Software // Enterprise Applications
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2/13/2013
01:31 PM
Chris Murphy
Chris Murphy
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P&G CIO: There's A Better Way To Create Software

Procter & Gamble CIO Filippo Passerini thinks cooperation among the likes of Disney, FedEx and Goldman Sachs could push software vendors to build more relevant analytics software --and build it faster.

Another variation of this "challenge" approach is what GE has just done by releasing two months worth of flight data as part of a challenge to come up with better flight management algorithms. But neither of these approaches seems focused enough to guarantee the results buyers want. A P&G wants to know that a vendor is working on its problem, not just throw it wide open and hope something innovative comes back. An alternative might be a hybrid of the hub-and-spoke model: The CIOs agree on a common set of needs, and then each goes off to their preferred vendors.

Speed: Industry standards groups are a dime a dozen. A number of them are competing right now to create standards for cloud computing, for example. But standards groups tend to emerge after a flurry of innovation and implementations have happened already and companies start to feel the pain of supporting heterogeneous environments. "Speed" isn't the rallying cry of standards bodies. Getting consensus quickly on business needs and doing agile iterations along the way will be tough with any cross-company effort.

Agreement: A related tension point is sure to be how industry-specific or company-specific software needs are. One startup at P&G's Goldmine event, analytics software vendor Verix, illustrates this tension. P&G is partnering with Verix to develop the Israeli company's software. Verix's early success is driven in part by its industry focus -- bringing domain expertise in life sciences and, through close work with P&G, consumer packaged goods.

During a panel discussion at the P&G event, I asked two private-equity investors how they assess analytics companies. Are they more attracted to industry specialists or broader providers? Both leaned toward focus for the startups they back.

So could companies in very different industries -- such as consumer goods, aerospace, investment banking, media, hospitality, logistics, transportation and energy -- agree on what they need in new analytics software? Passerini ultimately thinks businesses are more alike than different, so there's room to collaborate. "It's all business," he said.

Energy: Sustaining any cross-company, collaborative effort is hard, especially around technology development. Remember RFID in the supply chain? Wal-Mart in the mid-2000s tried to turbo-charge a huge, cross-industry effort to spur development and use of radio-frequency ID technology, in which tiny chips are placed on goods to make it easier to track them. That industry-wide momentum foundered, even with Wal-Mart's enormous supply chain influence.

I asked Passerini about that example, and he said one lesson is that companies pushing for better analytics all need to see a clear payoff; with RFID, the return wasn't clear to everyone throughout the supply chain.

Urgency: We're back to Passerini's impatience. Do other companies -- both buyers and builders of software -- share his sense of urgency that we need a new way to develop software? At P&G, Passerini has shaken up the IT strategy every few years for a decade -- outsourcing much of the daily operations to Hewlett-Packard, then creating a service approach where business units can take or leave what IT offers, then pushing to give 60,000 employees analytical tools on their desktop.

"We use change as a strategy," Passerini said. "We obsolete our current model. We think it's important to do that when we're in a position of strength." Translation: Passerini thinks today's software development business model is working, but we should change it now before there's a crisis. Often it takes a crisis to drive change.

So that leaves the door open to you to articulate what's needed. Share your comments below. Is there a need for a better way to build software? What will work and what definitely won't?

Can data analysis keep students on track and improve college retention rates? Also in the premiere all-digital Analytics' Big Test issue of InformationWeek Education: Higher education is just as prone to tech-based disruption as other industries. (Free with registration.)

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ChrisMurphy
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ChrisMurphy,
User Rank: Author
2/25/2013 | 4:01:40 PM
re: P&G CIO: There's A Better Way To Create Software
I received this comment via email, posting below with permission:

According to Eric von Hippel's "Democratizing Innovation" (MIT Press, 2006, open source), user-centered innovation provides the most rapid type of innovation: product breakthroughs as opposed to product evolution from the vendor. This argues for a new software product architecture. We (I'm a software designer) typically build closed systems, software with focused feature sets and limited configurability. To foster innovation, we should really build toolkits, not single-purpose end products. Software buyers would then enhance and tune the toolkit for their particular needs.

The IT people who are being consolidated out of a job would have something new to do.

Bayard Kohlhepp
Nexus Technologies Inc.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
2/18/2013 | 7:15:22 PM
re: P&G CIO: There's A Better Way To Create Software
It's definitely a big point of tension. But look at what Lee Patty is saying above -- develop for one market and then pivot. An investor might want to fund for an initial market, but an investor also wants growth, and that quickly turns to the potential in adjacent markets. And if a startup embraces lean startup ideas, maybe it doesn't even need that much funding for the initial vertical market -- they don't even bring in traditional investors until an expansion into adjacent industry markets.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
2/18/2013 | 7:10:01 PM
re: P&G CIO: There's A Better Way To Create Software
Lee, very practical insights from someone who's out there innovating on new software for digital business. Lean principles and lean startup tactics need to be part of the answer to move faster, glad you brought that into the discussion.
Elang
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Elang,
User Rank: Apprentice
2/18/2013 | 1:12:28 PM
re: P&G CIO: There's A Better Way To Create Software
The dichotomy between Investors looking to invest in Software companies with a specific industry focus vs clients across industries looking to come together to figure out a common minimum requierment.. tough to break this impasse..
Lee Patty
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Lee Patty,
User Rank: Apprentice
2/16/2013 | 4:36:28 AM
re: P&G CIO: There's A Better Way To Create Software
Interesting for startup companies that are trying to validate product-market fit to have a customer fund or support their development. This is definitely a lean principle in that you're developing to a customer need and with possible customer funding. The risk for the startup is that you're technology becomes so specific to one customer's needs that you will need to pivot dramatically to find more of a mass appeal for the product. Not a bad problem to have though.
cbabcock
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cbabcock,
User Rank: Strategist
2/15/2013 | 1:01:35 AM
re: P&G CIO: There's A Better Way To Create Software
Software development is slowly but surely moving to the DevOps model, but the development environment and deployment environment need to be identical, or nearly identical. To me, that means future software development is going to take place on a developers' platform as a service where the output deploys smoothly to infrastructure as a service. There are many prototypes of this mdoel, including what Microsoft has done with Azure and VMware with Cloud Foundry. Still hard at this stage for enterprise to just throw a switch and adopt it.Charlie Babcock, InformationWeek
Mark Montgomery
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Mark Montgomery,
User Rank: Strategist
2/14/2013 | 8:22:23 PM
re: P&G CIO: There's A Better Way To Create Software
This is the comment I posted under link I found article from Heather Munroe-Vallis at LinkedIn--may be of interest.

"Very strong CIO with one of the better models we've observed, and have known several strong managers coming out of the P&G culture, but most of the market leaders are also among the most difficult to deal with for emerging companies that have the kind of solutions they are seeking --layers deep, many conflicts, too busy. It would be wise for any such org to test shop how their own orgs are dealing with incoming external innovation they themselves suggest they badly need. Some may be shocked with the results. .02 - MM"

I would add that the open innovation movement has been insulting to the stronger inventors and innovators. Turn the table around and ask which of these companies are willing to open up their inventions and innovations and distribution channels to competitors for free, after investing decades of time and money into solutions. I've dealt with most- the answer is none. So don't ask it of us unless you want the world's intellectual capital swinging against you.

In my own experience in attempting to deal with P&G, what I found from his own people was cognitive bias, a fair amount of hubris--not invented here syndrome was apparent, and completely mislabeled and misunderstood the system. It's not that the intellect didn't exist, it's that they were too busy with the wrong priorities for anything that important to them. The real question is would these companies see the solution they seek if it was delivered on a golden platter? The answer in other companies, including top tier VCs, media, and leading universities and most others has been no-- almost never. The public would be amazed at how much energy and education it takes to convince most cultures of what has already become obvious to those deep in the trenches. This is no doubt true in their business as well.

It's not a trivial issue -- many cultures with multi-billion$ USD IT budgets are considered not to be viable markets for the most innovative. This situation quite often results in a competitive advantage in others that turns markets over time. It's obvious to me at least that P&G understands this better than most--as does their CIO, but they obviously still struggle with it greatly. Large budgets does not necessarily a viable partner make, particularly if and when IP & IC are at risk.
Laurianne
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Laurianne,
User Rank: Author
2/14/2013 | 6:37:38 PM
re: P&G CIO: There's A Better Way To Create Software
What about the Salesforce.com Force.com model? What lessons can be applied here? That example certainly speaks to the "speed" challenge.

Laurianne McLaughlin
InformationWeek.com
Deirdre Blake
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Deirdre Blake,
User Rank: Apprentice
2/14/2013 | 4:20:00 PM
re: P&G CIO: There's A Better Way To Create Software
The development effort proposals Passerini is making are nothing new within the coding community, but the fact that large, non-tech-based businesses are interested in exploring and adopting such practices is definitely interesting. A good reference for more info on "non-traditional" software development processes is "Eight Papers for Project Managers"
http://is.gd/EKOGHT
John Foley
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John Foley,
User Rank: Apprentice
2/14/2013 | 3:14:56 PM
re: P&G CIO: There's A Better Way To Create Software
So you're throwing the ball in our court, Chris? I love that Filippo is challenging his peers and the tech community in this way. I'm thinking that some combination of platform-as-a-service (new model) and open source (long-established model) could be used to bring collaboration and speed to enterprise software development. That would leave room for established vendors and startups to be involved, as well as companies with industry-specific requirements to branch off in their own direction.
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