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Friday, March 25, 2005

On Demand, In the Soup, and On the Path to Glory

by Jay Cross

Forbes magazine (March 14, 2005) throws cold water on IBM's On Demand computing strategy and grid computing in general, quoting a hardware-hawking competitor that "The utility computing model is bull. Hardly anybody is buying that way."

Forbes reports that IBM CEO Sam Palmisano is now pushing "business process transformation," and continues...

In addition to that, there is a market called "business process outsourcing." Instead of simply running computers, IBM hopes to operate entire parts of a company's business, such as personnel or accounting. Last year at a meeting with Wall Street analysts, Palmisano touted this kind of outsourcing as a $500 billion market of which IBM dreamt of someday getting 10%.

Is IBM smoking something? We think not. Sam is merely ahead of his time.

When every business is getting exponentially quicker and more connected, who's to say we should evaluate future potential by the conventional calendar?

Permit me to describe the inevitable convergence of some very powerful forces from the perspective of the Workflow Institute.

SMART SYSTEMS. Business software is becoming sentient; it knows what’s going on. Networks are linking to networks like topsy. As long as every new node adds disproportionate value, the grid will continue to expand like kudzu. As if the existence of the internet were not enough, organizations are linking customers, suppliers, partners, and workers. Businesses are forging deeper links to one another. Sensors inform the net of physical conditions. We're approaching an information singularity, the point when membership in the net becomes so valuable that joining will be irresistible and the resulting wealth inestimable.

. To maximize shareholder value, invest in core and outsource everything else. Sort of. That's what you'd do in a world without friction. I'd hire a yard guy to mow my lawn so I could do something more productive. But I haven't done that. I'd have to drive down the hill to pick up a migrant, negotiate his pay for the job, monitor his work, and, if I planned to seek elective office, pay a nanny tax or something. Outsourcing business functions sounds great until you face the transfer costs. But IT is poised to make those costs go away.

INTERNET OPERATING SYSTEM. All commercial software development is informed by the example of the internet. Adopt simple standards, be open, make connections, simplify, let it flow. Think virtual. Java runs on a virtual machine; the internet operates in a cloud. The adoption of internet principles and standards is called Service-Oriented Architecture. (I know, stupid name.) Instead of Client-Server Architecture, where one computer's in control and another is doing its bidding, SOA is democratic, and interactions among software agents control the show. SOA is flexible and robust, more like a school of minnows than a whale. Having a hive mind but separate bodies enables the minnows/agents to reconfigure themselves, something we call....

LOOSE COUPLING. The minnows of business are processes. In an old-style organization, the processes were all glued together. (Legacy stickiness is why every business isn't outsourcing whole hog already). A set of standards called Web Services makes it possible to pull business processes apart and reconnect them with a universal socket and plug. Mind you, this is all in software; it's virtual. The result is an organization that resembles a Tinkertoy set. You can take off a piece and replace it with another. Maybe you decide to remove your payroll department and replace it with ADP. Why not? You're not in the payroll business. Thanks to loose coupling, ADP's payroll is now wired into your systems. From a reporting standpoint, you can't tell the difference.

BUSINESS PROCESS MANAGEMENT. All the virtual stuff in the world isn't going to make a dent unless it's connected to the real world, and that's where we get to the concept of business process. This is a field of limitless acronyms, so I'll try to describe it by analogy instead of TLAs. Imagine you are seated in front of a triple-size touch-screen monitor upon which is displayed a map of the processes in your organization. You zoom in on, say, credit approval. The color alerts you to a chokepoint. You see a way to route around the problem by jumping to an outside credit bureau during peak times. You run a quick what-if scenario and find out the change will save $5,600 a year. Here's the magic: you change the process on screen -- and the underlying code changes simultaneously. Hold your applause, but in that instant, business units wrest the power to improve processes from the clutches of the IT.

These five things, all in prototype now, spray organizational WD-40 on the couplings of business processes and make Sam Palmisano's dream of frictionless business process transformation come true. Business executives can optimize workflow by swapping functions in and out. They'll be able to model the benefit of doing so in advance. Bots will work through the night optimizing business structure. This is the ticket of entry to the next higher level: reconfiguring the business to exploit new opportunities.

But I get ahead of myself. What about the people? How are they supposed to adapt to this world? I go to work at the fish store and by the end of the day it has morphed into an upscale market research firm. Maybe not, but you get the idea -- keeping up with change will be one hell of a challenge. Within a few years, the amount of information in the world will be doubling every week! Enter workflow learning technologies.

RICH CLIENTS. No, not Warren Buffet and the Sultan of Brunei. We're talking portals. The intelligent front-end. Instead of a static jump page (Yahoo or your intranet, for example), a rich client portal is a dynamic, smart connection to people, news, processes, alarms, learning, and more. Rather than worry about locating experts, monitoring the work I'm responsible for, accomplishing routine tasks, and everything else, it's all there when I need it. Remember Apple’s vision for the Knowledge Navigator? A Rich Client is the Knowledge Navigator grown up. This sort of technology will be built into the IT woodwork. That frees up my thinking to ponder…

WORKFLOW LEARNING. Training is a lousy way to cover over design flaws. The first performance support tools were developed in lieu of training, to simplify the task rather than train people in something needlessly hard to do. It was a great concept; unfortunately it was ahead of its time for realization. Take the principles of performance support, real-time workflow monitoring through a rich client, connections with all the people/process/tools one needs, and voilà: workflow learning -- learning that finally returns to where it belongs, embedded in the work itself.

When the work process moves on, the related learning hooks accompany it. Work and learning, bound together as tightly as protons in the nucleus of an atom. Some of us have been waiting for this moment for a long time.

Granted, this is enough to make your head spin. My friend Wayne Hodgins likes to live five years in the future. I try to live in the present, but I find that my optimism has me putting things in the "real" category a couple of years before they arrive. I have no doubt that what I'm describing will be commonplace in the near future.

But why, one wonders, has Sam Palmisano bought in to this? He's going to have to show revenues. Soon. His On Demand vision requires businesses made of interchangeable parts with people who can adapt to jarring change. I can dream it, but he must deliver. Why now?

TIME, TIME, TIME. The answer is time. The time is right. The pace of business is ever faster. There's no going back. Yesterday's differentiating advantages of shortening time-to-market or being lowest cost producer don't count for much when everything's cheap and can be delivered by FedEx tomorrow.

Organizations that cannot morph at the speed of change are toast. Sam Palmisano has the only game in town that's working on all the pieces of the puzzle. Can he make it? Business is never just a day at the beach. If not IBM, who? If not now, when? Thank goodness someone is looking ahead more than one quarter.


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