Monday, January 18, 2016

Procurement in 2016—The supply chain goes digital

The next BriefingsDirect business innovation thought leadership discussion focuses on the heightened role and impact of procurement as a strategic business force.

We'll explore how intelligent procurement is rapidly transforming from an emphasis on cost savings to creating new business value and enabling supplier innovations.

As the so-called digital enterprise adapts to a world of increased collaboration, data access, and business networks, procurement leaders can have a much bigger impact, both inside and outside of their companies.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

To learn more about the future of procurement as a focal point of integrated business services we’re joined by Kurt Albertson, Principal of Advisory Services at The Hackett Group in Atlanta, and Dr. Marcell Vollmer, Chief Operating Officer at SAP Ariba and former Chief Procurement Officer at SAP. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: We're looking at mobile devices being used more and more for business. We have connected business networks. How are these trends impacting procurement, and why is procurement going to have a bigger impact as time goes on?

Vollmer: I see a couple of disruptive trends, which are very important and are directly impacting procurement.

We see how smartphones and tablets have changed the way we work on a daily basis, not to forget big data, Internet of Things (IoT), Industry 4.0. So, there are a lot of technology trends out there that are very important.

On the other side, we also see completely new business models taking off. Uber is the largest taxi company without owning a single cab. Airbnb is basically the same, the largest accommodation provider, but not owning a single bed. We see also companies like WhatsApp, Skype, and WeChat. They don't own the infrastructure anymore, like what we know from the past.

I could mention a couple more, like Alibaba. Everybody knows it was the highest IPO in history, with an initial market capitalization of around $230 billion, and they even don’t have an inventory. What we're seeing are fundamental changes, the technology on one side and then the new business models.

We now see the impact here for procurement. When business models are changing, procurement also needs to change. Companies intend to simplify the way they do business today.

Complex processes

We see a lot of complex processes. We have a lot of complex business models. Today it needs to be "Apple easy" and "Google fast." This is simply what millennials expect in the market.

But also, we see that procurement, as a function itself, is transforming from a service to function. And this is definitely one trend. We see a different strategic impact. What is asked of procurement from the lines of business is more important and is on the agenda for the procurement function.

Let me add one last topic, the evolution of the Chief Procurement Officer (CPO) role, by saying that seeing the different trends in the market, seeing also the different requirements indicated by the trends for procurement, the role of procurement, as well as the CPO role in the 21st Century will definitely change.

I believe that the CPO role might evolve and might be a Chief Collaboration Officer role. Or, in the future, as we see the focus is more and more on the business value, a Chief Value Officer role might be the next big step.

Gardner: Kurt, we're hearing a lot from Marcell about virtual enterprises. When we say that a major retailer doesn’t have an inventory, or that a hotel rooms coordinator doesn’t have any beds, we're really now talking about relationships. We're talking about knowledge rather than physical goods. Does that map in some way to the new role of the CPO? How has the virtual enterprise impacted the procurement process?

Albertson: Marcell brought up some great points. Hackett is a quantitative-based organization. Let me share with you some of the insights from a very recent Key Issues Study that we did for 2016. This is a study we do each year, looking forward across the market. We're usually talking with the head of procurement about where the focus is, what’s the priority, what’s going to have the biggest impact on success, and what capabilities they're building out.

Let me start at a high level. A lot of things that Marcell talked about in terms of elevating procurement’s role, and more collaboration and driving more value, we saw it quite strongly in 2015 -- and we see it quite strongly in 2016.

In 2015, when we did our Key Issues Study, the number one objective of the procurement executive was to elevate the role of procurement to what we called a trusted adviser, and certainly you've heard that term before.

We actually put a very solid definition around it, but achieving the role of a trusted adviser, in itself, is not the end-game. It does allow you to do other things, like reduce costs, tap suppliers for innovation, and become more agile as an organization, which was in the top five procurement objectives as well.

Trusted advisor

So when we look at this concept of the trusted adviser role of procurement, just as Marcell said, it's about a lot of the procurement executives across multiple industries who are asking, "How do we change the perception of procurement within the eyes of the stakeholders, so that we can do more higher value type activities?"

For example, if you're focusing on cost, we talk a lot about the quantity of spend influence, versus the quality of spend influence. In fact, in our forum in October, we had a very good discussion on that with our client base.

We used to measure success of the procurement organization by cost savings, but one of the key metrics a lot of our clients would look at is percent of spend influenced by procurement. We have a formal definition around that, but when you ask people, you'll get a different definition from them in terms of how they define spend influence.

What we've realized is that world-class organizations are in the 95 percent range and 90 percent plus on the indirect side. Non world-class procurement organizations are lagging, in the 70 percent range in terms of influence. Where do we go from here? It has to be about the quality of the spend influence.
When we look out in the market, there are a lot of companies that don't have line-item level detail or they don't have 90 percent or 95 percent-plus data quality with respect to spend analytics.

And what our data shows very clearly is that world-class organizations are involved during the requirements and planning stages with their internal stakeholders much more often than non-world-class organizations. The latter are usually involved either once the supplier has been identified, or for the most part, once requirements are identified and the stakeholder already knows what they want.

In both cases, you're influencing. But in the world-class case, you're doing a much better job of quality of influence, and you can open up tremendous amounts of value. It changes the discussion with your internal stakeholders from, "We're here to go out and competitively bid and help you get the best price," to, "Let’s have a conversation with what you're trying to achieve and, with the knowledge, relationships, and tool sets that we have around the supply markets and managing those supply markets, let us help you get more value in terms of what you are trying to achieve."

We've asked some organizations how we become a trusted adviser, and we've built some frameworks around that. One of the key things is exactly what you just talked about. In fact, we did a forward-looking, 10-year-out procurement 2025 vision piece of research that we published a few months ago, and big data and analytics were key components of that.

When we look at big data, like a lot of the things Marcell already talked about, most procurement groups aren’t very good at doing basic spend analytics, even with all the great solutions and processes that are out there. Still, when we look out in the market, there are a lot of companies that don't have line-item-level detail, or they don't have 90 percent or 95 percent-plus data quality with respect to spend analytics.

We need to move way beyond that for procurement to really elevate its role within the organization. We need to be looking at all of the big data that’s out there in the supply networks, across these supply networks, and across a lot of other sources of information. You have PDAs and all kinds of information.

We need to be constructively pulling that information together in a way that then allows us to marry it up with our internal information, do more analysis with that, synthesize that data, and then turn it over and provide it to our internal stakeholders in a way that's meaningful and insightful for them, so that they can then see how their businesses are going to be impacted by a lot of the trends out in the supply markets.

Transformational impact

This year, we asked a question that I thought was interesting. We asked which trends will have the greatest transformational impact on the way procurement performs its job over the next decade. I was shocked. Three out of the top five have to do with technology: predictive analytics and forecasting tools, cloud computing and mobility, the global economy and millennial workforce.

Mobility, predictive analytics, forecasting, and cloud computing are in the top five, along with global economy and the millennial workforce, two other major topics that were in our forward-looking procurement 2025 paper.

When we look at the trend that’s going to have the greatest transformational impact, it's predictive analytics and forecasting tools in terms of how procurement performs its job over the next 10 years. That’s big.

Consider the fact that we aren’t very good at doing the basics around spend analytics right now. We're saying that we need to get a lot better to be able to predict what’s going to happen in the future in terms of budgets, based on what we expect to happen in supply markets and economies.
We need to put in the hands of our stakeholders toolsets that they can then use to look at their business objectives and understand what’s happening in the supply market and how that might impact it in two to three years.

We need to put in the hands of our stakeholders tool sets that they can then use to look at their business objectives and understand what’s happening in the supply market and how that might impact it in two to three years. That way, when you look at some of the industries out there, when your revenue gets cut in more than half almost within a year, you have a plan in place that you can then go execute on to take out cost in a strategic way as opposed to just taking a broad axe and trying to take out that cost.

Vollmer: I couldn’t agree more what Kurt said about the importance of the top priorities today. It's very important also to ask what you want to do with the data. First of all, you need technology. You need to get access to all the different sources of information that you have in a company.

We see today how difficult it is. I could echo what Kurt said about the challenges. A lot of procurement functions aren't even capable of getting the basic data to drive procurement, to do spend analytics, and then to see that it really links this to supply-chain data. In the future this will definitely change.

Good time to purchase

When you think about what you can do with the data by predictive analytics and then say, "This is a good time to buy, based on the cycle we've seen is this time-frame." This would give you a good time to make a purchase decision and go to the market.

And what do you need to do that? You need the right tools, spend visibility tools, and access to the data to drive end-to-end transparency on all the data what you have, for the entire source-to-pay process.

Gardner: Another thing that we're expecting to see more of in 2016 is collaboration between procurement inside an organization and suppliers -- finding new ideas for how to do things, whether it’s marketing or product design.

Kurt, do you have any data that supports this idea that this is not just a transaction, that there is, in fact, collaboration between partners, and that that can have quite an impact on the role and value that the procurement officer and their charges bring back to their companies?
That helps procurement category managers raise their game and really be perceived as adding more value, becoming this trusted advisor.

Albertson: Let me tie it into the conversation that we've been having. We just talked about a lot of data and analytics and putting that in the hand of procurement folks, so that they can then go and have conversations and be really advisers in terms of helping enable business strategies as opposed to just looking at historical spend cost analysis, for example. That helps procurement category managers raise their game and really be perceived as adding more value, becoming this trusted adviser.

Hackett Group works with hundreds of Global 1000 organizations, and probably still one of the most common discussions we have, and even in on-site training support that we do, is around strategic category management. It's switching the game from strategic sourcing, which we view as an end-step process that results in awarding a competitive bid process, with aggregation of spend and awarding a contract, to a more formal category management framework.

That provides a whole set of broader value levers that you can pull to drive value, including supplier relationship management (SRM), which includes working with suppliers to innovate, impacting a much broader set of value objectives that our stakeholders have, including spend cost reduction, but not only including spend cost-reduction.

We see such a level of interesting category management today. In our Key Issues Study in 2016, when we look at the capability building that organizations are rolling out, we've been seeing this shift from strategic sourcing to category management.

Strategic sourcing as a capability was always number one. It still is, but now number two is this category management framework. Think of those two as bookends, with category management being a much more mature framework than just strategic sourcing.

Category management

Some 80 percent of companies said category management is a key capability that they need to use to drive procurement’s objectives, and that’s because they're impacting a broader set of value objectives.

Now, the value levers they're pulling are around innovation and SRM. In fact, if you look at our 2016 Key Issues Study again, tapping supplier innovation is actually a little bit further on down the list, somewhere around 10.

When we look at all the things that are there, it’s actually ninth on the list, with 55 percent of procurement executives saying it’s a critical and major importance for us.

The interesting thing, though, is that if you go back to 2015 and compare where that is versus 2016, in 2016, that moves nearly into the top three with respect to the significantly more focus on a key capability. SRM has been a hot topic for our clients for a long time, but this tells us that it’s getting more and more important.

We're seeing a lot of organizations still with very informal SRM, supply innovation frameworks, in place. It’s done within the organization, but it’s done haphazardly by individuals within the business and by key stakeholders. A lot of times, that activity isn't necessarily aligned with where it can drive the most value.
We have to rethink how we look at our supply base and really understand where those suppliers are that can truly move the needle on supplier innovation.

When we work with a company, it's quite common for them to say, "These are our top five suppliers that we want to innovate with." And you ask, "If innovation is your objective, either to drive cost reduction or to help improve the market effectiveness of your products or services and drive greater revenue, whatever the reason you are doing that, are these suppliers going to get you there?"

Probably 7 out of 10 times, people come back to us and say that they picked these suppliers because they were the largest spend impact suppliers. But when you start talking about supplier innovation, they freely admit that there's no way that supplier is going to engage with them in any kind of innovation.

We have to rethink how we look at our supply base and really understand where those suppliers are that can truly move the needle on supplier innovation and engage them through a category-management framework that pulls the value lever of SRM and then track the benefits associated with that.

And as I said, looking at our 2016 Key Issues Study, supplier innovation was the fastest growing in terms of its focus objective that we saw when we asked the procurement executives.

Gardner: Marcell, back to you. It sounds as if the idea of picking a supplier is not just a cost equation, but that there is a qualitative part to that. How would you automate and scale that in a large organization? It sounds to me like you need a business network of some sort where organizations can lay out much more freely what it is that they're providing as a service, and then making those services actually hook up -- a collaboration function.

Is that something you're seeing at Ariba, as well that the business network, helping procurement move from a transaction cost equation to a much richer set of services?

Key role

Vollmer: Business networks play a key role for us for our business strategy, but also on how to help companies to simplify their complexity.

When you reach out to a marketplace, you're looking for things. You're probably also starting discussions and getting additional information. You're not necessarily looking for paint in the automotive industry or the color of a car. Why not get an already painted car as a service at the end?

This is a very simple example, but now think about when you go to the next level on how to evolve and have a technology partnership, where you reach out to suppliers, looking for new suppliers, by getting more and more information and also asking others who have probably having already done similar things.

When you do this on a network, you get probably responses from suppliers you wouldn't even have thought about having capabilities like that. This is a process that, in the future, will continue to aid successfully the transformation to a more value-focused procurement function, and simplicity is definitely a key.
You need to run simple. You need to focus on your business, and you need to get rid of the complexity.

You need to run simple. You need to focus on your business, and you need to get rid of the complexity. You can’t have all the information and do everything on your own. You need to focus on your core competencies and help the business in getting whatever they need to be successful, from the suppliers out in the market to ensure you get the best price for the desired quality, and ensure on-time deliveries.

The magic triangle of procurement is not a big secret in the procurement world. Everybody knows that it's not possible to optimize everything. Therefore, you need to find the right mix. You also need to be agile to work with suppliers in a different way by not only focusing just on the price, which a lot of operational technical procurement functions are used to. You need what you really want to achieve as a business outcome.

On a network you can get help from suppliers, from the collaboration side also, in finding the right ones to drive business value for your organization.

Gardner: Another major area where we're expecting significant change in 2016 is around the use of procurement as a vehicle for risk reduction. So having this visibility using networks -- elevating the use of data analysis, everything we have talked about, in addition to cost-efficiencies, in addition to bringing innovation to play between suppliers and consumers at the industrial scale -- it seems to me that we're getting insight deeply into supply chains and able to therefore head off a variety of risks. These risks can be around security, around the ability to keep supply chains healthy and functioning, and even unknown factors could arise that would damage even an entire company's reputation.

Kurt, do you have some data, some findings that would illustrate or reinforce this idea that procurement as a function, and CPOs in particular, can play a much greater role in the ability to detect risk and prevent bad things from happening to companies?

Supply continuity risk

Albertson: Again, I'll go back to the 2016 Key Issues Study and talk about objectives. Reducing supply continuity risk is actually number six on the list, and it’s a long list, and that’s pretty important.

A little bit further down, we see things like regulatory noncompliance risk, which is certainly core. It's certainly more aligned with certain industries than others. So just from our perspective, we see this as certainly number six on the list of procurement 2016 objectives, and the question is what we do about it.

There's another objective that I talked about earlier, which is to improve agility. It's actually number four on the list for procurement 2016 objectives.

I look at risk management and procurement agility going hand in hand. The way data helps support that is by getting access to better information, really understanding where those risks are, and then being able to quickly respond and hopefully mitigate those risks. Ideally, we want to mitigate risks and we want to be able to tap the suppliers themselves and the supply network to do it.

In fact, we attacked this idea of supply risk management in our 2025 procurement study. It’s really about going beyond just looking at a particular supplier and looking at all the suppliers that are out there in the network, their suppliers, their suppliers, and so on.

But then, it's also tapping all the other partners that are participating in those networks, and using them to help support your understanding and proactively identifying where risk might be occurring, so that you can take action against it.
How do we manage and analyze all this data? How do we make sense of it? That's where we see a lot of our clients struggling today.

It’s one of the key cornerstones of our 2025 research. It's about tapping supplier networks and pulling information from those networks and other external sources, pulling that information into some type of solution that can help you manage and analyze that information, and then presenting that to your internal stakeholders in a manner that helps them manage risk better.

And certainly, an organization like SAP Ariba is in a good position to do that. That’s obviously one of the major barriers with this big-data equation. How do we manage and analyze all this data? How do we make sense of it? That's where we see a lot of our clients struggling today.

We have had some examples of clients that have built out an SRM group inside their procurement organization as a center-of-excellence capability purely to pull this information that resides out in the market, whether it’s supplier market intelligence or information flowing from networks and other network partners. Marrying that information with their internal objectives and plans, and then synthesizing that information, lets them put that information in the hands of category managers.

Category managers can then sit down with business leaders and have fact-based opinions about what’s going to happen in those markets from a risk perspective. We could be talking about continuity of supply, pricing risks and the impact on profitability, or what have you. Whatever those risks are, you're able to use that information. It goes back to elevating the roles of trusted advisor. The more information and insight you can put into their hands the better.

The indirect side

Obviously, when we look at some of the supply networks, there's a lot of information that can be gleaned out there. Think about different buyers that are working with certain suppliers in getting information to them on supply risk performance. To be frank, a lot of organizations still don’t do a great job on the indirect side.

There are opportunities, and we're seeing it already in some of these markets for supply networks to start with the supplier performance piece of this, tap the network community to provide insight to that, and get help from a risk perspective that can be used to help identify where opportunities to manage risk better might occur.

But there are a lot of other sources of information and it’s really up to procurement to try to figure this out with all the sources of big data. Whether it’s sensor data, social data, transactional data, operational data, partner data, machine-to-machine (M2M) data, or cloud services based data, there's a lot of information. We have a model that looks at this kind of these three levels of kind of this analytics model.

The first level of the model is just for recording things and generating reports. The second level is that you're understanding and generating information that then can be used for analytics. Third, you're actually anticipating. You have intelligence and you're moving towards more real-time analytics so that you can be quicker in responding to potential risk.
Procurement organizations need to ensure that they really help the business as much as possible, and also evolve to the next level for their own procurement functions.

I mentioned this idea of agility as being key on the procurement executive’s list. Agility can be in many things, but one of the things that it means with respect to risk is that you can’t avoid every risk event. Some risk events are going to happen. There's nothing you're going to do about them, but you can proactively make plans for when those risk events do occur, so that you have a well thought-out plan based on analytics to execute in order to minimize the impact of that risk.

Time and time again, when we look at case studies and at the research that’s out there, those organizations that are much more agile in terms of responding to these risks where you're not going to be able to avoid them, minimize the impact of those risks significantly compared to others.

Gardner: As we look ahead to 2016, we're certainly seeing a lot on the plate for the procurement organization. It looks like they're facing a lot more technology issues, they're facing change of culture, they're thinking about being a networked organization. Marcell, how do you recommend that procurement professionals prepare themselves? What would you recommend that they do in order to meet these challenges in 2016? How can they be ready for such a vast amount of change?

Vollmer: Procurement organizations need to ensure that they really help the business as much as possible, and also evolve to the next level for their own procurement functions. Number one is that procurement functions need to see that they have the right organizational setup in place. That setup needs to fit the overall organizational line of business spectra, what a company has.

The second component, which I think is very important, is to have an end-to-end focus on the process side. Source-to-pay is a clearly defined term, but it's a little bit different in all the companies. When you really want to optimize, when you really want to streamline your process, you want to use business networks and strategic sourcing tools, as well as running in a highly automated level of transaction to leverage the automation potential of what you have in a purchase order or invoice automation, for example.

One defined process

Then, you need to ensure that you have one defined process and you need to have side systems covering all the different parts of the process. This needs to be highly integrated, as well as integrated in your entire IT landscape.

Finally, you need to also consider change management. This is a most important component by which you help the buyers in your organization transform and evolve to the next level into a more strategic procurement function.

As Kurt said about the data, if you don’t have some basic data, you're very far away from driving predictive analytics and prescriptive guidance. Therefore, you need to ensure that you invest also in your talents and that you drive to change management side.

These are the three components that I would see in 2016. This sounds easy, but I've talked to a lot of CPOs. This journey might take a couple of years, but procurement doesn't have a lot of time. We need to see now in procurement that we define the right measures, the right actions, to ensure that we can help the business and also create value.

As was already mentioned, this needs to go beyond just creating procurement savings. I believe that this concept is here to stay in the future. I think the value is what counts, what you can create.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: SAP Ariba.

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The Open Group president, Steve Nunn, on the inaugural TOGAF User Group and new role of EA in business transformation

The next BriefingsDirect thought leadership interview explores a new user group being formed around TOGAF, The Open Group standard, and how this group will further foster the practical use of TOGAF for effective and practical business transformation.

The discussion, which comes in conjunction with The Open Group San Francisco 2016 event on January 25, sets the stage for the next chapter in enterprise architecture (EA) for digital business success.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy

To learn more about the grassroots ecosystem building around transformational EA, we're joined by the President and CEO of The Open Group, Steve Nunn. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Before we get to the TOGAF User Group news, let’s relate what’s changed in the business world and why EA and frameworks and standards like TOGAF are more practical and more powerful than ever.

Nunn: One of the keys, Dana, is that we're seeing EA increasingly used as a tool in business transformation. Whereas in the past, maybe in the early adoptions of TOGAF and implementations of TOGAF, it was more about redesigning EA, redesigning systems inside an organization more generally. Nowadays, with the need to transform businesses for the digital world, EA has another more immediate and more obvious appeal.

It’s really around an enablement tool for companies and organizations to transform their businesses for the digital world, specifically the worlds of the Internet of Things (IoT), big data, social, mobile, all of those things which we at The Open Group lump into something we call Open Platform 3.0, but it really is affecting the business place at large and the markets that our member organizations are part of. [More from Steve on the new user group.]

Gardner: TOGAF has been around for quite a while. How old is TOGAF now?

Nunn: The first version of TOGAF was published in 1993, so it's been quite some time. For a little while, we published a version every year. Once we got to Version 7.0, the refreshes and the new versions came a bit slower after that.

We're now at Version 9.1, and there is a new version being worked on. The key for TOGAF is that we introduced a certification program around it for both tools that help people implement TOGAF, but also for the practitioners, the individuals who are actually using it. We did that with version 8.0 and then we moved to what we consider, and the marketplace certainly considers, to be an improved version with TOGAF 9.0, making it an exam-based certification. It has proved to be very popular indeed, with more than 50,000 certified individuals under that program to date.

Gardner: Now the IT world, the business world, many things about these worlds have changed since 1993. Something that comes to mind, of course, is the need to not just think about architecture within your organization, but how that relates across boundaries of many organizations.

I sometimes tease friends who are Star Trek fans that we have gone from regular chess to 3-D chess, and that’s a leap in complexity. How does this need to better manage Boundaryless Information Flow make EA and standards like TOGAF so important now?

Common vocabulary

Nunn: With the type of change that you talked about and the level of complexity, what standards like TOGAF and others bring is commonality and ability to make architecting organizations a little bit easier; to give it all a bit more structure. One of the things that we hear is most valuable about TOGAF, in particular, is the common vocabulary that it gives to those involved in a business transformation, which obviously involves multiple parts of an organization and multiple partners in a group of organizations, for example.

So, it’s not just for enterprise architects. We're hearing increasingly about a level of training and introductory use of TOGAF at all levels of an organization as a means of communicating and having a common set of terminology. So everyone has the same expectation about what particular terms mean. With added complexity, we need things to help us work through that and divide up the complexity into different layers that we can tackle. EA and TOGAF, in particular, are proving very popular for tackling those levels of complexity.

Gardner: So in the next chapter, these things continue to evolve, react to the market, and adjust. We're hearing that there is news at the event, the January 25 event in San Francisco, around this new user group. Tell me why we're instituting a user group associated with TOGAF at this point?

Nunn: It’s going to be the first meeting of a TOGAF User Group, and it’s something we have been thinking about for some time, but the time seems to be now. I've alluded to the level of popularity of TOGAF, but it really is becoming very widely used. What users of TOGAF are looking for is how to better use it in their day jobs. How can they make it effective? How can they learn from what others have done, both good and bad, the things to try and the things not to try or more the things that worked and things that didn’t work? That isn’t something that we've necessarily offered, apart from a few conference sessions at previous events.

So this really ends up getting a broader community around TOGAF, and not just those members of the Architecture Forum which is our particular forum that advances the TOGAF standard. It’s really to engage the wider community, both those who are certified and those who aren’t certified, as a way of learning how to make better and more effective use of TOGAF. There are a lot of possibilities for what we might do at the meeting, and a lot of it will depend on what those who attend would like to cover. [More from Steve on the new user group.]

Gardner: Now, to be clear, any standard has a fairly rigorous process by which the standard is amended, changed, or evolves over time. But we're talking about something separate from that. We're talking about perhaps more organic information flow, sharing, bringing points into that standard’s process. Maybe you could clarify the separation, the difference, the relationship between a standard’s adoption and a user group's input.
This is the first time we've offered nonmembers a real opportunity, not necessarily to decide what goes into the standard, but certainly a greater degree of influence.

Nunn: That’s the key point, Dana. The standard will get evolved by the members of The Open Group, specifically the members of The Open Group Architecture Forum. They are the ones who have evolved it this far and are very actively working on a future version. So they will be the ones who will ultimately get to propose what goes in and ultimately vote on what goes in.

Where the role of the user community, both members and non-members -- but specifically the opportunity for non-members -- comes in is being able to give their input, put forward ideas that areas where maybe TOGAF might be strengthened or improved in some way. Nobody pretends it’s prefect as you use it. It has evolved over time and it will evolve in the future. But hearing from those who actually use TOGAF day to day, we might get, certainly from The Open Group point of view, some new perspectives, and those perspectives will then get passed on through us to the members of the Architecture Forum.

Many of those we expect to attend the event anyway. They might hear it for the first time, but certainly we would spend part of the meeting looking at what that input might be, so that we have something to pass on to them for consideration in the standard.

This is the first time we've offered nonmembers a real opportunity, not necessarily to decide what goes into the standard, but certainly a greater degree of influence.

It's somewhat of a throwback to the days where user groups were very powerful in what came out of vendor organizations. I do hope that this will be something that will enable everyone to get the benefit of a better overall standard.

Past user groups

Gardner: I certainly remember, Steve, the days when vendors would quake in their boots when user meetings and groups came up, because they had such influence and impact. They both benefited each other. The vendors really benefited by hearing from the user groups and the user groups benefited by the standards that could come forth and vendor cooperation that they basically demanded.

I recall, at the last Open Group event, the synergy discussions around Zachman, and other EA frameworks. Do you expect that some of these user group activities that you're putting forth will allow some of that cross pollination, if you will, people who might be using other EA tools and want to bring more cooperation and collaboration across them?

Nunn: I would certainly expect that to happen. Our position at The Open Group, and we've said it consistently over the years, is that it’s not "TOGAF or," it’s "TOGAF and." The reality is that  most organizations, the vast majority, are not just going to take TOGAF and let it be everything they use in implementing their EAs.

So the other frameworks are certainly relevant. I expect there to be some interest in tools, as well as frameworks. We hear that quite a lot, suggestions of what good tools are for people at different stages of maturity and their implementation of the EA. So, I expect a lot of discussion about the other thoughts or the other tools in the toolbox of an EA to come up here.

Gardner: So user groups serve to bring more of an echo system approach, voices from disparate parties coming together sounds very powerful. Now this is happening on January 25. This is a free first meeting. Is that correct? And being in San Francisco, of course, it's within a couple hours drive of a lot of influential users, start-ups, the VC community, vendors, or service providers. Tell us a little bit about why people who are within a quick access to the Bay Area might consider coming to this on January 25?
What people would get out of it is the chance to hear a bit more about how TOGAF is used by others, case studies, what’s worked, what hasn’t worked, the opportunity to talk directly with people.

Nunn: That’s another reason, the location of our next event. We were first thinking this is the right time to do a first TOGAF User Group, because you see there are a lot of users of TOGAF in the area or within a few hours of it. What people would get out of it is the chance to hear a bit more about how TOGAF is used by others, case studies, what’s worked, what hasn’t worked, the opportunity to talk directly with people, whether it’s through networking or actually in the sessions in the user group meeting.

We're trying to not put too much rigid structure around those particular sessions, because we won’t be able to get the most benefit out of them. So it’s really what they want to get out of it that will probably be achievable.The point of view of The Open Group is that it's about getting that broader perspective for the attendees, learning useful tips and tricks, learning from the experience of others, and learning a bit more about The Open Group and how TOGAF has evolved.

This is a key point. TOGAF is so widely used now and globally, and even though we have quite a few members in The Open Group, we have more than 350 organization participating in some way in the Architecture Forum, and more in The Open Group as a whole.

But there's obviously a much wider community of those who are using it. Hearing more about how it has developed, what the processes are inside The Open Group, might make them feel good about the future of something that they clearly have some investment in. Hopefully, it might even persuade a few of those organizations to join and influence from the inside.

Gardner: Now, there's more information about the user group at You're meeting on January 25 at 9:30 a.m. Pacific Time at the Marriott Union Square right in the heart of San Francisco. But this is happening in association with a larger event. So tell us about the total event that's happening between January 25 and 28.

Quarterly events

Nunn: This is part of one of our quarterly events that we've been running for lot of years now. They take the form generally of a plenary sessions that are open to anyone and also member meetings, where the members of the various Open Group forums get together to progress the work that they do virtually. But it’s to really knuckle down and progress some of it face-to-face, which as, we all know, is generally a very productive way of working.

Apart from the TOGAF User Group, we have on the agenda sessions on the Digital Business Strategy and Customer Experience, which is an activity that's being driven inside our Open Platform 3.0 Forum, as a membership activity, but this is really to open that up to a wide audience at the conference. So, we'll have people talking about that.

Open Platform 3.0 is where the convergence of technologies like cloud, social computing, mobile computing, big data, and IoT all come together. As we see it, our goal is for our members to create an Open Platform 3.0 Standard, which is basically a standard for digital platform, so that the enterprises can more easily use the technologies and get the benefit of these technologies that are now out there. There will be quite a bit of focus on Open Platform 3.0.

The other big thing that is proving very popular for us, which will be featured at the conference is the Open Group IT4IT Reference Architecture, and there is a membership activity, the IT4IT Forum. They're working on standards. We published the first version of that reference architecture at our last quarterly conference, which was in Edinburgh in October last year.
There has been a lot of interest in it so far, and we are working on a certification program for IT4IT that we will be launching later this year, hopefully at our next quarterly event in London in April.

There has been a lot of interest in it, and it's really a standard for running the business of IT. Oftentimes, IT is just seen as doing its own thing and not really part of the business. But the reality nowadays is that whoever is running the IT, be it the CIO or whatever other individual, to be successful they have to not just run IT as a business, with the usual business principles of return on investment, etc., but they have to be seen to be doing so. This is a reference architecture that's not specific to any industry and that provides a guide for how to go about doing that.

We're quite excited about it. There has been a lot of interest in it so far, and we are working on a certification program for IT4IT that we will be launching later this year, hopefully at our next quarterly event in London in April.

Gardner: I'll just remind our listeners and readers that we're going to be doing some separate discussions and sharing with them on the IT4IT Reference Architecture. So please look for that coming up.

Getting back to the event, Steve, I've attended many of these over the years and I find a lot of the discussions around security, around specific markets like healthcare and government really powerful and interesting. Is there anything in particular about this conference that you're particularly interested in or looking forward to?

Nunn: The ones I've already spoken to are the ones that I'm personally most looking forward to. We'll be having sessions on health care and security, as you say.

In the security area it’s worth calling out that one of the suggestions that we've had about TOGAF -- I won’t call it criticism, but one of the suggestions for future versions -- is that TOGAF is a bit light on security. It could do with beefing up that particular area.

The approach that we've taken this time, which people attending the conference will hear about, is that we have actually got the security experts to say what we need to cover in TOGAF, in the next version of TOGAF from a security point of view. Rather than having the architects include what they know about security, we have some heavyweight security folks in there, working with the Architecture Forum, to really beef up the security aspect. We'll hear a bit more about that.

Customer experience

Gardner: I also see that customer experience, which is closely aligned with user experience, is a big part of the event this year. That’s such a key topic these days for me, because it sort of forms a culmination of Platform 3.0. When you can pull together big data, hybrid cloud architectures, mobile enablement and reach, you can start to really do some fantastic new things that just really couldn’t have been done before when it comes to that user experience, real-time adaptation to user behaviors, bringing that inference back into a cloud or a back-end architecture, and then bringing back some sort of predictive or actionable result.

Please flesh out a bit more for us about how this user experience and customer experience is such a key part of the output, the benefit, the value, and the business transformation that we get from all these technical issues that we've discussed; this is sort of a business issue.

Nunn: You're absolutely right. It’s when we start providing a better experience for the customers overall and they can get more out of what the organizations are offering that everybody wins.
What we're trying to do from the organizational side is focus on what is it that you can do to look at it from the customers’ point of view, meet their expectations, and start to evolve from there.

From the group that we have working on this inside The Open Group, they are coming at it from a point of view that some of these new technologies are actually very scary for organizations, because they are forced to transform. The expectations of customers now are completely different. They expect to be able to get things on their cellphones or their tablets, or whatever device they might be using. That's  quite a big shift for a lot of organizations, and that’s not even getting into some of the areas of IoT, which promises to be huge.

What we're trying to do from the organizational side is focus on what is it that you can do to look at it from the customers’ point of view, meet their expectations, and start to evolve from there.

To me, it’s interesting from the point of view that it’s pretty business-driven. The technologies are there to be taken advantage of or to actually be very disruptive. So the business needs to know at a fairly early stage what those customer expectations are and take advantage of the new technologies that are there. That’s the angle that we are coming from inside The Open Group on that.

Some of the main participants in that group are actually coming from the telco world, where things have obviously changed enormously over the last few years. So that one is going to move quite quickly.

Gardner: It certainly seems that the ability to have boundaryless architecture is essential on that customer experience benefit. You certainly seem to be in the right place at the right time for that.

But the event in San Francisco also forms a milestone for you, Steve. You're now in your first full event as President and CEO of The Open Group, having taken over from Allen Brown last Fall. Tell us a little bit about your earlier roles within the standards organization and a bit more about yourself perhaps for those folks who are not yet familiar with you?

Quite different

Nunn: Yes, it will be quite different this time around. I've been with The Open Group for 22 years now. I was originally hired as General Counsel, and then fairly quickly moving on to Vice President of Corporate, Legal and Chief Operating Officer under Allen Brown as CEO. Allen was CEO for 17 years, and I was with him all of that time. It’s going to be quite different to have somebody else running the events, but I'm very much looking forward to it.

From my point of view, it’s a great honor to be leading The Open Group and its members into our next phase of evolution. The events that we hold are one small part of it, but they're a very important part, particularly these quarterly ones. It’s where a lot of our customers and members come together in one place, and as we have heard, there will be some folks who may not have been involved with one of our events before through the user group, so it’s pretty exciting.

I'm looking forward to building on the very solid foundation that we have and some of the great work activities that we mainly have ongoing inside The Open Group.
I'm looking forward to building on the very solid foundation that we have and some of the great work activities that we mainly have ongoing inside The Open Group.

Don’t expect great change from The Open Group, but just really more of the same good stuff that we've been working on before, having regard to the fact that obviously things are changing very rapidly around us and we need to be able to provide value in that fast changing world, which we are very confident we can.

Gardner: As an observer of the market, but also of The Open Group, I'm glad to hear that you're continuing on your course, because the world owes you in many ways. Things you were talking about 5 or 10 years ago have become very essential. You were spot on on how you saw the vision of the world changing on IT and its influence on business and vice versa.

More than ever, it seems that IT and EA is destiny for businesses. So I'm glad to hear that we're having a long vision, and the future seems very bright for your organization as the tools and approaches and the mentality and philosophy that you have been espousing becomes essential to do some of these things we have been discussing, like Platform 3.0, like customer experience, and IoT.

In closing, let’s remind our audience that you can register for the event at The Open Group website, The first day, January 25, includes that free user group, the inaugural user group for TOGAF, and it all happens at the Marriott Union Square, San Francisco, along with the General Conference, which also runs from January 25 to 28.

Any last thoughts Steve, as we close out, in terms of where people should expect The Open Group to go, or how they can become perhaps involved in ways that they hadn’t considered before? [More from Steve on the new user group.]

Good introduction

Nunn: Attending one of our events is a really good introduction to what goes on in The Open Group. For those who haven’t attended one previously, you might be pleasantly surprised.

If I had to pick one thing, I would say it's the breadth of activities there are at these events. It’s very easy for an organization like The Open Group to be known for one thing or a very small number of things, whether it’s UNIX originally and EA more recently, but there really is a lot going on beyond there.

Getting exposure to that at an event such as this, particularly in a location as important to the industry and as beautiful as San Francisco is, is a great chance. So anyone who is on the fence about going, then jump over the fence and try us out.

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