How Cisco's digital transformation is driving business outcomes
The initiative, which includes moving operations under the purview of IT, builds on the networking giant's earlier work calculating the cost to operate the servers, storage, networking and applications that fuel the business. "We need to show the margins of the companies' offer structures," Diaz told CIO.com at the Technology Business Management conference last week. "The things we’ve done to digitize IT, we’re now moving into the business structures."
CIOs are scrambling to stay ahead of the changes digitization is triggering in their companies. Advances in mobile, cloud and analytics technologies create new opportunities for automation, something that Cisco has seized upon in its quest to harness technology as a competitive advantage. Jacoby and Diaz have spent the last several years accelerating the pace of IT service delivery, and simplifying cost structures to show business unit leaders what value they're getting for the technologies they've purchased.
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"It’s about being able to define what you’re delivering in the context of the value back to the business," Diaz says. Through this "operations as a service" model, Robbins wants Diaz to demonstrate with hard data the outcome of not only IT services delivered, but the business processes those services are supporting.
Diaz offered a practical example of this fairly abstract concept by way of order management. Suppose a customer who ordered a router via Cisco's ecommerce platform needed to add a module or some other customization to the equipment. Cisco's operations team would have previously conducted a number of manual processes and policy changes to ensure the product was delivered as ordered. This could take several weeks. Using a custom-built software platform, along with analytics software from Apptio that the company initially used to track IT costs, Cisco is now automating those changes and updating the order on the fly. A process that once took three to four weeks has been reduced to three or four minutes.
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The changes are accompanied by a full accounting, or a "cost of goods sold" to deliver the orders, which includes any technologies used to deliver a service, such as file-sharing from Box and CRM software from Salesforce.com. If a business unit requests a new cloud service, IT must deliver it. But first the business must demonstrate the benefit, or the business outcome, of the cloud service. "If I give you X, you must give the company Y," Diaz says. "That is total business outcome assurance. When you get this, you need to make sure you're selling faster, that you're reducing cost or that your boosting margins faster because that's what Chuck wants to see."
This approach has enabled every IT leader's dream: With costs tracked from service delivery through deployment, the business unit is accountable for the services it consumes and the outcomes it seeks to achieve. About 20 "tenants" from various business units, including human resources management, currently use this platform. But the ultimate goal is to “replatform” Cisco's entire business in this vein.
A key component underpinning business outcome assurance is Cisco's continuous delivery model of writing and shipping applications -- and making various tweaks and refinements to those app -- in an iterative yet rapid fashion. For example, Cisco now customizes its Oracle business software for finance, procurement, order management and accounting in 15 to 20 smaller releases annually versus two large launches per year. This has increased the velocity of Cisco's software delivery by 78 percent over previous waterfall methods of building software based on a book of requirements, and shipping it when those specs are met.
The continuous delivery model has its challenges. Diaz says that he is embedding security policies into every service offering, which is the only sensible way to safeguard data for automated services. It's also incumbent on Cisco's lines of business to match the speed with which IT delivers the products and services it requests. "When you get [a requested service], you need to make sure you're selling faster, that you're reducing cost or that your boosting margins faster because that's what Chuck wants to see," Diaz says.
The velocity uptick introduces new challenges in change management, requiring business stakeholders and their IT constituents to collaborate closely. To ensure everyone is on the same page, teams comprised of 10 to 12 business unit leaders meet every six weeks to hash out various features and policies, such as how the company is conducting its continuous delivery model. "Fast IT isn't good enough -- you need quality, resiliency, compliance and security," he says.