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Dell - a new direction for industry IT

Friday, February 3, 2017

Research firm Gartner has developed a number of models showing how company CIOs can make better IT systems for their company - and how every company is being disrupted by IT. John McLaren, account director, Dell, formerly with Gartner, explains what it means for oil and gas.

CIOs might be able to improve how they manage IT by modelling the capabilities of their company, applying different IT technologies at a different pace, and splitting IT into 'agility' and stability', said John McLaren, account director with Dell.

It might also help to be aware of the different ways that digital technology is disrupting just about every industry, he said.

Mr McLaren is formerly a business development manager with Gartner, until August 2015, helping company senior management transform their business with technology.

He was speaking at the Digital Energy Journal forum in Aberdeen in May, 'subsurface computing and competitive advantage'.

Capability modelling

One idea from Gartner is to encourage company CIOs to draw up 'business capability models', showing where their business (not the IT systems of the business) has its strongest capabilities, and what is strategic objectives are.

From the business capability model, the company will see that some of its capabilities are ones that any company in the sector has, but there are some which differentiate the company from competitors, and other areas where the company is developing new ideas (innovating).

Then they should look at where IT investment has been made, and see how aligned it is with the company's most critical capabilities. You might identify areas where there has been IT investment which has nothing to do with strategic objectives, and the reverse.

CIOs should try to understand how their business really works, not base their understanding of the business around its IT infrastructure, he said.

The more IT people can understand the business, the better their relationship will be with the business.

'I hate terms like business and IT because IT is a discipline within the business,' he said.

Pace layering

In a similar vein, you can 'pace layer' your IT system, another Gartner concept, Mr McLaren said.

This means looking at different aspects of the IT management task, dividing the IT infrastructure into 'systems of record', 'systems of differentiation' and 'systems of innovation'.

'Systems of record' are commodity systems, such as the Enterprise Resource Planning systems. 'Ideally you want to source these things as cheaply as possible,' he said.

'Systems of differentiation' are what differentiates you from competitors.

Then the 'Systems of innovation' are experimental projects - which will become 'systems of differentiation' once they work.

Currently, company IT departments are under enormous pressure to build new tools as demanded by customers.

But if IT just focusses on managing the commodity part of the business, the 'systems of record', and nothing else, it may see opportunities fly by.

Bimodal IT

Another Gartner concept is that organisations split up the IT work into 'stability' related work and 'agility' related work. Gartner calls this idea 'bimodal IT,' he said.

In the 'stability' mode, the emphasis is on safety and accuracy, and working sequentially step by step.

In the 'agility' mode, the emphasis is on agility and speed.

Perhaps the CIO needs to have a dual personality, one half focussing on keeping the business running safely, the other half focussing on developing new technology, Mr Mclaren joked.

The 'stability' mode focusses on creating technology which will run for a long time. The 'agility' mode needs sprinters, continuous fast change. 'They are both very different. It is very much about the speed of change.'

Oil and gas

In the oil and gas industry, Mr McLaren predicts that there could be big changes in how people use computer tools to understand and model the subsurface.

There may also be much more hybrid infrastructure, perhaps with companies running high performance computers in the cloud together with their local networks.

The low cost environment is very disruptive to the industry, and times of disruption are times when digital transformation is more likely to be brought in, he said. 'There's a colossal recognition that digital technologies will help oil and gas reduce cost.'

Similarly, there has been big digital disruption in government, driven by the austerity programs, people needed to work in a different way.

'While there's tough times, there's a lot of exciting opportunity, we can start to make a difference to organisations,' he said.

Digital 'remastering'

Mr McLaren shared some ideas about how advances in digital technology are driving industry in general. Many consultants have said that every industry will be 'digitally re-mastered' with technology re-defining its products, he said.

'This attack, this disruption, is going to come from outside your industry, from above or below, not from your usual competitors,' he said.

Different industries will be impacted at different points in time, so it may be 2020 to 2030 before the oil and gas industry is affected. 'I would contest, we're starting to see an impact of that taking place now,' he said.

As an example, you can see how fast car manufacturers have started taking the idea of self driving cars seriously, after being dismissive of it just two years ago. That digital disruption was probably driven by Google.

Today 'every single one of the automobile players clamber over themselves to say when they will have it in the marketplace,' he said.

Control the platform

In the digital world, 'whoever has control of the digital platform, will be the organisation or company that wins the game.'

You can make a strategic planning assumption that by 2020 'the strongest companies will be those with the strongest industry digital platform control.'

As an example, Uber runs the platform people use to find taxis, and Air BnB runs a platform people use to find accommodation. 'They are in control,' he said.

Four driving forces

Mr McLaren quoted four 'driving forces' pushing digital transformation, taken from the Gartner book 'Digital to the Core'.

The first is 'resolution revolution'. The resolution of sensors, particularly cameras, is improving massively, particularly due to improved computer processing power - so we see that mobile phone cameras today are as good as digital cameras a few years ago. The more high resolution connected devices we have, the more people will be able to 'view the business, understand and make changes,' he said.

The second driving force is 'compound uncertainty'. There is uncertainty about how people adopt technology, how the technology is evolving, and how regulation is changing. 'Each one of those 3 points will have a big impact'.

As an example of uncertainty, Mr McLaren told the story of a tennis racket manufacturer, who benefitted from an unexpected regulatory change (in tennis association rules), allowing players to use rackets with sensors in them. The sensors could judge how well the player was hitting the ball, and help the player to learn.

The company subsequently used data analytics to find out that the optimum tension for the strings was actually higher than it had previously thought.

A third driving force is 'boundary blurring', where companies work out new ways to get from one industry to another and develop new business models. An example is the sports clothing manufacture Under Armour, which entered the software industry through acquisition of website MyFitnessPal. The company could see the trend towards people wanting to 'measure themselves', and realised that at some point in the future it would want to install sensors in clothing and develop an ecosystem.

Along these lines, there are quotes from car manufacturers saying they are now 'information companies,' and competing against Apple rather than other manufacturers.

GE Chairman and CEO Jeff Immelt said in 2004, 'If you went to bed last night as an industrial company, you're going to wake up this morning as a software and analytics company.'

Mr McLaren is interested in the UK government's plan to make seismic data available for public analysis - this could lead to 'boundary blurring' with new companies entering the subsurface data field with special algorithms.

Companies are often complacent about the threat from new 'platforms' for example, before Uber arrived, taxi companies probably thought their biggest threat was new taxi companies, who would be handicapped by the cost of finding vehicle and drivers.

Dell

Dell has an advanced analytics offering called Statistica. In particular, it can help understand all the data from different sensors, run algorithms, and develop solutions for security, mobility, and collaboration.

Dell also provides high performance computing solutions, and an information integration platform called Boomi.

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