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Are Value Chains the “new thing” for IT?

Guest Blogger (HPE-SW-Guest) ‎06-06-2013 10:36 AM - edited ‎06-25-2015 10:27 AM

Guest post byJoshua Brusse, Chief Architect, Asia Pacific and Japan, HP Software Professional Services


It was some years ago that a few “pioneers” came together in an HP office to talk about something that was already common in the business but was not yet established in IT—Value Chains.


First launched through Michael Porter’s book, “Competitive Advantage: Creating and Sustaining Superior Performance,” a value chain is an integrated chain of activities that an organization performs to deliver value to their customers. It has been adopted by many organizations since then but only in the “business”, not so much in IT.  The experience that those “pioneers” had while working with many enterprise customers however, was difficult. They realized that to make the Service Lifecycle Management sustainable, IT needed something more holistic then just the “stand-alone” processes that were adopted in many IT organizations through the increasing popularity of ITIL, ISO/IEC20000 and COBIT. It seemed that IT was ready to adopt Value Chains too.



Today I see the interest in Value Chains growing. Myles Suer recently wrote a series of blogs that I think are quite an interesting read. Every time I discuss IT value chains to board members they listen and engage with the idea and many customers are now working with HP to decide which value chains (sometimes called value streams) are relevant for an IT organization.


Value chains are not yet main stream in IT, but in my opinion they should be, because – like in any other business – IT should have an integrated chain of activities that an they perform to deliver value to their customers. And in the future this is going to be even more important.


IT organizations have historically been the sole source of technology enablement to the enterprise – the gatekeeper of all things related to the mysterious world of technology. However, as a result of consumerization and cloud, the mystique of technology is no more.  The digital natives have entered the workforce and they aren’t intimidated by technology; they are exploiting it!  We are starting to see that IT is no longer telling the users what they will get. Instead, users are deciding what they will consume and use and where they will source it from, often driven by the overall experience rather than just functionality.  This is forcing companies to rethink their approach to IT, how it works, what it delivers to the enterprise and how it is sourced. 


Users demand speed and flexibility


Most of HP’s customers are still using the traditional IT model, but the general consensus from their user communities is that it is too slow and inflexible to deliver innovation at the pace they need. Commoditization and consumerization of IT bring new business models, open up new markets globally and spawned new systems of engagement. This is forcing IT to become a service provider to the business and deliver services through a self-sourcing experience (like a catalog). 


Until now most of the efforts we’ve seen in this space have been oriented toward delivering “IT technologies as services”, compute, storage, network, apps on-demand. Unfortunately the business doesn’t want technology services and monolithic applications on demand – they want ready-to-use business services that they can source, control and configure to generate their own breakthroughs. To further add to the situation, there are more disruptions in front of us—the information explosion and big data


It is not only my opinion that - without fundamental change - IT will end up as the maintenance department for the current (legacy) environment while the business sources its own innovation from somewhere else. In fact, this is already happening for many of HP’s customers. So what’s needed is a hybrid IT modelthat enables the organization to maintain the traditional systems,  the multi-sourcing of business services and the ability to harness the power of the information explosion and big data. 


Can IT be everything to everyone?


This is a new structure, with service provider and broker characteristics aimed at connecting the various sets of economic buyers with the services they need at the right time, in the right context from anywhere on the planet. The goal here is to create an engagement experience that helps move from project-sourced to self-sourced deliverables, which in itself increases the speed of innovation.  And if IT can become the central service broker, then the enterprise can operate with the appropriate level of control, security and risk mitigation that the board demands.


I believe that thevalue chain based operating model should be the foundation for the new (hybrid) structure of next generation IT. This is  because IT needs to move from a siloed, technology-centric structure to an integrated value chain model focused on the consumption and delivery of services.

But wait…did we not say this when we introduced Service Management? Yes wedid…however…back to the beginning of this article…the focus on processes has not delivered what was promised so far…and maybe never will…because it didn’t address the integration of activities into a chain to deliver value.

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