This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or otherauthorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied,distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2012 Gartner, Inc. and/or its affiliates. All rights reserved.

Workshop: AcceleratingInnovation by Adopting a Pace-Layered Application Strategy

George Ambler@cioleader

Why Is a New Application StrategyNeeded?

OneSize Fits

All

BusinessLeader

Apps/ITLeader

The Conversation Between Businessand IT Leaders Is Not Working!

NewIdeas

Better Ideas

CommonIdeas

“I don’t knowexactly what Iwant. I need toexperiment”

“I know what Iwant, but it needs

to be different frommy competitors”

“I know what Iwant and it doesn’thave to be unique”

How Do Other "Systems" in Industries DealWith Varying Rates of Change? Pace Layering?

Structure:

Skin:

Space Plan:

Services:

Stuff:

30 to 300 Years

20 Years

3 to 30 Years

7 to 15 Years

1 Day to1 Month

Site: Eternal

Note: For more on pace layers and shearing layers in buildingarchitecture, see "How Buildings Learn" (1994) by Stewart Brand

Systems of Record

Systems of Differentiation

Systems of Innovation

A Pace-Layered View of Applications

BetterIdeas

GreaterEfficiency

CommonIdeas

UniqueProcesses

CompetitiveThreatsNew Ideas

What Are Your Systems of Record?

Employee

Customer(Constituent)

Order

Product(Offering)

Asset

Financial

SupplierOthers

Core BankingPolicies (Insurance)

Etc.

What Are Your Differentiating Capabilities?

Finance(Evolves to PM)

Customer(Constituent)

Market

DeliverS

ervi

ceD

eliver

Employee

Recruit/Hire

Review

Pro

mot

e Develop

Supplier

Contract

Man

age P

rocure

Offering

R&D

Version

End

ofLi

fe

Source/M

ake

Asset

Buy/Build/Lease

End

ofLi

fe MR

OUpgrade

How Should New Ideas Be Supported?

OpenInnovation

Employee

Recruit/Hire

Customer(Constituent)

Market

Service

Offering

R&D

Systems of Record

Systems of Differentiation

Systems of Innovation

SentimentAnalysis Service

Open InnovationSubmission Box

Product ReviewService

RecommendationsEngine

iPhoneApp

DroidApp

FacebookPresence

Customer ServiceProcesses & Systems ConfiguratorR&D & Product Development

Systems & Processes

Customer Product Supplier Order

Example: Externally Driven Innovationand Differentiation Meet "Layers"

Facebook, Twitter, YouTube, Communities, Portal, etc.

System ofRecord

It's All About the Governance -Differences Between the Layers

System ofDifferentiation

System ofInnovation

ProcessChange

Architecture

Funding

Agile Practices

Waterfall

DevelopmentPractices

BusinessEngagement

PlanningHorizon

Strict Change Control Experimentation

Investment Pool

Capital Process

Traditional Alternate Platforms

Doing the Work

Formal Process

7+ years 2-3 months1-2 years

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Bimodal IT Offers a Way to Get Unstuck

"The reality is thatyou do have tooperate at twospeeds, and some ofthat you do bycreating dedicatedteams for each.Focusing on the bigsystems, makingthem run smooth,while at the sametime havingdisrupters toinnovate, togetherwith marketing andthe customer,exploiting digital."— Willem Eelman, global

CIO, UnileverTraditional Mode Nonlinear Mode

Waterfalldevelopment

Known vendorsStrong governance

Minimized riskTechnology teams

Stuck in the middle"Fit for no one"

Agile dev.Small/

innovativepartners

Lightweight"Just good

enough" governanceManaged risk

Multidisciplinary teams

When speed or innovation isneeded, or there is a high

degree of uncertainty

Workshop Discussion

Hybrid ERP is Becoming the Norm

• Most organizations have a heterogeneousportfolio of business applications.

• The applications range from mainframe to iPad,data center to cloud, and critical to casual.

• The business processes they support maychange every few years or every few days.

• No single strategy or governance model can beappropriate for all applications.

• The problem will get worse as Cloud and SaaSoptions continue to gain popularity

Group DiscussionIn your groups appoint a spokesperson for your group toreport on the discussion around the following two questions:

1. What do you see as the key benefits gained fromimplementing a place layered application strategy?

2. What are the challenges you can see in implementing apace layered application strategy?

Common Challenges When ImplementingPace Layers

• Defining the Appropriate Scope for the Effort- All applications, even the Departmental ones?- Whole Organization or by BU or Functional domain

• Getting to the right level of Granularity for defining Application- ERP is too broad, but how much to we break it down- Is a web service to granular?

• Lack of business Involvement• Focus too much on eliminating spend on Systems of Record• Look at it as a one and done exercise

- Don’t establish distinct governance for each layer- Don’t tie pace Layers to their APM/investment management

process

Common Benefits cited by clients

• Communication Vehicle for improving business and ITpartnership- By far the most common positive feedback

• Simple model that everyone understands• Provides clarity on where investment priorities should be

- Shift funding towards differentiation/innovation• Creates more manageable segments for portfolio

management• Can help convince business to implement SoR with little

or no customization• Shifting more resources to differentiating/innovative work

since it needs to change more frequently

Feedback from Clients on how PaceLayers Can Enable Differentiation

• Provides a process to consider individualbusiness activities rather than applicationcategories.

• Creates a framework to support the coexistenceof integrated suites and best-of-breed apps.

• Establishes a governance process that allowsdepartments to specify, justify and even purchasetheir own applications.

• Improves the dialogue between business and ITleaders about which activities are (or should be)truly differentiating.

Feedback from Clients on How They are usingPace Layers to Encourage Innovation• Creating an “Innovation Center" with a budget

and governance process to identify and nurturenew ideas

• Establish a development environment with toolsand resources to make innovative apps. fasterand easier to develop. Many looking to cloud

• Identifying consolidation and rationalizationopportunities and shifting investment towardsinnovation

• Reinforcing that failure isn’t a bad thing, as longas you fail fast.

Recent Trends on How people are usingPace Layers• Identifying what applications can/should move to cloud• Support planning for ERP Upgrade or Consolidation

projects• Using Pace Layers as a way to incorporate “Rogue IT”• Incorporating Pace Layer concepts into RFP’s for

application outsourcing deals• Pace Layered Budgeting

- SOR – long term capital planning- SOD – classic annual budgeting process- SOI – Innovation Fund, VC model (Many re-thinking how

to do this)

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or otherauthorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied,distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2012 Gartner, Inc. and/or its affiliates. All rights reserved.

Accelerating Innovation byAdopting a Pace-LayeredApplication Strategy

George AmblerExecutive Partner

Gartner Africageorge.ambler@gartner.co.za

www.twitter.com/cioleader