IT's all about business outcomes
In his latest
blog post over at Loosely Coupled, Phil Waineright discusses the challenges to traditional software-based pricing models. He refers to an
Economist article which highlights some of the factors which are driving a reappraisal of processor-based pricing models, such as the advent of multi-core processors and virtualisation. Whilst these factors have certainly served to catalyse what has been an ongoing industry debate, his later reference
to an article by former McKinsey & Co partner Mike Nevens gets to the heart of the matter. Here at MWD we firmly believe – in fact, it’s why we created our own company – that business investment in IT is directed to deliver business outcomes and that IT organisations should be measured on that basis – and by implication their IT suppliers. However, this is not limited to pricing models. Our discussions with enterprises make it quite clear that they are far less concerned with the features and functions of stovepipe technology solutions and far more with how they can work together to support the desired business outcomes. Which brings me on to SOA.
Much of the industry discussion around SOA is focussed on the design, development and integration of business software applications as groups of software-based web services. Whilst this certainly goes some way to addressing the need to break open technology stovepipes, it doesn’t go far enough. A service-oriented approach to IT must consider more than these "business function" services. It must also take account of the infrastructure services that provide the underlying platform and the lifecycle services that are responsible for the design, implementation, operation and alteration of infrastructure and business function services. It is the combination of these distinct but interdependent IT services that IT organisations must deliver to enable investment in and delivery of IT capabilities in line with business objectives. But how can the business assess those capabilities in terms of the business outcomes they deliver? The key here is to ensure that the mutual obligations of service providers and consumers are agreed and then enforced. Once again, current SOA thinking is lacking here, with much of the emphasis on ‘what’ the service provides – the functional aspects. Service contracts must also consider ‘how well’ the ‘what’ is delivered and ‘how much’ it costs – the quality-of-service and commercial aspects. This demands that infrastructure to support SOA initiatives has sophisticated capabilities in areas such as policy-based prioritisation and optimisation, identity management etc which are essential if IT organisations are to support business outcomes – and be seen by the business to do so. As SOA initiatives mature it will only serve to increase the pressure on IT suppliers to shift to a model, in terms of packaging and pricing, which reflects the way it is being used to support business outcomes.
