IT 2.0

Our focus to date has been on the future of Enterprise 2.0 with regard to four communities: customers, contracts, corporation and HR. There are some trends in information technology (IT) that are enabling what is happening in these four enterprise communities and is in turn being driven by them.

In a March 2000 study by PricewaterhouseCoopers titled Why isn't IT spending creating more value? looks at the value of IT spending from 1973 to 2006. They concluded that, "from 1995 to 2000, information technology played a central role in the productivity of IT-intensive industries [and] that the decline in quality-adjusted prices and the increase in computer processing power contributed 'directly to aggregate, or economy-wide, productivity gains.' ... business communications equipment, hardware, and software began contributing less to rising US productivity after 2000.

"PricewaterhouseCoopers believes that the decline in IT-related productivity over the past few years is attributable partly to an unintended consequence of Moore’s Law. ... As the cost of computer power has continued to fall, it has been easier and easier to fulfill business units’ demands for more features, functions, and applications. The result is greatly increased IT complexity, a phenomenon we refer to as Moore’s Flaw.

"A significant challenge for companies, then, is to manage out unneeded complexity. Once they free up corporate resources by managing out complexity, they’ll be able to redirect these resources to spending on IT innovation.

"IT innovation is the chief casualty of this preoccupation with system maintenance. In 2007, only 13 percent of the average IT budget supported innovation in business processes or products. ... The remaining 87 percent disappeared into the black hole of general maintenance and upkeep, ... The key is that the proportion of IT budgets dedicated to innovation must increase, complexity must be managed out to prevent innovation from drowning in a sea of redundant systems, applications, and hardware.

"A good example of a highly strategic redeployment of resources is ... Hewlett-Packard. ... The company reclaimed IT dollars from the dustbin of system maintenance—resources that could then be targeted to whatever innovations HP’s employees could conjure up.

Before	After
85+ data centers in 29 countries	3 paired centers
3,500 to 5,000+ applications	1,100 applications
21,700+ servers	14,000 servers
762+ data marts	Single view of the enterprise
Excessive power consumption	Power and wattage reduced by 65%"

"... today’s executives need a much better understanding of which IT investments maintain and create competitive distinction, and which can—and should—be cut or managed differently. ... A good place to start is by understanding the potential correlation between IT spending and profitability.

"Over the next five years, enterprise software will continue its evolution to offer a management platform that allows customers to design, deploy, manage, and measure their own unique business processes. This structural transition is fundamentally altering the nature and purpose of enterprise applications and, PricewaterhouseCoopers believes, will be more disruptive than the move to client/server architecture in the 1990s. The core of the next generation of enterprise software is the concept of "loose coupling," or decoupling the business process logic from static source code so that the software can be modified and managed to accommodate changing business requirements."

Enterprise 1.0	Enterprise 2.0	Impact
Process standardization	Process differentiation	Firms will be able to differentiate their business processes, releasing a new wave of innovation.
Systems integration	Process integration	Instead of conforming to the static way that systems function, a business will be able to configure and manage systems to meet changing needs, making the entire organization more agile.
Go-live	Continuous Releasing	Releasing business process logic from static source code means companies will continually manage and improve how systems support the business.
Data capture	Data insight	Companies will move from a focus on data collection to a focus on data analysis that drives competitive insight.

E2W2 comments: The PricewaterhousCoopers' paper is written for C-level officers because of the impact the change in IT will have on the way the enterprise does business. Fortunately, many of the changes that will occur in the business will be enabled and enhanced by these changes in IT. There are problems, of course. Many of the security structures now in place will have to be modified to manage date as it is processed and made available to different users, some of whom may not be authorized to view some of the data. As users gain power in tailoring their systems some of the costs will be moved from IT to the users so trend-line data may be skewed. These are relatively small prices to pay for the benefits. The good news is that IT and the rest of the business will be working more closely together.

You can obtain a copy of the paper Why isn’t IT spending creating more value? from PricewaterhouseCoopers.

HR 2.0

One of the Enterprise 2.0 communities we have identified is HR to include both both recruiting and retention. There are some interesting changes going on within Enterprise 2.0.

Job boards are everywhere and they range from barely useful to worthless. They are more like Friday night singles bars than business tools. Almost all of them are populated by jobs from recruiters who take job seekers' resumes, strip out the identifying information, and pass it on to their client. A resume is a good place to start, but most of us who have been around even a short while have other information posted on Linkedin (recommendations and groups), Facebook (comments and groups), Websites and blogs. A resume is like a quick conversation in a noisy bar, not much on which to base a future relationship.

How can a candidate learn more about a company? A recent example is Glassdoor.com. They invite employees to post sample of salaries and comment on the company as a place to work. Does that provide a "bitching place" for employees? The growing experience with Enterprise 2.0 suggests that there will be some bad apples but a large part of any community will respond responsibly. Cisco has 54 reviews and John T. Chambers, Chairman and CEO gave the site a 95% Approval Rating. Microsoft has 155 ratings, Steve Ballmer, Microsoft's CEO gave the site a 65% approval rating. They have ratings from a lot of companies you know including IBM, Deloitte, PricewaterhouseCoopers, Apple and maybe yours. This type of reporting is part of the transparency of Enterprise 2.0. It will upset the apple cart for those who insist on secrecy for salary ranges and make the marketplace more competitive. The job seekers in the HR community are changing the game.

How can you screen that huge stack of resumes? Talent Spring has created a ranking system using anonymous comparative rankings of resumes. Interesting concept but not well explained on their Web site. Instead go to The Chad.JobCentral.com for two very clear and clever visual presentations: "Employees benefit from Resume Scoring" and "Talent Spring's benefit to Employers." Basically, resume submitters rank others resumes, A is better B, and the best are sent to you for the next steps. Presumably people who submit a resume for a job know something about the job and can evaluate the buzzwords and specifics.

How can a candidate submit more than a resume, avoid buzzword bingo and get matched with the best jobs? Thar is what JobFox offers. An applicant defines their skills and experience by choosing and ranking the best words offered by JobFox to assure common terminology for applicants and employers. They diagram the applicant's work experience and offer a "psychological" test -- take it or choose not to. Specify locations, salary, etc. Add your resume and post the whole package on the JobFox site. Employers go through a similar process in defining the job map from one set of terms and to avoid buzzwords. JobFox immediately matches jobs to resumes on file and provides the employer a ranked list with matches including categories, e.g., salary, education, experience, etc. Applicants are notified that their resume has been considered and shown a comparable category match to the job. No more resumes that go down black holes.

How can a company improve its retention rate and succession planning? There are a lot of elements in this area that a common across multiple employers, there are regulatory requirements that are changing and must be met and there is value in being able to compare some information. A large and growing element of Enterprise 2.0 is SaaS -- Software as a Service. Basically, the computers, data and applications are housed in an off site utility. Cornerstoneondemand.com is an example of such a company. They provide learning (more than 30,000 training titles), performance evaluations, compensation, succession and compliance services online. Much of what they offer is in whole or in part delivered to employees desktops and appears as part of the employer's own Web site.

As we pointed out in an earlier post , this level of change needs to be strategic. You have to start at the shallow end of the pool. Pick a target need and start there.

We do not endorse any of these solutions. We present them just to give you some ideas about how the world of HR is changing in response to Enterprise 2.0. Comments, reactions, other changes we should know about? Please let us know by clicking "Post a Comment" below.

Enterprise 2.0 Strategists

Enterprise 2.0 Strategists are the ambassadors of E2.0. They are the authorized representatives of business executives or information technology. They speak the languages of business and technology and know the cultures of business, technology and Enterprise 2.0.

Business analysts played this role for the development and enhancement of business processes, legacy systems, and Web 1.0. The focus then was on processes, either the systematization of existing processes or the design of new processes to take advantage of changes in technology. The impact of processes and/or technology changes were a factor to be considered as part of the implementation and training plans but did not have a significant impact on design.

Web 2.0 applications may incorporate legacy, Web 1.0 and new technologies. The emphasis is on the technologies with some regard for the changing environment or culture in which a particular set of technologies will be used. It encompasses both enterprise technology and culture plus technologies and cultures found outside of enterprises. Outside examples include personal blogging, social networks and wikis that are not linked to specific enterprises.

Enterprise 2.0 uses the technologies of Web 2.0 but reflects the business requirements and cultural issues of an enterprise. Changes in the business environment or culture are a significant element in the design of strategies for E2. In its most effective form, an E2 strategy changes the culture of the market, business relationships, internal operations, and/or human resources recruiting and retention.

In an earlier post, we talked about four corporate communities to be considered for Enterprise 2.0 strategies: customers-who buys, who influences, competitors, etc., contracts-suppliers, dealers, advertising and PR agencies, law firms, etc., corporate including marketing, finance, production, lines of business, etc., and HR-with particular emphasis on recruiting and retention.

Outside the enterprise, Web 2.0 tends to look at just one or two communities at a time. Within the enterprise, one of these may represent a good place to start but the strategy must expand to encompass all four. We also posed four questions:

What are your:
Communities doing today? - probably more than you expect
What are your tactics for these four communities?
What are your strategies for these four communities?
What are your plans to manage these strategies?

None of these questions are focused on technology although the answers will involve technologies. The tactics and strategies will depend on what you and your competitors are doing and the needs of your enterprise and each of your communities. The tactics and strategies need to be coordinated because these communities overlap to some extend, e.g., how your deal with your customer communities will be known to your recruiting and employee communities.

If you have started, congratulations. Where do you go from here? If you haven't started, where do you start? There is no single answer but experienced business analysts who are familiar with Web 2.0 within and beyond the enterprise are good candidates to start designing processes that will lead to the answers you need for your enterprise.