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IT Innovations: Evaluate, Strategize, and InvestManas Sahoo
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Introduction
Adoption of a particular IT innovation is sometimes the key survival factor for many firms
“How can I best evaluate an emerging trend for its investment worthiness?”
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Introduction (cont’d)
Classic diffusion of innovations (DoI) theory By Everett M. Rogers Focuses primarily on the
“customer context” (how an innovation helps customers) without much regard to other contexts such as the “competitor or industry context” or the “technical intricacies context.”
Everett M. Rogers
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Introduction (cont’d)
The business ecosystem in the IT space in particular plays a very vital role—an innovation must therefore be “eco-friendly” to be successful.
As an alternative, Sahoo proposed a slight variation on Rogers’ original work—the diffusion of IT innovation framework—that IT professionals and academics alike can use to evaluate emerging trends.
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Outline
Evaluation Framework Analyzing Current Trends
How Can I Leverage These Trends?
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Evaluation Framework
Apart from customer-related factors, other factors such as ecosystems (networks of firms tightly linked to each other) and technology hugely influence an emerging trend’s success.
PC/client-server configurations Internet’s rise
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Evaluation Framework (cont’d)
Taking many factors into account, the diffusion of IT innovation framework evaluates whether an innovation renders the following: relieves current customer pain points provides relative advantages when compared to other
existing offerings is compatible with existing products is simple, is easy to use or implement is making inroads with larger customers has an open architecture
relieves current customer pain pointsprovides relative advantages when compared to other existing offeringsis compatible with existing products
is simple, is easy to use or implement
is making inroads with larger customers
has an open architecture
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Evaluation Framework (cont’d)
This framework’s users can develop a scoring model based on the likelihood of the trend becoming mainstream.
This score, along with considerations for the user’s economic, regulatory, and political environment, help facilitate decision-making.
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Diffusion of IT innovation framework
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Analyzing Current Trends
A survey from various IT firms and research of technical journals reveals that
are the most prominent emerging trends in IT today
SaaS SOA
Cloud Computing
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Software as a Service (SaaS) SaaS-based applications save customers from making
huge upfront investments in IT infrastructure the software vendor provides and maintains the overall
infrastructure
With its subscription-based model, offers a “quantum of solace” for customers reeling from cost pressures.
However, SaaS raises concerns related to security (because applications are hosted outside the customer’s firewalls), customization, availability, and scalability.
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SaaS (cont’d)
From an ecosystem perspective, SaaS reveals that firms tend to use it mostly to pursue an IP-based product strategy, rather than as part of ecosystem development.
However, some SaaS solution providers are trying to build a network of firms on the provider side, thus planting the seeds for a possible ecosystem.
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SaaS (cont’d)
For example, SalesForce, via its AppExchange platform, is trying to enable independent software vendors and value-added resellers to co-develop integrated solution for delivery in a SalesForce-hosted environment.
Similarly, Progress Software is providing a set of tools in its business application platform, OpenEdge, that enables firms to develop, deploy, and manage integrated applications in the SaaS model.
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SaaS (cont’d)
Because SaaS are hosted elsewhere, it isn’t easy to integrate SaaS-based solutions with on-premise applications This integration is difficult to accomplish and
expensive to execute.
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How Can I Leverage SaaS
SaaS-based solutions should be designed to trade-off between customizability ease of set
up/maintenance
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Service Oriented Architecture (SOA)
SOA’s flexibility via its standardized loose coupling between disparate applications soothes a major pain point for customers maintaining an extremely heterogeneous IT system
landscape
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Before and after SOA
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SOA (cont’d)
Existing IT applications and products can be redesigned to fit the SOA paradigm Several firms in the IT space have already started
reworking their old products For example, SAP has redesigned its Business Suite
products, providing SOA-based web services that both partners and customers can leverage as an API.
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SOA (cont’d)
SOA is an open standard that allows the integration and interoperability of different applications by different members of an ecosystem.
Typical SOA-based ecosystem offers avenues for
service providers service requestors
development tools providers
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Cloud Computing
A cloud is a type of parallel and distributed system consisting of a collection of interconnected and virtualized computers provisioned and presented as one or more unified
computing resources
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Cloud Computing(cont’d)
Compared to SaaS, Cloud computing is like “hardware as a service” it provides similar benefits and challenges
Key players
Amazon Sun
Google Grids Lab
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Cloud Computing(cont’d)
Convert customers’ capital expenditures to operational expenditures
Provides large one-time storage/processing requirements and the flexibility of unlimited storage/processing capacity
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Cloud Computing(cont’d)
However, much like SaaS It has limitations in regard to ecosystem building
The key players all have propriety clouds that aren’t interoperable.
To date, none of them have made the effort to build an ecosystem around the concept and bring in more customers
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How Can I Leverage These Trends?— SaaS
In their attempt to provide faster time to value for customers, SaaS-based applications make a trade-off with configurability
The applications most suited for this model are those that are non-core or non-mission-critical to the customer Because they raise many concerns about security,
availability, and scalability It’s important to segment the market for SaaS solutions
based on the customer’s usage rather than size
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How Can I Leverage These Trends?— SaaS (cont’d)
SaaS-based solutions should be designed to trade-off between customizability ease of set up
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How Can I Leverage These Trends?— SaaS (cont’d)
In the future, SaaS-based applications should transform from being ecosystem unfriendly to ecosystem friendly
IT solution providers can help by doing
Integrating with on-premise IT solutions
Encouraging collaboration among SaaS solution providers
Encouraging system integrators and value-added resellers to collaborate on SaaS-based solutions
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How Can I Leverage These Trends?— SaaS (cont’d)
Another dimension that IT solution providers should consider is the demand on organizational capabilities to deliver on the SaaS model when compared to the traditional on-premise software model.
An organizational transformation is essential to best serve this model: on the operations front, IT solution providers must acquire hosting and data maintenance capabilities.
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How Can I Leverage These Trends?— SaaS (cont’d)
They also need to align service and support in a hosted application context
Sales and marketing efforts must be tuned to serve the volume business
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How Can I Leverage These Trends?— SaaS (cont’d)
As a consumer for IT solutions, if your organization wants an IT solution that accelerates productivity and the time to value, yet does not want to invest in IT infrastructure acquisition and maintenance SaaS model is most suitable for you
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How Can I Leverage These Trends?— SaaS (cont’d)
But before the final decision Ensure that the offering has the functionalities that you
require today and is scalable for future use Compare and contrast these functionalities with an on-
premise option and consider the following aspects:
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How Can I Leverage These Trends?— SaaS (cont’d)
The following aspects
Reduce risks by considering only non-core and non-mission-critical applications for SaaS
Choose the solution that provides the best balance for the trade-off between “customizability” and “ease of set up and maintenance”
Choose the solution that integrates best in the context of your existing on-premise IT solution infrastructure
Choose the solution that provides an acceptable response time, up time, security, data protection, privacy, support service, and change-request service
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How Can I Leverage These Trends?— SaaS (cont’d)
Integrating with on-premise IT solutions
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Summary—SaaS
IT solutions based on SaaS can be first tried on a small scale and then scaled up based on real benefits considering “return on investment” and “total cost of ownership” parameters
Appropriate accounting best practices can help in tracking and making the best investment decision
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How Can I Leverage These Trends?—SOA
SOA fares very well in its potential for mass adoption when analyzed using the diffusion of IT innovation framework Compared to the traditionally tightly coupled integration, SOA
provides much greater flexibility due to loose coupling The standardized manner makes it easier for execution and
maintenance SOA has acceptance from the technical fraternity and is
being rapidly adopted most new IT products are being developed with SOA as the
primary design principle
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How Can I Leverage These Trends?—SOA (cont’d)
SOA is an innovation that’s well-suited with the business ecosystems currently found in the IT space It’s an open standard it fosters strong relationships within the ecosystem
A typical SOA-based ecosystem would have the following participants
SOA Development
Tools
Service Requestors
Service Providers
SOA Management
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How Can I Leverage These Trends?—SOA (cont’d)
Service Requestors
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How Can I Leverage These Trends?—SOA (cont’d)
A key element in this ecosystem is the “business services platform” provided by major independent software vendors
This platform contains a basket of business services along with tools for other ecosystem partners to use those services
This platform could then serve as a keystone by creating high-value shareable assets The firm that first provides such an infrastructure of
services would become an important network hub
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Summary—SOA
When choosing an IT solution, consumers should give due importance to whether its architecture is based on SOA They should insist on a SOA-based system design
when engaging with a system integrator for their IT infrastructure
For their custom IT solutions, they should also consider granularity of Web services, version control, and service life-cycle management
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How Can I Leverage These Trends?—Cloud Computing
Enterprises currently use cloud services to improve service scalability and to deal with bursts in resource demands
However Service providers offer inflexible pricing, which restricts
consumers to offerings from a single provider at a time Many providers have proprietary interfaces to their services,
thus restricting the customer’s ability to swap one provider for another
For cloud computing to mature, services must follow standard interfaces
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How Can I Leverage These Trends?—Cloud Computing (cont’d)
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How Can I Leverage These Trends?—Cloud Computing (cont’d)
Business leaders from firms consuming IT solutions should seriously consider a cloud computing platform to meet their hardware requirements It provides an easy way to cater to demand surges and
helps with testing newly developed applications
Startups can leverage cloud computing as a bootstrapping strategy can reap the benefits of unlimited scalability in this
environment
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Summary—Cloud Computing
Leveraging cloud computing to centralize hardware and computing can make firms more efficient, cost-effective, and “sustainable”
However, IT management must be aware of the trade-off between greater efficiency due to centralization flexibility due to decentralization
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Summary—SaaS
SaaS it’s highly touted, but it isn’t a clear high scorer in all
aspects because it tends to remove players from the IT value
chain, it isn’t ecosystem friendly SaaS-based applications provide limited compatibility
with existing on-premise IT solutions
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Summary—SOA
SOA emerges as a strong trend when analyzed using the
framework It also fosters and enables strong relationships within
the ecosystem Organizations should take SOA very seriously and
adopt it if they haven’t already done so
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Summary—Cloud Computing
Cloud computing resembles SaaS in many ways it enables organizations to substitute large capital
expenditures on IT infrastructure with on-demand, small, operational expenditures to cloud providers
However, these providers still need to standardize their interfaces to build a market infrastructure that encourages the trading of services rendered in the cloud
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Conclusion
By using the diffusion of IT innovation framework, IT professionals can develop deep insights into upcoming trends and strategies for investing in them
The framework is similarly applicable to other trends and domains, and should become a key part of any professional’s toolbox