Mark McDonald

The very notion of what IT is and how it works in transition driven by economic, business and technical forces.  One of those forces is the accelerating degree to which the traditional IT stack is transforming from private to public infrastructure.  That transition has profound impacts on what we consider IT and how we value technology and the people who implement it.

The technology stack at an industry wide level can be described as consisting of four layers.  The layers, shown in the figure below, denote the different structures with different types of investment and classes of technology involved.  Change the nature of any one of these structures and you change the nature and value of IT.

The various structures in the technology stack are not new.  The figure above seeks to provide a simplified model based on a long running conversation I have had with Peter Keen about the shifting fundamentals of business technology.  The simplification of the levels and any errors are entirely mine alone.  The technology stack can be thought of as a series of structures, moving from bottom to top they include:

The Substructure comprises the physical communications and connectivity technologies required for computing.  The Internet is the ultimate substructure.  Substructure is hidden and in fact you do not realize it exists until it is compromised, for example when someone severs the cable that delivers your TV and Internet Service.

The Infrastructure covers the computing, communications, systems software, hardware and other elements running on the substructure.  This layer constitutes what we traditionally think of as IT infrastructure in includes the data centers, servers, storage, etc.

The Structure contains the business logic that you use to run your company.  These are the applications, the information / intelligence, the user interface, etc.  Structure is the way you run your business.  Structure runs on infrastructure to isolate complexity and provide scale.

Context is the ‘structure’ that creates value and meaning to your operations.  Context is what makes you unique in terms of your economic model, context, enterprise strategy, customers/markets, etc.  Context is the ‘ghost in the machine’ that brings the rest of the stack to life.

Using this simple model, we can see that over the last 40 years, technology structures have gone public – by that I mean they have moved from being services the company had to provide for itself to services that could be purchased on the market.  The figure below provides an illustrative example and some rough timing about the transition of the technology stack private to public hands.

So what?

It is interesting to note that these transitions were made in response to market forces and the nature of technology innovation that created new price performance ratios.  In many ways, the move from private to public has been a major force behind realizing scale efficiencies and the value of Moore’s law.  After all without the ability to share across enterprises, there would be little in terms of scale efficiencies and connectivity.

Transitions at the substructure and infrastructure levels are well underway and they have been shaping IT since Gartner introduced the IS-Lite Model in 1999.  The migration of infrastructure, via technology outsourcing, managed services and the cloud, is changing the nature of IT organizations, economics, and its value proposition.

When each structure goes from private to public it changes its value, capacity, capability and the structure of IT itself.  We can expect further changes in IT as structure goes public, through things like Web 2.0, software as a service and other consumer based technologies.  These forces will change the relevance of our application and data structures and their ability to deliver competitive advantage.

Context will change and some technologies that support context will shift into deeper structures, but it will never go public.  Context cannot by definition go public and have a viable and competitive enterprise.  In this regard, context is not the strategy, but the source of value that makes the strategy relevant to customers, competitors and investors.

CIOs need to recognize the changing forces created by shifts in the technology structure as they have deep and lasting implications for IT.  The impact of each of these shifts on the value of the technology, the IT organization, and the business views of IT will be covered in the next few posts.

Technology goes public changing the IT organization

Technology goes public changing IT value

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Category: 2010 Personal Observation     Tags: CIO strategy, IT strategy, Strategy and Planning, Technology Leadership

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