Heed the Role of Dev/Ops - Another Proxy for Industry Revolution

My postings are centered on the shifting sands of the outsourcing and shared services industries.  So, why is the title of this one promoting a little-known role in the bathwater of corporate organizations?

It’s a matter of symptom and significance.

Two weeks ago I wrote about The Outsourcing Industry’s Need for Renewed Relevance.  Last week the topic that motivated me was Overcoming Inertia.

I try, to the best of my ability, to share observations that are grounded in reality.  Not wishes and hopes, but facts of substance and significance.

There’s a thesis at the center of my “world view” that says companies are moving to “spot buying” of services, and unifying these service providers through platforms that provide the framework for scalable business.  I’ve seen a few progressive companies run ahead of the pack with this strategy, and more than a few innovators bring essential components of this strategy to the market.

Amazon Web Services Elastic Beanstalk is a utility perfectly suited to enabling applications being provisioned “as a service” at the whim of a savvy enterprise architect.

Companies like Gravitant are positioned to enable the brokerage of the provisioning process.

I spent time last week with a progressive CIO of a major US energy utility.  His top three issues:

1)     Engineering a services integration framework to allow for modular provisioning of business services;

2)     Enabling acquisitions and divestitures much more efficiently, predictably, and cost-effectively; and

3)     Helping to devise new sources of revenue through monetizing the “big data” that is the exhaust from his core business.

I shared with him my observation of ROIC as a key proxy for efficiency and a lever for driving the restructure of legacy business models – beyond the back-office.  He was intrigued and readily agreed that executives remain focused on ROIC as a measure of strategic performance.  He also validated that the cost-cutting which occurred during the recession has emasculated any capacity for innovation or even organic growth.

As the tides turn, companies will need to support growth by finding new ways to provision the basic operating capacity that sustains day-to-day business.

Hence, the emergence of the Dev/Ops role in the enterprise.  I view this to be just as significant an indicator of the shifting sands in our industry.

If you haven’t yet encountered a Dev/Ops persona, you may be bewildered.  A great description of the role is found here.

Companies that are committed to breaking through the status quo, determined to behave with a sense of energy and urgency, and embracing the “as a service” mantra … those are the companies that are empowering the Dev/Ops community.

Agility, speed to capability, surviving chaos … those are the attributes of a business model attuned to operating in the “as a service” economy.  Does your outsourcing or shared services operation feel like a Dev/Ops environment?  Heed the role of the connector-of-dots.

Peter

Overcoming Inertia / ROIC As a Proxy for Innovation in Business Models

It’s the greatest power in the universe.  Inertia.  Resistance to change.

Applied in the context of today’s business world, it can seal the fate of any company.

Look at the life of Blockbuster – a market leader in retail rental of movies.  Tell me that the executives couldn’t see the threat from nimble competitors on their horizon.  Surely they could.  Yet, the change in Blockbuster’s business model was too little, too late.

There exists an abundance of pundits who can write more eloquently than me about how difficult change is to deploy, and how important it is to survive.  My point-of-view is informed by working with those who are either so desperate, or so ambitious, to do something to control their own destiny.

Change in business models – the very nature of what a company sells, to whom, and with what form of delivery – is at the heart of the revolution in the outsourcing and shared services industry.  My post of last week outlined the need for renewed relevance among both outsourcing service providers, and enterprise shared services practitioners.

The conception and deployment of new business models frame the penultimate opportunity for the “as a service” ecosystem.  Let me outline how I see this playing out.

·       By driving commoditization of the lower-end of the business process stack, we release investment that was previously dedicated to inefficiently-deployed capital;

·       That investment allows for the rationalization of the applications layer to retire bespoke services and migrate to as-a-service solutions for common business services;

·       It also motivates the adoption of a common platform for services integration and services brokerage/orchestration;

·       Making the shift to a focused portfolio of applications enables streamlining of the operations staff;

·       These efficiencies, in turn, serve as the funding source for applying the same modernization techniques for business-oriented applications and operations.

The journey towards reinvention of business processes is self-funded through driving from commodity upwards to business-facing operations.  I also believe that a fair measure of a company’s execution on a strategy of business model reinvention is the trend in Return on Invested Capital.  ROIC portrays efficiency and effectiveness in achieving results from the investment in the business.  It’s a great proxy for leverage.

In my view, this roadmap for enterprise transformation relies on the collaboration of three executive roles to serve as the nucleus for change.  The CIO, the head of Shared Services, and the head of Supply Chain must come together to form the central point of enablement for transforming the business operations.  These are the roles with the resources, and functional responsibility, to materially adjust the operating cadence of the business through policy, partners, and funding.  Together, they can engage the business around a roadmap for transformation.  They are the stewards of ROIC and innovation.

Progressive outsourcing service providers and enterprise shared services organizations will see themselves in this roadmap for transformation.  Most, I fear, do not. 

Ultimately, fortune favors the bold, and control of one’s destiny demands courage to change the status quo.  Creativity in the restructure of a legacy business model (comprising the people/process/technology) demands new ways of thinking – beyond the back-office.

Peter

The Outsourcing Industry's Need for Renewed Relevance

I spent today at the Horses for Sources (@horses4sources) Blueprint 3.0 event.  Thanks to Phil Fersht (@philfersht) for the gracious invitation.  This was my return to an outsourcing-oriented industry forum and I enjoyed seeing so many old friends.

The experience motivates me to re-start my blog postings on the trends and dynamics of the outsourcing and shared services industry.  So, here we go.

My thoughts are numerous ... and pivot around a central theme of how the service providers in the global outsourcing industry seem to be stuck in an antiquated view of their relevance to their Clients.

I sat on a panel session comprising leading Advisors and my parting comment was about the fact that most larger companies (buyers of outsourcing) appear to have abandoned hope for innovation through these relationships and are moving towards a strategy of self-determination.

From my own dialogues with many Clients, I sense an accelerating strategy for platform-based services integration strategies.  These strategies allocate service responsibility to those service partners which are world-class in their particular function.

Some might call this "multi-sourcing," but I think it's an entirely new paradigm for the industry.  I am wondering how many of the "traditional" service providers have internalized this. 

Former models of staff augmentation, governance, contracting processes, benchmarking, service level management, and the like ... these are all shifting.  (Go ahead, try to apply traditional outsourcing contracting processes and terms to Amazon Web Services.)

I cited the fact that SAP, Oracle, salesforce.com, and VMware, among many others, are positioning themselves as the integrators of services.

This calls to question the strategy of the traditionalists ... are they intending to offer their own platforms as an alternative to the ERP narcotic that has cascaded across so many companies?  Or, are they advocates of PaaS integration strategies that place the burden of integration and interoperability on the backs of the Client?

For many of the well-established service providers, I think there's an awakening happening - or should be happening.  The definition of relevance is changing dramatically.  Clients aren't looking for "partnerships" as much as they are wanting best-in-class functions knitted together through nimble integration technologies.

The implications to the service provider community are extensive.  Further, the implications to Clients is even more extensive - to the CIO, Shared Services, and Supply Chain leaders. 

I have much more to say on this, and will post over time.  The pages in the outsourcing industry are turning, and the move towards Client-driven enterprise services integration (including "spot buying") are moving the cheese of many companies on the buy and sell side of the "as a service" ecosystem.

Peter

Launching

I believe that there is an increasing tendency for adoption of as-a-service operating models. These models focus on pay-for-outcomes as opposed to pay-for-effort. Organizations of all sizes and orientation are weighing the merits of buying defined services at defined prices as part of a broader strategy to reduce the deployment of capital, improve the agility of their operations, and leverage capacity that is provisioned variably in response to demand. 

Product-oriented companies that previously sold and delivered discrete components are needing to reorient their go-to-market and delivery models to respond to the buy-side interest in service-based offerings. These transformations encompass the entire spectrum of demand generation, sales, service delivery, client relationship management, and commercial contracting. Changes to financial reporting (e.g., revenue accounting, taxation, etc.) and supply chain networks are also implied.

Buy-side organizations (governments and commercial enterprises) are driving organizational and operating changes to more efficiently engage in service-based operations, whether these are internally provisioned, contracted to third-parties, or fulfilled as some form of market venture. The changes typically encompass resource realignment/restructure and shift of expense from CAPX to OPEX categories.  The design and implementation of enterprise shared services, for example, is one form of service-based operating construct. 

The transformation of business processes and operating/reporting functions to fully realize the benefits of this shift - as applied to either the provider of services or the consumer of services - requires considerable expertise across the spectrum of organizational change management; commercial contracting; monitoring, reporting and risk management; financial modeling; and asset management. New internal expertise is needed to fully realize the benefits of a buy-vs-build approach to business. Enabling trends that are accelerating the shift to service-based operations include Social Networks, Mobility, Big Data Analytics, and Cloud Services.  Open Source has its role as well. 

I will be leading a global practice committed to enabling successful adoption of "as-a-service" ecosystems. This means that we guide both those who want to buy service-based offerings and transition away from legacy resource-based models to make the shift. We also assist those organizations who seek to take service-based propositions to market to implement the commercial and operating structures to do so. This latter group includes both traditional product companies and newer-age participants in the "as a service" economy. 

I will be an advocate for the transformation towards SMAC-enabled "as a service" ecosystems. 

I decided that the best way for me to participate in this trend is from the vantage of architect, advisor, and implementation leader. I am building a team of like-minded consultants who will work through the methods of transition from resource-based operations to service-based. 

I have tested this concept/need with Private Equity, large enterprise (those outsourced and those with shared services) and with the technology community. The resounding response has been the need for enablers across the full spectrum of commercials, go-to-market, transition, operations, and governance. 

This is a space for which there is no current source of specialized expertise. So, I am excited to be able to pursue my passion in this way. 

Details to follow by mid-September. 

On the verge of Wave 4

Summer's days are numbered.  I know this because my oldest daughter heads off for her freshman year at university in two weeks.  I also know this because my wife has increased the frequency of her questioning about my next job.

Truth be told, my summer was a balance between family, golf, and job-searching.  In turn, the highlights included ...

• Visits to our Maine cottage, and a trip to Los Angeles with my two girls (so that they could see "One Direction" in concert)
• A hole-in-one on Father's Day and generally good rounds at may new courses
• A diverse spectrum of job conversations ranging from start-ups, to Private Equity, to mid-stage; consulting, research, and services

A few of my outreaches weren't answered, but most resulted in at least one substantial conversation.

For each conversation, I referred to the 'manifesto' that I published on LinkedIn which defines my passion for the "as a service" trend across industries.  That has been my standard for gauging alignment of interests.  I credit my friend Peter Fuda for this approach to soul-searching.  Peter's wisdom is posted for all at www.peterfuda.com

Having my framework committed to writing has been exceptionally helpful when presented with an opportunity by enthusiastic advocates.  Guardrails are really powerful.

So, I find myself on the verge of committing to the fourth wave of my career.  It will leverage the lessons (positive and otherwise) from my prior waves, and yet define a new experience.  I hope to touch, and be touched, by new colleagues and new Clients.  I also hope to advance the cause of "as a service" economic realities around Social/Mobile/Analytics/Cloud.

The most substantial recent relevation of importance was the significance of diversity in experience that I value.  Colleagues during my prior waves will attest to the fact that I enjoy learning via multitudes of activity.

So, Wave 4 is defined in my mind and I will lock this down imminently.  After a few more rounds of golf, another trip to Maine, and a weekend with my wife in Martha's Vineyard ... I will start calling on Clients on 16 September.

Thanks for your many kind notes and words of support.

Peter

Weighing Options

I am blessed for the opportunity to take up a fourth major chapter in my career.  Most people don't have the fortune of being a participant in so many substantial waves of change.  

In 1982 I worked for a company called BBN that was building today's Internet.  I was fresh out of university, and soaked up the wisdom of the brilliant minds who conceived, develop, and deployed the foundation of connectivity among computing machines and their users.  We deployed the revolutionary capabilities for government uses first, and then for the first commercial email service - MCIMail.  I learned about the power of networking devices.  Wave 1.

In 1989 I joined CSC and had the opportunity to lead business development activities take up substantial general management assignments.  This was a lesson in leadership, planning, and risk management.  It was also my introduction to global business operations, financial services, and the economic model called outsourcing.

My three years in Seattle as Chairman/CEO of a small publicly-listed consulting company was my lesson through failure.  It also taught me the power of alignment among colleagues around relevancy and purpose.  During this time, the internet wave accelerated and busted ... and I was frustrated by the fact that I didn't find a way to participate more substantially in this euphoric period.  Then again, I didn't take the losses that many experienced when things blew up.  The lesson here was around economic fundamentals and markets ... if things seem too good to be true, they likely aren't true.  Wave 2.

From 2001 thru 2007 I was privileged to serve alongside a cadre of remarkable colleagues in the outsourcing advisory firm of TPI.  I took the role after we sold the Seattle company, and purely as a way to stay connected in the industry while I figured out what I really wanted to do next.  The eight-year run was invigorating for one principle reason.  We served some of the most accomplished companies in the world, providing advice and structure to their contracting strategies for business process and IT services.  

The eighteen months that I spent helping Procter & Gamble with their business process sourcing strategy was the most memorable and influential.  I learned about corporate culture, leadership traits, executive decision-making styles, "moments of truth" in marketing, and the sell-side tactics of major service providers.  The lessons here were life-changing for me.  From P&G to McDonalds to Disney to JPMorgan to UBS ... some of the biggest brands across industries.  Make-vs-Buy trade-offs in the allocation of capital, the engagement of employees, the leverage of intellectual property, and the hedging of risk.  Wave 3.

My most recent 3.5 years at CSC as leader of global sales & marketing leveraged the experiences of all three of the waves I had experienced previously, and flavored my worldview through the spices of transformation in a large-scale setting and the power of cohesiveness in terms of message/purpose/mission.  I am still internalizing the take-away lessons from CSC, but I am most influenced by the talented people and their commitment to their Clients.  There's much to be said about the value earned through transparency, candor, objectivity, and personal engagement.

That brings us to today.  What to do next?

I have a few months to refine my thoughts, but the leanings are around a central thesis:


After all of these incredible experiences, the one thing I have learned above all others is that true innovation is brought to life through the combination of information technology and commercial services constructs. Why? It is clear to me that the expectations of consumers and businesses are converged. Both are looking to leverage technology as holistic services, rather than as discrete parts. Innovators who are developing the next-generation of technologies recognize this reality and are seizing the opportunity to create services-based offerings that will scale. I have studied and practiced in this realm for my entire career, and the market circumstances are ideal for creating tremendous new service offerings in an “As a Service” fashion.


My expertise is earned in multiple disciplines through leadership positions for outsourcing/offshoring management consulting, IT services sales and marketing, and service delivery management:

• Architect of technology-enabled managed services ... creating service-based relationships
• Emphasis on distributed/networked business models through global operations
• Strong marketing and sales orientation, including extensive public speaking and digital marketing techniques
• Track record of building high-performance teams through strong engagement and personal commitment
• Passion for innovation in scale-based practical application of technology solutions and commercial models
• Reputation for partnerships/alliances for maximum leverage in solutions
• Expertise in commercial contracting terms for complex and risk-oriented propositions
• Excited to take ambitions from conceptual to operational

My next position will allow me to leverage and apply this unique combination of practical experience and market awareness to drive growth, scale, and shareholder value through high-energy and passionate leadership for capitalizing on the “As a Service” economy.  Wave 4 ... ahead.

Restarting the Engine

Greetings to all who find these words ... I am restarting my blog.

When I joined CSC in 2009, I sustained the blog for a few months but ultimately elected to place it in hibernation.  The reason was simple: as an officer of a Fortune 150 company, it was just too risky to express the sort of opinions for which I had become known.

Time has passed and circumstances are changed.

Over the coming weeks I will be re-framing the orientation of this blog.  I am inclined to share the process of considering new opportunities while I simultaneously outline the thesis I am developing around our services-based economy.

More to follow.  Thanks for visiting.

Peter