ISM101 Discussion, 10.21.04 Notes from the Field

ISM101 Discussion, 10.21.04Notes from the Field Adam Seligman Platform Strategy Advisor Microsoft Corporation

Agenda • The Business – Technology Gap • The Web Services Revolution • Thoughts on selling technology • Thoughts on Microsoft

A bit about me

Business Value & Technology or, why executives don’t care about developer productivity Adam Seligman, .NET Agitator

2 Minute MBA • $1 tomorrow is not the same as $1 today • Difference is called “discount rate” • 10% annual discount rate means: “$1.10 in a year == $1 today”

Discounted Cash Flow Write down your cash inputs and outputs Discount each one Sum them

Advanced Management Business Case Development Guesstimate cash flows for projects Portfolio analysis and management Pick projects with positive NPV Don’t drop the ball Don’t drop the ball

MBA ISM101 Fall 2004 Graduation!

How do Business Execs think about projects? Invest some cash up front Get a big inflow of cash later Positive NPV

Cut Development Cost by 50%

Add Some Project Delay

Three Scenarios

Observations • Fat tail end of projects determine returns • Developer productivity is low priority • Project risk = Delay of return • New technology has a lot more downside than uspide

What do technical people think of business people?

What do business people think of technical people?

How we hear, think differently, examples of problems this causes

Market Challenges • Earnings pressure Lowering costs Rising Consumerism Regulatory Pressure Competition Security issues New technologies

Growth is Difficult • Research 130 businesses • H&R Block, Lowe’s, Johnson Controls, Medtronic, Mohawk Industries, Wal-Mart, Harley-Davidson, Dell, etc., • Findings • 1997-2002 the thirty companies that make up the Dow Jones Industrial Average grew at a collective rate of 4.9% in revenue, 4% in gross profit and 0.5% in after-tax profit • If you take out the top five performers the remaining 25 companies grew revenues at 2.3% - about the rate of inflation • Root causes – management systems, management tools and techniques have not kept pace Source: Michael Treacy’s Double-Digit Growth, 2003

Advances in Management Tools

“The major differentiator between companies now is their agility – their ability to create value quicker than their competitors. This may be the only differentiator in the future, as every other innovation can be copied.” -Rolf Jester Chief Analyst – IT Services Market Asia/Pacific Gartner

The Debate About IT

Fundamental Business Questions • What is the “basis of competition” in the market(s) where my company competes? • How will we know when the this basis of competition shifts ? • How do the velocity of information and the agility of my organization impact my company’s ability to compete ? • How does the Microsoft platform help me realize strategic competitive advantage ?

What’s all this WS stuff about?

Business IT today

If You Invest …Then Tomorrow

10 Years LaterWhat Actually Happened

Treasury / Forex Payment Systems and Card Mgmt 3D Secure Trading / Back office Wealth Management Core Banking Branch Banking Internet Banking EAI Business Intelligence Straight through Processing CRM Aggregation Wireless ATM / POS No Application Is An Island

Employees Employees Customers Customers Suppliers Suppliers Suppliers Partners Partners Partners No Company Is An Island

What are XML Web Services? • Industry standards for applications to talk to each other • Extend basic web concepts… (HTTP, HTML) • To applications (SOAP, XML, WSDL, UDDI) • Designed to work across platforms & languages • Coexist well with firewalls and networks • Standards body defining the specs: • Participation by all the major players

What is .NET? • .NET is our brand for our XML and WS stacks • Microsoft is delivering XML and Web Services capability across our product line • Windows OS, BizTalk, SharePoint, etc. • New applications use the .NET framework, which includes WS and XML tools • Use Visual Studio to develop applications on the .NET framework from a variety of languages • C#, C++, J#, VB.NET, (and many others)

Service-Oriented Architecture • An approach to take existing IT assets • Think of these assets as technical capabilities: “services” • Use these services, along with new services, to support business processes • Reconfigure these services flexibly to support changes in business process

What does a customer think of a vendor?

What does a vendor think of a customer?

1. Writing a Business Case • Start with your core business objectives • Top line: growth, new customers, expand market • Cost savings: simplify, consolidate, shutdown old systems • Build a business case with champions from both IT and business • 4 sections: • 1 background & strategic need • 2 what you want to do • 3 benefits to your firm • 4 economics (cost & benefit)

2. Pitching Technology to Mgmt • Get a clear “GO” or “NO-GO” from management • Force the point • Make a pitch • Make a clear “ask” for funding and sponsorship • Use a core team of both business and IT staff to map out the project • Build a real project plan – don’t just pitch for $ • Program manage project aggressively • Enforce phase-gates/milestones and reviews

Getting “unstuck” • Strategies for “NO-GO” or on the fence… • Wrap an existing system as a service and deliver value to a business process where there’s a clear pain • Use case studies from http://www.microsoft.com to demonstrate value of .NET Architecture in your industry • Take a “challenge” – a hard problem that nobody else has a good solution to, and deliver past expectations

Still stuck? Is this a company that is using technology to its strategic advantage?

Microsoft cheerleading • R&D spend, financials • What we’re good at, what we’re bad at • Roles & Org • A day in my life

ISM101 Discussion, 10.21.04 Notes from the Field