Sdi, 2014.04 final

OOff IITT
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consulting
Jožek Gruškovnjak
Principal and Managing Director

Disclaimer: "Prediction is very difficult, especially
about the future." Niels Bohr, Nobel Laureate
Photo: http://www.discoverynews.org
"There is no reason anyone would want a
computer in their home.”
Ken Olson, founder of Digital Equipment Corporation
"This 'telephone'... is inherently of no
value to us.”
Western Union memo, 1876
"We don't like their sound, and guitar
music is on the way out."
Decca Records about The Beatles, 1962
"The world potential market for copying
machines is 5,000, at most,"
IBM to Xerox, 1959
"[Apple's iPhone] is the most expensive
phone in the world and it doesn't appeal
to business customers because it doesn't
have a keyboard which makes it not a
very good e-mail machine…”
Steve Ballmer, Microsoft’s CEO, 2007
© Inluceo Consulting, Ltd., 2014 2

Themes for Discussion
Does
technology
matter?
Human
evolution and
technology
Key trends
shaping the
future
Call to actionThe role of
IT
Aligning business
and IT
Thriving in the new
world
The ten
technologies
changing the
Internet and the
world

Does
technology
matter?
Human
evolution and
technology
Key trends
shaping the
future
IT
Aligning
business and IT
Thriving in the new
world
The
technologies
changing the
Internet and the
world

Is Technology Important? Why?
Technology is important because
it empowers people. That's
where you start…
Dave Winer

Seriously disruptive technology
innovations
…from centralized to
decentralized knowledge
The Internet
…from information age to
age of network intelligence /
age of collaboration
...that fundamentally changed society

Does
technology
matter?
Human
evolution and
technology
Key trends
shaping the
future
IT
Aligning
business and IT
Thriving in the new
world
The
technologies
changing the
Internet and the
world

There are many prophets…

Exponential Growth Continues
0
500
1000
1500
2000
2500
3000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
IInntteerrnneettuusseerrss((mmiilllliioonnss))
IInntteerrnneett UUsseerrss
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
PPeerrffoorrmmaannccee((MMIIPPSS))
The Power of Consumer Computing Networking speeds
1962
AT&T’s
Bell 103
modem
300 bps
1980
Ethernet
Protocol
Standardized
Fast
Ethernet
100 Mbps
9,600
bps
28,800
bps
56,600
bps
Ethernet
10 Base T
10 Mbps
Gigabit
Ethernet
1 Gbps
10 Gigabit
Ethernet
10 Gbps
100
Gigabit
Ethernet
100 Gbps
Speed/Bandwidth
1990
1995
1989
1998
2003
2010
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
EExxaabbyytteess
DDiiggiittaall UUnniivveerrssee
2011 Prediction
2014 Prediction

1. A Global Village—
Connecting the Unconnected
-
20
40
60
80
100
120
SSuubbssccrriibbeerrssppeerr110000IInnhhaabbiittaannttss
Wireless
Fixed
Source: The Global Information Technology Report 2012, WEF & INSEAD
Slovenia

2. The World Has Gone Mobile
-
25
50
75
100
125
-
2,500
5,000
7,500
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12*
'13*
PPeerr110000IInnhhaabbiittaannttss
MMoobbiillee--CCeelllluullaarrSSuubbssccrriippttiioonnss((MMiilllliioonnss))
GGlloobbaall MMoobbiillee SSuubbssccrriibbeerrss
((22000011--22001111))
Subscriptions
Per 100
Inhanbitants
Source: ITU World Telecommunication/ICT Indicators database
-
500
1,000
1,500
2,000
2,500
'05 '06 '07 '08 '09 '10 '11 '12* '13*
MMoobbiillee--CCeelllluullaarrSSuubbssccrriippttiioonnss((MMiilllliioonnss))
BBrrooaaddbbaanndd SSuubbssccrriibbeerrss
FFiixxeedd vvss.. MMoobbiillee
((22000055--22001111))
Fixed BB
Mobile BB
* estimates

6666%% CCAAGGRR
22001122––22001177
Converging forces:
§  3rd Generation Applications—
video, social networks, music,
books, etc.
§  Devices—
bigger, powerful
§  Rise of Wi-Fi—
availability, ease of use
§  Nomadic Use—
versus mobile
2. The World Has Gone Mobile
00
22
44
66
88
1100
1122
22001122 22001133 22001144 22001155 22001166 22001177
EExxaabbyytteessppeerrMMoonntthh
MMoobbiillee TTrraaffffiicc FFoorreeccaasstt
bbyy AApppplliiccaattiioonn
MMoobbiillee FFiillee SShhaarriinngg ((33..55%%))
MMoobbiillee MM22MM ((55..11%%))
MMoobbiillee WWeebb//DDaattaa ((2244..99%%))
MMoobbiillee VViiddeeoo ((6666..55%%))
Source: Cisco VNI Global Mobile Data Traffic Forecast, 2012–2017

3. The Internet of things
The “traditional” Internet world
The “new” world
The Internet of Everything

3. The Internet of things
The massive growth of connected “things” is only
beginning…

Analytics and business
intelligence tools
empower decision
makers as never before
by extracting and
presenting meaningful
information in real-
time, helping us be
more predictive than
reactive.
AAnnaallyyttiiccss
Ubiquitous networks
and device
proliferation enable
access to a massive
and growing amount
of traditionally siloed
Information.
BBiigg DDaattaa
4. Internet of things, big data and analytics
Where is the value?
The Internet of Things
connects all manner of end-
points, unraveling a
treasure trove of data.
Valueforbusiness
IIooTT
Source: Frost & Sullivan

We still have a long way to go…
Source: IDC, Digital Universe 2012

4. The Internet of Things— Evolving to
The Internet of Everything
Connecting the Unconnected
Business
MobileHome
Process
Things Data
People
People to
Machine (P2M)
People to
People (P2P)
Machine to
Machine
(M2M)
Source: Cisco

The time is right
Demand = Supply
Smarter Businesses
§  Customer Experience
§  Customer Value
§  Customer Retention
§  Marketing Effectiveness
Technology Delivers
§  Storage
§  Computing power
§  Flexible databases and analysis
§  Valuable data surplus
§  Network as source and distributor of
data
Source: Cisco IBSG, 2012

5. Cloud—A New Way of Delivering
Technology
1960 1970 1980 1990 2000 2010+
Mainframe
Minicomputer
Client Server
Web
Virtualization
Clouds
Source: Cisco IBSG, Forrester
110000 BB$$ MMaarrkkeett
IInn 22001155

5. Cloud—The End of Corporate Computing?
From a Corporate Function to a Utility…
Power
Generation
Print Shops
Information
Technology
Dynamos
in Enterprise
Centralized
Utilities
Outside power to
consumers / shops
Time1870
No technical standards
No distribution network
1900 1920
Improved Quality & Uptime
Business Leader
1960 1995 20xx
Steam Engine
Household
Light
Commonwealth Edison
Thermal turbines – AC distr.
Scalable Compute – Internet
Enterprise team
running IT
Utility computing to
consumers & SMB
Enterprises link into the
cloud (public, hybrid, …)
Source: The End of Corporate Computing – MITSloan Management Review (Spring 2005, Vol.46 No. 3)

6. Everything Can Be Delivered Over-the-Top
Voice
Messaging
Video
Conferencing
Music

6. Everything Can Be Delivered Over-the-Top
… and It Has a Major Impact
Voice
§  Global market for voice traffic only grew by 4% in 20111
§  The growth if report
voice traffic
Messaging
§  Operators , of messaging
revenues to social messaging apps in 2011.1
Video
§  Netflix subscribers in the United States consumed 30 GB
per month in 2012 –
§  25% of streaming video users
Conferencing
§  , equating to 300
million minutes of Skype video per day
Music
§  Globally,
; 3.4 million consumers
subscribe to music services
Sources: TeleGeography, Ovum, OMA, Sandvin, Consumer Reports 2012, skype.com, Internet Retailer 2012

Mapping the Future—
The Digital Explosion Continues
CCoonnssuummeerrss
§  Huge demand for all things digital and
connected
§  Hunger for new and innovative apps,
devices, and solutions
§  Network- and technology-agnostic
IInndduussttrryy
§  Lower costs for technology and
connectivity
§  Increased competition and blurring of
segments
§  Seek new sources of business value
TTeecchhnnoollooggyy
§  Everything is wireless with fat pipes
§  Cloud drives openness and
interoperability
§  Everything is connected across
multiple networks
EEccoonnoommyy
§  Data-, innovation-, and connectivity-
driven
§  Creates new sources of economic
value
§  Raises citizens’ quality of life
Source: Cisco IBSG

Does
technology
matter?
Human
evolution and
technology
Key trends
shaping the
future
IT
Aligning
business and IT
Thriving in the new
world
The
technologies
changing the
Internet and the
world

What’s your IT department’s position in the
organization?

The only constant is change
New Breed of
Apps
Mobility / Video Cloud Internet of Things
Big Data &
Analytics
Growth &
Productivity
Opportunities
User Experience &
Expectations
New Business
Models
Globalization
Security &
Regulatory
Compliance
Changing Role of IT
Business Implications
Technology Transitions
Source: Cisco

So what should IT
leaders focus
on?
Photo: HBR

Core
business
priorities
Operational
excellence
Core IT
Performance
Resource
policy
Security /
resilience
Investment
Operational
planning
Innovation
Transformation
Asset value
Hardware, software,
IT organization’s
processes and skills
Value-in-use
  Business value from IT
is of an economic and/
or strategic nature has
different facets,
depending on business
priorities
  Metrics vary in
accordance with
business context
  Business units own IT
projects and value
created
Focus on value generation may be a
good idea
IT is generating value on two levels
Source: CIGREF; McKinsey analysis

Core IT performance problem: IT needs to
invest in new capabilities, but where is the
money going?
32
63 64 62
68 67 67 66 64 67 66 65
22 22 24
19 20 19 19 20 19 20 20
15 14 14 13 13 14 15 16 14 14 15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
IITT BBuuddggeett BBrreeaakkddoowwnn
Transform
Grow
Run
Source: “Gartner Perspective – IT Spending” – 2010, 2011, 2012, 2013; Gartner Group
© Inluceo Consulting, Ltd., 2014

There is a paradox – how can IT execute
and fulfill business expectations?
63 64 62
68 67 67 66 64 67 66 65
22 22 24
19 20 19 19 20 19 20 20
15 14 14 13 13 14 15 16 14 14 15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Transform
Grow
Run
Innovation and business
transformation
⅔ of the IT budget for maintenance, ⅓ available for innovation
Infrastructure operations
“Keeping the lights on”
Core question: what is your IT budget balance?

There is a paradox – how can IT execute
and fulfill business expectations?
63 64 62
68 67 67 66 64 67 66 65
22 22 24
19 20 19 19 20 19 20 20
15 14 14 13 13 14 15 16 14 14 15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Transform
Grow
Run
transformation
⅔ of the IT budget for maintenance, ⅓ available for innovation
How can the balance be changed?

Infrastructure Cost Optimization
Capacity Planning Dilemma
Infrastructure
costs
Time
CAPEX
Getting started tax
Large capital
expenditure
Wasted
money
Actual demand
Cloud computing
Lost customers
and/or lost
revenue
Source: Cisco Services, 2010

CIO of Fortune 500 Pharmaceutical Company
“I would be willing to pay
more for my IT services if
I could get an order of
magnitude faster time to
deployment for my
applications.”
Source: Cisco IBSG

… and he is not alone. Key driver of cloud
adoption is business flexibility
37
Source: “How IT is managing new demands”, McKinsey Global Survey, 2010

Cloud is no panacea for IT – business
demands are driving shadow IT
… social to connect
with customers…
… our customers use a
different collaboration
solution…
… we want to host an
application on AWS….
…Google docs and Dropbox to
share documents…
… use SalesForce.com to host
our customer application…
23%Share of IT spending devoted to
cloud today. Growing by 17% in
3 years.
(Cisco/Intel, Impact of Cloud on IT Consumption
Models Study)
$210BProjected size of cloud market in
2016
(Forester)
Source: Cisco, 2013

Shadow IT is Creating a Challenge for IT
5-10XCloud services typically purchased
without IT involvement (Cisco)
90%Percentage of IT expenditures
spent outside of IT budget by
2020 (Gartner)
50%Global 1000 companies that will
have customer data stored in the
public cloud by 2016 (Gartner)
VViissiibbiilliittyy
CCoosstt
RRiisskk
Source: Cisco, 2013

Shadow IT is Creating a Challenge for IT
5-10XCloud services typically purchased
without IT involvement (Cisco)
90%Percentage of IT expenditures
spent outside of IT budget by
2020 (Gartner)
50%Global 1000 companies that will
have customer data stored in the
public cloud by 2016 (Gartner)
VViissiibbiilliittyy
CCoosstt
RRiisskk

Environment
However, the CEO (business) and CIO (IT)
views are not necessarily the same…
Strategy People
Organization
Processes
Technology
Data
Vision
The gap needs to be
closed. But how?

42
Connection between business and IT
VViissiioonn
BBuussiinneessss iimmppeerraattiivveess
BBuussiinneessss ccaappaabbiilliittiieess
IITT CCaappaabbiilliittiieess
IITT IInnvveessttmmeennttss
SSttrraatteeggyy
Relocate IT
spending as
business
priorities evolve.
Develop the IT
strategy
roadmap
Design the
operations and
technology
architecture
Identify IT
capabilities that
support business
capabilities and
close gaps
Define business
imperatives and
capabilities.
Source: Bain & Company
Alignment“sweet-spot”

Enterprise
architecture is
focusing here
The focal point of alignment
Environment
Strategy People
Organization
Processes
Technology
Data
Vision
Business Architecture
Technology Architecture

44
§  An enterprise architecture is not optional. Every enterprise already
has one…
§  Enterprise architecture (EA
business, not technology. It is, quite simply, a way to ensure all
parts of your business plug into an overall plan or architecture.
§  EA flow is something like this – with governance throughout.
Some facts about enterprise architecture
…… aanndd ssoommee jjuusstt
hhaappppeenn
SSoommee aarree
ddeessiiggnneedd……
Infrastructure
Architecture
Information
Architecture
Application
Architecture
Business
Architecture
Business
Capabilities
Business
Strategy
Source: Cisco IBSG

45
The architecture discussion
Business
Key questions:
What business is IT enabling?
Operations
What capabilities are needed to
support that business?
Systems
What data and application services
and tools are needed?
Technology
What technology will we use to enable
the applications & tools?
Requirements
Capabilities
Source: Proact Business Transformation, Inc.

The Five Steps That Move Budgets
CCaappEExx
Bias
OOppEExx
Bias
11..  CCeennttrraalliizzee:: Bring operations under a single
authority to reduce overhead costs and create a
single decision-making authority to manage risk
22..  SSttaannddaarrddiizzee:: Reduce the variety and variability of
processes delivering similar outputs to further
reduce costs and minimize risks.
33..  MMoodduullaarriizzee:: Deconstruct the system into its
component subsystems and standardize interfaces
for future cost reductions.
44..  OOppttiimmiizzee:: Eliminate redundant steps, automate
standard sequences, streamline remaining
operations, substitute lower-cost resources, and
instrument the process for monitoring and control.
55..  BBuuyy aass aa SSeerrvviiccee:: Drive processes out of the
enterprise entirely, to further reduce overheads, &
move to SLA based services.

Focus and
Grow
Transition and
Out-Task
Discover
Disengage and
Out-Source
Intelligent Sourcing
MISSION
CRITICAL
CORE
NON-MISSION
CRITICAL
CONTEXT
OPERATEIMPLEMENTDESIGNPLAN
Involvement
IT
Other
Service Providers
Process Lifecycle
Repurpose
Resources

What needs to be done to increase IT
relevance to business?
63 64 62
68 67 67 66 64 67 66 65
22 22 24
19 20 19 19 20 19 20 20
15 14 14 13 13 14 15 16 14 14 15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Transform
Grow
Run
Use architectural approach and smart sourcing to
transform IT and rebalance the IT budget expenditures.
transformation
Allows innovation &
drives competitive advantage
Creates flexibility &
reduces costs

Does
technology
matter?
Human
evolution and
technology
Key trends
shaping the
future
IT
Aligning
business and IT
Thriving in the new
world
The
technologies
changing the
Internet and the
world

Enterprise
architecture is
focusing here
Enterprise architecture is not enough
Environment
Strategy People
Organization
Processes
Technology
Data
Vision
Business Architecture
Technology Architecture
Strategy

Alignment of IT and business strategies
is critical to (perceived) IT effectiveness
Source: “IT in the New Normal”, McKInsey & Co.,
L
✔

IT needs to assert its strategic relevance
Getting the basics right
Joint
business / IT
levers
Integrated
Governance
Alliances / new
roles for CIOs
Value of IT
for the
business
Control quality,
costs, delivery,
and availability
Take action in tight
sync with the
business units
Understand the
business priorities
value in business
terms
Proactively propose
business–IT initiative
Build alliances and
develop new skills
Integrate IT governance
into corporate
governance
Source: CIGREF; McKinsey analysis

CIO’s will play an instrumental role in the
rapidly changing environment
Five areas where the CIO is key to drive
business value
1.  Secure alignment between business
transformation and technology architectures
2.  Ensure that IT is using the most effective
combination of internal and external
resources (smart sourcing)
3.  Evolve IT team skills e.g. architecture, risk
management, business understanding
4.  Substantiate the business impact of IT
5.  Pilot new technologies

From CIO to CIO – a major transition…
InformationChief

From CIO to CIO – a major transition…
ImpactChief

Seriously disruptive technology
innovations
…from centralized to
decentralized knowledge
The Internet
…from information age to
age of network intelligence /
age of collaboration
...that fundamentally changed society

Imagine...

PROCESS
PLAN
CREATIVE
COMMUNICATE
MOTIVATE
INNOVATE
CREATE
STRATEGY
GO
WORK
BRAIN
MEDIA
BOX
OUT OF THE
WRITE
RESEARCH
SKETCH
MEETING
SUCCESS
!
!
OK
THINK
IDEA
SELL
POSITIVE
BRAINSTORM
POWER
TEAM
GOAL
MARKET
MOTIVATE
TARGET
GROUP
TALK
WORDS
iinnlluucceeoo

consulting
THANK YOU!
For more information please
contact us on info@inluceo.eu

Sdi, 2014.04 final

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