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Evolve Your Operating Model – It Will Drive Everything
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Why is a technology company so interested in the term “operating model?” Doesn’t sound very techy does it? It so happens that through all the years of global experience HPE has built in deploying and managing technology, the single biggest constraint is our customers’ operating model.
How we help our customers imagine new horizons and seize the opportunity of the digital era is manifestly tied to the capability (some might argue the maturity) of “how we do things around here” – a regularly quoted synopsis of what an operating model is. And that conversation has come even more sharply into focus as we move into the “Age of Insights” powered by “as-a-service” business models.
I hope to convince you that your own operating model will regulate how you engage your partners to ultimately create value. While not going into the academics of what an operating model is, as there’s a wealth of content and best-practices already available, I do like the simplicity of the Operating Model Canvas. An extension of the Business Model Canvas, it allows the visualization of a high-level operating model1, broken down into some constituent elements (acronym POLISM).
To quote, the objective of the operating model canvas is to “capture thoughts about how to design operations and an organization that will deliver a value proposition to a target customer or beneficiary. It helps translate strategy into choices about operations and organization.” My own version is that the operating model describes “the things you do to create value.” And that is a critical point, because it begs the question, what value do you need to create?
Here’s how we adopt the operating model to position IT for exploring the digital edge.
In a traditional, or pre-digital organization, where IT is perceived as a cost function, the value might be as simple as workload availability (back-end focused). But as we pivot to organisations that leverage information and technology to gain competitive advantage, the value will shift towards the ability to develop and release new digital products and services (front-end focused).
This shift from back-end to front-end focused is well captured in a Gartner article called “Designing and Implementing the I&T Operating Model: Components and Interdependencies2.” The critical inflection point is the transition from an IT operating model (Asset > Process > Service), towards the future of an Information and Technology operating model which affects the organization well beyond IT. It is an operating model that embraces technology to the extent that it questions the underlying business model of the organization (Value > Invention).
Now look at your own organization and think about the value you create – or at least the way that value is perceived. Are you considered a cost, or an innovator? Someone who focuses on the bottom line or the top line of your company? Where are you on this evolution?
The answers to these questions really matter, not just to you but to how your partners can add value to you. HPE is a great case study in this debate because we occupy many different roles for our customers largely regulated by their operating model. HPE is a “platform as a service” company, meaning that through HPE GreenLake you can consume workloads anywhere you need to deploy them – all the way out to the edge. But we also provide choice for our customers that are not yet ready for their operating model to take advantage of this. You can still buy products and services from HPE that fulfil a more traditional buying cycle of up-front capital investment – where utilization is not linked to how much you pay. So, what value will you look for in a company like HPE? And if you hadn’t already guessed, my assertion is that it will be your operating model that will dictate the answer, not be HPE’s readiness and capability to help you.
For example, if your value inside the organization is equivalent to the “asset” level of IT operating model, then you might turn to HPE simply to drive down the cost of that asset footprint. And that’s a continuous journey, as we all know – HPE’s ability to add value here is to help constantly challenge the performance, size, space, and power attributes of that footprint. If you are process-centric then you might look to HPE to provide you with more than just the asset – you might now need to unlock the value of our GreenLake Managed Services organization – who can run your environment up to your desired level. HPE’s ability to add value here is to seamlessly integrate into your IT processes and free you and your teams up to set your sights on the next level. For those IT organizations that are service-centric, then you are more interested in the outcomes and the experiences, not the underlying technology of run-services. HPE’s ability to add value here is to deliver workloads such as GreenLake for SAP HANA, or industry workloads like EPIC for Healthcare providers, again delivered as a service.
For those making the pivot towards value and invention, or companies that are looking to use information and technology to achieve competitive advantage and innovate new business models, we can work to co-invent with you. Look at how we are helping Continental explore the value of car sensor data in the automotive industry. HPE’s ability to add value goes well beyond products and services. It’s a direct result of the line of business executives deciding to explore new business models and working with HPE to help them on that technology-enabled journey.
In other words, your own operating model, how you create value, and what that value is directly impacts how far you can leverage the resources and capabilities of your supply chain to support your digital journey. I use HPE as a case study only because it demonstrates my point perfectly. Next time you look for a technology partner, or you are challenged to evolve from mere cost containment to value-based innovation, think about how much of a constraint you are in the equation – and challenge how you perceive and measure those partners around you that can genuinely help. Your own operating model evolution is critically linked to how you engage your partners and your wider eco-system to come with you on the journey.
If you are looking to evolve your own operating model and accelerate towards value and invention then we have ways to help. HPE has its own Cloud Adoption Framework that can structure your journey, and help you learn from a wealth of other customers that we have guided along the same steps.
By taking the earlier representation in figure 1 we can adopt it to illustrate the cloud adoption framework and its relationship to the operating model.
If you’d like to know more then take the time to watch this webinar. If you would like to co-invent your digital future then ask your HPE Pointnext Services sales contact to talk to you about HPE Digital Next Advisory.
Craig Partridge is the worldwide senior director for HPE Pointnext’s Digital Advisory & Transformation practice. The practice focuses on helping customers explore the opportunities presented by the digital era, providing them with a strategic framework through which the value of new digital initiatives can be realized. It helps customers link IT and the business desire to use technology as a strategic asset to achieve new levels of productivity and shows organizations how technology acquisitions can play a major role in helping to reshape and redefine the underlying value proposition of their business model.