The current business setting creates a panorama in which traditional companies, dragged along by an unstoppable current of digital transformation, must face change in order to compete.
As these companies advance through this transformation process their IT areas become more and more important, going from having secondary importance to becoming the real core that moves the business. Every new idea, every new feature depends on IT for its release and companies are increasingly moving to the speed their IT areas set.
Companies such as Amazon, PayPal, Google, Netflix, TripAdvisor etc. that were formed around technology, are currently a serious threat for incumbent companies in the main industry sectors (banking, retail, media, telecom etc.) .Pressured by the enormous responsibility of having to bear the weight of the entire business, IT areas in traditional companies find themselves unable to compete with the ones in these companies which, thanks to their strong purely digital culture, have found the formula to work in a revolutionary way that allows them to achieve:
- Minimal time to market, very aggressive development times.
- Fluidity to rapidly adapt their products to either customer feedback or market changes.
- Purely multichannel experience products with high customer service in which waiting and loading times are minimal.
- Minimal times of services being unavailable, “planned stoppages’’ are simply inconceivable, just a bad memory.
- Capacity for innovation, testing and discarding new ideas rapidly in order to find those that work.
- Low service cost, even when facing potential high load demands.
In order to compete on an equal footing, IT departments in traditional companies also need to be able to work in this way: in velocity mode.
What is the secret to this apparently magic formula that allows you to achieve much better results at a lower cost? To work in velocity mode implies a profound change for a classic IT organization which will have to evolve in three key areas which we show below.
New methodologies and support tools for Development
In velocity mode, time to market isn’t measured by a calendar, it is measured by a clock. Monumental product development cycles with months of analysis, years of development and months to validate and deploy releases are simply inconceivable, and nevertheless these are still the time frames of many IT areas which shield themselves behind the criticality of their services when really it is possible to achieve high quality products in much shorter time frames.
To achieve this it is necessary to use:
- Agile methodologies (like Scrum) that, compared to traditional waterfall methodologies, allow the product to progress while it is being developed, reducing time, costs and contributing to fluidity.
- Continuous delivery tools and automation of tests which, when implemented in a cloud infrastructure (private and public), allow developers to put their releases into production on their own.
- DevOPs models that integrate developers and system specialists into the same team, balancing and speeding up the deployment and operation processes to the point of making them almost instant.
We find ourselves in front of one the most important technological disruptions in the past 20 years. Internet projects have been living very comfortably installed in client-server architectures since these broke in substituting mainframe technologies. Today, analysts are talking about a third evolution, or third platform, where different types of technologies come together such as NoSQL, Big Data, Cloud, Microservices, or Omnichannel, which mean an authentic disruptive movement in the IT panorama and which will capitalize on the investment and growth in the sector in the coming years
Controlling and taking advantage of these technologies is essential to successfully tackle projects in velocity mode. Without trying to go into too much detail, we can identify underlying trends in all of them; distribution, resistance to failure, light and independent elements, focus on availability, elasticity of operating cost, free software, instant response and adaptation to an optimal user experience in which failure, slowness or lack of service is not acceptable. As we can see, these are all key elements in the ‘’magic formula’’ of velocity mode.
We are talking about a change not only of tools, frameworks or languages, but rather of mentality when designing architectures and technical solutions.
New Organization Structures
The best formula 1 car is only a fantastic tool in the hands of a driver who is the one that wins or loses the races, and the more powerful the car is, the more talented a person needs to be in order to use it to its maximum.
The same thing happens with velocity mode; we are talking about technologies and new complex methodologies and in order to make the most of them it is necessary to have very talented professionals with the ability to understand, to imagine, to try new ideas and to innovate, all of it while being humble and capable enough to work as a team. It’s not easy to find professionals like this.
The importance of finding and retaining talent is so vital that it must be the first priority when using velocity mode and for this it is necessary to create the required working environment to attract these professionals. Competition is fierce and such is the difference the talent of our team makes, that dedicating a lot of time to selection processes is no longer enough, because one thing is to find them and another one is to convince them to join our project; in order to do that we must think about making a change to the company’s organizational structure.
Some years ago Netflix published a presentation that summed up its company culture, with dozens of brutally useful rules (no flashy phrases or basic concepts), some of them shocking at first (imagine you take holidays when you believe you need them, without any need to apply or count them?) but all of them oriented to finding talent and excellence through a culture of freedom and responsibility. Today the document has more than eleven million views, and it has been qualified by some as one of the most important to ever come out of Silicon Valley.
Not everyone can afford reinventing their organization like Netflix did but it must be clear that it should at least be a goal to reach, a reference point, and we have to accept that talented professionals capable of making a difference choose their company, the company does not choose them.
Bimodal IT: velocity mode as the second high velocity IT mode
A realistic analysis of the implications that the previously described changes have leads to a clear conclusion: the complete transformation to velocity mode for a traditional company is so complicated that trying it may not only not lead to the desired results but also put at risk current processes that have been established in the company’s culture for years.
A further comparison would be if someone owned a lorry and wanted to bring it to the mechanic in order to turn it into a sports car. It would of course make a lot more sense to buy a new sports car and to keep both vehicles in use, having each one for different objectives.
This is the conclusion that the greatest analysts have gotten to. Gartner talks about a bimodal IT, with a traditional style oriented to maintaining the core software of the company, and a velocity mode for the development of products closer to the user. McKinsey presents his idea of a two-speed IT, in which mode 2 is logically the highest velocity, but standard velocity is kept for backend developments
Some companies set up their own development groups for this, building practically entire independent organizations inside their business, which are capable of working faster and cheaper with the same means as the parent company. A clear example are second low cost operators (Simyo – Orange, Tuenti – Telefonica, Lowi – Vodafone) that while using the same resources offer a far cheaper service.
However this solution isn’t valid for technology providers. Returning to the previous comparison, for the owner of the lorry it is perfectly viable to buy a sports car, but for the lorry manufacturer it would be very difficult to competitively make sports cars. Practically a brand new factory would be required for this change. It’s not viable.
Therefore the current business panorama is not only advantageous for digital companies but for digital providers, born in the digital age, whose business models, tools and architectures have been successfully refined and applied for years and now find themselves being highly demanded by businesses that want to add a velocity mode to their IT systems.
It’s the big bang for pure internet providers like Paradigma Digital.