1010RA Cloud+Social IT Serendipity Implies Increased Management Challenges

What is Happening?   Saugatuck SVP Bruce Guptill has returned from three days at IBM Lotusphere, including the IBM Connect sub-event devoted to social business IT. Among Guptill’s goals for the trip were to test the extent of IBM’s emergent SmartCloud positioning, and to probe IBM’s increasing emphasis on social business, including insights and evidence of how customers are adopting and using it, and what benefits those customers are realizing.

As regards SmartCloud, IBM has developed and is delivering solid and consistent articulation of a still-improving cross-offering, cross-technology, cross-application platform approach to enable and deliver Cloud-based software and business services. While technology and service holes exist in the overall portfolio, and wrinkles remain to be worked out regarding interoperabilities and integration, IBM is one of the few vendors, especially Master Brands, with a coherent and viable strategy in this manner.

The same holds true of IBM’s “Social Business” mantra. The messaging, interfaces, and positioning are increasingly consistent across the entire SWG portfolio, not just Lotus; and their articulation is pragmatic and (almost) hype-free. We are scheduling a series of briefings with IBM to further examine its capabilities and plans for developing and delivering Cloud-based integrative software and services for business management, including social business IT.

What’s more important than what IBM is doing and saying about Cloud and social business, of course, is what their customers are doing. During Lotusphere, Guptill attended more than a dozen user sessions, spoke with more than 30 customers about their use of Cloud and social business IT, and was briefed by several IBM GMs and VPs.

What we found was that customer adoption of Cloud, including social business IT and services, is widespread and increasingly sanctioned by IT organizations. There is still a widespread lack of general governance, but IT organizations are certainly moving toward increasing and improving their awareness and involvement in Cloud and social IT instances, whether before or after the fact.

We found also that the measurable benefits of Cloud and social business IT adoption and use are real. As noted in Saugatuck’s recent blog post from Lotusphere, more than 30 conversations with IBM users indicate consistently-quantified business benefits from social business IT implementation. 

But while almost all the user organization leaders we spoke with were able to reduce operational business costs and demonstrate significant ROI (including payback for acquired solutions typically within weeks), their choice of Cloud or social business IT solutions per se was more serendipitous than planned. In short, they went in search of solutions to business problems, found more than they expected, used it more widely than planned, and developed most guidelines after the fact.  And still, they were able to quantify business benefits ranging from reduced costs of operations to improved communications.

Why is is Happening?  Time after time, I listened to CEOs, CIOs, LOB executives, and department managers explain how they went not in search of a social business solution, or even a Cloud-based solution, but a solution that would improve their abilities to improve a business process. Of more than 30 conversations with IT and business leaders over three days, I found not one who went looking for a Cloud or social business IT solution specifically – and very few who had any idea that specific Cloud or social business IT solutions existed for their needs.

Typically, what happened was that a leader, either IT or business, identified a business process problem, then went in search of a solution for that problem. Most frequently, the initial problem or need was relatively small or focused, such as a specific business or IT process inefficiency. In most cases presented at Lotusphere, the leader approached IBM or an IBM business partner (unsurprisingly), who then led the buyer toward a Cloud-based, social business IT solution. The solution was then typically configured or customized for the specific customer need, and implemented.

What was most serendipitous for the customers was that, in practically every case discussed with the customer IT or business leaders, the solution delivered benefits well beyond what was planned or expected, resulting in more widespread improvements – and resulting in more widespread adoption and use. Social solutions, for example, tended to get used in ways well beyond what was expected, enabling much greater / faster / broader connectivity and communication.

For example: The software development group within one large financial services provider was able to reduce project time (and therefore many development costs) by half simply by enabling and using Cloud-based shared documentation with version control instead of the more traditional email-based processes previously used. Developers’ comfort with the Cloud social solution grew quickly, to the point where developers began using and then relying on more aspects of the solution for virtual meetings, resource scheduling, micro-blogging, and project management. In short order, the use and utility of the solution grew vastly beyond the scope initially envisioned – and yet the customer was able to realize continued and expanded time and cost savings, mainly by improving process efficiencies.

Market Impact   Such patterns of adoption and behavior well beyond initial expectations are familiar to long-term Saugatuck clients. We have been researching and analyzing similar trends since 2003, beginning with early research and analysis of user adoption of SaaS and business processes delivered and used as a service. The pattern is one of initially simple goals, limited adoption, point solutions rapid expansion, and rapid, increasing ROI.

What is unusual about the customer experiences noted at Lotusphere is (1) that these instances are increasingly within IT organizations, or coordinated with IT organizations, (2) that the benefits accrue and grow well beyond their initial instances, and (3) that those benefits are based almost entirely on business process efficiency improvements that were not planned or expected.

This pattern actually makes understanding and managing the costs of Cloud, including the costs of social business IT, more complex.

Saugatuck has spent a great deal of time researching and analyzing the costs of Cloud-based IT and business services, and we continue to refine and expand that, notably with our ongoing modeling of Cloud TCO (956CLR, A Framework for Cloud IT Total Cost of Ownership (TCO), 29Sept2011; 992CLS, Cloud IT TCO: The Complexity Factor, 05Dec2011). The bottom line for TCO is that the more complexity arises, the greater the management costs become. When how, where, and why IT is used cannot be adequately predicted, its inherent complexity increases exponentially. The benefits will continue to be real, but the costs will become less easily or accurately quantified.

Our bottom line? There’s no ignoring the business benefits being realized from Cloud and social business IT adoption. But the speed and proclivity of their adoption outside of/beyond planned or expected areas or processes means that it will become increasingly challenging to see, measure, and manage their true costs.

Saugatuck will continue to work with enterprise IT and business leaders to learn how they are managing such situations. Future research for our CRS clients will examine and analyze this research to develop and provide best practices for quantifying, channeling, and improving the business benefits of Cloud and social business IT. . . .CLICK HERE TO DOWNLOAD A PDF OF THE RESEARCH ALERT