The ongoing industry disruptions are forcing businesses to change their operational model; that’s the only way to avoid and survive digital bankruptcies.
In North America, companies like Sears Canada filed for bankruptcy, others like Toys R Us and Weight Watchers were on the verge of it. In Europe, particularly, in France, banks like Societe Generale and leading retailers like Carrefour are anticipating it through ambitious and innovative digital transformation programs.
What’s actually going on is, the cheap access to innovative technologies, enabled by cloud services providers like Amazon Web Services (AWS) has caused a proliferation of innovative tech startups and technology companies, making competition tougher for established businesses.
The innovative digital products and services they deliver are slowly but surely substituting conventional ones. As an example, Weight Watchers’ weight loss programs did not resist Fitbit and Jawbone innovative wearable devices like Fitbit Tracker that helped millions around the world lose weight. They measure data such as the number of steps walked, heart rate, quality of sleep, steps climbed, and many other personal metrics involved in people health.
Digital products and services are becoming customer consumption standards, accelerarated innovation lifecycles are now the competitive advantage to have, and DevOps in its entirety, is the capability companies must equip themselves with to make substantial digital profits.
In 1985, Harvard’s Strategy professor Michael Porter unveiled to the business world, in its best selling, Competitive Advantage, the concept of value chain. It ‘s been revolutionizing business practices for over 30 years, and inspired approaches as varied as Michael Hammer’s Process Reengineering, Toyota’s Lean Production, Total Quality Management (TQM), and even Software Capability Maturity Model (CMM).
The value chain’s principle is the notion that, in every single company there’s a subset of interactions, staff and skills, processes and practices, tools and infrastructure that repeatedly generates expected benefits. That substet is what’s meant by the value chain, to succeed businesses must continuously optimize it.
Today, software development is the foundation of digital products and services; it’s becoming the fundamental industrial activity. DevOps by providing the technological, organizational, and operational framework that will enable digital profits is replacing the value chain as Porter designed it. It’s the competitive instrument businesses need to make big gains.
This article, inspired from my next book, “The DevOps Revolution: The IT Organization of the Digital Age,” explains why DevOps is about to revolutionize the way companies tackle their digital business.
Michael Porter's Value Chain: Purpose, Foundations, and Principles
The value chain through focusing companies on their added-value activities and resources has been revolutionizing businesses’ competitivity for 30+ years and made several thousands business leaders successful around the globe.
What you must know is, the underneath principle is, only a subset of the company’s activities— Primary activities and Support activities— can repeatedly generate expected benefits. That subset is what’s meant by value chain.
Let’s discuss them!
Creating Value: The Primary Activities
The objective of the primary activities is to create value. They include seven activity groups:
Marketing and Sales
Inbound Logistics performs Supply Chain functions. It’s a group of key supply chain processes and associated experts, tools, and infrastructure. The mission is to make sure the company gets on time the best material to manufacture top products and services.
Operations refers to manufacturing functions. It puts together the company’s top expert, engineers, and product managers to design, develop, and test products and services. They take advantage of key processes and industry best practices to make the company’s products and services as innovative and profitable as possible.
Outbound Logistics performs distributions functions. It’s a subset of the company’s top distribution partner relationships management (PRM) experts mobilized across the company using top distribution processes, practices, and tools to make sure the company’s productions and services are properly distributed across its partner networks and make profit.
Marketing and Sales as the names suggest perform marketing and sales activities. It’s a group of the company’s top marketers and salespersons mobilized through top marketing and sales processes and practices to make sure the business make profits.
Services refers to post sales activities. It’s a group of the company’s best Customer Relationships Management (CRM) experts and associated top processes, practices, and tools mobilized to make sure customers have the best experience with the company’s productions and services.
Making Value Creation Sustainable: Support Activities
The primary activities do not generate value on their own, they need levers. It’s purpose of the value chain’s support activities, making sure the company’s generate sustainable value. They include four activity groups:
Let’s see how they enable value creation activities!
Firm Infrastructure is a group of high-level executive experts appointed to guarantee the company’s infrastructure profitability. Such executive experts include Chief Information Officers (CIOs), Chief Technology Officers (CTOs), and Chief Enterprise Architects (CEAs) and they rely on top processes, practices, and tools such as ITIL, IT Services Capability Maturity Model (CMM), and TOGAF to guarantee the company’s infrastructure profitability.
Human Resources is a group of the company’s selected recruiting and human resource management experts and the associated top processes, practices, and tools. There mission is to not only make sure the company has the top experts it needs but also get from the maximum contribution.
Technology Development relates to Research & Development (R & D) activities. It’s an elite of experts dedicated to monitoring markets trends and developing product ad service prototypes likely to create value for the company. They rely on extremely sophisticated product and service engineering processes, practices, and infrastructure.
Procurement relates to a selected group of the company’s investment decision experts. Relying on top financial processes, practices, and tools their mission is to guarantee the maximum return on the company’s investments.
Why DevOps is the new Enterprise Value Chain?
Contrary to what many thought leaders, experts, and solution vendors pretend, DevOps is unknown; it can’t be narrowed to the complex toolchains IT vendors have been selling to CIOs. Things aren’t that simplistic.
DevOps According to Chef's Adam Jacob's Perspective
Adam Jacob, co-founder and CTO of Chef, the IT-automation company that helps enterprises use DevOps to build and deliver quality software quickly, wrote a memorable, article about DevOps: The Secret of DevOps: It’s Always Been About People, Not Technology. Relying on his experience working with the inventors of DevOps — Jesse Robins, John Allspaw, Paul Hammond— he provides an unprecedented and accurate perspective of DevOps.
He reminds this, « Becoming better at building and delivering software is the stake. It’s not an optional piece of their strategy: It’s the future of how their customers want to work with them. Software is table stakes for survival. »
He adds, « But the real answer lies in looking at what John, Paul, and Jesse were doing in 2009—not in the specific technical choices they made, but the style in which they worked, the essence of what they believed made them high functioning and successful. » He goes on, « Then the challenge begins: how to apply this new style to businesses trying to become better at building and delivering software. »
And proceeds, « DevOps is about bringing together all the people you need to build and run your business effectively, and empowering them to move as quickly as possible towards their goals. Tools matter. Make no mistake, trying to change the way you work without changing the mechanisms by which you do that work is a futile exercise in excruciating failure. »
Then concludes, « Fundamentally DevOps is about taking the behaviors and beliefs that draw us together as people, combining them with a deep understanding of our customers’ needs, and using that knowledge to ship better products to our customers. »
DevOps' Fundamental Building Blocks
What’s interesting in Adam’s rhetoric is, two group of key words and sentences help to bring out two fundamental components of DevOps.
People, customers, work, work style, beliefs, bringing together people, empowering people are part of the first group. It relates to what experienced and qualified business transformation experts refers to as operational model.
Technology, tools, make no mistake tools matter, don’t the change the way you work without changing the mechanic underneath are all part of the second group. It relates to what experienced and qualified business transformation experts refers to as a technology platform, known by DevOps experts as Continuous Delivery (CD) platform.
The following picture is a DevOps model derived from Adam’s perspective. It makes easy its understanding:
As illustrated, DevOps can be modeled as two-components business capability including:
Let’s see how these two components are making DevOps, the powerful business capability CIOs have been expecting!
The DevOps' Automation Toolchain
The automation toolchain or CD platform is what many either refers to as or confuse with DevOps. It conceptually structures software deployment in 4 steps:
Each stages uses one or more products as illustrated in the following table:
The Agile and Lean Operational Model
The operational model is the poor relation of DevOps; it’s totally either unknown or ignored by 98% of business leaders and their CIO. It’s where agility, flexibility, responsiveness, and even innovation culture are implemented. It organizes the application development effort in a 4-step circular lifecycle:
Plan & Measure
Develop & Test
Release & Deploy
Monitor & Improve
Each stage mobilizes specific staff and skills, uses specific processes and practices, tools and infrastructure, and more importantly, specific Agile and Lean practices. The following table summarizes each stage:
Why DevOps is the new Enterprise Value Chain
One of the problems with the value chain as Michael Porter thought it is, it has a compartmental vision of the business with two categories of activity divided each in several processes and associated staff, skills, and tools.
This perspective nurtures organizational silos and prevent cross-functional collaboration. It slows down problem solving and decision-making, and inhibits innovation culture.
The value chain as Michael Porter thought it, didn’t help Sears Canada to avoid digital bankruptcy, it didn’t prevent Toys R Us and Weight Watchers get on the verge of it.
Where DevOps brings value and fills the gaps of today’s value chain is, it not only provides a business capability that’s easy to deploy but also an organizational, operational, and technological framework embedding the Agile and Lean practices, as well as the automation toolchains companies need to survive their industry disruptions and make substantial digital profits.
The Key Takeaways
Industry disruptions are a reality and properly transform the business is the only solution. Sears Canada, Weight Watchers, and recently Toys R Us learned it the hard way.
In 2018 make DevOps transformation your priority investment decision, I’m not talking about DevOps’ automation toolchain but DevOps a business capability which includes the Agile and Lean operational model and the automation toolchain.