Bridging the Business to IT Gap

1. Bridging the Business to IT Gap Ray Harishankar Distinguished Engineer & Partner Member IBM Academy of Technology IBM Global Business Services harishan@us.ibm.com

2. Abstract During the last several years, the IT industry has focused significant attention on the problem known as the "Business/IT Gap". This gap is primarily one of semantics, such that business people and IT people appear to speak and think in entirely different languages. IBM has specifically addressed "the Gap" within numerous technical forums and studies. These studies have typically concluded that, while the company and the industry have continued to make significant progress, there is still a long way to go. After studying this subject, and reflecting on the studies themselves, the presenter and his team have reached two, possibly controversial, conclusions. One conclusion discussed will be that there will always be a gap. The other conclusion is that there is not just one gap, but many. Even though the gap is inevitable, the concepts of service orientation when applied at a business level may help bridge the gap significantly and bring business and IT much closer than ever before.

3. Topics Covered • The Landscape • Characteristics of the Gap • Service Orientation at the Enterprise Level • References

4. Current industry trends point to growth, need for agility and broader innovation. • Growth is back on the CEO agenda • 8 in 10 view growth as a key focus area • Companies are concerned that they are not agile enough • 8 in 10 rate “rapid response” as a high or very high priority • Clients view product & service innovation as a top priority • Nearly two-thirds view products/service improvement as one of the greatest opportunities for revenue growth • Clients seek company wide transformation with a very short time horizon • About 9 in 10 believe they need to achieve their transformation goals in less than 5 years; nearly half think they need to do so in less than 2 years

5. Recently it has become increasingly urgent to bridge the Business / IT gap. Trends in the use of IT by business has accelerated the need but also encouraged solutions. • Technology has become a key business value enabler. Business is very dependent upon IT, with some businesses being close to 100% IT (e-Bay, Amazon, Schwab, etc.) • The time to implement basic new processes or change existing one is governed by the speed of development: The closer the business representation is to IT’s understanding, the faster it is. • Internet connectivity, new channels-to-market and now the reduced business cycle time and B2B integration have further focused attention on the gap.

6. As enterprises have expanded their geographic, product, and channel breadth, business models have become complex, limiting their flexibility & agility. The Reality: Disjointed operations, product manufacture, and distribution resulting in hit-or-miss efforts to serve target clients. Overlapping capabilities in the product silos drive an inefficient cost structure. Mass Retail Segment Private Banking Segment Sub-Prime Segment Mass Affluent Segment Ultra High Net Worth Segment Product Specific Delivery Marketing Sales & Distribution Product Manufacture Operations Shared Facilities Product Silo 1 Product Silo 2 Product Silo 3 “Simplify to Succeed” - Published in May, 2002, IBM

7. Service orientation has become increasingly attractive & has been adopted, primarily as the basis for IT systems. A service-oriented architecture (SOA) is an architectural framework and approach that takes everyday business applications and breaks them down into individual business functions called services. An SOA lets you build, deploy and integrate these services independent of applications and the computing platforms on which they run.

8. Topics Covered • The Landscape • Characteristics of the Gap • Service Orientation at the Enterprise Level • References

9. There are numerous aspects to this gap … • Business Speak vs. Technology Speak • Organizational Factors • Business artifacts & Technology artifacts • Roles & responsibilities within business & IT • Culture & the social system • … • While we need specialists in business & technology domains, we also need them to connect, communicate & understand each other perfectly.

10. Transforming business intent into IT systems & solutions that address them is a multilayered & a multi-dimensional problem • Industry hot spots • Industry Imperatives • Business Solution Priorities Business Aspect Business Model • Functionality expressed as Services • Map to Business Processes • Based on industry standards(ACORD, iXRetail, eTOM) Functional Aspect Service Oriented Architecture Operational Aspect • Model Driven Development • Middleware and Software • Technology Platforms & Frameworks • Network & Hardware Solutions Realized on an Infrastructure

11. What do we need to bridge this gap? A semantic architecture identifies domain specific business terms from documents & conversations and classifies & links them into meaningful patterns based on pre-defined business concepts extended by industry-specific and discipline-specific concepts. • A structured view of the business, which both expedites its strategic and operational analysis and is a familiar representation to IT professionals • A rigorous method to translate this structured business view to the evolving, well suited information technologies (SOA) • New build and run time technologies suited to the new design and programming model. Doug McDavid

12. Topics Covered • The Landscape • Characteristics of the Gap • Service Orientation at the Enterprise Level • References

13. The Reality: Disjointed operations, product manufacture, and distribution resulting in hit-or-miss efforts to serve target clients. Overlapping capabilities in the product silos drive an inefficient cost structure. The Vision: Seamlessly integrated operations, product manufacture, and delivery capabilities, cost effectively serving discrete customer segments. Mass Retail Segment Private Banking Segment Mass Retail Segment Private Banking Segment Sub-Prime Segment Mass Affluent Segment Ultra High Net Worth Segment Product Specific Delivery Sub-Prime Segment Mass Affluent Segment Ultra High Net Worth Segment Product Specific Delivery Marketing Sales & Distribution Marketing Sales & Distribution Product Manufacture Product Manufacture Operations Operations Shared Facilities Shared Facilities Product Silo 1 Product Silo 2 Product Silo 3 Product Silo 1 Product Silo 2 Product Silo 3 “Simplify to Succeed” - Published in May, 2002, IBM Existing business models limit the flexibility & agility of enterprises. Existing business models limit the flexibility & agility of enterprises. They need to deconstruct themselves and re-construct across the value net.

14. Supports a discrete set of business services Has been deconstructed and componentized Has discrete self contained components Has flexible & dynamic business processes Has alignment between business & IT Has SOA as the underpinnings of its IT Has governance for IT & business services Has services provider and/or consumer relationships with partners Has organized itself to be optimal and efficient Service Oriented Enterprise – Primary Characteristics

15. Has retrained and retooled its workforce to function efficiently as an SOE. Has changed its culture or adapted its culture to be an SOE Has plans and processes in place to match skills to services, redefined metrics to measure performance, etc. Has strategies and plans to drive increased business value through service orientation & dynamic collaboration Has adopted standards and best practices at all levels of the organization Service Oriented Enterprise – Additional Characteristics

16. Realization of a true service oriented enterprise requires research and innovation in several areas • Understanding of collaboration of business services to produce new ones with added business value • Understanding and modeling of business contracts between services • Organizational structures, new roles and responsibilities • Business performance monitoring and measurements • Tools & capabilities required to support such an environment and organization

17. Facilitates communication between services ESB Apps & Info Assets Techniques such as SOMA, which link business intent with its realization through IT help align business and IT and bridge the gap. Business Innovation & Optimization Services Facilitates better decision-making with real-time business information Interaction Services Process Services Information Services IT ServiceManagement DevelopmentServices Enables collaboration between people, processes & information Manages diverse data and content in a unified manner Orchestrate and automate business processes Component Business Model Integrated environment for design and creation of solution assets Manage and secure services, applications & resources Partner Services Business App Services Access Services SOMA Services Services Facilitates interactions with existing information and application assets Connect with trading partners Services Build on a robust, scaleable, and secure services environment Services Services Services Services Infrastructure Services Services Optimizes throughput, availability and performance Services Services Services SOA Reference Architecture SOMA – Service Oriented Modeling & Architecture

18. Are we there yet? • We have made and continue to make progress in bridging the gap • IT continues to become an inextricable part of business • Business Design continues to become more and more sophisticated – thereby increasing the complexity

19. Topics Covered • The Landscape • Characteristics of the Gap • Service Orientation at the Enterprise Level • References

20. References • “Impact of Services Orientation at the business level and its influence on IT” - Cherbakov, Galambos, Harishankar and Kalyana. IBM Systems Journal, Nov 2005. • “Simplify to Succeed” – May 2003, IBM • “The Business-IT Gap; A Key Challenge” – Doug McDavid, IBM • “IBM’s Vision of the on demand enterprise” – Michael D. Zisman • “Towards a Service Oriented Organization” – Richard Veryard, Jan 2004 CBDI.

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