Many IT people underestimate that a great new technology can be insufficient to build a successful and sustainable business. Because of their trust in a technology’s superiority they fail to spend enough time exploring business drivers, (alternative) business models and business architecture. They often go with the first IT product they come up with. Yet, history is littered with great technologies, products that didn’t succeed.
IT people could greatly improve their success chances by spending more time with understanding the current used business model and business architecture or searching and finding new business models and business architectures. Every IT technology, IT product or IT service can be used but the challenge is to find the IT solution that fits the best with the business model and business architecture that is being used. Improving a data center starts with a proper understanding of the business model and the business architecture that is being used and not by a simple roll out of the newest technology.
To give some examples. Virtualization is a great technology to improve the utilization of your servers. But if the people of the datacenter have the incentive to maximize the utilization of floorspace you can expect resistance to your virtualization plans.
Another example is that part of the problem to get IT green is that one of the involved parties can make a choice or transaction that has an effect on other parties that are not accounted for in the market price. For instance, a firm using excessive energy and thereby emitting carbon will typically not take into account the costs that its carbon emissions imposes on others. As a result, carbon emissions in excess of the social optimum level may occur. In economic terminology there is an externality.
And using cloud computing terminology what is your datacenter really offering? Is it SaaS, PaaS, IaaS or just a facility center on top of which third parties can build their propositions. And then what are the (technical)implications when you are offering a SaaS, PaaS or IaaS service?
Bottom line your technology proposals must be in sync with the business drivers and the business model.
To meet the business and technology needs of a data center an architecture development method is wanted. To take an architecture approach (see for example TOGAF) in constructing a datacenter you first have to start with
- A proper comprehension of the business model that is being used …
- then you can formulate the business architecture and
- finally you can start with designing the IT architecture and defining a technical design and finding appropriate products.
A method to describe a business model that has become extremely popular this last year is the business model canvas of Osterwalder. If you are unfamiliar with this concept have a look at this side or this slideshow Basically the concept introducing a standard language and format for talking about business models. Nine key items serve as the building blocks for all business models:
- Customer segments: Who will use the product?
- Value proposition: Why will they use the product?
- Channels: How will the product be delivered to the customers?
- Customer relationships: how will you develop and maintain contact with your customers in each segment?
- Revenue streams: How is revenue generated from which customer segments?
- Key activities: What are the key things that you need to do to create and deliver the product?
- Key resources: What assets are required to create and deliver the product?
- Key partners: Who will you want to partner with (e.g suppliers, outsourcing)
- Cost structure: What are the main sources of cost required to create and deliver the product?
These building blocks are laid out on a page (canvas) in a very specific way, referred to as a ‘business model canvas’. The business model canvas can be used to describe any of a wide variety of business models.
There are two extensions on this model. One of them is taking the “extended enterprise perspective” and is paying more attention to the partners and the customers.
The other one takes the issue of economic externality and sustainability into account by adding two building blocks: a societal costs and societal benefits.
All summarized this canvas is a great tool for an architect to start a conversation with the business to gain a good understanding of what they want to achieve and how they want to achieve their goals.
Next time some words on business architecture …
Follow Up: Datacenters, an architecture approach Part 2