1
IT Innovations: Evaluate,
Strategize, and Invest
Manas Sahoo
Introduction
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

Adoption of a particular IT innovation is sometimes
the key survival factor for many firms
“How can I best evaluate an emerging trend for its
investment worthiness?”
Introduction (cont’d)
3

Classic diffusion of
innovations (DoI) theory
 By
Everett M. Rogers
 Focuses primarily on the
“customer context” (how an
innovation helps customers)
without much regard to other
contexts such as the
“competitor or industry context”
or the “technical intricacies
context.”
Everett M. Rogers
Introduction (cont’d)
4


The business ecosystem in the IT space in particular
plays a very vital role—an innovation must
therefore be “eco-friendly” to be successful.
As an alternative, Sahoo proposed a slight variation
on Rogers’ original work—the diffusion of IT
innovation framework—that IT professionals and
academics alike can use to evaluate emerging trends.
Outline
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Evaluation
Framework
Analyzing
Current
Trends
How Can I
Leverage
These Trends?
Evaluation Framework
6
PC/client-server
configurations

Internet’s rise
Apart from customer-related factors, other factors
such as ecosystems (networks of firms tightly
linked to each other) and technology hugely
influence an emerging trend’s success.
Evaluation Framework (cont’d)
7

Taking many factors into account, the diffusion of
IT innovation framework evaluates whether an
innovation renders the following:
 relieves
current
customer
pain points
relieves
current
customer
pain points
 provides relative advantages when compared to other
provides
relative advantages when compared to other existing
existing offerings
offerings
 is compatible with existing products
is compatible
with existing products
 is
simple, is easy to use or implement
is simple,
is easyinroads
to use or
implement
 is making
with
larger customers
 has an
open architecture
is making
inroads
with larger customers
has an open architecture
Evaluation Framework (cont’d)
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

This framework’s users can develop a scoring
model based on the likelihood of the trend
becoming mainstream.
This score, along with considerations for the user’s
economic, regulatory, and political environment,
help facilitate decision-making.
Diffusion of IT innovation framework
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Analyzing Current Trends
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
A survey from various IT firms and research of
technical journals reveals that
SaaS
SOA
Cloud
Computing
are the most prominent emerging trends in IT today
Software as a Service (SaaS)
11

SaaS-based applications save customers from making
huge upfront investments in IT infrastructure



the software vendor provides and maintains the overall
infrastructure
With its subscription-based model, offers a “quantum
of solace” for customers reeling from cost pressures.
However, SaaS raises concerns related to security (because
applications are hosted outside the customer’s firewalls),
customization, availability, and scalability.
SaaS (cont’d)
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

From an ecosystem perspective, SaaS reveals that
firms tend to use it mostly to pursue an IP-based
product strategy, rather than as part of ecosystem
development.
However, some SaaS solution providers are trying
to build a network of firms on the provider side,
thus planting the seeds for a possible ecosystem.
SaaS (cont’d)
13


For example, SalesForce, via its AppExchange
platform, is trying to enable independent software
vendors and value-added resellers to co-develop
integrated solution for delivery in a SalesForcehosted environment.
Similarly, Progress Software is providing a set of
tools in its business application platform,
OpenEdge, that enables firms to develop, deploy,
and manage integrated applications in the SaaS
model.
SaaS (cont’d)
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
Because SaaS are hosted elsewhere, it isn’t easy to
integrate SaaS-based solutions with on-premise
applications
 This
integration is difficult to accomplish and
expensive to execute.
How Can I Leverage SaaS
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
SaaS-based solutions
should be designed to
trade-off between
customizability
 ease of set
up/maintenance

Service Oriented Architecture (SOA)
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
SOA’s flexibility via its standardized loose
coupling between disparate applications soothes a
major pain point for customers
 maintaining
landscape
an extremely heterogeneous IT system
Before and after SOA
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SOA (cont’d)
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
Existing IT applications and products can be
redesigned to fit the SOA paradigm
 Several
firms in the IT space have already started
reworking their old products
 For example, SAP has redesigned its Business Suite
products, providing SOA-based web services that both
partners and customers can leverage as an API.
SOA (cont’d)
19

SOA is an open standard that allows the integration
and interoperability of different applications by
different members of an ecosystem.

Typical SOA-based ecosystem offers avenues for
service
providers
service
requestors
development
tools providers
Cloud Computing
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
A cloud is a type of parallel and distributed system
consisting of a collection of interconnected and
virtualized computers
 provisioned
and presented as one or more unified
computing resources
Cloud Computing(cont’d)
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
Compared to SaaS,
 Cloud
computing is like “hardware as a service”
 it provides similar benefits and challenges

Key players
Amazon
Sun
Google
Grids Lab
Cloud Computing(cont’d)
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

Convert customers’ capital expenditures to
operational expenditures
Provides large one-time storage/processing
requirements and the flexibility of unlimited
storage/processing capacity
Cloud Computing(cont’d)
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
However, much like SaaS
 It


has limitations in regard to ecosystem building
The key players all have propriety clouds that
aren’t interoperable.
To date, none of them have made the effort to build
an ecosystem around the concept and bring in more
customers
How Can I Leverage These Trends?—
SaaS
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

In their attempt to provide faster time to value for
customers, SaaS-based applications make a trade-off
with configurability
The applications most suited for this model are those
that are non-core or non-mission-critical to the
customer


Because they raise many concerns about security,
availability, and scalability
It’s important to segment the market for SaaS solutions
based on the customer’s usage rather than size
How Can I Leverage These Trends?—
SaaS (cont’d)
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
SaaS-based solutions
should be designed to
trade-off between


customizability
ease of set up
How Can I Leverage These Trends?—
SaaS (cont’d)
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

In the future, SaaS-based applications should
transform from being ecosystem unfriendly to
ecosystem friendly
IT solution providers can help by doing
Integrating with on-premise IT solutions
Encouraging collaboration among SaaS solution providers
Encouraging system integrators and value-added resellers to
collaborate on SaaS-based solutions
How Can I Leverage These Trends?—
SaaS (cont’d)
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

Another dimension that IT solution providers
should consider is the demand on organizational
capabilities to deliver on the SaaS model when
compared to the traditional on-premise software
model.
An organizational transformation is essential to
best serve this model: on the operations front, IT
solution providers must acquire hosting and data
maintenance capabilities.
How Can I Leverage These Trends?—
SaaS (cont’d)
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

They also need to align service and support in a
hosted application context
Sales and marketing efforts must be tuned to serve
the volume business
How Can I Leverage These Trends?—
SaaS (cont’d)
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
As a consumer for IT solutions, if your
organization wants an IT solution that accelerates
productivity and the time to value, yet does not
want to invest in IT infrastructure acquisition and
maintenance
 SaaS
model is most suitable for you
How Can I Leverage These Trends?—
SaaS (cont’d)
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
But before the final decision
 Ensure
that the offering has the functionalities that you
require today and is scalable for future use
 Compare and contrast these functionalities with an onpremise option and consider the following aspects:
How Can I Leverage These Trends?—
SaaS (cont’d)
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
The following aspects
Reduce risks by considering only non-core and nonmission-critical applications for SaaS
Choose the solution that provides the best balance for the
trade-off between “customizability” and “ease of set up and
maintenance”
Choose the solution that integrates best in the context of
your existing on-premise IT solution infrastructure
Choose the solution that provides an acceptable response
time, up time, security, data protection, privacy, support
service, and change-request service
How Can I Leverage These Trends?—
SaaS (cont’d)
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Integrating with on-premise IT solutions
Summary—SaaS
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
IT solutions based on SaaS can be first tried on a
small scale and then scaled up based on real
benefits considering “return on investment” and
“total cost of ownership” parameters

Appropriate accounting best practices can help in
tracking and making the best investment decision
How Can I Leverage These Trends?—
SOA
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
SOA fares very well in its potential for mass adoption
when analyzed using the diffusion of IT innovation
framework



Compared to the traditionally tightly coupled integration,
SOA provides much greater flexibility due to loose
coupling
The standardized manner makes it easier for execution
and maintenance
SOA has acceptance from the technical fraternity and is
being rapidly adopted

most new IT products are being developed with SOA as the
primary design principle
How Can I Leverage These Trends?—
SOA (cont’d)
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
SOA is an innovation that’s well-suited with the
business ecosystems currently found in the IT space
 It’s
an open standard
 it fosters strong relationships within the ecosystem

A typical SOA-based ecosystem would have the
following participants
SOA
Development
Tools
Service
Requestors
Service
Providers
SOA
Management
How Can I Leverage These Trends?—
SOA (cont’d)
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Service Requestors
How Can I Leverage These Trends?—
SOA (cont’d)
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
A key element in this ecosystem is the “business
services platform”
 provided


by major independent software vendors
This platform contains a basket of business services
along with tools for other ecosystem partners to use
those services
This platform could then serve as a keystone by
creating high-value shareable assets
 The
firm that first provides such an infrastructure of
services would become an important network hub
Summary—SOA
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
When choosing an IT solution, consumers should
give due importance to whether its architecture is
based on SOA
 They
should insist on a SOA-based system design
when engaging with a system integrator for their IT
infrastructure
 For their custom IT solutions, they should also
consider granularity of Web services, version control,
and service life-cycle management
How Can I Leverage These Trends?—
Cloud Computing
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

Enterprises currently use cloud services to improve
service scalability and to deal with bursts in resource
demands
However
Service providers offer inflexible pricing, which restricts
consumers to offerings from a single provider at a time
 Many providers have proprietary interfaces to their services,
thus restricting the customer’s ability to swap one provider
for another


For cloud computing to mature, services must follow
standard interfaces
How Can I Leverage These Trends?—
Cloud Computing (cont’d)
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How Can I Leverage These Trends?—
Cloud Computing (cont’d)
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
Business leaders from firms consuming IT solutions
should seriously consider a cloud computing platform
to meet their hardware requirements


It provides an easy way to cater to demand surges and helps
with testing newly developed applications
Startups
can leverage cloud computing as a bootstrapping strategy
 can reap the benefits of unlimited scalability in this
environment

Summary—Cloud Computing
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

Leveraging cloud computing to centralize hardware
and computing can make firms more efficient, costeffective, and “sustainable”
However, IT management must be aware of the
trade-off between
 greater
efficiency due to centralization
 flexibility due to decentralization
Summary—SaaS
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
SaaS
 it’s
highly touted, but it isn’t a clear high scorer in all
aspects
 because it tends to remove players from the IT value
chain, it isn’t ecosystem friendly
 SaaS-based applications provide limited compatibility
with existing on-premise IT solutions
Summary—SOA
45

SOA
 emerges
as a strong trend when analyzed using the
framework
 It also fosters and enables strong relationships within
the ecosystem
 Organizations should take SOA very seriously and
adopt it if they haven’t already done so
Summary—Cloud Computing
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
Cloud computing
 resembles
SaaS in many ways
 it enables organizations to substitute large capital
expenditures on IT infrastructure with on-demand,
small, operational expenditures to cloud providers
 However, these providers still need to standardize their
interfaces to build a market infrastructure that
encourages the trading of services rendered in the
cloud
Conclusion
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
By using the diffusion of IT innovation framework,
IT professionals can develop deep insights into
upcoming trends and strategies for investing in
them

The framework is similarly applicable to other
trends and domains, and should become a key part
of any professional’s toolbox