2 days with Chris Potts – Good Bye to IT as we know it!

(Breaking down the wall around IT !)

This week I spent 2 exciting days at one of Chris Potts' seminars on Corporate (IT) Strategy.

It certainly was an eye-opener for me, having lived through all stages of IT since the 360 mainframe.

A few years ago when Enterprise Architecture became the hot topic, we all agreed, that one of the fundamental problems of this world was to align business and business strategy with IT and IT strategy – but all this is nonsense, according to Chris Potts. 'You shouldn't have an IT Budget' was one of initial remarks. But after 2 days I am convinced he's right and that this new approach leads to complete different and much more meaningful business decisions, investments and methods of managing complex portfolio of projects – including projects heavily relying on IT and technology.

However, Chris' point of view is completely different from Nicholas Carr's 'IT Doesn't Matter' kind of approach trying to persuade business managers to spend less on IT, to follow in stead of leading at the 'bleeding edge'. Chris' point is straight forward: As you cannot do anything business wise without deploying 'some' IT and some technology in it's broadest sense, than there is simply no reason in treating IT 'projects' and IT spending as if it is an animal of it's own. What is even worse is, that this tradition has been thriving on the 'IT specialists' that have kept the WE and THEM paradigm in what Chris Pott calls the second generation II era. Fueled by crisis and downturn, the 2. G people are 'cutting down on IT spending' instead of asking the obvious question: What Value do we get for it? Which are the key business investment areas we should be concentrating on and first at this point maybe wonder of technology could be deployed in these areas in a smarter way than to day.

So it is not about cost, it's about value. (Even accountants are beginning to admit this!) IT in itself creates no value – as if we didn't know it, the sinister implication is that the public sector's (IT) projects being launched these days are all being selected according to the strict EU tendering rules focusing on minimizing cost and securing 'delivery' – meaning fulfillment of a development/deployment contract at a specific point in time at a spefic cost – but where is the value of the project?

Chris' observation not only leads to the clear conclusion that the perceived outcome in terms of value of a project not only should be the guiding principle, but that the whole accounting process around project selection and project management is completely wrong:

Any project – and public sector projects in particular – should be selected according to their contribution to value – maybe cost reduction is one of them, but in that case total operational costs. Also transparency could be a very interesting value of a public project as could citizen participation and take-up of eGovernment projects. So the estimated impact on all essential types of value is absolutely meaningful, but ONLY if the project management is measured on how the value of the project is created AFTER it's fulfillment. We are deploying 2. generation project managers maybe skilled in PRINCE 2 to deliver 4. generation solutions deploying web 2.0 technologies and aiming at involving citizens – but we are not measuring it.

One of the latest scandals in Denmark is the project dealing with electronic bonds and real estate registration. According to CSC's project manager 'The IT project is a success – we have a service level of 99.5% availability and we have had that for months!' - but reality is that now it takes anything from 4 to 8 months to register a sale of a real estate. Again – the tendering rules selected the winner of the development project, but didn't in any way measure, secure or include the total costs of the process, let alone found it necessary to manage that real value was actually achieved.

(See this blog: (In Danish) http://it-bizzen.blogspot.com/2007/11/csc-forsinker-hurtig-tinglysning-it.html )

So Chris Potts lesson is that you need to go to the thirds generation thinking: focus on the value people are getting from projects involving IT and employ BUSINESS experts to ensure this – not nerds, npår technical people – not even 'Enterprise Architects' still stuck in the THEM/US thinking.

But Nirvana only comes if you forget IT completely – drop the idea of a specific IT budget, think in terms of business organization and embed the investment and management issues of IT in the proper context.

In summary: From Chris we learned how to make an overall Corporate strategy in one page – with a clear strategic objective, with max 10 basic principles and/our beliefs and max 10 core tactics.

I can clearly recommend this seminar and the thinking behind it to any 2. generation frustrated IT manager or to any forward thinking CEO. If you happen to be employed by the Public Sector, I have to warn you, though: Your politicians are all 2. G, the rules are from last century and the narrow budget thinking is killing many bright ideas. But if you don't try, we might face 'civil unrest' – when the new generations used to web 2.0 technologies demand a decent way of thinking what value the Government is really bringing to the table!

(See also http://www.aeaassociation.org/ )

IT History - Fractions from a Journey

On December 30. I had my last working day with IBM. After 39½ years I received a very nice offer, and yet it was a strange feeling trying to summarize all the changes I have lived through since I joined the IBM Denmark company in 1970. It wasn't really my intention to make a career out of it – I graduated as a Master Economist, but I got interested in Data Processing, and decided that the best place to learn more probably was in the department for Operating Systems in IBM. At that time the Disk Operating System (DOS) was being outdated by OS that came in two brands: OS/MFT (Multiprogramming with a fixed number of tasks) and OS/MVT for the REALLY big machines allowing a variable number of transactions concurrently.

The picture here is me in 1970 and the photo was illustrating 'Modern Data Processing' in the Danish encyclopedia. It was a 360/40 – huge machine, 256K memory.

Over the years a lot of rather dramatic changes occurred – both in the way the Company was organized, in technology and in the competitive landscape. I soon got captured by the Government Branch and spent most of my career working with Government in some way, interrupted by assignments in Stockholm organizing and running Sales School and internal Training in mid 70's and handling staff job in the early 1980's and again in the mid 90's.

My first job was with what became one the 4 DP Centers for the Kommunedata organisation, and the first center to work with typewriter terminals to run financial management systems. 5 years before the color screens and the Systems network Architecture was announced. I later become responsible for the entire local Government and Health Care market, which had a fantastic growth in the late 70'es

IBM changed dramatically in the early 80'es – we had been split up in 3 divisions, DP (the Large Customer segment), GB (mid size machine and small and medium customers) and the DCS - the Data center Operations. The split was made to prepare for a split up if a court ruling found IBM guilty in monopolistic behavior, but thanks to the growing competition from Amdahl for the high machines, Memorex and similar for peripheral and Digital for mini computers, IBM avoided to be cut up and instead pooled the resources. Then in 1981 the IBM PC suddenly emerged as a new star – based on standard components bought on the open market it seemed to be the brand name that sold the product. I was asked to organize a group of system engineers and salesmen to conquer the Danish Education and Scientific market for the PC's, and I had the pleasure of interviewing some 300 teachers before hiring 6 of them – with sweaters and hairy faces and everything. Plus a nice lady, a French teacher from a high school. In fact we succeeded in just 4 years, the mantra was that it was not the question of the Hardware but how the software could help the teachers. It worked – and I still recall the first IBM PC we sold with 2 diskette stations, 256K for 7.000 US Dollars (35.000 Danish Kroner). At the end of the 80'es and early 90'es I was responsible for Market Development for the Public Sector (including Post, Defense, Central Government, Tele). At that time it was dawning on IBM's management that the business model had to change and that we had to charge for our skilled Systems Engineers and Networking CE's. The Business Consulting area began to be the hot topic, but my position - together with some of the former Government Branch Managers - was that it was important to marry the consulting skills with deep industrial knowledge. We lost the argument, and the General Business Consultant emerged, later to be split into practices and boosted by the subsequent purchase of Price Waterhouse. (See: Seven Keys to Success )

In the 90'es a new thing emerged – the Internet. Although I already got acquainted with it during my job with the University Sector, it wasn't until around 1994 that it became clear that a new market was emerging; I started a fantastic group of quite young people, creative designer-types and long haired programming freaks plus a couple of deeply engaged old time Systems Engineers. Within just a few years we managed to create first-of-a-kind of websites for Copenhagen City, a number of Danish Companies, plus launched the first secure payment systems on the Internet. And then suddenly – it all became 'pervasive' – which in practice meant that the profit margin for doing websites and similar solutions were coming down, and that the new business model would call for a value chain of Business Partners and IBM withdrawing to delivering the SW platforms and intermediate layers.

So the turn-around of the Company mid to late 90's architected by Lou Gerstner, once again laid to a dramatic change in organization, and started the period of active acquisitions, that Sam Palmisano carried on. As of today, the organization is split in divisions reporting to global or regional managers, and the coordination that is necessary in every major customer engagement handled by a an all-encompassing CRP and accounting system and strict procedures for bidding.

Since the end of the 90'es I have worked internationally as an eGovernment Advisor in a job working with the public sector and the Software group – plus of course a number of dedicated business partners and our GBS people that on and off have supported Public Sector.

This has been an enormousinspiration, has brought me to the Middle East working with the forward thinking Governments in Dubai and Quatar, I have witnessed and supported the Baltic Countries in their quest to outgrow the older parts of Europe, with Iceland, with the Nordic Countries and during the last few years with Greenland and the new Greenland parliament, which I hope to continue as a ppensioner.The dramatic changes in the IT world since 2001 and the rise of the Open Source Community is a trend, that I expect we have only seen the tip off. When Cloud Computing really takes off, the business model for selling Software Licenses will change once again and the new competitive landscape will be different from anything we have seen so far. Google probably aiming to become the next top competitor and Microsoft standing to loose.

And this may be some of the reasons IBM has survived all the turmoil – at least during my 39½ years: We have always been careful to select the battlefield. The competitors we had in the late 70'es were all gone 10 years after; the competitors we had in the 80'es have almost all disappeared, with HP as an exception. And with IBM now launching the Smart Planet approach and going for Software as a service and supporting Open Source, the competitors in 10 years again will be a different crowd. An old IBM'er told me 25 years ago that IBM meant: I'll Be Moved – because the mantra of the company is change.

So I will. And I have promised to start to document IBM Denmark's History. It started January 1. 1950 as a local Danish Operation. It shouldn't be too difficult – after all I have lived through 2/3 of the history myself!