Last year Netflix attempted to shift its business strategy to focus mainly on streaming video. Although I wasn’t present in the boardroom discussions, it’s a reasonable bet that Reed Hastings and his team had decided the future was online streaming and that physical discs were a dinosaur. Since the war for content would be fought over streaming, Netflix would focus on adding value to its streaming customers and spin off the disc customers. On the surface this seemed to many a reasonable strategy, especially since Netflix reported that its digital streaming customers and the disc-in-the-mail customers were mostly not one and the same. So Netflix execs crunched the numbers and decided this was the right move for them. Perhaps they had hoped to spin off the disc side of the business to raise some capital. Whatever their thinking, their strategy choices left some gaping unanswered questions for observers like me:
In November 2011, Atos and Yonyou (formerly Ufida) announced the creation of a joint venture dubbed Yunano™ aimed at the European SMB market. The two companies are at it again, this time focusing specifically on the Chinese domestic market. I recently met with Herbie Leung, CEO of Atos in Asia Pacific, to discuss the partnership and future market opportunities in China. This new agreement essentially covers three areas of collaboration:
Bringing PLM and MES expertise to Yonyou customers. With more than 1.5 million customers, Yonyou is one of the largest software providers in China with strengths in ERP and CRM solutions. However, the company lacks capabilities in adjacent areas like product lifecycle management (PLM) and manufacturing execution systems (MES). Following the SIS acquisition, Atos has significantly strengthened its capabilities in these domains and will offer them to Yonyou clients.
Helping Yonyou’s customers migrate to private cloud architectures. The lack of private cloud technical skills in China led Yonyou to leverage Atos’s expertise to develop private cloud assessment workshops and ERP migration services targeting the China market. Atos will in turn leverage Canopy, a company it recently created in partnership with EMC and VMware to provide cloud solutions to its clients globally.
Helping Yonyou expand into new markets in Asia. Like many Chinese companies, Yonyou has global aspirations.While theYunano joint venture focuses on bringing Yonyou’s ERP solutions to the mid-market in EMEA, the new partnership will leverage Atos go-to-market capabilities to take the Yonyou solutions to other markets in Asia.
During a recent global analyst event in Paris, Capgemini presented its strategy to a panel of market and financial analysts. It hinges on two main objectives: improving the resilience of the organization in an uncertain economic environment — especially in Europe — and finding new levers for margin improvements.
From an operations point of view, Capgemini intends to continue leveraging the usual suspects: industrialization, cost cutting, and accelerating the development of its offshore talent pool. It also aiming to optimize its human resource pool via a pyramid management program aimed at, among other things, allocating the right experience level to the right type of work.
More interestingly, the company showcased some of the global offerings it has put together or refined over the past 12 months. Capgemini’s strategic intent is to develop offerings addressing three major client-relevant themes – customer experience, operational processes, and new business models. The offerings will be enabled by a combination of cloud, mobile, analytics, and social technologies. Among the set of offerings managed globally, I found the following of particular interest due to their emerging nature and Capgemini’s interesting approach to developing them:
I recently finalized a report* on software asset (SA) based IT services, this time looking at vendors’ best practices in terms of governance, organization, skills, tools, and processes. Needless to say, the move to software asset-based services will have a huge impact on the traditional operating models of IT services firms.
Obviously, IT services firms need to learn from their large software partners to understand and implement specific software asset management processes such as product sales incentive schemes, product management, product engineering, and release management.
This will induce a formidable cultural change within the IT services vendor’s organization, somewhat similar to the change Western IT service providers had to undergo 10 years ago when they finally embraced offshore delivery models.
I see a few critical steps that IT services firms need to take in order to facilitate this shift towards software asset-based business models:
Build a client-relevant SA strategy. Building an SA base offering is not (only) about doing an inventory of the existing intellectual property (IP) that you have on employee hard drives and team servers. More importantly, it’s about making sense of this IP and building strategic offerings that are relevant to your clients by centering them aounrd your clients’ most critical business challenges.
Next month, I will be relocating to Singapore after two years in India. These two years have been an amazing learning experience for me, both from a personal and professional point of view. A very intense experience too! Of the few Hindi words I learned during my stint in India, there is one that I am particularly fond of: “jugaad,” which can be translated as “making things work.” This is one way to summarize what India is all about — and why India works as an economy, in spite of the gods and despite all of the challenges that India currently faces as a society.
This concept has taken on a lot more importance on the global scene in recent years from an innovation management point of view. A former Forrester colleague has recently coauthored a book about the concept and how it could “reignite American ingenuity.” The economic and ecological crises that we have been through over the past few years call for new ways of approaching economic development and growth. And the “jugaad” concept could bring interesting solutions to our modern societies.
I work with a lot of CIOs and heads of strategy in Australia and the Asia Pacific area – particularly concerning the development and updating of their IT strategies. As a part of our strategy document review service, I have seen plenty of approaches to IT strategies – from “on a single page” position statements through to hugely detailed documents that outline every project that will take place over the next 5-10 years.
While it can be argued that an IT strategy can’t really be strategic at all if it is just responding to business needs and requests (isn’t that just an IT plan?), the broader question of “what, exactly is a strategy?” is rarely touched upon.
It’s the perennial issue for many CIOs and often the No. 1 challenge for new CIOs: “How do I align IT with the business?” And while this is perhaps the most important challenge for IT groups struggling with a bad reputation across the business, it’s certainly not the most important challenge for IT groups with a solid track record of success. For these teams, the challenge is how to move beyond alignment.
In the report Beyond Alignment: BT Strategic Planning, I highlight how critical it is for IT to help formulate business strategy. The research suggests that how a firm develops and manages business strategy is pivotal to the question of how IT can move beyond alignment. Unfortunately, there are a number of challenges with this:
Now that you’ve settled into your latest position as the head of Hewlett-Packard, we wish to make a request of you. That request is, “Please take HP back to the greatness it once represented.” The culture once known as “The HP Way” has gone astray and the people have suffered as a result. Those people are of course the vast collection of incredible HP employees, but also its even vaster collection of customers. They (ahem, we) once believed in the venerable enterprise that Bill Hewlett and David Packard conceived and built through the latter half of the 20th century.
HP became renowned for its innovation and the quality of its products. While they tended to be pricey, we bought HP products because we knew they would perform well and perform long. We could count on HP to not only sell us technology, but to guide us in our journey to use this technology for the betterment of our own lives. We yearn for the old HP that inspired Steve Jobs to change the world – and he did!
We need not remind you of what transpired over the past decade or so, but we do have some suggestions for what you should address to restore the luster of HP’s golden age:
Commit to a mission. HP needs an audacious mission that articulates a purpose for every employee, from you and the HP board all the way down to the lowest levels. Borrow a page from IBM’s Smarter Planet mission. While it sometimes seems over the top, that’s the whole point. It is over the top and speaks to a bold mission to create a new world. Slowly but surely, IBM is making the planet smarter. Steve Jobs got Apple to convince us to Think Different, and we did. What is HP’s mission?
It's strange, but some things about the CIO role change very little from year to year -- and one of the most consistent priorities for CIOs has always been achieving better "alignment" with “the business.” But should this really be a top priority?
I can’t help it, I really dislike the term “alignment” -- it suggests to me that CIOs are trying to bring together two separate and distinct things: “the business” and “IT.” But the really successful CIOs already know this specific language sets everyone up to perceive IT as something apart from the business. And we all know that every business has technology woven intricately throughout -- to suggest technology is not a vital part of business success is simply wrong. So instead of talking about aligning IT with the rest of the business, we need to focus on ensuring the business is using technology to achieve defined goals and deliver business results.
Unfortunately, for many companies, IT appears to be in the software development business -- responding to “orders” from “internal customers” and busily delivering applications. CIOs need to ask: “what business are we in?” For most CIOs, the answer will undoubtedly NOT be the technology business. For these CIOs, the most precious skill IT can bring to the organization is business knowledge and process understanding coupled with technology know-how. By helping identify how technology can change the business dynamics and move the organization more efficiently toward its objectives, IT becomes the foundation for competitive advantage. In other words, IT needs to be in the business of helping shape business strategy.
From nothing more than an outlandish speculation, the prospects for a new entrant into the volume Linux and Windows server space have suddenly become much more concrete, culminating in an immense buzz at CES as numerous players, including NVIDIA and Microsoft, stoked the fires with innuendo, announcements, and demos.
Consumers of x86 servers are always on the lookout for faster, cheaper, and more power-efficient servers. In the event that they can’t get all three, the combination of cheaper and more energy-efficient seems to be attractive to a large enough chunk of the market to have motivated Intel, AMD, and all their system partners to develop low-power chips and servers designed for high density compute and web/cloud environments. Up until now the debate was Intel versus AMD, and low power meant a CPU with four cores and a power dissipation of 35 – 65 Watts.
The Promised Land
The performance trajectory of processors that were formerly purely mobile device processors, notably the ARM Cortex, has suddenly introduced a new potential option into the collective industry mindset. But is this even a reasonable proposition, and if so, what does it take for it to become a reality?
Our first item of business is to figure out whether or not it even makes sense to think about these CPUs as server processors. My quick take is yes, with some caveats. The latest ARM offering is the Cortex A9, with vendors offering dual core products at up to 1.2 GHz currently (the architecture claims scalability to four cores and 2 GHz). It draws approximately 2W, much less than any single core x86 CPU, and a multi-core version should be able to execute any reasonable web workload. Coupled with the promise of embedded GPUs, the notion of a server that consumes much less power than even the lowest power x86 begins to look attractive. But…