There is a shift happening but it’s been happening longer than many think and its effects may be larger and more significant than we at first expect.

This shift is business driven, as it strives to maintain its innovation edge ensuring that costs are reduced and ensuring it moves to a more lean and efficient model of operation. In truth , we can look back as far as Adam Smith and the division of labour in the 1700s to the origins of this shift and may therefore suggest that the shift is not really new at all. However, the old model and granularity of operations is under major pressure to change once more.

The shift is to one of Service Centricity and although it has been a long time in coming, the advancement in technology and the role of technology as an agent of change and business differentiator in the modern enterprise is rapidly moving us over the tipping point that causes us to re-evaluate the very foundations of “the enterprise” itself.

Hype and hot air!

Cloud is undoubtedly centre stage and the hype is reaching tsunami proportions. Many blame this on the vendors but while the idea has got the technology market excited I think this view deflects us from the real question of cause and effect. Is this an example of technology creating new markets or is it an example of technology reflecting the needs of existing markets? In essence it’s an element of both and as is often the case with new innovations it often causes us to view things differently which results in new ways of solving existing problems.

As such ‘Cloud’ in all its forms is set to a have a significant impact on the enterprise, but it is in delivering direct quantifiable business value that the cloud will deliver its most significant impact. If you think of cloud simply in terms of utility computing or dynamic provisioning of infrastructure then the point of cloud and its significance may pass you by.

I want your solution not your software

The impact of cloud is already visible across the enterprise today in the endemic use of Software as a Service (SaaS) Solutions at least somewhere within the enterprise and it is not that this is something that just happened overnight but has certainly been growing over the past 5 or so years. Many Independent Software Vendors (ISVs) cite that customers want but don’t want to burden IT. They ask if they can prototype the solution hosted by the ISV. The solution seldom ends up coming in house. One ISV recalled a customer saying “we want your solution, but we don’t want your software”. The issue for the ISV is that they are now a hoster and need infrastructure expertise, something they have little in-house skill or budget for. Cloud platforms provide these ISVs with an instant, scalable, reliable solution that they themselves would be hard press to achieve and all at a price that scales with their customers.

The dilemma for Internal IT

For Internal IT this creates a problem if done without their knowledge and its incumbent on IT to be proactive in the establishment of external services rather than representing a obstacle which will only be seen as holding the enterprise back. Taking a lead on these fronts is where IT can achieve the best results, providing vendor selection services to streamline the process and actually becoming the agent of adoption promoting well governed use of services across the enterprise.

Rise of multi-sourcing

The impact of cloud is not exclusive to the ISV or Internal IT but to the very fabric of the traditional software supply chain.Today we readily recognise different roles and functions across the supply chain from ISVs, to System Integrators, Outsourcers to Offshoring but what happens to these discrete entities if we look to the deliver of services? They start to converge. If I deliver a solution as a service, then I am no longer disengaged from the customer post-sale, we’re tied together for as long as the provision the service. What of the System Integrator? The solution is no longer deployed on-premises for running in-house, but as with the ISV, it’s hosted by the SI. The relationship between consumer and supplier are tied together once more. And so it goes, an ISV looks more like an SI, an SI more like and ISV, they both are outsourcing because the solution never in-sourced. The enterprise is now no longer exclusively in-house or outsourced, but multi-sourced.

Collaborative/Shared Innovation

similar to open innovation through multi-sourcing the enterprise is seeking partnerships for the provision of business services. This is fine at the commodity level, but as one delves ever closer to core business services the need to tailor and personalise and more importantly, protect IP becomes more significant. However, here too we see developments in service centricity through the development of innovation centres and incubation hubs often maintained by the enterprise itself. This works well but is limited and often expensive to nurture. By collaborating and sharing innovation more pro-actively with service partners it is possible to drive the innovation faster, cheaper through a shared risk/reward model, thus allowing the innovation the opportunity to expand much further beyond the horizons of the parental organisation as the market opportunity evolves.

Integration as a Service

Today we see see the commodity functions of email and collaboration moving out of the enterprise at a dramatic rate. So what next? Mission critical? Core Functions? Maybe not, but by using cloud to extend or embellish these core functions and to connect and integrate with other service providers, business partners or different parts of the enterprise itself then adoption rates here too can be seen to be gathering pace.

The Business as a Service

When I think of this I am always reminded of Amazon’s Mechanical Turk which takes it’s name from an 18th century chess-playing machine that really hid a human chess master inside.This service provides human workflow services that are accessible through a web service (programmable API). If we look at the business as a set of collaborating capabilities then we can effectively define boundaries or APIs and describe what the capability does but not how it does it or who does it. This is service centricity business style. This is the “composite” business or business as a service.

Small is the new big.

None of this for you? Maybe not. But if it’s not for you then be sure it certainly is for someone and as is the way with disruptive innovation, it may come from a source much nearer home than you think. Take one person with good business domain knowledge,  take one developer, take one cloud and what have you got? A business service that is reliable, scalable and available to a world of consumers at a cost that they can all afford.