the opportunities of digital transformation

01Interoute MArCH 2015DIgItAl trAnsforMAtIon WHItepAper

By Matthew Finnie, CTO, Interoute

I was recently struck by how the entire industry of analysts and consultants that seek to advise CIOs and IT managers have without exception turned their focus toward the subject of DIGITAL. Browse any of their websites and the word DIGITAL screams out. Digital transformation, digital disruption, digital opportunity...everything is prefixed by the word DIGITAL. A couple of years ago, everything was going to be transformed by ‘the cloud’ or be ‘in the cloud’, and it seems we are now facing a new foe in the form of the digitisation of business.

I see that much of the commentary is framed in the negative, for example:

“Only one-quarter of the companies we surveyed have a clear understanding of new and underperforming digital touchpoints, yet 88% of the same cohort reports that they are undergoing digital

transformation efforts.” Source: Altimeter Group1

“Fifty-one percent of CIOs are concerned that the digital torrent is coming faster than they can cope, and 42% don’t feel they have the talent needed to

face this future.” Source: Gartner2

The analysts’ raison d’etre is to advise, consult and guide the direction of those seeking advice. Rather than leap onto their bandwagon of impending tsunamis and other such superlatives, I thought a more prosaic view of the challenge would be helpful, to talk about enabling the change, or at least understanding what change will entail and mean.

WhAT Is DIGITAL?

I began my career as a semiconductor engineer working in the artisan field of mixed signal (that is, analog to digital and digital to analog) processing during the late 1980s. It was a time of huge transformation: in my 8 years there the world of digital, from ASICS to DSPs, slowly and steadily eliminated artisan production and replaced it with the scale and simplicity of digital. Transformation was a process that involved compromise.

If you could design something to work digitally it would be cheap and replicable to produce. But generally you had to compromise what you wanted to achieve, or come up with some design brilliance, which was rare.

In sum, we knew that change was unstoppable but the art was to be able to see what could be changed, when and at what cost, and also keeping an eye on what the competition was doing.

For businesses today what the consultants refer to as the ‘digitisation of business’ also strikes me as a process of compromise. The endpoint of ‘perfect’ digital business seems clear enough. If most businesses

1 The 2014 State of Digital Transformation http://www.altimetergroup.com/2014/07/the-2014-state-of-digital-transformation/

2 Taming the Digital Dragon: The 2014 CIO Agenda (Insights From the 2014 Gartner CIO Agenda Report) http://www.gartner.com/imagesrv/cio/pdf/cio_agenda_insights2014.pdf

The Opportunities of Digital Transformation - or, “how to Train your Digital Dragon”.

Author: Matthew FinnieCTO, Interoute

ENT00080_DigitisingTransformationWhitepaper_AW_OPT2_V3.indd 1 09/03/2015 16:43


are effectively about the customer wanting product, buying product and receiving product, the perfect digital business eliminates the unnecessary steps and automates everything else between the customer’s want and its satisfaction3. So the digitisation of your business is the ability to compromise and work towards removing any inefficiency in that process of realising value.

Accenture4 defines DIGITAL as:

“Increasing information intensity and connectedness of customer and business resources. Any resource can become digital through the

application of technology.”

Whereas Gartner5 says:

“All electronically tractable forms and uses of information and technology. It is bigger in scope than the typical company definition of ‘IT’ because it includes technology outside a company’s control: smart mobile devices (in the hands of customers, citizens and employees), social media, technology embedded in products (such as cars), the integration of IT and operational technologies (such as telecom networks, factory networks and energy grids) and the Internet of Things (physical objects becoming

electronically tractable).”

Back to Accenture which nicely summarises:

“Grow value, revenue and efficiency via digital technologies...that change

the terms of competition.”

Either way DIGITAL is about looking at your business at a global level and identifying those areas that will give the maximum return from automation, as we have seen with the advent of CRM and cloud computing. The common characteristics between two quite different tools (one is for sales automation, the other is computational infrastructure) are TIME and RESOURCES. They eliminate the need for a resource, or maximise the efficiency of deploying a resource, be it a sales rep being able to kick off a process in the car (rather than waiting to get back to the office), or building out the IT platform for the corporate website that is exactly the right size with the required level of cost and resource commitment and no more. DIGITAL basically means an optimisation of your processes, products, people and assets.

BuILDInG DIGITAL

So what are the challenges of being able to effectively exploit the opportunity of DIGITAL?

Gartner6 has done a nice job of characterising what many of us see everyday. The shift from ITIL (Information Technology Infrastructure Library) to DevOps, or as Gartner describes it the move from the second era of enterprise IT ‘industrialisation’ to the third era of ‘digitalisation’.

The breakdown into ‘eras’ is convenient but in short the most successful companies of the past 10 years have been the digital pioneers who already entered the third era by taking risks where others would have waited, and have capitalised relentlessly on what they have learnt with a continuous stream of change. This model has been widely accepted by the consumer industries but deemed inappropriate for the seriousness of the corporate environment. However the past three years have demonstrated that the assumed schism of belief systems between enterprise and consumer will no longer hold.

Back to Gartner which assesses (again in a neat model) the way to tame the ‘Digital Dragon’ in three parts:• Createpowerfuldigitalleadership• Buildbimodalcapability• RenovatethecoreofIT

Many people will look at this advice and say “OK, but where do I start?”

CreATe An AmBITIOn AnD WOrk BACkWArDs

As a young engineer I had to learn two kinds of control theory, one was traditional ‘analog control’ the other was ‘digital’. The former required years of experience and an almost zen-like feel to get it right (or at least that’s how it felt). The latter was new and way more up my street: unlike the ‘old version’, the new world of digital control was mechanical and methodical. You started with the answer more or less and worked backwards. Likewise, with the digitisation of business you have to start with an ambition. This could be dis-intermediation of your supply chain, or your go to market strategy, or any aspect of your organisational processes. The elimination of intra-process handoffs is always a good start. But for each aspect of your program articulate what you want to be. Avoid flashy superlatives and use ‘corner shop’language to make it real.

WhAT DOes ‘CreATe pOWerFuL DIGITAL LeADershIp’ meAn?

In short, know what you want to focus on and pick your battles. You need a leader who understands the impact of technology and the inefficiencies in the business. You cannot outsource this, you need to know it. Your organisation is a human system created by you and your peers to deliver value. Changing and automating that requires intimate understanding – a consultant lacks the intuitive understanding to provide that.

Part of the challenge is that process architecture and development, especially in IT projects, easily becomes sterile, where the adherence to the process becomes more important than the outcome. Also the ‘neatness’ of completeness from an IT perspective isn’t always the right outcome for the business. Replacing the hand-built spreadsheets with some reassuringly expensive ‘system’ isn’t always the right answer. Automating the incidental or custom is an oxymoron if you don’t have repetition. In terms of ‘compromise to digitise’ this probably means that your product or your order-to-cash process needs to be re-architected before you look to see what can be digitised.

3 See my blog for Wired [http://www.wired.com/2015/01/whats-next-for-cloud] about the evolution of popular music consumption from vinyl to CD to MP3 download to realtime Internet streaming.

4 Digital Double-Down: How far will leaders leap ahead? http://www.accenture.com/us-en/Pages/insight-doubling-down-drive-digital-transformation.aspx

5 http://www.gartner.com/imagesrv/summits/images/global/CIO-Agenda-2014-Summary.pdf

6 http://www.gartner.com/imagesrv/summits/images/global/CIO-Agenda-2014-Summary.pdf



WhAT DOes ‘BuILDInG A BImODAL CApABILITy’ meAn?

The criticism of the second era of IT is a familiar one. IT departments created this crazy notion that their colleagues were customers. As long as they delivered what they were asked for, they had satisfied their role. Clearly wrong and clearly not satisfying their ‘customers’, who, when the opportunity arose with the arrival of SaaS that was accessible to the end-user, just went around the IT department using T&E budgets to run marketing campaigns and undermined the sales automation program by going direct.

Bi-modal IT talks to the idea of mode 1 and mode 2 IT. Mode 1 is the traditional IT way characterised by ITIL whereas mode 2 is DevOps and agile development, which focus on an iterative approach.

To defeat shadow IT you need to provide an alternative to the traditional mode 1. The arrival of DevOps and Agile are a formalisation of what has been going on in the webscale Internet economy for years: the iterative development and release of software (mode 2). Call it what you like, the principle is dead simple and obvious. All requirements captured at time t=0 are stale the second you capture them. The risk of them being wrong increases the longer the time it takes you to realise the product from the requirements. So in simple terms if you can grab the requirements and deliver something after two weeks in a sprint the requester can say yay or nay, but the worst that can happen is that you have burnt two weeks. The alternative is a ‘big project’, with months of development and UAT at the end, which runs the very obvious risk of being wrong or outdated by the time it’s delivered. So in short you need to reduce the time for feedback and release on your projects to improve the chances of relevance. This is not new, ask any other industry and they will probably concur that the shorter the gap between inception and release the better the chance of getting it right. The internet economy is in a permanent state of ‘release’, and therefore it is constantly changing or as the consultants would say, it is a continuous goal of ‘good enough IT’.

One note of caution to this: if you attempt to run both modes internally be wary of creating two cliques, the old stalwarts of mode 1 up against the cool kids of mode 2, neither of whom will be productive without a clear and shared end-goal.

hOW TO ‘renOvATe The COre’: The perspeCTIve FrOm InTerOuTe

This is the part that is obviously closest to my heart. At Interoute with our ground to cloud continuum model we see every kind of implementation from the cautious to adventurous and all flavours in-between. It would be overly simplistic to say the adventurous are always right. But the general rule of thumb is that whatever you have as a core architecture is without doubt out of date at some level right now, and it certainly will be in three years’ time. So replicating again is probably the wrong thing to do – think about buying the same TV as the one you have now, three years later – you wouldn’t.

But how far do you go? Where is the point that works for you and your organisation? We have some brilliantly advanced customers who have elements of their platforms that are 7 years old and they simply can’t face the inevitable re-write so they accommodate the limitations. Excessive latency is often the result that we see. But the question is how can you renovate without creating a building site?

The sage advice from the consultants is to build together disparate elements of private and public clouds, tweaking your static infrastructure and injecting a little bit or a lot of cloud. A little or a lot of cloud is one of the immediate challenges with renovation. Too little and the longer it takes for you to create a platform that your teams can use; too much and you could easily find yourself in migration hell.

The other and critical problem with cloud is integration. Using cloud is an obvious and practical route to a solution, but before you know it you’ve succeeded in building an agile, flexible silo that is as separate from your core infrastructure as in the old model.

The challenge of ‘Cloud 1.0’ and its public and private clouds is that it leads to as much complexity trying to get inter-working to work as the problem you started out trying to solve.

The INTEROUTE INTEGRATED DIGITAL PLATFORM Interoute Virtual Data Centre (VDC):

Interoute VDC with its MPLS backbone is a network of computing with public cloud consumption and utilisation.

Interoute VDC can be used like a traditional public cloud or to replace/augment an existing private cloud or physical data centre infrastructure.

Interoute VDC automatically integrates both private network and public networks with your cloud computing zones across 13 global locations.

Interoute VDC has tiered levels of multi and single tenancy asset separation so you can choose the right level for your application and legacy applications.

The density and proximity to the network of Interoute VDC gives low latency, improving performance and legacy integration.

Find out more at http://cloudstore.interoute.com/main/TryInterouteVDCFREE



At Interoute we long ago rejected the separation of computing and networking and we started to think in terms of ONE DIGITAL PLATFORM or a DISTRIBUTED CLOUD where you can run and distribute workloads anywhere.

A world where the workloads are where they need to be for latency, language or data sovereignty reasons or because I want to create resilient workloads in a market. The network is abstracted as part of the solution and is appropriately mobile, secure, assured or ubiquitous.

The net effect is that rather than spinning up virtual machine instances ‘somewhere in the cloud’ you automatically get a global network of computing. You know exactly where each instance is – you can even craft it precisely to your requirements. It can be on the private or public (Internet) side of the network. The integration is achieved using a well-understood technology called MPLS that is normally used to run private WANs. We use the technology to create private, global domains that allow you to build your environments as you would if you had your own global backbone. The bonus is that you are inclusive from the start so the silos never get a chance to take hold. You still get the ‘cloud’ but you also get security, compliance, performance and control. Interoute’s integrated digital platform is global with very low latencies, private and public networking with a global pool of computing and storage that you can place anywhere.

Renovation means preserving some of the past while preparing for the future. One of the challenges when choosing what to do is that many of the options are presented as either/or: either ‘old world’ (private cloud) or ‘internet world’ (public cloud). These options are too stark and impractical. This ‘digital’ choice (excuse the pun) means you can’t sensibly prioritise and compromise – you are either all in or all out. In the end you will have hacked together your disparate clouds, either over the Internet or via a series of dedicated private links. Either way this isn’t the progress we should really want.

The key benefit of Interoute’s approach is that it is both sympathetic to legacy – through low latency and the ability to integrate any networked device into your platform – and open to the future. On the legacy side it is the ability to integrate all of your IT assets that is key. You still get the same ability to spin up instances or containers on demand but you can also be inclusive. The Interoute model offers the same consistent view on a continuum from public cloud through private cloud to those assets that are part of your infrastructure but will simply never be part of the cloud, such as AS400.

Having got your legacy under control you can look forward. Interoute VDC supports the rise of new application environments like the use of containers, for example Docker, where the developer abstracts from the infrastructure to a distributed computational environment populated by containers. With technologies like Docker it’s an unnecessary complication for the application developer to have to ‘go under the hood’ and create the static routing relationships between virtual machines. The aim is to present simple addressing to each application. Our approach also opens up the ability to create scalable, resilient clusters that straddle multiple zones without the constraint of traditional routing.

To leverage these new technologies requires content replication, application synchronisation and the ability to deploy in multiple locations. Crucially it requires a smart network. Application technologies are ready, but traditional IaaS solutions are not.

Interoute’s network solution for IaaS Interoute VDC abstracts the network from the user so there are:

No IP addressing headaches.

No routing needs to be setup by the customer.

No complex security required; networks are private by design.

No performance issues; performance is optimal due to huge bandwidth and low latency.

No charges for bandwidth.

COnCLusIOn: hOW TO TrAIn yOur DrAGOn

The imperative for digital transformation isn’t a technical one, it’s a necessity of business and economics but as with all technology-enabled change the time between cycles gets compressed. The three to five year transitions that you were able to plan for in the past are gone. You probably don’t know what the future will bring but you can put yourself in a place where you can react.

The trajectory of change is well understood (we are living it). If it’s possible to do something, then someone is already doing it. Competitiveness is a race, but it doesn’t have to be a race to the bottom. On the other hand history is littered with overly ambitious aspirations proving detrimental to progress. Being smart and flexible with your resources and learning all the time is the watchword.

I invite you to try out Interoute vDC, our integrated digital platform, and find out if it gives you that flexibility to challenge, change and evolve your destiny.

Try Interoute vDC for free: cloudstore.interoute.com/main/TryInteroutevDCFree
