Available: IT Sourcing Textbook for the Classroom

RightSourcingCoversmallJust before the summer I and two other fellow editors published a book about IT sourcing that is also suitable for the classroom. By presenting perspectives on IT sourcing from 21 different contributors, we as editors hope to enable and inspire readers to make better-informed IT Sourcing decisions.

We received some nice endorsements:

“What most impressed me about this book is the scope of it’s coverage, and the level of academic rigor behind the analysis. The broad scope makes this relevant to senior executives concerned with strategy, operational executives accountable for results, and technologist on the ground. The academic rigor gives me confidence that the findings and recommendations are sound. This book will be the reference guide for anyone seriously involved in strategic sourcing.”
R. Lemuel Lasher
Global Chief Innovation Officer, CSC

“Thought provoking, occasionally frustrating and timely! As the theory of the firm is “tested” with evolving technology and globalization driving down transaction costs and enabling greater connectivity we’re presented with many different possibilities for business operating models. By exploring the perspectives of organization, economics, technology and people this book provides the reader with a compendium of theory, ideas and practical tips on “Right Sourcing” the business of IT and enabling different business models. The slightly idiosyncratic nature of a book with contributions from different authors only serves to engage the reader in the discussion. I hope the editors find a way to continue this discussion beyond the book!”
Adrian Apthorp
Head of Enterprise Architecture, DHL Express Europe

“Sourcing is a business theme which gets more and more attention. But making the right decisions is not easy. Sourcing is a wicked problem. This book provides valuable insights and concepts that will help to improve decisions with regard to sourcing. I would recommend this book to anyone who wants to achieve right sourcing.”
Martin van den Berg
Enterprise Architect, Co-Founder of DYA and author of several books, including “Dynamic Enterprise Architecture: How to Make It Work”.

“Sourcing is becoming an increasingly complex task – one that requires fundamental changes in management thinking, radical new ways in which to communicate and deal with knowledge, and a totally new and different view of all the stakeholders. In this book leading thinkers in this space, do a great job in opening up the reader’s mind to possibilities for alternative solutions that integrate the human aspects in everything we do.”
François Gossieaux
Co-President Human 1.0 and author of “The Hyper-Social Organization”

The book Right Sourcing helps undergraduate students to better understand and appreciate the topic of sourcing the information processing function of an organization.
Shortening time to market, huge transaction volumes, 24 x 7 business at lesser cost puts a burden on organizations. How should one adapt to the increasing complexity and changes in the organization and its environment?
Sourcing the information processing function of an organization is covered from different perspectives and light is shed on how we can assure that the chosen solution is in line with the business strategy, business models, business plans and the technology that is available
The book puts forward the proposal that the modern enterprise must fundamentally rethink its ‘sourcing equation’ to become or remain viable.
It is ideal for tomorrow’s decision makers who need to understand the requirements of how best to source the people, services and products it needs, to deliver its business model and keep its commitments to all the stakeholders.
Editors:Rien Dijkstra
John Gøtze 
Pieter van der Ploeg ISBN: 978-1481792806

List price: 

23.96 USD/
20,60 EUR/
15.04 GBP

286 pages
Pub Date: May 2013

KEY FEATURES:

  • Explains management and design choices along with tradeoffs to consider when sourcing information systems and/or technology that run in an enterprise environment.
  • Explores trending topics such as cloud computing, SOA, security, complexity/chaos & organizations, and cross cultural collaboration.
  • Explores sourcing from the perspectives of organization, economics, technology and people.
Website: www.sourcing-it.org
Amazon: http://amzn.to/GzrqaT

The Sourcing Initiative; enabling cooperation

Sourcing Initiative WordleThe Sourcing Initiative is an international, non-profit, collaborative effort of a group of writers to cover as many areas of Sourcing. The idea is that there are a lot of issues at stake in modern enterprises. Our proposition is that the modern enterprise must fundamentally rethink its sourcing equation (Organization, People, Economics and Technology) to become or remain viable. We have dubbed this Right Sourcing.

Now we like to share with you our first iteration of the book.

This first iteration shows the summaries of the chapters we are currently working on. It will give you a first impression about the topics we like to address.

Until now we got positive feedback on the theme of the book. By sharing this first iteration with the public audience we hope to get renewed attention and feedback and also we like to attract new authors.

We are actively looking for contributors to the book to improve the quality of the message being conveyed. Therefore we need your help and your ideas on the vast topic of ‘Sourcing’ – in order to reach an agile organization. If you are interested we would very much like to talk to you.

Some examples of topics we would also like to address:

Supply chain; The traditional view is that value chains are mostly linear but the way organizations work shifts away from the linear value chain. An extended enterprise is a loosely coupled, self-organizing network of organizations that combine their output to provide products and services offerings to the market. Organizations in the extended enterprise may operate independently, for example, through market mechanisms, or cooperatively through agreements and contracts. One step beyond is the notion of value grid or network. What is the influence of this development on sourcing activities?

Sustainability; Given the current energy and environmental issues society has, what does this mean for sourcing activities in terms of responsibility and accountability? What governance model must we use in cases like working with hazardous substances, carbon reduction, or e-waste?

Networks; How to connect people, applications and platforms in an easy way given the fact of the increasing complexity and changes of the organization and its environment and the mobility of customers, employees, partners and suppliers? Network inflexibility can lead to the reduction of choices you have in sourcing activities. What is the relation between connectivity and sourcing activities.

Cloud Computing Economics; Here we want to address the relation between Cloud Computing delivery models (private, public, hybrid) and in-, co-, or out-sourcing in terms of lock-in, switching costs, ownership and governance.

Have a look at this first iteration: http://bit.ly/kiqbQU

Cloud Computing – a disruptive new business model

Guest blog on Cloud Computing Economics:
“Cloud Computing – a disruptive new business model”, call for writers: http://bit.ly/frBAL0

Cloud computing isn’t just a discussion about technology, capex and opex it is about economics. Cloud computing is a disruptive new business model with large consequences for the demand AND the supply side, with interesting micro-economical aspects (principal-agent problem).

And for your information, about Cloud-Computing-Economics.com: Cloud-Computing-Economics.com is run by the Institute of Computer Science at University of Tartu in Estonia. It is the biggest research institution in the Baltics (Skype was invented and developed there) and has a special focus on Cloud Computing and all economics aspects of Cloud Computing.

Datacenters, an architecture approach Part II

Recapture part 1 of Datacenters, an architecture approach

“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 meet the business and technology needs of a data center an architecture development method is wanted. To take an architecture approach in constructing a data center you first have to start with

  1. A proper comprehension of the business model that is being used …
  2. then you can formulate the business architecture and
  3. finally you can start with designing the IT architecture and defining a technical design and finding appropriate products.”

Business Architecture

As a follow up we dive in to the business architecture of a data center. In making the business model, as discussed earlier, a general statement on the value proposition has been made. Therefore we now zoom in on this value proposition that was defined in the business model. But before we start we have to take some current developments in to account. The widespread adoption of a Service Oriented Business approach by means of virtualization technology and service oriented architecture (SOA) has a profound impact on the data center. It is therefore wise to describe a Service Oriented Data Center offering in terms of cloud computing service models. Also if the proposed data center is for internal use it is still wise to use general, cloud computing, service models. The NIST institute has made the following, draft, service model definitions:

  • Cloud Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based email). The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.
  • Cloud Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed applications and possibly application hosting environment configurations.
  • Cloud Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, deployed applications, and possibly limited control of select networking components (e.g., host firewalls).”

We can add to this that in practice we can see that Platform as a Service has currently two flavours. A simple one, where the platform is a standardized operating system, or an extended one where also a standardized database and/or middleware environment is offered.

Another interesting cloud computing document used as input describes a Value Framework. The Value Framework, as described in “Do Clouds Compute? A Framework for Estimating the Value of Cloud Computing” by M. Klems et al. , presents an easy and very general usable framework for cloud computing. I have been working on the idea that it can also be used with some small changes and modifications to describe different kinds of data center value creations. This modified framework, see below, forms the business architecture of a data center.

Data Center Business Architecture Framework

Data Center Business Architecture Framework

It start with defining and explaining the business domain, this forms the link between the customer one has in mind and the value proposition. Then we get the business objectives. Is it about reducing costs, reducing time to create value or increasing quality and functions of the data center? In other words what is the main business objective we want to achieve. Also we have to pay attention to the demand behavior. Can we predict the demand of the customer in some way or another or not? Next question to be answered is which kind of service model you want to provide. There we use the NIST service model definitions, with two extensions: the extended PaaS model and the Colocation service.  So is it just square meters (Colocation As A Service) or are you offering Software As A Service? Each standard service offering should have a well defined interface. Beware that the consumer does not manage or control the underlying components of the platform that is provided. The consequence is that by choosing one of the service models you are  in fact ruling out certain customers because they want to manage or control certain components. Next step is to define the so called “technical requirements”. At this level of abstraction it is all about the service and/or quality you want to offer. So you have to be explicit about capacity/performance, availability, continuity, security and last but not least sustainability demands.

Now that we have al this information we can define the computing service, its function, the qualities and the quantities. Depending on the proposed service model you define your needs on software, processing power, storage, network and facilities (power, cooling, etc.) services. Where service stands for the sum of people, process & technology. This part forms the input for the resource costs. Here we can differentiate between capital expenditures (CAPEX) and operational expenditure (OPEX) and direct and indirect costs. To make ‘what-if’ analysis possible for different scenarios you can make and use a computing service reference model that has the same building blocks as the proposed scenarios.

By using this framework as a business architecture you have a tool for discussing your data center ideas or proposal with senior management.

Next time some words on performance management…

Datacenters, an architecture approach

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.

Architecture

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

  1. A proper comprehension of the business model that is being used …
  2. then you can formulate the business architecture and
  3. finally you can start with designing the IT architecture and defining a technical design and finding appropriate products.

Business model

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:

  1. Customer segments: Who will use the product?
  2. Value proposition: Why will they use the product?
  3. Channels: How will the product be delivered to the customers?
  4. Customer relationships: how will you develop and maintain contact with your customers in each segment?
  5. Revenue streams: How is revenue generated from which customer segments?
  6. Key activities: What are the key things that you need to do to create and deliver the product?
  7. Key resources: What assets are required to create and deliver the product?
  8. Key partners: Who will you want to partner with (e.g suppliers, outsourcing)
  9. 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.

Business model canvas of Osterwalder

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.

Extended business model canvas of Fielt

The other one takes the issue of economic externality and sustainability into account by adding two building blocks: a societal costs and societal benefits.

Extended business model canvas from Businessmodeldesign

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