Via @Interoute - The opportunities of digital transformation, or how to train your digital dragon

1. 01Interoute MARCH 2015Digital Transformation Whitepaper
By Matthew Finnie, CTO, Interoute
I was recently struck by how the
entire industry of analysts and
consultants that seek to advise
CIOs and IT managers have without
exception turned their focus toward
the subject of DIGITAL. Browse any of
their websites and the word DIGITAL
screams out. Digital transformation,
digital disruption, digital opportunity...
everything is prefixed by the
word DIGITAL. A couple of years
ago, everything was going to be
transformed by ‘the cloud’ or be ‘in the
cloud’, and it seems we are now facing
a new foe in the form of the digitisation
of business.
I see that much of the commentary is
framed in the negative, for example:
“Only one-quarter of the
companies we surveyed have
a clear understanding of new
and underperforming digital
touchpoints, yet 88% of the
same cohort reports that
they are undergoing digital
transformation efforts.”
Source: Altimeter Group1
“Fifty-one percent of CIOs
are concerned that the digital
torrent is coming faster than
they can cope, and 42% don’t feel
they have the talent needed to
face this future.”
Source: Gartner2
The analysts’ raison d’etre is to advise,
consult and guide the direction of those
seeking advice. Rather than leap onto
their bandwagon of impending tsunamis
and other such superlatives, I thought
a more prosaic view of the challenge
would be helpful, to talk about enabling
the change, or at least understanding
what change will entail and mean.
What is DIGITAL?
I began my career as a semiconductor
engineer working in the artisan field of
mixed signal (that is, analog to digital
and digital to analog) processing during
the late 1980s. It was a time of huge
transformation: in my 8 years there the
world of digital, from ASICS to DSPs,
slowly and steadily eliminated artisan
production and replaced it with the scale
and simplicity of digital. Transformation
was a process that involved compromise.
If you could design something to work
digitally it would be cheap and replicable
to produce. But generally you had
to compromise what you wanted to
achieve, or come up with some design
brilliance, which was rare.
In sum, we knew that change was
unstoppable but the art was to be able
to see what could be changed, when and
at what cost, and also keeping an eye on
what the competition was doing.
For businesses today what the consultants
refer to as the ‘digitisation of business’ also
strikes me as a process of compromise.
The endpoint of ‘perfect’ digital business
seems clear enough. If most businesses
1 The 2014 State of Digital Transformation
http://www.altimetergroup.com/2014/07/the-2014-state-of-digital-transformation/
2 Taming the Digital Dragon: The 2014 CIO Agenda (Insights From the 2014 Gartner CIO Agenda Report)
http://www.gartner.com/imagesrv/cio/pdf/cio_agenda_insights2014.pdf
The Opportunities of
Digital Transformation - or,
“How to Train your Digital Dragon”.
Author: Matthew Finnie
CTO, Interoute
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2. 02Interoute MARCH 2015Digital Transformation Whitepaper
are effectively about the customer
wanting product, buying product and
receiving product, the perfect digital
business eliminates the unnecessary
steps and automates everything else
between the customer’s want and its
satisfaction3
. So the digitisation of your
business is the ability to compromise and
work towards removing any inefficiency
in that process of realising value.
Accenture4
defines DIGITAL as:
“Increasing information
intensity and connectedness
of customer and business
resources. Any resource can
become digital through the
application of technology.”
Whereas Gartner5
says:
“All electronically tractable
forms and uses of information
and technology. It is bigger in
scope than the typical company
definition of ‘IT’ because it
includes technology outside a
company’s control: smart mobile
devices (in the hands of customers,
citizens and employees), social
media, technology embedded
in products (such as cars), the
integration of IT and operational
technologies (such as telecom
networks, factory networks and
energy grids) and the Internet of
Things (physical objects becoming
electronically tractable).”
Back to Accenture which nicely
summarises:
“Grow value, revenue
and efficiency via digital
technologies...that change
the terms of competition.”
Either way DIGITAL is about looking
at your business at a global level and
identifying those areas that will give
the maximum return from automation,
as we have seen with the advent
of CRM and cloud computing. The
common characteristics between two
quite different tools (one is for sales
automation, the other is computational
infrastructure) are TIME and RESOURCES.
They eliminate the need for a resource,
or maximise the efficiency of deploying
a resource, be it a sales rep being able
to kick off a process in the car (rather
than waiting to get back to the office),
or building out the IT platform for the
corporate website that is exactly the
right size with the required level of cost
and resource commitment and no more.
DIGITAL basically means an optimisation
of your processes, products, people
and assets.
Building DIGITAL
So what are the challenges of being able
to effectively exploit the opportunity of
DIGITAL?
Gartner6
has done a nice job of
characterising what many of us see
everyday. The shift from ITIL (Information
Technology Infrastructure Library) to
DevOps, or as Gartner describes it the
move from the second era of enterprise
IT ‘industrialisation’ to the third era of
‘digitalisation’.
The breakdown into ‘eras’ is convenient
but in short the most successful
companies of the past 10 years have
been the digital pioneers who already
entered the third era by taking risks
where others would have waited, and
have capitalised relentlessly on what
they have learnt with a continuous
stream of change. This model has
been widely accepted by the consumer
industries but deemed inappropriate
for the seriousness of the corporate
environment. However the past three
years have demonstrated that the
assumed schism of belief systems
between enterprise and consumer will
no longer hold.
Back to Gartner which assesses (again
in a neat model) the way to tame the
‘Digital Dragon’ in three parts:
• Create powerful digital leadership
• Build bimodal capability
• Renovate the core of IT
Many people will look at this advice and
say “OK, but where do I start?”
Create an ambition
and work backwards
As a young engineer I had to learn
two kinds of control theory, one was
traditional ‘analog control’ the other
was ‘digital’. The former required years
of experience and an almost zen-like
feel to get it right (or at least that’s
how it felt). The latter was new and
way more up my street: unlike the ‘old
version’, the new world of digital control
was mechanical and methodical. You
started with the answer more or less
and worked backwards. Likewise, with
the digitisation of business you have to
start with an ambition. This could be dis-
intermediation of your supply chain, or
your go to market strategy, or any aspect
of your organisational processes. The
elimination of intra-process handoffs is
always a good start. But for each aspect
of your program articulate what you
want to be. Avoid flashy superlatives
and use ‘corner shop’language to make
it real.
What does ‘Create powerful
digital leadership’ mean?
In short, know what you want to focus
on and pick your battles. You need a
leader who understands the impact of
technology and the inefficiencies in the
business. You cannot outsource this,
you need to know it. Your organisation
is a human system created by you and
your peers to deliver value. Changing
and automating that requires intimate
understanding – a consultant lacks the
intuitive understanding to provide that.
Part of the challenge is that process
architecture and development, especially
in IT projects, easily becomes sterile,
where the adherence to the process
becomes more important than the
outcome. Also the ‘neatness’ of
completeness from an IT perspective
isn’t always the right outcome for the
business. Replacing the hand-built
spreadsheets with some reassuringly
expensive ‘system’ isn’t always the right
answer. Automating the incidental or
custom is an oxymoron if you don’t have
repetition. In terms of ‘compromise to
digitise’ this probably means that your
product or your order-to-cash process
needs to be re-architected before you
look to see what can be digitised.
3 See my blog for Wired [http://www.wired.
com/2015/01/whats-next-for-cloud] about the
evolution of popular music consumption from
vinyl to CD to MP3 download to realtime Internet
streaming.
4 Digital Double-Down: How far will leaders leap
ahead? http://www.accenture.com/us-en/
Pages/insight-doubling-down-drive-digital-
transformation.aspx
5 http://www.gartner.com/imagesrv/summits/
images/global/CIO-Agenda-2014-Summary.pdf
6 http://www.gartner.com/imagesrv/summits/
images/global/CIO-Agenda-2014-Summary.pdf
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3. 03Interoute MARCH 2015Digital Transformation Whitepaper
What does ‘Building a bimodal
capability’ mean?
The criticism of the second era of IT is a
familiar one. IT departments created this
crazy notion that their colleagues were
customers. As long as they delivered
what they were asked for, they had
satisfied their role. Clearly wrong and
clearly not satisfying their ‘customers’,
who, when the opportunity arose with
the arrival of SaaS that was accessible
to the end-user, just went around the IT
department using TE budgets to run
marketing campaigns and undermined
the sales automation program by going
direct.
Bi-modal IT talks to the idea of mode 1
and mode 2 IT. Mode 1 is the traditional IT
way characterised by ITIL whereas mode
2 is DevOps and agile development,
which focus on an iterative approach.
To defeat shadow IT you need to provide
an alternative to the traditional mode
1. The arrival of DevOps and Agile are a
formalisation of what has been going
on in the webscale Internet economy
for years: the iterative development and
release of software (mode 2). Call it what
you like, the principle is dead simple
and obvious. All requirements captured
at time t=0 are stale the second you
capture them. The risk of them being
wrong increases the longer the time it
takes you to realise the product from the
requirements. So in simple terms if you
can grab the requirements and deliver
something after two weeks in a sprint
the requester can say yay or nay, but the
worst that can happen is that you have
burnt two weeks. The alternative is a ‘big
project’, with months of development
and UAT at the end, which runs the very
obvious risk of being wrong or outdated
by the time it’s delivered. So in short you
need to reduce the time for feedback
and release on your projects to improve
the chances of relevance. This is not
new, ask any other industry and they
will probably concur that the shorter the
gap between inception and release the
better the chance of getting it right. The
internet economy is in a permanent state
of ‘release’, and therefore it is constantly
changing or as the consultants would
say, it is a continuous goal of ‘good
enough IT’.
One note of caution to this: if you
attempt to run both modes internally
be wary of creating two cliques, the old
stalwarts of mode 1 up against the cool
kids of mode 2, neither of whom will be
productive without a clear and shared
end-goal.
How to ‘Renovate the Core’: the
perspective from Interoute
This is the part that is obviously closest
to my heart. At Interoute with our ground
to cloud continuum model we see
every kind of implementation from the
cautious to adventurous and all flavours
in-between. It would be overly simplistic
to say the adventurous are always right.
But the general rule of thumb is that
whatever you have as a core architecture
is without doubt out of date at some
level right now, and it certainly will be in
three years’ time. So replicating again is
probably the wrong thing to do – think
about buying the same TV as the one
you have now, three years later –
you wouldn’t.
But how far do you go? Where is the
point that works for you and your
organisation? We have some brilliantly
advanced customers who have elements
of their platforms that are 7 years old
and they simply can’t face the inevitable
re-write so they accommodate the
limitations. Excessive latency is often the
result that we see. But the question is
how can you renovate without creating a
building site?
The sage advice from the consultants
is to build together disparate elements
of private and public clouds, tweaking
your static infrastructure and injecting a
little bit or a lot of cloud. A little or a lot of
cloud is one of the immediate challenges
with renovation. Too little and the longer
it takes for you to create a platform that
your teams can use; too much and you
could easily find yourself in migration
hell.
The other and critical problem with cloud
is integration. Using cloud is an obvious
and practical route to a solution, but
before you know it you’ve succeeded in
building an agile, flexible silo that is as
separate from your core infrastructure
as in the old model.
The challenge of ‘Cloud 1.0’ and its public
and private clouds is that it leads to as
much complexity trying to get inter-
working to work as the problem you
started out trying to solve.
The INTEROUTE
INTEGRATED DIGITAL
PLATFORM Interoute
Virtual Data Centre (VDC):
Interoute VDC with its MPLS
backbone is a network of
computing with public cloud
consumption and utilisation.
Interoute VDC can be used like
a traditional public cloud or to
replace/augment an existing
private cloud or physical data
centre infrastructure.
Interoute VDC automatically
integrates both private network
and public networks with your
cloud computing zones across
13 global locations.
Interoute VDC has tiered levels
of multi and single tenancy
asset separation so you can
choose the right level for
your application and legacy
applications.
The density and proximity to
the network of Interoute VDC
gives low latency, improving
performance and legacy
integration.
Find out more
at http://cloudstore.
interoute.com/main/
TryInterouteVDCFREE
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4. 04Interoute MARCH 2015Digital Transformation Whitepaper
At Interoute we long ago rejected the
separation of computing and networking
and we started to think in terms of ONE
DIGITAL PLATFORM or a DISTRIBUTED
CLOUD where you can run and distribute
workloads anywhere.
A world where the workloads are where
they need to be for latency, language or
data sovereignty reasons or because I
want to create resilient workloads in a
market. The network is abstracted as
part of the solution and is appropriately
mobile, secure, assured or ubiquitous.
The net effect is that rather than
spinning up virtual machine instances
‘somewhere in the cloud’ you
automatically get a global network of
computing. You know exactly where
each instance is – you can even craft it
precisely to your requirements. It can be
on the private or public (Internet) side of
the network. The integration is achieved
using a well-understood technology
called MPLS that is normally used to run
private WANs. We use the technology
to create private, global domains that
allow you to build your environments as
you would if you had your own global
backbone. The bonus is that you are
inclusive from the start so the silos never
get a chance to take hold. You still get
the ‘cloud’ but you also get security,
compliance, performance and control.
Interoute’s integrated digital platform is
global with very low latencies, private
and public networking with a global pool
of computing and storage that you can
place anywhere.
Renovation means preserving some of
the past while preparing for the future.
One of the challenges when choosing
what to do is that many of the options
are presented as either/or: either ‘old
world’ (private cloud) or ‘internet world’
(public cloud). These options are too
stark and impractical. This ‘digital’
choice (excuse the pun) means you can’t
sensibly prioritise and compromise – you
are either all in or all out. In the end you
will have hacked together your disparate
clouds, either over the Internet or via a
series of dedicated private links. Either
way this isn’t the progress we should
really want.
The key benefit of Interoute’s approach
is that it is both sympathetic to legacy
– through low latency and the ability to
integrate any networked device into your
platform – and open to the future. On the
legacy side it is the ability to integrate
all of your IT assets that is key. You still
get the same ability to spin up instances
or containers on demand but you can
also be inclusive. The Interoute model
offers the same consistent view on a
continuum from public cloud through
private cloud to those assets that are
part of your infrastructure but will simply
never be part of the cloud, such as
AS400.
Having got your legacy under control
you can look forward. Interoute VDC
supports the rise of new application
environments like the use of containers,
for example Docker, where the developer
abstracts from the infrastructure
to a distributed computational
environment populated by containers.
With technologies like Docker it’s an
unnecessary complication for the
application developer to have to ‘go
under the hood’ and create the static
routing relationships between virtual
machines. The aim is to present simple
addressing to each application. Our
approach also opens up the ability to
create scalable, resilient clusters that
straddle multiple zones without the
constraint of traditional routing.
To leverage these new technologies
requires content replication, application
synchronisation and the ability to
deploy in multiple locations. Crucially it
requires a smart network. Application
technologies are ready, but traditional
IaaS solutions are not.
Interoute’s network
solution for IaaS
Interoute VDC abstracts
the network from the user
so there are:
No IP addressing headaches.
No routing needs to be setup
by the customer.
No complex security required;
networks are private by design.
No performance issues;
performance is optimal due to
huge bandwidth and low latency.
No charges for bandwidth.
Conclusion:
How to train your dragon
The imperative for digital transformation
isn’t a technical one, it’s a necessity of
business and economics but as with all
technology-enabled change the time
between cycles gets compressed. The
three to five year transitions that you
were able to plan for in the past are
gone. You probably don’t know what the
future will bring but you can put yourself
in a place where you can react.
The trajectory of change is well
understood (we are living it). If it’s
possible to do something, then someone
is already doing it. Competitiveness
is a race, but it doesn’t have to be a
race to the bottom. On the other hand
history is littered with overly ambitious
aspirations proving detrimental to
progress. Being smart and flexible with
your resources and learning all the time
is the watchword.
I invite you to try out Interoute VDC,
our integrated digital platform, and
find out if it gives you that flexibility
to challenge, change and evolve
your destiny.
Try Interoute VDC for free:
cloudstore.interoute.com/main/
TryInterouteVDCFREE
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