R&D spending is an input, not a measure of efficiency, effectiveness or productivity. Ingenuity, invention and innovation are rarely functions of budgetary investment & pointed to the fact that Wal-Mart, Texco and Dell have miniscule R&D budgets, their quality, procurement and growth requirements have probably done more to drive productive innovation investment than any competing initiatives. Growing market competition, not growing R&D spending, is what drives innovation. A successful innovation policy is a competition policy where companies see innovation as a cost-effective investment to differentiate themselves profitably. John Hagel adds that it is a fallacy in equating patents with innovation. Normally the focus is on product innovation, ignoring process and business model innovation. Process innovation is far more powerful than product innovation – it has a multiplier effect that product innovation can rarely match & notes that the only effective measure of innovation activity is the rate of productivity improvement in an enterprise – the growth in value added generated per employee. Static productivity measures can be misleading & what may really count is the ability to sustain and amplify productivity improvements through innovative products, process improvements or new business models. Lets all shout for more innovation and whatever comes in the way that may include patents – lets get rid of them!
Just finished some random reading. Started with Jeane Bliss on customer loyalty and Zappos is profiled therein in detail. Zappos decision making paradigm seems to be centered around making far reaching changes happen as part of their DNA. As Tony Hseih says in his afterword of Jeane Bliss book on customer loyalty –“Decision making not purposefully directed can lead your company down a path and to an unintended conclusion. Products, Services, Companies can be taken down the wrong direction whereas well thought out , purposeful decision making centered around customer needs can make a huge difference to business growth !
The more and more I think of it , decision making gets more impactful when it meets the trajectory of change. Look at Seth Godin’s post on the calculus of change. Seth outlines how how a change in operating systems (from DOS to Windows) made people look at different things – in this case, people began to rethink about choice in word processors. The leader at that time was Word Perfect but when Windows began to take centerstage, World also grew along with it -all this while Word Perfect was not ready on the Windows platform. The closest analogy is in Smartphones and where Android is set to get to the top of the heap, many business are having just an iPhone app and not investing in getting an Android App out fast. The point of maximum disruptive timing is the point where people have to make something new or different to happen, got to make a change and can't be avoided.
Extend this logic. When is the last time when the sales , marketing & customer service function of our business got a refresh – no am not taking about just changing people but the process, measures, response etc. Extend this a litte further – when did the core technologies that run our business enterprise get a meaningful refresh – Am talking about Enterprise Software here. Today emerging technologies revolve around Java, MySQL, Open Source, Cloud Computing, and Web 2.0 Social Media. Clearly, these did not exist in full form when the current enterprise software leaders began to dominate the space. Each one of these forces are powerful forces of disruption .
As the beneficiaries and victims of the technology gap phenomenon can testify. For people in both the camps, everything in their digital lives have changed so much. Today, more than 4 billion people around the world now use cell phones, and for 450 million of those people the Web is a fully mobile experience.Alas the big fat guys of the technology world are so slow to embrace and make them as part of their core offerings. We all know the lessons of history.
Look at what change can do to the employed. The evolution of the role of the employed is indeed remarkable. Thomas Malone believes that we're headed for equilibrium in the global wage market.It may take a decade or two, but at some point, people capable of doing work will get paid roughly the same amount wherever they are. It will happen a lot faster than people think," Malone said. He earlier wrote,"Four decentralized organizational structures—loose hierarchies, democracies, external markets, and internal markets—that will be enabled by technology but centered around enduring human values shall be the dominant model. The shift from "command-and-control" management to "coordinate-and-cultivate," and the new skills that will be required to succeed would become critical to succeed. A framework for determining if a company’s situation is ripe for decentralizing and which organizational structure would be most effective would evolve".
Mckinsey identifies ten important tech-enabled business trends to watch out- Its an important read. For the first six trends, which can be applied across an enterprise, it will be important to assign the responsibility for identifying the specific implications of each issue to functional groups and business units. The impact of these six trends—distributed cocreation, networks as organizations, deeper collaboration, the Internet of Things, experimentation with big data, and wiring for a sustainable world—often will vary considerably in different parts of the organization and should be managed accordingly. Three of the trends—anything-as-a-service, multisided business models, and innovation from the bottom of the pyramid—augur far-reaching changes in the business environment that could require radical shifts in strategy. CEOs and their immediate senior teams need to grapple with these issues; otherwise it will be too difficult to generate the interdisciplinary, enterprise-wide insights needed to exploit these trends fully.
Mckinsey rightly observes, the pace of technology and business change will only accelerate, and the impact of the trends above will broaden and deepen. For some organizations, they will unlock significant competitive advantages; for others, dealing with the disruption they bring will be a major challenge. It’s clear that organizations should incorporate an understanding of the trends into their strategic thinking to help identify new market opportunities, invent new ways of doing business, and compete with an ever-growing number of innovative rivals. Embracing change in every major twist and turn is an absolute must and decision making process that can force technology companies to respond in a timely and efficient manner would bring huge rewards to the stakeholders of the business. To keep trying to change regularly needs to be in the decision framework and DNA of sustainable growth focused business . Watch out for the alternative : Standing still is the kiss of the death and those standing with deep roots would not see such waves of change but when they get affected, it would be a massive hit for them.