Government // Cloud computing
Commentary
12/4/2013
10:50 AM
Peter Gallagher
Peter Gallagher
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The Hybrid Enterprise Demands An IT Shift

As disruptive technologies change our enterprises, we must also rethink our approach to IT investments.

During the early days of the Internet boom, an investor friend posited that while the Web might make a car manufacturer's business marginally more efficient, it was still just about the car. In that regard, he asserted that the Internet was just a new phone, and that the carmaker's core business was not going to change. It seemed reasonable at the time.

Today we have all kinds of examples that demonstrate my friend was wrong. Disruptive technologies are upsetting the applecart all the time in ways we cannot predict. Today, every business is a digital business. If your organization cannot adapt, it can perish very quickly.

As technology has advanced, the enterprise itself has changed. Let’s call it Enterprise with a big E.

The new Enterprise now depends on all types of integrated partners, from suppliers, to intermediaries, to colleagues, to customers, to citizens, directly and indirectly participating in combining data that turns into some kind of information or activity. This integration now happens within systems that are increasingly made up of composite services inside and outside the old business IT boundary and that are increasingly shared across agencies.

Digital strategies depend on social networks enabling collaboration in ways we could not have imagined. With untold variations of public and private clouds, mobile access, the Internet of things, and big data analytics, the agency of old is now truly something more diverse and more complex: a continuously evolving multi-dimensional hybrid Enterprise that is organic and alive.

Just as my friend could not see the changes coming with the Internet, neither can anyone accurately predict where the new hybrid Enterprise will take us in the years to come. What opportunities and threats will arise from this continuous integration?

Insightful government agencies will embrace a strategy to enable the new hybrid Enterprise, not by predicting the future or fixating on the cloud as the solution, but by making sure the pragmatic day-to-day IT investments are tuned to provide flexibility and to reduce complexity for the business. Success is now dependent on a more holistic management approach to infrastructure, applications and end user/customer/partner enablement. The world of hybrid Enterprise still places a premium on compliance and security, an imperative that has only become more urgent.

[What can agencies learn from IT investments that fail? Read: Lessons For HealthCare.gov: Recovering When Your IT Project Crashes.]

Federal agencies such as the General Services Administration, the IRS, and the Department of the Interior are making dramatic changes to mission-critical IT services in order to enable their vision of hybrid Enterprise. GSA's decision to move to cloud email and collaboration more than two years ago now seems so logical. Costs were reduced, and collaboration was greatly enhanced. But prior to that proof point, security concerns had pretty much closed the door on software-as-a-service.

The IRS's recent move to private cloud storage has not gotten as much attention, but it is a radical departure in the business model. Think of the nation's tax records stored in contractor-owned infrastructure located in IRS data centers, but with per-gigabyte, consumption-based pricing.

The recent move by the Department of the Interior to move its agency ERP system into a private cloud environment is equally groundbreaking. Talk about mission-critical! These agencies are taking advantage of real cloud trends to become more agile, focused, and efficient.

We can't know what your hybrid Enterprise will look like in the years to come but we do know it will keep evolving. We need to think differently about how our IT investments can best help achieve our missions. One of my personal heroes, Albert Einstein, wrote about how the process of our thinking can change the future of our world, cause or prevent wars, and create new models of cooperation.

Our challenge in IT, while less dramatic, may be no less important in defining our future. Innovative IT is promoting the integration and co-opetition that are expanding the scope of the Enterprise. Einstein declared that the world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.

Here’s to the future!

Peter Gallagher is Group Vice President and Managing Partner for Horizontal Solutions across the federal government for Unisys. He has more than 20 years’ experience in IT services in the federal sector, specializing in IT re-use strategies, applications, security, end-user support, and datacenter transformation.

Moving email to the cloud has lowered IT costs and improved efficiency. Find out what federal agencies can learn from early adopters in "The Great Email Migration" report. (Free registration required.)

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RobPreston
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RobPreston,
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12/4/2013 | 1:24:59 PM
Carmaker's Core Business
Reliability, design, and horsepower (and price) still matter most to car buyers. I'm not sure that will change. But the IT-enabled entertainment, mapping, safety, and other "extras" will matter more and more. Car makers are now also software developers and integrators.
TerryB
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TerryB,
User Rank: Ninja
12/4/2013 | 1:25:13 PM
Not everyone is a digital business
We are still a long way from that ever being true in certain segments. At least the way you mean it with social media, mobile phone apps, sensors linked to Internet, etc.

We are Mfgr which makes brass wire we sell to other manufacturers who make the final product for consumers. We use ERP systems, can deliver data to customers electronically and other computer related old school stuff. But are we going to need heavy analytics processing, iPad apps or mining for comments on Twitter anytime soon? Ever? Heck no.

Your position makes much more sense for businesses that sell directly to consumers. But there is still a lot of us that don't and we aren't going anywhere. At least not because we don't data-mine social media feeds anyway.
PeterG
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PeterG,
User Rank: Author
12/4/2013 | 1:35:58 PM
Re: Carmaker's Core Business
Hi Rob, Agreed - IT integration in vehicles is becoming perhaps the key issue in some ways. But the use cases I was thinking about (ran out of space) addressed business models. Think of how Tesla is selling direct vs the control dealerships exert (where allowed by law) - much of it enabled by better access to information and on-line marketing. Also thinking about ZipCar where 'ownership' is redefined in ways we did not imagine. I would argue the auto industry business model is being re-defined in significant ways by IT but agree with you that the auto itself has not (although that may change with automated driving down the road).
PeterG
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PeterG,
User Rank: Author
12/4/2013 | 2:05:21 PM
Re: Not everyone is a digital business
Hi Terry, Granted IT is not transforming the core of many (most?) business, espeically those that do not interact directly with consumers. Yes, if you are a B2B wire manufacturer that is still your core regardless of how your supporting business processes (e.g. ERP, just in time, etc.) are changed by new IT capabilities. And I agree that Twitter is not going to do much for your B2B sales either. But in many cases the core business get's upset by the way in which IT changes the business model - classics include booksellers/Amazon. The core business with books being written and printed may not have changed but the sales channel is so radically different it changed the business and disintermediated specialized book retailers. I certainly know nothing about the wire business but there may be some model lurking out there that changes the buyer/seller relationships in a fundamental way using IT to facilitate.
Susan Fogarty
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Susan Fogarty,
User Rank: Author
12/4/2013 | 5:48:35 PM
Re: Not everyone is a digital business
I also think every business is a digital business, or if it's not it should be. That doesn't mean the business is totally digital, but it takes advantage of the internet and computing processes where they make sense. You may just manufacture wire, but why wouldn't you want to be accessible to new customers via the Internet? And why wouldn't you want to optimize your business processes to use automation and be more efficient where you can?
PeterG
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PeterG,
User Rank: Author
12/5/2013 | 10:41:53 AM
Re: Not everyone is a digital business
Good discussion. I try (not easy) to separate the business process opportunities/issues (e.g. ERP, internet enabled, mobile, etc.) from the business model itself. A manufacturer can become more effective/effecient using IT without any changes to the business model - and that is always a good thing. But when someone figures out a way to consolidate specialized B2B markets like wire or adhesives (a company called VerticalNet tried this during dot-boom and failed unfortunatley although it may now be happenning piecemeal) that could be a game changer. Two different issues/problems.
WKash
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WKash,
User Rank: Author
12/5/2013 | 11:16:48 PM
Cars & Code
Another way at looking at how the car business has changed: Today's high end automobilies now rely on nearly 100 million lines of software code to run each car's climate control, transmission and other electronically-controlled systems. To put that in perspective, we were able to put a man on the moon using just 24,000 lines of code.

 
Susan Fogarty
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Susan Fogarty,
User Rank: Author
12/6/2013 | 12:25:29 PM
Re: Not everyone is a digital business
PeterG, I remember VerticalNet! I guess we are talking about online versus offline business processes. But I think a lot of that is merging as more internal company processes become networked to branches, partners and suppliers. There is certainly a lot of potential to consider.
Stratustician
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Stratustician,
User Rank: Ninja
12/8/2013 | 6:25:15 PM
Cloud as an enabler
The real benefit of cloud for these Enterprises will be that they can use it to fill the holes that come from operational or resource deficiencies.  Have issues with maintaining IT assets? Great, outsource it to a cloud provider.  Security problems?  Instead of hiring tons of IT staff, why not look at augmenting your current teams with additional services.  But most importantly, look at how your organization is using its resources, if there are more efficient ways to do things, then by all means, start the discussion.  Cloud is meant to augment, not necessarily replace.  The key to remember is that at the end of the day, if your are spending resources on services and processes that do not support your customers or your core business, maybe it's worth looking at how to leverage third party providers to get you back to the real purpose of your business, to drive value for your customers.
PeterG
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PeterG,
User Rank: Author
12/9/2013 | 1:38:58 PM
Re: Cloud as an enabler
Yah I agree 100%. Especially like fundamental advice to focus on customers and outsource where you can - now 'cloud' has more options <<maybe it's worth looking at how to leverage third party providers to get you back to the real purpose of your business, to drive value for your customers.>>
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