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October 4, 2013

Guest Blog: Capitalise on change, avoid the disruption

Suresh Chandrasekaran and Suhaas Kodagali of Denodo Technologies explain how data virtualisation creates an agile environment to deal with unforeseen events.

By Cbr Rolling Blog

Suresh Chandrasekaran, Senior VP and Suhaas Kodagali, Product Marketing Manager at Denodo Technologies discuss the importance of disaster management and moving with the times.

The global financial crash, Deepwater Horizon oil spill or the advent of the iPhone and Facebook – positive or negative, these are examples of disruptive events that have shifted the underlying forces of several industries and have led many businesses to make dramatic changes in how they operate.

Let’s consider, for instance, the impact of the iPhone launch on the telecommunications landscape. Competitors had to move quickly to sustain the shock of this launch and the resulting consumer defection. The day following the launch, RIM’s stock fell to less than half and in the coming years Google launched Android, HP acquired Palm, and Motorola spun off Motorola Mobility Holdings in an attempt to compete with Apple’s success. As for service providers like AT&T and Verizon, they too had to make major changes to their business models because ‘data’ soon displaced ‘minutes’ as the new revenue driver.

When this happens, some win and some lose – what determines this? Disruptive events have had a significant impact on business functions and have led companies to react with major changes such as acquisitions and divestitures in order to keep pace. But given the increase in the number and impact of such disruptive events, companies need a more proactive approach where they develop business agility to better handle rapid changes.

This means not just managing changes in business processes and organisational structures, but also building the agility in the underlying IT systems to enable the implementation of large projects in short time periods. To build IT agility, companies are turning to the cloud, mobility, cheap big data processing power, and increasingly also to data virtualisation, which is a technology that enables a flexible, unified data layer to smooth out the turbulence of a disruptive organisational change.

Unfortunately, the importance of building agility into a company’s IT infrastructure is often underestimated or overlooked, leading to an adverse impact on critical business functions. This is even more applicable in the event of a disruptive change as the success of the business initiatives is often tied closely to how well the IT changes are managed.

According to a McKinsey report, 50-60% of post-merger initiatives designed to capture synergies are strongly related to IT. Examples include merging finance and HR systems, integrating customer data for cross-selling and vendor consolidation, etc. Even so, IT teams are given very little time to plan and execute these major system changes. Not only does this result in increased resource costs, it also creates delays and downtimes on key operational processes. The example of the Delta-Northwest merger helps understand the magnitude and complexity of these IT system changes. This merger was largely deemed a success, but it also required 2,000 employees to spend two years to analyse nearly 1,200 IT systems and to complete several projects including the migration of over 1.5 million passenger records from the Northwest reservation system to Delta’s system.

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So, what does IT infrastructure agility entail? First, companies should be able to quickly add or remove source systems. One of the key IT projects after a merger is the consolidation of financial systems before the next quarterly reporting period. This requires several new data sources to be added and the time available for integration is fairly limited due to compliance reasons.

Second, companies should be able to quickly build or modify data workflows in order to accommodate new data sources and data consumers. For example, one of the objectives of a merger may be to leverage the increased customer base to grow revenue, but companies spend months or even years analysing and integrating customer data into their existing sales and marketing processes in order to realise the synergies.

Finally, the users and the operational processes on the receiving end of the workflows should be decoupled from all underlying source systems and processes. This means that, after an acquisition, data consumers shouldn’t have to know or care which of the companies’ source systems the data is originating from and should be able to continue using current front-end tools. After all, call center personnel shouldn’t have to login to a different application to field calls from customers of an acquired company. This information should be normalised and integrated into their existing applications, transparently.

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