IT Innovations: Evaluate, Strategize, and Invest

1. IT Innovations: Evaluate, Strategize, and Invest ManasSahoo

2. Introduction • Adoption of a particular IT innovation is sometimes the key survival factor for many firms • “How can I best evaluate an emerging trend for its investment worthiness?”

3. Introduction(cont’d) • Classic diffusion of innovations (DoI) theory • By Everett M. Rogers • Focuses primarily on the “customercontext” (how an innovation helps customers) without much regard to other contexts such as the “competitor or industry context” or the “technical intricacies context.” Everett M. Rogers

4. Introduction(cont’d) • The business ecosystem in the IT space in particular plays a very vital role—an innovation must therefore be “eco-friendly” to be successful. • As an alternative, Sahoo proposed a slight variation on Rogers’ original work—the diffusion of IT innovation framework—that IT professionals and academics alike can use to evaluate emerging trends.

5. Outline

6. Evaluation Framework • Apart from customer-related factors,other factorssuch as ecosystems (networks of firms tightly linked to each other) and technologyhugely influence an emerging trend’s success.

7. Evaluation Framework(cont’d) • Taking many factors into account, the diffusionof IT innovation framework evaluates whetheran innovation renders the following: • relieves current customer painpoints • provides relative advantages when compared to other existing offerings • is compatible with existing products • is simple, is easy to use or implement • is making inroads with larger customers • has an open architecture

8. Evaluation Framework(cont’d) • This framework’s users can develop a scoring model based on the likelihood of the trend becoming mainstream. • This score, along with considerations for the user’s economic, regulatory, and political environment, help facilitate decision-making.

9. Diffusion of IT innovation framework

10. Analyzing Current Trends • A survey from various IT firms and research of technical journals reveals that are the most prominent emerging trends in IT today

11. Software as a Service (SaaS) • SaaS-based applications save customers from making huge upfront investments in IT infrastructure • the software vendor provides and maintains the overall infrastructure • With its subscription-based model, offers a “quantum of solace” for customers reeling from cost pressures. • However, SaaSraises concerns related to security (because applications are hosted outside the customer’s firewalls), customization, availability, and scalability.

12. SaaS (cont’d) • From an ecosystem perspective, SaaSreveals that firms tend to use it mostly to pursue an IP-based product strategy, rather than as part of ecosystem development. • However, some SaaS solution providers are trying to build a network of firms on the provider side, thus planting the seeds for a possible ecosystem.

13. SaaS (cont’d) • For example, SalesForce, via its AppExchange platform, is trying to enable independent software vendors and value-added resellers to co-develop integrated solution for delivery in a SalesForce-hosted environment. • Similarly, Progress Software is providing a set of tools in its business application platform, OpenEdge, that enables firms to develop, deploy, and manage integrated applications in the SaaS model.

14. SaaS(cont’d) • Because SaaS are hosted elsewhere, it isn’t easy to integrate SaaS-based solutions with on-premise applications • This integration is difficult to accomplish and expensive to execute.

15. How Can I Leverage SaaS • SaaS-based solutions should be designed to trade-off between • customizability • ease of set up/maintenance

16. Service Oriented Architecture (SOA) • SOA’s flexibility via its standardized loose coupling between disparate applications soothes a major pain point for customers • maintaining an extremely heterogeneous IT system landscape

17. SOA (cont’d) • Existing IT applications and products can be redesigned to fit the SOA paradigm • Several firms in the IT space have already started reworking their old products • For example, SAP has redesigned its Business Suite products, providing SOA-based web services that both partners and customers can leverage as an API.

18. SOA(cont’d) • SOA is an open standard that allows the integration and interoperability of different applications by different members of an ecosystem. • Typical SOA-based ecosystem offers avenues for

19. Cloud Computing • A cloud is a type of parallel and distributed system consisting of a collection of interconnected and virtualized computers • provisioned and presented as one or more unified computing resources

20. Cloud Computing(cont’d) • Compared to SaaS, • Cloud computing is like “hardware as a service” • it provides similar benefits and challenges • Key players

21. Cloud Computing(cont’d) • Convert customers’ capital expenditures to operational expenditures • Provides large one-time storage/processing requirements and the flexibility of unlimited storage/processing capacity

22. Cloud Computing(cont’d) • However, much like SaaS • It has limitations in regard to ecosystem building • The key players all have propriety clouds that aren’t interoperable. • To date, none of them have made the effort to build an ecosystem around the concept and bring in more customers

23. How Can I Leverage These Trends?— SaaS • In their attempt to provide faster time to value for customers, SaaS-based applications make a trade-off with configurability • The applications most suited for this model are those that are non-core or non-mission-critical to the customer • Because they raise many concerns about security, availability, and scalability • It’s important to segment the market for SaaS solutions based on the customer’s usage rather than size

24. How Can I Leverage These Trends?— SaaS(cont’d) • SaaS-based solutions should be designed to trade-off between • customizability • ease of set up

25. How Can I Leverage These Trends?— SaaS(cont’d) • In the future, SaaS-based applications should transform from being ecosystem unfriendly to ecosystem friendly • IT solution providers can help by doing

26. How Can I Leverage These Trends?— SaaS(cont’d) • Another dimension that IT solution providers should consider is the demand on organizational capabilities to deliver on the SaaSmodel when compared to the traditional on-premise software model. • An organizational transformation is essential to best serve this model: on the operations front, IT solution providers must acquire hosting and data maintenance capabilities.

27. How Can I Leverage These Trends?— SaaS(cont’d) • They also need to align service and support in a hosted application context • Sales and marketing efforts must be tuned to serve the volume business

28. How Can I Leverage These Trends?— SaaS(cont’d) • As a consumer for IT solutions, if your organization wants an IT solution that accelerates productivity and the time to value, yet does not want to invest in IT infrastructure acquisition and maintenance • SaaS model is most suitable for you

29. How Can I Leverage These Trends?— SaaS(cont’d) • But before the final decision • Ensure that the offering has the functionalities that you require today and is scalable for future use • Compare and contrast these functionalities with an on-premise option and consider the following aspects:

30. How Can I Leverage These Trends?— SaaS(cont’d) • The following aspects

31. How Can I Leverage These Trends?— SaaS(cont’d) Integrating with on-premise IT solutions

32. Summary—SaaS • IT solutions based on SaaS can be first tried on a small scale and then scaled up based on real benefits considering “return on investment” and “total cost of ownership” parameters • Appropriate accounting best practices can help in tracking and making the best investment decision

33. How Can I Leverage These Trends?—SOA • SOA fares very well in its potential for mass adoption when analyzed using the diffusion of IT innovation framework • Compared to the traditionally tightly coupled integration, SOA provides much greater flexibility due to loose coupling • The standardized manner makes it easier for execution and maintenance • SOA has acceptance from the technical fraternity and is being rapidly adopted • most new IT products are being developed with SOA as the primary design principle

34. How Can I Leverage These Trends?—SOA (cont’d) • SOA is an innovation that’s well-suited with the business ecosystems currently found in the IT space • It’s an open standard • it fosters strong relationships within the ecosystem • A typical SOA-based ecosystem would have the following participants

35. How Can I Leverage These Trends?—SOA (cont’d) • Service Requestors

36. How Can I Leverage These Trends?—SOA (cont’d) • A key element in this ecosystem is the “business services platform” • provided by major independent software vendors • This platform contains a basket of business services along with tools for other ecosystem partners to use those services • This platform could then serve as a keystone by creating high-value shareable assets • The firm that first provides such an infrastructure of services would become an important network hub

37. Summary—SOA • When choosing an IT solution, consumers should give due importance to whether its architecture is based on SOA • They should insist on a SOA-based system design when engaging with a system integrator for their IT infrastructure • For their custom IT solutions, they should also consider granularity of Web services, version control, and service life-cycle management

38. How Can I Leverage These Trends?—Cloud Computing • Enterprises currently use cloud services to improve service scalability and to deal with bursts in resource demands • However • Service providers offer inflexible pricing, which restricts consumers to offerings from a single provider at a time • Many providers have proprietary interfaces to their services, thus restricting the customer’s ability to swap one provider for another • For cloud computing to mature, services must follow standard interfaces

39. How Can I Leverage These Trends?—Cloud Computing(cont’d)

40. How Can I Leverage These Trends?—Cloud Computing(cont’d) • Business leaders from firms consuming IT solutions should seriously consider a cloud computing platform to meet their hardware requirements • It provides an easy way to cater to demand surges and helps with testing newly developed applications • Startups • can leverage cloud computing as a bootstrapping strategy • can reap the benefits of unlimited scalability in this environment

41. Summary—Cloud Computing • Leveraging cloud computing to centralize hardware and computing can make firms more efficient, cost-effective, and “sustainable” • However, IT management must be aware of the trade-off between • greater efficiency due to centralization • flexibility due to decentralization

42. Summary—SaaS • SaaS • it’s highly touted, but it isn’t a clear high scorer in all aspects • because it tends to remove players from the IT value chain, it isn’t ecosystem friendly • SaaS-based applications provide limited compatibility with existing on-premise IT solutions

43. Summary—SOA • SOA • emerges as a strong trend when analyzed using the framework • It also fosters and enables strong relationships within the ecosystem • Organizations should take SOA very seriously and adopt it if they haven’t already done so

44. Summary—Cloud Computing • Cloud computing • resembles SaaS in many ways • it enables organizations to substitute large capital expenditures on IT infrastructure with on-demand, small, operational expenditures to cloud providers • However, these providers still need to standardize their interfaces to build a market infrastructure that encourages the trading of services rendered in the cloud

45. Conclusion • By using the diffusion of IT innovation framework, IT professionals can develop deep insights into upcoming trends and strategies for investing in them • The framework is similarly applicable to other trends and domains, and should become a key part of any professional’s toolbox