Cyber Security Investment Requires Procurement Discipline Despite Urgency.

Cyber Security is a high priority issue for enterprises globally. This should not surprise anyone. The risk of underinvestment is enormous, both indirectly and directly. This risk is only matched by the outcomes of significant transgression. Add to this that if there is an issue, as with most crisis situations, the coverup is often even worse than the initial incident.

Equifax is the latest example of a CEO being (finally) toppled by a massive breach, and subsequent inept crisis management. Some small mercy to the 145 million who had their identity compromised.

capioIT has often discussed the lack of senior management education and understanding of the risk and management of cyber and security threats. This is still an issue. Education will take time.

Other issues involve the relationship between the CISO (Chief Information Security Officer)  role and IT. Who does it report to? Where does autonomy lie? Who owns the budget?

Best practice is now focused on having the CISO report into the highest levels of the organisation, with direct board connections, particularly with the risk function. This may be the COO, CFO or  CEO. It is not undermining the role of the CIO, rather reflect where the focus has to be, the education is required and where the cost and negative outcomes will occur if there is any breach (which there will be).

On the vendor side, there is of course, a rush to offer the most easy solution to cyber and security. The problem for the industry is that security technology is the most fragmented sector of the technology ecosystem. A small number of vendors provide a partly comprehensive solution approach to security and cyber, but no one vendor has a full end to end solution. To get a solution that allows the enterprise or agency to be at least standing still in the battle for cyber strength requires multiple vendors, with significant integration that takes time and costs money.

As a result of the speed imperative, it is concerning to that at capioIT we regularly talk with enterprises and agencies that have discarded the discipline around procurement for Cyber Security. Budgets are booming, faster than virtually any other enterprise expenditure.

Whilst for some, procurement, and the CPO role is considered a burden in the enterprise, it does provide a framework and discipline for cyber, just as it does for travel, devices or other categories of expense. Just rushing in and buying with no procurement discipline and as a result without regard to cost, contract, or capacity is in the short-term tempting but runs the risk of further removing or delaying the solution to Cyber from the front line of risk to the organisation.

To achieve this it comes to education. Include procurement up front as you do with any expenditure. Educate them on the requirements. Get them engaged as appropriate with the vendors. Otherwise, run the risk of long-term pain that may impact the entire organisations.

Capture Point

Cyber Security is a critical industry requirement. Unfortunately, a lack of education, understanding of risk and a very fragmented vendor environment have resulted in a situation where the solutions do not match the threat. This is a challenge across the organisation. Procurement is not insulated from this. They must be included in the overall solution for Cyber, and educated along the way. Taking this approach will ensure that long-term investments are sustainable with minimising the risk of exposure.

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

 

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Telco’s have failed at the Cloud and Streaming. What is the future for them?

In a parallel universe, the Telco would be the dominant vendor platform of the modern integrated digital economy for both consumers and enterprise. They could have leveraged their monopolies, network, and utility, and led the way to the digital, cloud and content streaming revolution. Instead, they lag and legislate for survival and relevance.  No Telco has come close to AWS, Netflix or Microsoft. They have spent billions becoming cloud companies and in short, they provide pipe and write down assets. They will not become the dominant player. LIke their interest in application services, the outcomes will be painful and expensive.

There are many many for this. In short, the Telco’s were hamstrung by their monopolistic or near monopolistic positioning. For capioIT one of the most fundamental underlying philosophies is the importance of competition to breed innovation, in the private sector in particular. Why do we have such a creative cloud platform ecosystem? Simply because we have multiple providers who are innovative. AWS, Microsoft, Google are all investing to win and significantly innovating at the same time. A legacy telco cannot do this.

One of the other key reasons for the failure revolves around the culture of the telco. This is at the heart of their issue. I often bemoan the engineering and Capex culture of the telco in 2017. This is incredibly limiting. It also has not fundamentally or sustainably changed. Those who do wish for this sort of radical transformation of culture within the Telco are usually disappointed.

Take one large Australian telco that has spent way too much money for no significant cloud benefit. When a solutions sales person complains loudly and publicly that their parent company finds it easier to use AWS than the own internally developed solution, how can it expect the telco’s sales team to be able to sell? If you cannot get internal buy in, then how can you convince the customer. There is no point being critical of the internal service requirements, get the product right and the customer is much more likely to come.

Secondly, an ASEAN based telco has struggled with the ability to be flexible enough in the current market The reason is the board level obsession with Capex that limits the business ability to look at investments from an OPEX perspective. Offerings that were sent up to the board for approval got pushed back because of an OPEX pricing methodology that was in conflict wit the CAPEX approach of the telco. If the basic culture and investment approach cannot change, and is limiting business, what hope do telco’s have.

Capture Point

Telco’s are in trouble. Their decline was of their own making. Too many tried to legislate monopolistic behaviour and were simply unable to keep to the pace required. The cultural approaches were also unable to migrate to a cloud and digital world. What does it mean? Firstly, the telco will have to reinvent when previous attempts to reinvent have failed. That is a near impossible task. It will have to reinvent without regressing to the normal response of high charges and low service. Secondly it needs to identify relevant differentiated offerings around pipe and networks. It has to ensure that a value is placed on this. Can this be done? Probably not, so the role of the telco is not yet at the bookstore stage, but without a lot of luck and a changing culture it will continue to add to the list started by Kodak among others of industries that arguably created their future then couldn’t win in it.

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Go West in China – Xian and the opportunity for Outcome Excellence

Most business and tourist visitors to China visit Beijing, Shanghai and the Pearl River Delta Megalopolis. Not many blaze a trail further afield and away from the coast. Without becoming a travel agent or spokesperson for the Chinese Tourism Industry, they are missing out.

One of the highlights of central China is of course Xian. Xian has a population of just under 9 million people, making it a tier 2 city by Chinese standards. That statistic alone is one of the many “only in China moments”. As a comparison, the city alone has more people than Switzerland, Austria, and Israel.

Xian was the site of the first capital of a unified China and is the home of the superlative, Terracotta Warriors. It is a major domestic and increasingly, international tourist location in its own right.

I wasn’t there for a holiday, I was there to see the Teleperformance contact centre capabilities and to understand the market capabilities more broadly. Teleperformance had first mover advantage in the city in terms of global contact centre providers. Convergys, Concentrix etc, are in China of course, but not Xian. It is the largest centre in China for Teleperformance which has had a very successful globalisation policy for delivery of customer experience.

The attractions of Xian are obvious.
– Average wages are about 1/3 cheaper in Xian than Beijing and Shanghai, although specific skills carry a premium.
– It has one of the largest university footprints in China
– The city is considered a magnet for central and western China, although for many reasons locals tend to not aspire to shift towards the coastal cities
– A strong innovation and manufacturing led economic basis
– City and provincial government support
– Infrastructure is modern with a strong airport and cultural offerings

Some of the challenges include
– The quality of English is much more limited than the coastal cities. You do not invest there for English skills.
– In general, there is a very Chinese culture. There are limited pools of non-Chinese skills in the market. Any that exist are not likely to be attracted by the call centre space.
– Attracting the expatriate market to the city is a tough call. The climate and environment are tough.

Overall for non-Chinese the primary role of Xian is to develop capabilities as an R&D hub. This has not gone unnoticed. Samsung has a large presence in the city, as does Emerson and other foreign entities, ZTE is one of the many local entities that have R&D based there.

Capture Point

China has more major cities than any other country on earth. That is of course not a surprise. The challenge is identifying what cities are the best source of skills for both local and foreign entities. Xian is one such centre. Whilst the major opportunity for contact centres has largely been successfully captured by Teleperformance, from the perspective of R&D, it has the potential to be one of the top 3-5 centres in China. Innovation has already flowed from Xian and it will continue to do so from semiconductors to battery power.

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The Google Cloud Platform Accelerates as it opens in Sydney, Australia

Finally, the Google Cloud Platform has a legitimate story to tell in the Asia Pacific region. Today (June 20th, 2017), it launched a Sydney region. This makes four regions in the region, following the opening of Singapore just last week. Mumbai is the next in line, opening up India. For more details follow this link from Google – https://cloudplatform.googleblog.com/2017/06/Google-Cloud-Region-in-Sydney.html?m=1

capioIT has closely followed the growth and expansion of Google from an enterprise perspective. Clearly, it has taken Google too long to be robust from a location, scale and strategy perspective, but it has accelerated in 2017. It has new regions open in Asia Pacific, with more to come. Globally, additional regions are scheduled to open in North America, Latin America and Europe. In all, a global footprint with scale is near completion.

What does it mean for organisations in Australia, Singapore and the rest of the region? The most important outcome is that innovation and choice driven by competition. The big three (AWS, Microsoft Azure and Google) are now all present in the region. Other providers such as Alibaba, IBM have facilities in the region with varied growth patterns and strategies. Oracle has an aspiration for the broader PaaS and SaaS market alongside an accelerating SaaS business.

This is positive news, not just on price and cost but from the perspective of capability, new services and redundancy. Competition and the need to gain customer share are fundamentally driving innovation across the IaaS, PaaS and SaaS ecosystems. No-one loses with the pace of innovation we are experiencing, except the laggards and Luddites. 

The challenges for Google is, of course, firstly to fill the capacity locally, but from a longer-term perspective, the most telling issue is to drive local, regional and global partnerships and skills ecosystems to scale out to Google levels of expectations.

Oh, it also has to deal with the momentum and scale of AWS and Microsoft across the region. As virtually every other cloud vendor has paid a high price to understand, AWS and Microsoft are dominant providers. The good news is that they also both have vulnerabilities. Google just has to exploit them.

 

Capture Point

Google has been slow from an enterprise perspective in fulfilling the clear potential it has. This is changing. It has greatly accelerated the pace of growth. Opening regions in both Singapore and Sydney within a week, provide greater scope and capability in the Asia Pacific region. It is now of course up to growth in the market and execution of the capability. Incumbents won’t give up easily, the good news is that the market has shown an appetite for cloud solutions, so it the opportunity lies with Google.

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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Amazon Acquires Whole Foods – World Forgets to Ask – Why was it for Sale?

Amazon Acquires Whole Foods – World Forgets to Ask – Why was it for Sale?

Amazon has announced the acquisition of biodynamic Kale store Whole Foods for US$13.5B. This has, of course, ramped up even further the excitement for Amazon online food delivery and the opportunities in the grocery market. This play is real. Whole Foods gets the best distribution and supply chain network in the world without peer.

This is the good news. The bad news is that Whole Foods was up for sale. Why? Same Store Sales (the performance benchmark for retail) fell 2.4% in the first quarter of this year. Store numbers declined for the first time ever. Whole Foods is not on its own. Retail is under pressure globally, but particularly at the commoditised and fashion sectors in the US. Brands are disappearing, and as Sears is finding out, sentiment doesn’t keep the bankruptcy issues away.

Customer feedback highlighted the ridiculous function, and overpriced nature of some products, not just Kale based ones. The demographic it targets is relatively narrow, the analysis of Cracker Barrel vs Whole Foods in the 2016 US presidential election is incredibly telling. Look at the distribution of stores in the Los Angeles Metropolitan Area. Santa Monica and Orange County are well covered. San Bernardino and Riverside barely have any. No guesses why.

The challenge for Amazon and Whole Foods is to fix the reason why Whole Foods was effectively for sale and under pressure anyway. Trader Joe’s was hurting it, ironically owned by the best bricks and mortar supply chain in the world – Aldi, as well as premium prices for biodynamic Kale not always matching the real world. It can improve the supply chain and delivery mechanisms, but it has to be delivering what the people want at a price they can afford. That is what Amazon is the master at.

Capture Point

The market clearly backs Amazon, and in our view, the brands fit well, and it should, in theory, be a successful deal. It may take the brand global. Management will change at Whole Foods, as will aspects of the supply chain, market proposition and stock management. Most importantly if it works, it won’t be the last of its type. The likes of hardware are arguably next on the line for disruption, with not many sectors left that are dominated by traditional retail.

 

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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Too many Bud Lights Gives SAP Brewers Droop

News broke last week that SAP was suing long-term client and global mega-brewer Anheuser-Busch InBev (brewers of Budweiser, Stella, Fosters amongst other beer of dubious quality) for the tidy sum of US$600M for license indiscretions. It is a staggering amount by any measure, and no doubt will be a complicated and bitter legal experience.
https://www.itnews.com.au/news/sap-seeks-817m-from-stella-artois-brewer-in-license-dispute-461321

My tip no-one wins, except lawyers. ABInBev won’t win, they will clearly have to change their approach to SAP regardless of the outcome and may have to make an expensive exit strategy.

Their loss is nothing in comparison with SAP. With Sapphire NOW starting this week, all the legal action proves is that SAP is an incredibly desperate legacy vendor. It is impossible to contemplate or fathom suing your client for $600M. The action should have been stopped several lawyer meetings ago and well before numbers of $600M were thrown around like drunks in a bar.

Last year SAP had ABinBev as a speaker, this year; it faces a $600M bill. It might make some speakers this year think twice if that is how large embedded clients are treated.

Despite the challenges faced by fellow legacy vendors IBM, Oracle, Dell Technologies and others, it is unlikely that they would resort to such public legal action, particularly the week before inviting their “beloved” customers to Orlando to be wined, dined and then potentially sued. There is no way that Salesforce, AWS or Google would treat their clients this way, nor would vendors such as Accenture, Microsoft and Adobe, who have successfully made the switch to a digital ecosystem contemplate such action.

The technology world is changing. SAP in 2017, does not have the power of SAP in 2012, let alone 2007. The development, pricing, distribution and the consumption model has changed for software and of course all other aspects of technology procurement. The old world is not coming back. SAP has illustrated as clearly as it could that they do not understand this and that they are not going to change to meet the market.

Before this action, I had some faith that SAP could defy its legacy status and remain indispensable to clients. Suing major and public clients for US$600M has undermined that change. It is simply a sign of a desperate vendor, one that hasn’t changed, and won’t change.

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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Some Legacy Vendors Still Underestimate AWS – As They Gasp for Air

“Amazon is propping it up.”

“They are just dev-test.”

“Their security is not up to standard.”

“They will fizz out.”

“They are not suited to the enterprise.”

Not a week goes by that I do not get told these “claims” and “insight” into Amazon Web Services (AWS). Yes, that AWS.

The insight comes from a small number of vendors, and individuals. It is easy to guess who they are, they collectively used to dominate, and still cannot understand why they no longer do. It is a perspective incredibly removed from reality.

Let’s put the dominance and performance of AWS into perspective. On current growth rates, it will be a $20B cloud and subscription platform company by the end of 2017. By the middle of 2018 it will be the same size as DXC Technology, which is the unified HP Enterprise Services, EDS and CSC.  It is larger than European IT Services powerhouse Atos, larger than Cap Gemini, with the list growing with each quarterly result publication.

AWS is not merely an IaaS provider. It has evolved to have a much deeper offering than what that out of date perspective suggests. It is a deep platform, covering IaaS, PaaS, Machine learning, Database and more. While not all offerings are entirely dominant and AWS, is far from perfect, it is still a once in a generation company.

Who is expert at dismissing AWS? The legacy vendors that have had their business hit so badly by AWS. Individually and collectively they hope that AWS is going to disappear as quickly as it has risen. These firms used to dominate, and believe that they have a divine right to continue to do so. Bad news. AWS is going nowhere. It will evolve, and that is perhaps even worse news for the legacy vendors. They cannot change or disrupt at the same pace as AWS, they do not have the customer focus, flexibility or reputation, and now languish, some with revenues that have halved in the last ten years, offering products no-one wants. These vendors included traditional IT Services providers, Telco’s, equipment manufacturers, distributors and managed services providers.

As I have written for many years, the only Tier 1 enterprise vendor who seriously has made the shift from legacy to the innovator, and that can compete up front with AWS is Microsoft. As highlighted, so many of the rest are still sitting in denial without the willpower, capital or culture to shift. (Of the smaller vendors, only Adobe can claim the transformation to SaaS and cloud is complete)

Is AWS perfect? No. Does it still have challenges? Yes, in the enterprise space, in the database space, in the partner area amongst other areas, challenges remain and will continue to. As highlighted by capioIT, some customer events need work as well. One day it may be threatened and toppled as the dominant provider. That day is not today or tomorrow. Old school vendors have to accept this.

Legacy vendors (and in a story for another day, legacy IT departments) have challenges that question their survival every day. They need to stop questioning AWS’s longevity, stop deflecting and make the dramatic, and traumatic from a business perspective, transition that they need to survive. Otherwise, they will still be underestimating and criticising AWS as they sink to the bottom of the IT market. Rackspace has done it, NetApps is trying to do it, still, others think it will pass.

Capture Point

Since its inception, too many competitors have not taken AWS seriously enough, even as their own strategy fell apart and revenue went into decline. While logic would dictate lessons have been learnt, too many individuals and their organisations still take the view that AWS will be a historical footnote in the great book of technology. They are wrong and need to wake up fast.

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.

phil@capioit.com

+61422231793

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