Internet of Thinking: Why IBM Bought The Weather Channel

 

Today’s sit-up-and-take-notice moment for me was IBM’s acquisition of The Weather Channel’s digital properties. We are having more and more of these unusual maneuvers occurring in the IT Services industry, and there are more to come as the industry reinvents itself.

I am a product of this industry. Genetically, it is an industry wired around the development and integration of systems. Dating back to the dawn of the computer age, companies such IBM have existed with the value proposition of being adept at automating processes via computing technologies (although few others have as deep a pedigree as IBM).

It’s an industry that ritualizes requirements-driven design and implementation of capabilities that meet specified “user” functions. 

One of the more instructive experiences in my career was a U.S. Defense Department program that I led to modernize the wholesale logistics (buying, storing, transporting, and delivering everything from boots to bullets) processes for all branches of the military. 

We had thousands of people working to synthesize the needs of the user community, rationalize legacy systems capabilities, model data sources and references, and write code to bring a new “standard system” to life.

This was the final government assignment in my career, as I was dismayed by the political unraveling that led to the cancellation of the program due to the lack of agreement among the military departments involved. Consensus is a tough way to drive innovation.  I moved on from this to the commercial services world - IT and Business Process outsourcing.

In the commercial services segment, I found much of the same: buyers and providers of IT Services tend to think in terms of requirements at the present moment. There’s less political consensus-taking, but decisions are still afflicted by thinking that is constrained by what’s comfortable and familiar.

IBM’s move to “use the data provided by The Weather Company's sensors to boost its analytics offerings for business clients” is remarkable for its progressive potential. I doubt that this is a strategy being driven by any specific client requirement.

Henry Ford observed, “If I'd asked customers what they wanted, they would have said ‘a faster horse’.” To be an innovator in your industry, you have to have a deeper understanding of the future than do your customers.

Ford’s observation is somewhat akin to a market leader understanding that its legacy business is fading fast and that it must make bets on new forms of value for the market of the future. 

By my reckoning, IBM’s strategy here is to create an “As A Service” suite of offerings that leverage the IoT assets of The Weather Channel. You can be assured that this isn’t the only such move, but merely a key component of a bigger ambition.

“As A Service” isn’t a requirements-driven approach where a service provider responds to a specific set of client needs. Rather, it’s a market-driven approach that reflects informed anticipation of the needs of multiple clients.  That’s the Internet of Thinking.

 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now a Boston-based Managing Director at Alvarez & Marsal.

Image: courtesy IBM via YouTube

 

 

 

 

 

 

Bridging IoT and As-A-Service

Over the past year, I’ve written extensively about two topics close to my heart: Internet of Things (IoT) applications and the evolution of the “As A Service” Economy. 

In my mind, these two topics are inexorably linked.  More accurately, the “business model” bullet in my IoT Requirements framework is predicated on adoption of As-A-Service modes of delivery. 

Few believe that IoT will take life as islands of gadgets that exist with the marginal benefit of network connectivity to “phone home” for updates to their software. Rather, IoT devices will be knitted into a system that learns and evolves over time. Commercial pressures will dictate that such systems are brought to reality as a service.

IoT will allow for new forms of decision-making prompted by events and/or triggers that are initiated by IoT sensors. The sensing IoT devices - whether monitoring the garage door, regulating Fido’s dog food consumption, or watching for rainfall in a wheat field - will communicate their observations. Some devices may take actions autonomously as well, but they will still communicate.

Once prompted by an IoT sensor, decisions will be based on input from multiple sources. These sources will include other IoT sources, contextual factors (e.g., time of day, environmental conditions, etc.), and relevant sources of insight. That’s the “correlation” reference in my requirements list.

As each system records decisions and related effects, it will learn.

This simplistic portrayal, which can be described for any number of examples, forms the ideal framework to industrialize, standardize, and scale as a service. In fact, even via “As A Service” models that exclude IoT - such as processing financial transactions, administering payroll, or monitoring compliance with regulatory policies - the same essential steps are taken. This is basic systems discipline: input, process, output.

The IoT to “As A Service” linkage comes most prominently at the point of defining the business model. Every device manufacturer who is thinking about Internet-enabling their products must define the ways through which their devices are part of a new service value proposition. That “As A Service” ecosystem may be a proprietary platform that is unique to the manufacturer. More likely, it will be part of a broader ecosystem that involves other forms of devices and services.

Does anyone think that the clever new thermostats that provide remote control of room temperatures are going to remain constrained to that functionality? I doubt it. Temperature-As-A-Service isn’t bold enough. 

I am seeing more and more IoT examples that carry the attributes of an “As A Service” mode of operation. These include a broad set of features that I will describe more completely in a future post, but which include:

●     Multi-tenancy

●     Functional modularity

●     Data security/Integrity

●     Open interfaces (APIs)

●     Configurability

●     Dynamic capacity provisioning

●     Workflow integration

●     Committed services roadmap

●     Little capital outlay

●     Contractual flexibility

●     Operating resilience

●     Dynamic denial of service resilience

●     Surveillance/audit

●     Usage/transactional pricing

 

Anyone hoping to play in the IoT market must develop expertise in the principles of operating “As A Service.” 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now a Boston-based Managing Director at Alvarez & Marsal.

Image: romanboed/Flickr

How to Pitch As-A-Service Offerings

 

I’ve seen my fair share of sales pitches for the outsourcing industry, and currently every aspiring service provider touts their “As A Service” offerings. I can’t resist sharing some observations on how these companies can best connect with the needs of enterprise buyers.

In the spirit of “context matters,” let’s start with the audience. Today’s buyer of commercial services is better prepared than ever before. Indeed, they are forewarned about the pitfalls experienced via prior generations of outsourced services. Most are working from a well-informed basis of knowledge.

The majority of buying executives are adept at networking; they are connected to their peers and they share experiences readily. The best way for a service provider to position itself favorably is to have a strong reference base from which to work. In the age of social networks, reputation really matters.

The buyer generally organizes a process around securing some form of value. The measure of value can take various methods, and may even evolve over the course of the evaluation, but make no mistake – value is the ultimate determinant of a decision to source services with a third party. 

That may seem like an obvious and well-understood tenet, but in the heat of a commercial transaction both buyers and prospective service providers often lose sight of the core value definition.  To be a bit more contentious … in a competitive market, the lowest price is seldom a broad enough definition of value. 

Beyond the fee-for-service dimension, common elements of value for “As A Service” offerings include:

·         Client confidence that they will receive the promises being made

·         Strong market position of the provider

·         Demonstrated commitment to the service category

·         Candor and transparency in the resilience of the services

·         Informed perspective on risks and high confidence in the vendor’s ability to mitigate them

·         Cultural alignment with regards to unknown future events

·         Growth potential for the relationship to evolve towards new sources of value

For a prospective service provider to win the right to serve one of today’s discriminating buyers, they must meet a high standard of proof that is evidenced across a broad set of hurdles. Pretenders are easily smoked out.

I would urge any service provider to fully commit to all of these five elements:

1. We are clear on the value we provide for our clients.

·         We create tangible value easy for others to recognize and measure.  

·         We understand our competition, and are comfortable with our relative positioning.

2. We are committed to be a leader in this service category. 

·         We are investing in the provision of defined and scalable services.

·         We have earned the right to serve discriminating clients, and they are satisfied.

·         We manage our offerings through a services lifecycle that provides confidence in future relevancy.

3. We are prepared to do business on terms that represent the state of the market.

·         We offer commercial terms and pricing that aligns with the needs of our market, and which conveys value to our customers.

·         We are prepared with standard scope of service that reflects our investment in proven, scalable offerings.

·         We provide an engagement interface that makes it easy to do business with us.

4. We provide transparency in the future direction of our services.

·         We publish roadmaps for our offerings that reflect the perceived needs of our market, and the feedback of our customers.

·         We anticipate changes to our offerings and communicate those candidly.

·         We readily engage with others in our industry to integrate our offerings seamlessly into the operations of our clients.

5. We manage the inherent risks within our business.

·         We know where we have vulnerabilities, and we mitigate those appropriately.

·         We are prepared to assume the liabilities inherent to being a market-leading service provider.

If you are a service provider offering “As A Service” solutions, I suggest that this outline should be your agenda for your next sales call. Beyond the sales conversation, this outline needs to form the basis for your company’s go-to-market platform. 

In this way, your targeted customers will see your offerings as being organized and integrated towards an expression of value that they will more easily recognize and be able to evaluate. “As A Service” means an end to the islands of misfit toys.

 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now a Boston-based Managing Director at Alvarez & Marsal.

 

Image: kafka4prez/Flickr

 

 

 

 

 

 

 

 

Beware: As-A-Service Snake Oil

In 2011, my team at CSC began using the term “As-A-Service Economy” to characterize a transformation we detected in the buying strategies and service integration approaches of our largest clients. Today, almost every tech vendor and outsourcing service uses the “As-A-Service” moniker to describe their offerings. 

The hard facts reveal that this transformation is far from complete and will likely entail more disruption than seamless transition.  New behaviors take time, and often require some degree of force.

I am privileged today to be at the intersection of the buying and selling of “As-A-Service” propositions. Most enterprise buyers have mastered the art of contracting for outsourced services of some flavor, with staff augmentation models prevailing in their portfolio. This means the services under contract are largely limited to generating benefits via lower-cost labor. 

The universe of service providers includes both old guard and new age players. All are using the same terminology, but many lack consistency in application. Sitting recently with a client listening to the pitches of hopeful service providers, I realized that both the buy-side and the provider-side need help in making the shift to a new form of commercial contracting.

To illustrate, think of your experience as a consumer. As a cable or satellite TV subscriber, you pay for access to TV programming. You don’t need to know how many servers the provider is running, or what level of training they apply to their staff, or the tools they use to configure their services.

The same should be true in business settings. In fact, it is for some classes of service.  If you contract with Amazon Web Services or Salesforce.com, you aren’t invited to prescribe “how” they deliver the services that they offer.

Yet, with most business functions – both IT and IT-enabled business services – the parties are still struggling with the vestiges of yesterday’s “lift and shift” outsourcing approach.  Clients don’t trust that they will receive market-proven services.  Providers can’t resist customizing their “offerings” to the point of bespoke uniqueness and associated loss of leverage.  These are self-reinforcing behaviors that will defeat breaking away from all that we dislike of outsourcing’s version 1.0.

Here are some of the top matters of misalignment that I’ve seen from recent marketplace encounters:

 

The net of this: more often than not, the parties are talking at cross-purposes and a potentially beneficial deal falls apart.  Or, devolves to a more-familiar instance of “lift and shift.”

Buyers need to be firm on their intentions, and be willing to trust (once verified) in the integrity of market-based offerings. That shift is not trivial.

Providers need to move beyond the hype and show their conviction to market-based services across the dimensions of terms, pricing, service models, and transparency.  The sales teams know the language; now the rest of the organization needs to line up to deliver industrial-grade services.

We ask prospective providers to show up with defined terms of service, a service catalog and well-established service levels, transparency around their services roadmap for future innovations (including committed investments), a clear sense of the market being served (and metrics for demonstrating effectiveness in market penetration), and evidence of alignment with the overall business strategy. 

After all, the "As-A-Service Economy" is all about the power of leverage that comes through serving a market, not merely adding another logo to the marketing deck.To scale “as-a-service” successfully, from either a buyer’s or seller’s perspective, you need to be clear: what value is at the center of this transaction? If it’s a mystery, you might as well be bickering over snake oil.

 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now a Boston-based Managing Director at Alvarez & Marsal.

 

Image: Mike Licht, NotionsCapital.com/Flickr

 

 

 

 

 

 

 

Internet of Thinking: Computing Races to the Edge

 

I have written previously about the five core requirements that must be addressed for any IoT application to work in reality.

By the way, most people call IoT the Internet of Things, but I call it the Internet of Thinking, because it opens up tremendous new possibilities for human thought.

As I talk to people around the industry about how companies are seeking to IoT-enable their businesses, these five topics stand firm as the recipe for enabling remote collection and activation of otherwise “dumb” devices.

When you closely examine the interdependencies of these elements, you realize that they often invert conventional thinking and logic around managing complex systems.

Most organizations have evolved over time with the fundamental understanding that centralization drives higher levels of control and predictability. The notion of fewer variables led to the conclusion that risks could be managed more effectively, and efficiently.

In the world of technology-enabled business processes, that’s what drove the creation of centralized “data centers” to house the computers and the storage arrays that processed data and produced essential information and services. It’s also what drove organizational design that placed accountability for performance of processes into the hands of designated experts.

Simplistically, the model was to leverage the precious computing power, and talent, that was organized and managed centrally.

In an IoT world we can anticipate a massive explosion in the volume of information collected and/or generated by myriad devices. The act of transporting that information to a point of central processing will be arduous and cost-prohibitive. In fact, it’s likely that not all the information being generated needs to be processed; some of it will be noted and discarded.

This will give rise to some exciting new information models and services that enable the IoT model of operation. 

Imagine that a device (i.e. a refrigerator, dog house, or fence camera) not only has the smarts to detect, recognize, and collect information, but also has the computing capacity to process that information. And, make decisions or take actions as a result. This is known as edge computing, where the first-line processing of the information occurs in a distributed manner. No longer will the information be transported to some central computational utility; it will be analyzed and evaluated by the edge devices themselves.  With resulting actions potentially initiated autonomously.

This capability will rely on a material reduction in the costs, power requirements, and physical profile of the edge devices. If Rover is wearing an IoT collar, it will need to be small, lightweight, and not reliant on power cords. 

Venture funding is already supporting such innovations. According to a recent report from research firm International Data Corp., the market for IoT devices and services will nearly triple to $1.7 trillion by 2020.  Plus, a few weeks ago Freescale Semiconductor announced the world’s smallest single chip module for IoT applications. Follow the money.

Taken together with the shift that many companies are making towards off-premise cloud-based computing and storage services, the IoT rush to the edge has the potential to turn traditional data center and IT service management models upside–down.

 

Peter Allen has many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now a Boston-based Managing Director at Alvarez & Marsal.

 

Image: Andreas-photography/Flickr