trends but no directions
TRANSCRIPT
Nordic Region Technical ConferenceOslo, May 2006
Michael Erichsen, CSC
Trends, but No Directions?IT in the Age of Globalization
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Purpose of this Presentation Not really to answer questions, but to try to ask them CAUTION: The speaker does NOT necessarily have any deep knowledge in
the areas discussed The presentation consists mainly of unsubstantiated statements,
unfounded prejudice, and loose claims ripped off the Internet A complete literature list would be longer than the presentation But perhaps we could draw some perspective and inspiration
when considering the many confusing trends The thoughts, opinions, and considerations are the speaker’s own,
and not necessarily those of his company or of the GSE Steering Committees
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Paradigm Shifts and Foresight “Paradigm Shifts” is a way of discussing changes in
the past by grouping them on a high level “Foresight” is a technique used by Governments and
Universities to build scenarios to help them choose policies to further their aims and strategies
Why are such methods important? They can help us better understand the trends that affect our
countries, our companies, and the future of each of us
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Trends, but No Directions?IT in the Age of Globalization
Paradigm Shifts
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What’s a Paradigm?
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Scott Adams’ Own Comment
If you can say “Well, we are going to do a paradigm here. We're looking at different models. We'll run a few simulations and put this together to see if we can get a consensus.”
That sounds much better than “I don't know”
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Brother, Can You Paradigm?
Thomas S. Kuhn: The Structure of Scientific Revolutions (1962):
Scientific advancement is not evolutionary A series of peaceful interludes punctuated by intellectually
violent revolutions, where one conceptual world view is replaced by another
A Paradigm Shift is a change from one way of thinking to another It's a revolution, a transformation, a sort of metamorphosis. It just
does not happen, but rather it is driven by agents of change As paraphrased by professor Frank Pajares
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Some Paradigm Shifts
Offshoring labour intensive work → Automation & Back-shoring → Offshoring automated work
“EDP” a part of accounting → IT a strategic resource → dot.com → Cost containment → Innovation
Batch → On-line → Client/Server → Web → SOA Decoupling of operating system, data, business processes, presentation,
business rules Data Centric ↔ Process Centric Data Entry ↔ Case Work Stationary → Mobile Centralized ↔ Decentralized Top-Down ↔ Bottom-up ↔ Meet in the middle
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Details and the Complete Picture
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No attempt made to explain “Everything”
A theory has to be simpler than the data it explains, otherwise it does not explain anything Gottfried Wilhelm Leibniz
in “Discours de métaphysique”, 1686, paraphrased by Gregory Chaitin
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Offshoring of Manufacturing In the 1950’es manufacturing boomed, and workers were drawn
from the countryside to the factories In the 1960’es workers were imported from abroad In the 1970’es manufacturing was exported to the third world
“Footloose” industries, Free Trade Zones Automation and robots demanded highly skilled workers
Some manufacturing was “backshored” In the 1990’es a highly skilled Chinese workforce entered the
world market, and almost all manufacturing was re-offshored Important to note that this has been a non-linear process The consequences in Europe: Marginalization of unskilled labour
(to a high degree affecting imported workers and their children). Fear of globalization (“Fortress Europe”)
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The Role of Information Technology IT entered companies as Data Processing (EDP), a subset of the
accounting department Faster file handling, better calculations
As IT matured, and IT departments became more ambitious, they promoted IT as a strategic resource Seen by upper management as a trick to gain power
During the dot.com bubble, everybody rushed into e-something ERP, CRM, SCM, EAI, Web…
The bubble burst, and cost containment ruled IT must support cost cutting – and take a lot of cutbacks itself
Now focus is moving back from the bottom line to the top line IT now must support Innovation to help companies compete
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Innovation is not the Same as Creativity
"Innovation… is generally understood as the introduction of a new thing or method… Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services.“ (Luecke & Katz, 2003)
"All innovation begins with creative ideas… We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second". (Amabile et al, 1996)
"Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline." (Davila et al, 2006)
Definitions taken from Wikipedia
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Tools to Promote Innovation
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Six Myths of Creativity
Myth Research Results (Teresa Amabile, Harvard)Creativity Comes From Creative Types
Anyone with normal intelligence is capable of doing some degree of creative work
Money Is a Creativity Motivator The handful of people spending a lot of time wondering about their bonuses were doing very little creative thinking
Time Pressure Fuels Creativity Creativity requires an incubation period; people need time to soak in a problem and let the ideas bubble up
Fear Forces Breakthroughs People are more likely to have a breakthrough if they were happy the day before
Competition Beats Collaboration When people compete for recognition, they stop sharing information
A Streamlined Organization Is a Creative Organization
People's fear of the unknown led them to basically disengage from the work
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The Computing Platform
Aiken’s Law, 1947: “Only 6 computers needed to perform all calculations in the US”
Batch → On-line → Client/Server/ERP/CRM → Web → SOA → POA? EDA? Something completely different?
Driven by forces like Technical inventions Globalization Business changes like mergers
and acquisitions Changing expectations by users,
customers, and partners
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Decoupling
The first systems were tightly coupled Operating System-Data-Business Logic-Presentation monoliths
Operating systems and applications were separated Data was separated using database management systems
(network, hierarchical, relational etc.) Presentation was separated using client/server, GUI, and Web
Interfaces Application components were decoupled from each other using
APPC, EDI, RPC, RMI, and Web Services/SOAP Business rules, processes, and control logic were separated using
Business Process Management Systems
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A Counter-Trend to Decoupling Case tools in the 1990’es like IEF/COOL:Gen derived
applications and data so strongly from business models that data was effectively owned by specific applications This is a problem for current reengineering projects, because an
enterprise data model is difficult to implement Shrink-wrapped ERP packages like SAP and Siebel is a new
generation of monoliths In practical life you cannot access or understand SAP relational data
outside the SAP system SAP opens up to SOA architectures by defining itself as the core
and providing the ESB
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The Data Centric Paradigm The Data Centric paradigm was driven by Database Management
systems and decoupling of data Built on a mathematical basis: Set Theory founded by Georg Cantor Modelling starting from enterprise “master data”
Identities and attributes of customers, products, employees, and other core reference data
Implemented in CRM, ERP, and other Shrink-wrapped systems of the 90’es Backed by vendors like Oracle and SAP
Business Intelligence, OLAP, Data Mining, ETL, etc. can discover new information from non-obvious patterns in large sets of data
Object orientation enhanced data with its inherent methods Metadata makes data more independent of single applications
XML an excellent medium Including both structured data (Databases) and unstructured data (email,
Office documents)
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The Process Centric Paradigm The Process Centric paradigm was driven by recent business changes,
SOA technologies and decoupling of processes Built on a mathematical basis: π Calculus founded by Robin Milner et
al. The processes of the enterprise is seen as the most important aspect
Sees databases as a place, where state is kept, when lights are out Focus is moving to innovation First generation SOA projects are often mainly technical integration
projects Service-enablement of legacy systems and SOAP-interfaces exposes
functionality as services and prepares combination into business processes that can be dynamically reconfigured
BPM systems are maturing and integrating with SOA technologies
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No More Waiting Rooms? Customers waiting in line,
spending hours in waiting rooms, or rusting on telephone queues are no longer deemed acceptable
Office staff changes from data entry clerks to case officers, handling a case or a client “from cradle to grave”
This drives continuous improvement of processes, higher degrees of automated and IT-supported processes, integration between systems, and self service
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Computer Terminals become Mobile
Teletype Terminals → green screens → GUI → handheld terminals/PDA’s/mobile phones etc.
Gartner predicts that in the future everybody will only have laptops – and that we will have to pay for them ourselves, since we also use them for private purposes This sounds like a hit
among company chief financial officers
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Centralize or Decentralize This set of paradigms has
regularly shifted back and forth
And will probably continue to do so
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Where to Start your Design Projects
The discussion about Top-Down or Bottom-up has been running for years
Top-Down puts the business needs in focus Bottom-Up provides robust building blocks to build any
application needed, and includes the possibility of buying 3rd party components
The Business Process-Service Oriented design is becoming popular by combining into “Meet in the Middle”
Business Process Analysis and Modelling should be guiding your services design
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Trends, but No Directions?IT in the Age of Globalization
Foresight
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What is Foresight?
Foresight covers activities aiming at thinking debating shaping the future
The driver is the complexity of science, technology and society interrelationships, the limitation of financial resources, and the increasing rate of scientific and technological change
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Thinking, Debating, and Shaping the Future Forecasting, technology assessment, future studies and other
forms of foresight try to identify long term trends and thus to guide decision-making Foresight aims at identifying today's research and innovation
priorities on the basis of scenarios of future developments in science and technology, society and economy
Foresight is a participative process involving different stakeholders Methods include academic studies, panels, and working groups
Foresight aims at identifying possible futures, imagining desirable futures, and defining strategies Results are generally fed into public decision-making, but they also
help participants themselves to develop or adjust their strategy
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Business Foresight
Consider whether you could use or participate in such Foresight projects There are university people who are very good at it
One aspect is the expectations of the next generation of users, customers, citizens They are going to be very much different from their parents’ generation And the next wave of retired persons are going to be demanding and
difficult too – because that will be many of us in this room! The new generation of reengineered IT systems that we are building
now might have a lifecycle expectancy of maybe 15-20 years, so very big changes in such directions must be prepared for
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Technology Foresight
If we think of a 15-20 year period it takes little imagination to foresee the possible size of technology changes over such a period
Wireless everywhere, grid, all kinds of new devices… Loosely-coupled, open-interface integration between systems
that need to know nothing about the internals of each other will be the standard
At the technology level nobody can claim to have the slightest idea whether the differences between mainframes and midrange systems still will exist or whether they have converged This does not necessarily mean that mainframes will die, as often
forecasted, but rather that midrange system will grow in size, processing power, stability and close symbiosis between hardware and operating systems, so the differences will wither away
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The Gartner Christmas Report 2005 No more company paid laptops Telephony will be mobile or internet based The job market for IT specialists will shrink More Business Process outsourcing Software will save lives in the health sector Government regulations will be in focus
The actual report is of cause more detailed and faceted. Get the details from Gartner yourselves
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A Gartner “Hype Curve”
Gartner’s phases are: Technology/Business
Trigger Peak of Inflated
Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity
No presentation is complete without either a Hype Curve or a Magic Quadrant
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A Revolution that Never Took Place “Before man reaches the
moon, mail will be delivered within hours from New York to California, to Britain, to India or Australia by guided missiles. We stand on the threshold of rocket mail”
Arthur Summerfield, US Postmaster General, 1959
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Remember “The New Economy”?
“There isn't an Internet company in the world that's going to fail because of mistakes – Internet companies make thousands of mistakes every week”
Candice Carpenter of iVillage, 1998
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Trends, but No Directions?IT in the Age of Globalization
Globalization
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The Globalization Era There has been an international division of work since long
distance trade started in the Stone or Bronze Age It changed drastically during colonial times when colonial
powers controlled who manufactured, who produced raw materials, who were allowed to buy from whom – and who were sold as slaves
After World War II and decolonization countries have become politically free, but with very different levels of development, economy and political rights
Changes in economic strength, the fall of the Iron Curtain, and the establishment of new networks of terror have changed both the political and the economic climate of the planet: The Cold War Era has been replaced by the Globalization Era
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Characteristics of Globalization People around the Globe are more connected to each
other than ever before Information and money flow more quickly than ever Goods and services produced in one part of the world
are increasingly available in all parts of the world International travel is more frequent International communication is commonplace
Critics claim that Globalization means US Domination (“McDonaldization”, “Coca-Colonization”)
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A Globalization Scenario
One scenario often discussed is the global consolidation of companies into three of each with an undergrowth of national subcontractors: Three car manufacturers, three computer
companies, three airplane manufacturers, three airlines, three food producers, etc.
Imagine the consequences on systems integration, network, layering of the Internet, etc.
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Warfare is changing
Warfare has been the main driver of technology for the last several thousand years
“The cold war” is replaced by “The war on terror” The US Patriot Act, EU, and national Nordic anti-
terror legislation affects the IT and telecommunication businesses by demanding large scale storage of communication patterns and/or content Its will keep a lot of the database, data mining and OLAP
specialists busy It also is subject for a large debate in all democratic countries
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Trends, but No Directions?IT in the Age of Globalization
Changes in IT
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Ten Key Trends for IT Services in 2006ComputerWire Market Watch predicts:Steady growth in spendingMega-deals to declineMulti-sourcingTelecoms, pharma and retail the hot sectorsContinental Europe warms to outsourcingTelecoms/IT services crossover continuesIndia arrives in infrastructure managementProcurement outsourcing to explodeFinance & Accounting outsourcing to ramp upMergers and Acquisitions among IT service providers
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Compliance
Financial scandals has put focus on “compliance”, i.e. acting according to accepted standard procedures and processes
Sarbanes-Oxley and Basel II Outsourcing, offshoring, and the
change of IT from art to industry has changed may relations from close partnerships to commercial relations
A contract is now a governance tool rather than an emergency brake
Tight standards on IT processes and project management like ITIL, PRINC 2, CMMI, and Six Sigma
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Processification of IT
The compliance paradigm drives IT organizations to change their ways of working from art and handicraft to industrial processes
Better documentation is one important product
Mainframe has learned to work structured many years ago
Midrange and desktop are struggling to change their processes
This is a sign of maturity, and without any doubt necessary
It changes the skill sets necessary to do the job
Which consequences for innovation and creativity?
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Does IT Matter?
Article by Nicholas Carr in Harvard Business Review, May 2003
Followed by the book “Does IT Matter? Information Technology and the Corrosion of Competitive Advantage”
Observation: IT becomes a commodity, and competitive advantage diminishes
His conclusion: Stop investing in IT
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IT Doesn’t Matter – Business Processes Do
Smith and Fingar divide IT into three stages: IT infrastructure Business automation Business process
management IT does matter in the last
area because it is a business process enabler, say Smith and Fingar
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Software Engineering
Procedural programming is based on mathematical models like λ calculus and the work of Alan Turing
Correctness can be proved mathematically
The US DoD spent years validating the Ada language, used for spaceflight and guided missiles
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Weinberg’s Second Law
If Builders Built Buildings The Way Programmers Write Programs, Then The First Woodpecker That Came Along Would Destroy Civilization
Gerald Weinberg, 1972 Years ago I quoted to an
architect Weinberg's line. "Oh," she said, "but that's just how they do build them.“
George Jansen in RISKS Digest, 2005
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A Component Architecture Debate in “RISKS” “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their published interface specifications, the results should be consistently correct. The results will be predictable, the usage will be consistent every time. But in general, this is not how we are designing software.” (Paul Robinson)
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A Component Architecture Debate in “RISKS” “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their published interface specifications, the results should be consistently correct. The results will be predictable, the usage will be consistent every time. But in general, this is not how we are designing software.” (Paul Robinson)
“There is only widespread take up of component reuse where those components are reliable and free.” (Steve Taylor)
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A Component Architecture Debate in “RISKS” “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their published interface specifications, the results should be consistently correct. The results will be predictable, the usage will be consistent every time. But in general, this is not how we are designing software.” (Paul Robinson)
“There is only widespread take up of component reuse where those components are reliable and free.” (Steve Taylor)
“Software patents make component reuse dead. Reuse a bunch of stuff and pay many fees, royalties, patent searches, lawyers and contract negotiations. So who will try reusing components with very real legal, financial, etc. risks when the risk of consequence for a bug (even resulting in deaths or huge financial losses,) is small?” (Steven Hauser)
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A Component Architecture Debate in “RISKS” “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their published interface specifications, the results should be consistently correct. The results will be predictable, the usage will be consistent every time. But in general, this is not how we are designing software.” (Paul Robinson)
“There is only widespread take up of component reuse where those components are reliable and free.” (Steve Taylor)
“Software patents make component reuse dead. Reuse a bunch of stuff and pay many fees, royalties, patent searches, lawyers and contract negotiations. So who will try reusing components with very real legal, financial, etc. risks when the risk of consequence for a bug (even resulting in deaths or huge financial losses,) is small?” (Steven Hauser)
[Open Source] “provides us with the ability to obtain components that we can fix (or hire experts to fix) if they break.” (Tom Swiss)
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A Component Architecture Debate in “RISKS” “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their published interface specifications, the results should be consistently correct. The results will be predictable, the usage will be consistent every time. But in general, this is not how we are designing software.” (Paul Robinson)
“There is only widespread take up of component reuse where those components are reliable and free.” (Steve Taylor)
“Software patents make component reuse dead. Reuse a bunch of stuff and pay many fees, royalties, patent searches, lawyers and contract negotiations. So who will try reusing components with very real legal, financial, etc. risks when the risk of consequence for a bug (even resulting in deaths or huge financial losses,) is small?” (Steven Hauser)
[Open Source] “provides us with the ability to obtain components that we can fix (or hire experts to fix) if they break.” (Tom Swiss)
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A Critique of OO from the Same Debate
“What OO has done to the development of software engineering is devastating
Instead of continue to develop more advanced languages we got stuck with half-assembler languages like C and followers. A compiler for a high level language (re-)uses code templates. A compiler for a more advanced language could reuse even larger chunks of code, without any need for a programmer to try to find the code in a catalog
To my disappointment, I have seen very little progress during the last two decades in the field of software development
The ever increasing speed of the processors and the cheap memory prices has more encouraged fast hacking than a systematic development based on sound engineering principles.” (Kurt Fredriksson)
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The Case for SOA and for LST The current answer to the problems discussed is Enterprise
Architectures that are built on standard components, shrink-wrapped packages, legacy systems functionality, plus custom built service-enabled applications where needed Plus stronger management procedures like ITIL etc.
The case for Legacy Systems Transformation (LST) is that these systems are thoroughly tested, tuned, debugged, and functionally corrected by change management, based on years of user observation in real production If it makes sense to reuse parts of their functionality in the new
business processes But Kurt Fredriksson would probably accuse us of hiding the
symptoms rather than curing the disease
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Open Standards and Open Source Open standards like SOAP
means that you can connect separate systems to each other in a documented way without paying a license fee
Everybody says they support it Open source is just another way
of pricing products and services The question about the quality
of open source has mainly ended by now
The discussions about open source and open document standards are also a battlefield in the struggle for market domination
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Trends, but No Directions?IT in the Age of Globalization
SOA, POA, EDA, and other TLA’s
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SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA
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SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA SOAP is not the same as SOA
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SOAP is not the same as SOA SOAP (aka Web Services) is a
protocol used for system-to-system communication
Any system can be equipped with a SOAP interface – like an APPC interface, a Sockets interface, an RPC interface etc.
SOAP can be used in a SOA, but so can other interfaces
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SOAP is not the same as SOA SOAP (aka Web Services) is a
protocol used for system-to-system communication
Any system can be equipped with a SOAP interface – like an APPC interface, a Sockets interface, an RPC interface etc.
SOAP can be used in a SOA, but so can other interfaces
SOA is an enterprise architecture model, where functionality in separate systems is exposed using loose coupling and open standard interfaces, including – but not exclusively – SOAP
Many current SOA projects are technical infrastructure projects rather business projects
Which is why some people call a full SOA with BPMS a Process Oriented Architecture (POA)
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Robert Morris in zJournal, 2006
There’s no shortage of vendors willing to further confuse the issue by offering simplistic solutions to delivering mainframe Web Services, and claiming this is synonymous with delivering SOA
This approach should come with a warning label: “Web Service enclosed. All assembly required.”
It’s like delivering a load of lumber to a prospective home-builder
It requires: An in-depth understanding of
how the components work together to comprise a recognizable business task
Automating the interaction of the underlying functionality and data sources necessary for the task
The whole thing be packaged in an easily recognizable and accessible form for effective use and reuse
Talking “Web Services” instead of “business services” really misses the point
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POA according to Howard Smith From “Workflow is just a π Process”, 2003: A BPMS does not “integrate” applications and Web services as
many workflow solutions and EAI do. That approach only creates aligned data and some workflow control over messaging
By contrast, a BPMS assists in the direct reuse of existing investments in IT processes by consolidating them within a process-oriented architecture (POA)
This means we can persist them as data records in a BPMS process base, a database of process records. Like stored information within the thread of email, the process base contains the past, present and alternative futures (via simulation) of the stored process
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POA according to Howard Smith Within a POA, the conceptual centre is the business
process itself, the focus of management attention In the same way that the RDBMS, based on the
relational model of data management, replaced disparate hierarchical and network-oriented databases, we believe BPMS will replace multiple approaches to workflow
The BPMS heralds a change in the IT stack itself, from applications built on a data foundation, toward process management tools built on a process foundation
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POA according to Howard Smith
The BPMS platform provides a process-oriented architecture (POA) that can be deployed over today’s Web services platforms that are, by contrast, service-oriented architectures (SOA)
Web services are just fine at exposing the process participants the BPMS can exploit
Web services live in the era before π calculus-based technologies
They represent the final standardisation of 20th century technology, and for many businesses that’s long overdue
By contrast, the BPMS is a 21st century innovation and ripe for market adoption
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Event Driven Architecture
Event-Driven Architectures (EDA) can be seen as an extension to SOA and BPMS
EDA refers to any applications that react intelligently to changes in conditions, whether that change is the impending failure of a hard drive or a sudden change in stock price.
Gartner sees EDA as “THE NEXT BIG THING”™
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IBM and Event Driven Architecture
“Planned enhancements to the CICS family of products”, IBM Statement of Direction May 2006, include:
“IBM intends to support Event Driven Architecture (EDA) to initiate the event-triggered delivery of a message for appropriate action in managing and separately maintaining infrastructure and business processes
It is planned for CICS to provide non-invasive instrumentation of business logic that can be used by both business analysts and developers. As a first step in its longer-term EDA strategy, IBM intends that the complementary product, CICS Business Event Publisher for MQSeries, will be extended to conform with the Common Event Infrastructure for working with a wide range of business, system, and network events”
Capability Description
Decoupled interactions
Event publishers are not aware of the existence of event subscribers
Many-to-many communications
Publish/Subscribe messaging where one specific event can impact many subscribers
Event-based trigger
Flow of control that is determined by the recipient, based on an event posted
Asynchronous
Supports asynchronous operations through event messaging
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Trends, but No Directions?IT in the Age of Globalization
Outsourcing and Offshoring
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Growth of Indian Offshoring Has gone through three stages
Development of world-class applications development skills, when firms like Tata became partners with Western firms for low cost development
Indian firms offering low-end back-office services (call centers, transcribing medical records, processing insurance claims etc.)
More complex services are now being provided in IT and Business Process Outsourcing
According to The Economist, 2006
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New Countries are Joining In
Some of India's offshoring giants are offshoring themselves, fueling the next round, and U.S. firms are joining in Tata has opened offices in Budapest, in Hangzhou, China, and in
Chile. It plans to add 1,500 to the 485 people at its Brazil arm Infosys Technologies set up shop in Shanghai, Mauritius, Prague
and Brno Wipro has new offices in Shanghai and Beijing and soon in
Bucharest
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New Countries are Joining In
Some of India's offshoring giants are offshoring themselves, fueling the next round, and U.S. firms are joining in Tata has opened offices in Budapest, in Hangzhou, China, and in
Chile. It plans to add 1,500 to the 485 people at its Brazil arm Infosys Technologies set up shop in Shanghai, Mauritius, Prague
and Brno Wipro has new offices in Shanghai and Beijing and soon in
Bucharest U.S. firms are expanding beyond India, too
Call-center giant Convergys recently opened offices in Dubai and Budapest
IBM Global Services is adding staff in China, Hungary, the Czech Republic and Brazil
Accenture is adding staff in the Philippines, China, Slovakia and the Czech Republic
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China’s Five Surprises
Edward Tse recently wrote in “Resilience Report” that by 2030, if not sooner, China could be the world’s largest economy. He thinks China will succeed, where Japan didn’t, because of five “surprises”:
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China’s Five Surprises
Edward Tse recently wrote in “Resilience Report” that by 2030, if not sooner, China could be the world’s largest economy. He thinks China will succeed, where Japan didn’t, because of five “surprises”:
“Why not me?” The intensity of Chinese entrepreneurialism is propelling many
companies, even now, beyond a role as producers of low-cost commodities
GUIDE SHARE EUROPEMay 2006 72
China’s Five Surprises
Edward Tse recently wrote in “Resilience Report” that by 2030, if not sooner, China could be the world’s largest economy. He thinks China will succeed, where Japan didn’t, because of five “surprises”:
“Why not me?” The intensity of Chinese entrepreneurialism is propelling many
companies, even now, beyond a role as producers of low-cost commodities
Fearless experimenters China’s emphasis on rapid-fire research and development makes it a
seedbed for original products and services in the future
GUIDE SHARE EUROPEMay 2006 73
China’s Five Surprises
China’s “brain gain” The ability to attract and retain executives from around the world
has provided a higher level of competence for China’s enterprises
GUIDE SHARE EUROPEMay 2006 74
China’s Five Surprises
China’s “brain gain” The ability to attract and retain executives from around the world
has provided a higher level of competence for China’s enterprises Out from Guanxi
Outsiders still view China as a largely patronage-based economy, in which connections and ethnic background determine success, but increasingly (at least in some sectors), high-quality management and transparent governance structures count more
GUIDE SHARE EUROPEMay 2006 75
China’s Five Surprises
China’s “brain gain” The ability to attract and retain executives from around the world
has provided a higher level of competence for China’s enterprises Out from Guanxi
Outsiders still view China as a largely patronage-based economy, in which connections and ethnic background determine success, but increasingly (at least in some sectors), high-quality management and transparent governance structures count more
China’s overseas ambition The country is taking on a role as a catalyst of sustained economic
growth in the emerging markets of the developing world
GUIDE SHARE EUROPEMay 2006 76
Backsourcing Backsourcing is taking back in-house services that
were previously outsourced JP Morgan Chase did it with IBM in the wake of the
Bank One merger Banco Santander has said that it is backsourcing some
of Abbey’s IT operations Sainsbury’s announced that it is bringing back in-
house its multi-billion outsourcing with Accenture Also examples from Denmark
Could this happen for offshoring as well?
GUIDE SHARE EUROPEMay 2006 77
The Danish Globalization Council
Established by the Danish government April 2005
It has been advising the government on an ambitious, comprehensive strategy to prepare Denmark better for globalization
It comprised representatives from Trade Unions, employer organisations, education, and research circles
GUIDE SHARE EUROPEMay 2006 78
“Progress, Renewal, and Security” A report from the government after
listening to the Globalization Council, published April 2006, concluded among other points:
Better education More competition among
universities Stronger cooperation between
companies and universities Stronger competition Import of more highly educated
workers Lower taxes
GUIDE SHARE EUROPEMay 2006 79
“Progress, Renewal, and Security” A report from the government after
listening to the Globalization Council, published April 2006, concluded among other points:
Better education More competition among
universities Stronger cooperation between
companies and universities Stronger competition Import of more highly educated
workers Lower taxes
The report has been criticised for not listening enough to the council, for just repeating existing government policy, and for having too short a perspective
It wisely focuses on furthering the Scandinavian “flexicurity” model
When I used the same argument as the report about education in a recent discussion, I was challenged: “What can your education do to compete with 100.000’es of Ph.D.’s in India and China?”
Perhaps the Innovation paradigm would be a better answer?
It is in fact a keyword in the report
GUIDE SHARE EUROPEMay 2006 80
The Offshoring Equation for Companies Offshore 20 jobs and keep 30 at home – or lose all 50
jobs to your competitor? Offshoring is a fact of life Companies have to analyze what to keep locally and
what to offshore Companies have to adapt new processes and standards
to control and manage this new level of complexity What are the social consequences for society and for
employees?
GUIDE SHARE EUROPEMay 2006 81
Intergovernmental Interoperability The Danish Ministry of Science, Technology, and Education is
promoting Intergovernmental Interoperability based on Service Oriented Architectures and a very long list of recommended standards
Many very large government systems are being reengineered into SOA architectures
Some systems, however, are too simple in their structure for a SOA to make sense Alternatively, they are exposing relevant parts of their functionality as
Web Services for others to use “Nordic Relocation” is an Inter-Nordic example of such projects
GUIDE SHARE EUROPEMay 2006 82
Trends, but No Directions?IT in the Age of Globalization
Stratification of IT
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Symptoms of Stratification Stratification, i.e.: separation in layers Peter F. Gammelby observed in a Danish newspaper, 2006:
Globalization and the lack of Danish IT experts are creating a deep salary gap in the Danish IT business
A growing number of companies are having their IT work done in low pay countries, which primarily affects the least educated IT staff here, both on job opportunities and salary
Highly educated IT specialists in contrary are in shortage here, and they are currently earning prize salaries. The lack of them are however now so strong – and their salaries so high – that companies have started to find the highly specialized workforce in low pay countries
GUIDE SHARE EUROPEMay 2006 84
A new Stratification is Emerging
Companies often look at IT as a commodity or utility They want to have unlimited IT resources and pay as they go
This pushes IT down the Value Chain IT departments look at IT as a strategic resource
They want to move IT up the Value Chain and into the board room The net product is a new division of work and a stratification of IT functions,
departments, and staff inside companies, between companies, and internationally
This question poses itself: Will you be an industrial worker on the code assembly line or in operations? Or will you be part of business- and customer-facing engineering, architecture,
and consulting? This may affect your long-term job satisfaction and job security
GUIDE SHARE EUROPEMay 2006 85
Trends, but No Directions?IT in the Age of Globalization
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