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Using Modern IT for Competitive Advantage Isn’t as Simple as it Seems

By May 14, 2012Article

Editor’s Note: Toby Redshaw has 30 years of insights from his experience as Global CIO at such leading companies as American Express and Aviva plus extensive business and IT leadership at Motorola, FedEx and in Silicon Valley. Always visionary and often contrarian, in this SandHill interview he discusses why modern IT is “conceptually simple but hard to do” and clamps down on tips for how to do it well. This is part 1 of a two-part article. Click here to read Part 2 (“Thinking Bigger about Cloud and Mobile”). Please explain what you mean by modern IT being conceptually simple yet hard to do well.

Toby Redshaw: Modern IT in the enterprise has fundamentally shifted. The difference between those that use the new tools, methods, models, etc. and those that don’t is significant, is expanding and matters in terms of business results. It is hard to see from inside a company, especially inside those that are internally focused, as it essentially is trying to compare status quo to a future that was not chosen. It is very difficult to see the change you did not implement.

An example of the paradox of modern IT being conceptually simple yet hard to do is Web services. They are reusable components – something that manufacturing has had for over a century and IT is just now getting. While it’s conceptually simple, it’s really difficult at scale and vulnerable to error-prone implementations. Doing it wrong has a negative-force multiplier effect. If you screw up your Web services layer, it is an enormous problem. It is a much bigger-scale problem than bad code in some application.

Modern IT is very learning intensive. Therefore, starting early and jumping into the deep end of the pool for real experience is important and competitively smart. When did “modern IT” begin? How do you distinguish its origins?

Toby Redshaw: Three forces that started to emerge in 2001 created a quantum leap for IT. Over the past decade, those forces have matured and there are 12 different things that add up to “a modern IT shop.”

The first force was the IP network became really ubiquitous, plus technology was developed that allows us to go back and forth through a firewall securely in ways that were not rocket science to implement.

The second force was serious, usable emerging standards around service-oriented architecture and the beginnings of Enterprise Architecture (EA). Enterprise Architecture is conceptually simple; but is really, really difficult to do. If you want to see your business partner go catatonic trying keeping them in a room for an hour to explain EA.

Enterprise Architecture is like a city plan. The plan has a road map, an electrical grid, a sewer grid, etc. When you’re planning to build something in the city, you really need to know about those grids; otherwise, you’ll need to do a ton of rework. Before this IT was built in silos without ever looking at the “city grid.” Many companies still do this simply because EA is hard to do and obtuse.

The third force occurred soon after Y2k. There was a growing backlash to ERP/big packaged apps and how much of a pain in the neck a big packaged application was. People who recognized how expensive that cost structure was for customers left and formed startup companies to build something from scratch using the new service-oriented architecture and Web services “Lego.” It was a classic Schumpeter move that smart folks who brought the old model “defected” to firms to creatively destroy that old model.

Then they added other bits of emerging “Legos” – like cloud. They gave birth to applications that solved big, costly problems in a more agile, cost-effective infrastructure. Like all effective modern tech, the solutions were faster, better and cheaper. If you implement it correctly, does an effective Web services layer reduce the time to solution because you avoid a lot of testing?

Toby Redshaw: It’s a Catch-22 dilemma. If you follow basic standards well and have an enterprise layer for Web Services Management and Web Services Security, then the beauty is you don’t have to know where it gets used – you just publish it.

While it’s conceptually simple, if you get the standards just slightly different from one section to another section, then all of a sudden you’ve got explosions and code breaking at your Web services component layer.

In the old world when a program blew up the applications people blamed the database people, the database people blamed development, engineering people would blame the problem on the operating system and the hardware, and all three of them blamed the middleware people. That would go round and round until they either fixed it or decided to restart it. You add a mismanaged Web services layer to that, and you may never diagnose what has happened. Is “hard to do well” something more than just not making mistakes when you start? If you don’t make these initial mistakes, are you doing it well?

Toby Redshaw: You’re going to make mistakes. It’s really about what you do with those and how you learn. And it’s also about motivated talent. Having talent is nice; but if they’re not motivated, it doesn’t matter. CIOs and IT shops in general often could be a bit more humble. Ask for expert help more often. By that I mean they need to start from the premise that this stuff is new and learning intensive and they need to manage learning as a task, a competitively important one. Often Big IT will spend millions on a new solution from vendor X, Y and Z but won’t spend the extra relatively small amount to hire folks that have done this before 20 times. IT is often a little like Lake Wobegon where everyone is above average. What is your advice for CIOs reading this article and recognizing they need to do modern IT better?

Toby Redshaw: There are two things that they really need to do with an IT shop for this transition. Down in the trenches, they need to seed their team with people who have been on this journey. It’s what I call “journey talent.” You would never take a baseball team and just give them skates and put them on the ice rink. They would get creamed. At the very least, you’d put some seasoned pros out there with them. The CIO needs to go get those pros and make them part of the team.

The second thing that’s necessary for the transition is to make sure they approach it from an attitude of “we’re going to capture the learnings and we’re going to manage the change management properly.” It can’t be an approach of: here’s the new strategy, the new memo, now everybody get going. To do this successfully, does it come down to having the right CIO?

Toby Redshaw: Actually it comes down to the right plan and the right leadership team. Business and IT are a team sport. It is not ballet where the leads make all the difference. You have to have a broader vision for IT anchored in the business being more competitive, understanding that if you don’t go there, then competitively you’re going to be operating at a disadvantage. If you do go there, you have an opportunity to be faster, better, cheaper and more agile than your enemy.

Chess is a good metaphor for this. Let’s say you’re a chess champion and I’m just an average chess player. But if I get to move twice for every time you get to move – because I’ve gone down the modern path and am more agile and more cost-effective and have better throughput – I’ll win, no matter how good of a chess player you are. And I’ll win very quickly. What are the 12 areas, and are they all equally important to doing modern IT well?

Toby Redshaw: Some of them are bigger and more pervasive than others. All 12 of them also improve the cost structure. These are not in any priority order and are not all encompassing. These are just the 12 I have seen delivered:

1. First off the bat is Enterprise Architecture, which I discussed earlier.

2. Next is visualization. Modern visualization tools help the perennial IT problem of IT and business not speaking the same language or in some cases even being the same species. Alan Kay said, “Context is worth 80 IQ points.” Very smart people have looked at this area and come up with visualization tools that fixed a large part of that context/communications problem.

3. Service-oriented architecture and Web services, which I discussed earlier.

4. Then comes portfolio management, which is not done well at most companies. The guy that invented portfolio theory won a Nobel Prize for a reason. It’s amazing to me that at big, modern companies independent silos or people way down the ranks get votes on “this is what we’re going to go work on.” Some of it is not strategic and it’s not managed in a portfolio-optimized way.

5. On the tail end of portfolio management, which also relates back to EA, is methodology. You really need a filter that says “which one of these nine methodologies should I use for this project?” For a big regulatory mandate from the Fed if you’re in financial services, you probably want a pretty rigorous modern Waterfall approach. For a little Web change for your HR system, you probably want a pure Agile get-it-done-and-get-it-out-there approach. And there are probably nine gradients in between. Using the appropriate methodology not only improves your cycle time radically but also improves product quality.

6. BPM (business process management) is next, and I think the best tool out there is Lombardi, which was bought by IBM. I believe talent, leadership and smart architecture are more important than tools. But in 30 years of doing this I think modern BPM is a game-changer and it’s here at the right time. Becoming good at BPM is hugely important. I’ve seen it generate a 3X cycle time and cost improvement for IT output while doubling the quality of the output. And I’ve seen it result in doing a prototype exactly right the first time. If you want love from your business partners, get going on this.

7. Cloud and infrastructure. (Click here to read part 2 of this article, “Thinking Bigger about Cloud and Mobile,” for tips on doing these well.

8. Managing journey talent is another thing you have to do well. It’s not a technology, but it goes along with it and is important.

9. Doing business intelligence, business analytics, and Big Data (all under the umbrella of modern analytics) is huge for the future success of companies. Very few do that well yet and some haven’t even started down that path.

10. Behind that is information architecture. Who is your information architecture lead? Where is that person in your organization and in your strategic thinking? In 90 percent of companies, it’s nowhere, or nowhere near where it should be. I think a lot of things are going to get solved at the information layer in the future. A lot of the problems and issues and missed opportunities are because of bad information architecture. At many companies, the scarcity of information architects and the lack of prominence of information architecture is astounding.

11. Every company needs to implement a social Web 2.0 platform internally. This is a combination of a knowledge-management layer, micro blogging and blogging, team sites, collaboration sites, individual sites, folksonomy, information ranking / pattern matching and workspace integrated Instant Message including video. While I love modern tech, I believe the best process bar none is still the face-to-face conversation; IM video connectivity delivers that.

So all this increases the company’s cumulative IQ and eliminates a huge chunk of waste that I call “uninnovation,” where people are struggling with a problem or process they don’t know was solved earlier by someone else somewhere in the firm. The brilliant CIO at the CIA has done a fantastic job at this. Putting in these layers improves decision cycle time and improves the quality of your decision. Think about how companies really compete: being cumulatively smarter and making better decisions is being more competitive.

12. Okay, this last one is the boring shocker. One of the big areas for agility and success is the prominence and the efficacy of the company’s development and test environment and processes. At most firms, it’s like a big bowl of ugly spaghetti that’s been undernurtured and has grown like a field of kudzu. There’s a quick, easy win in that area; and if you are humble enough, external experts will help you rapidly fix this. This is all the more important in part because of consumerization pushing companies on how fast they need to get their stuff done and at ever-increasing quality levels. Running that part of the IT factory needs to be a lot more prominent than it has been in the past. Inside great companies this has always been a huge emphasis. I know companies where the comment was “good luck, we’ve been trying to fix that for years.” So the risk of not doing modern IT well is not just cost in the bottom line but more a matter of being able to compete.

Toby Redshaw: In business today, it’s essential to be good at getting and keeping customers, improving margins and market penetration, achieving product development agility, getting the juice out of M&As, being good at supply chain and at customer intelligence. There is no chance that a company can be the competitive winner at those if it’s not great at modern IT. You will not beat your competitors in these critical business categories if you are not really good at IT.

But modern technology also necessitates that the IT team evolve to a deeper context with the business in order to execute IT well. Part of the CIO’s role is to help the business see what I call LOWP – the Land of What’s Possible.

There are a lot of examples of where small and agile has killed big and slow. In the tech sector, look at the evolution of or Workday. If you do the 12 things that fall into the bucket of modern technology well and become proficient in those, your company could be big and agile. Big and agile always wins. The icing on the cake is your IT throughput dramatically increases while quality always goes up. This was not possible a decade ago. Today you can deliver more for less, which is what most boards have been “nudging” IT about for years. Is there a company that you believe is doing modern IT well today?

Toby Redshaw: The scary answer is I think less than five percent of firms are fully engaged on modern IT. Various studies show a cluster of about 10 percent or less of IT shops being ranked very positively by their business. It is those that will drive great results for their business. In conclusion, it is important to remember that this is not a metaphysical or theoretical challenge. It is a massive change-management and execution challenge. Mathematically, only one in 10 can be in the top 10 percent. This journey will see its share of failures and train wrecks and is not for the timid, stick-a-toe-in-the-water IT shop. This is deep end of the pool sink or swim.

This is part 1 of a 2-part article. Click here to read Part 2 (“Thinking Bigger about Cloud and Mobile”).

Toby Redshaw is CEO of Kevington Advisors and is a leading authority on how to leverage modern IT for competitive advantage. He has 30 years of experience leading technology efforts in change intensive environments from both the business and CIO perspectives at firms like FedEx, Motorola, American Express and Aviva as well as with several startups. He has served on several boards, both private and public. Toby is the Chairman Emeritus of the Kellogg Innovation Network and was also the Chairman of the RosettaNet Council in Telecomm. Toby currently (enthusiastically) serves as Chairman of Cancer Schmancer, an innovative charity focused on prevention. Contact him at

Kathleen Goolsby is managing editor of


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