How the Network Becomes Your Beeline to Customers

The network has forever changed the landscape in which services are delivered to consumers. Vice President, CTO, and Distinguished Engineer for Sun Services Dan Berg shares with Executive Boardroom readers the trends and forces that are allowing companies to more quickly and efficiently respond to consumer needs in the new service economy.

Q: What are the business trends driving change in the ways services are delivered?

A: There are four key trends that have come to the forefront in my discussions with customers and CIOs in different IT departments. One is standardization. There is a high degree of standardization taking place, not just at a technical level (operating systems, chip architectures, etc.) but also at an operations level where we are seeing better cohesion of industry standards and best practices. We are seeing data centers and IT operations look more homogenous across different companies, even different industries. In the past, data centers were much more customized, from their technical infrastructure implementation to the operational procedures they followed.

A second trend is community. We are seeing communities stretch beyond the borders of enterprises into interest groups. Best practices are being discussed outside of company borders. We are finding that the community can play a bigger role in solving problems and identifying new ideas, and companies are finding unique ways to leverage one another. As an industry, we haven't previously had that. I think the challenge for a lot of companies is figuring out how to play with these communities and work them to their advantage.

The third trend is utility computing/grid computing. Obviously Sun has an interest in this, but if you look at industries in general as they go through their evolution, they go from custom to standard to utility. There's no reason why the computing industry wouldn't go through the same lifecycle. Almost every major industry goes through this, because when you start up with something, it's unique in nature and that's its differentiation. Over time, the differentiation comes from other things — deployment models, etc. We've seen that to some degree in the software space; deployment models for software are vastly different than they used to be.

Lastly, I'll mention a trend I call telemetry. By this, I mean a trend toward connecting consumers to the organizations that provide value to them such that continuous value is injected into the relationship and the consumer is providing continuous feedback to the product in terms of how they are using it, what they value, and so forth. Companies are then taking that information and acting upon it quickly to provide new, unique, custom services back to the consumer. It's about creating value from knowing more about your consumer. I don't think there is a single business on the planet that wouldn't appreciate more information about its consumers.

Q: What is the new service economy?

A: The new service economy is simply creating an ecosystem so that you have information exchanges between consumer and producer. Telemetry is the currency of the new services economy. The conversation that we have with a customer is critical. It's probably the most valuable thing a service-oriented economy can have, because, at the end of the day, services are what provide value to a customer.

If you're going to innovate service offerings, you need to know more about how consumers are using your products and what they value. Those things change rapidly, and being able to react to those changes is critical. In an ideal world, this information exchange is transparent to the consumer — the product just tells the producer what they need to know to provide more value.

Q: How can a company use IT to create new services, offerings, and revenue models?

A: If, in the new service economy, you have information on a continual basis, it becomes difficult not to create new services, offerings, and revenue models. You need to find those discontinuities and fill in the gaps. The problem has always been guessing what the consumer wants.

IT companies are in a position where new services can be created rapidly and new value can be derived and delivered. It's incumbent upon companies to create a relationship with customers so that producing the offerings they value becomes more streamlined.

Q: You often speak of the transformation of IT as a service. What does that mean exactly?

A: It is many of the things I've mentioned, but at a higher level I'll say that IT as a service provides many of the functions that an IT operations would today, but as a service. An example would be e-mail and messaging. That's something every company on the planet provides to its employees to interact with each other. The mail and messaging service has traditionally been provided by each company separately.

We are in a world now which has a well-connected network and bandwidth. IT departments don't necessarily need to invest in an e-mail system. Rather they could just use a service to provide that capability in a secure manner. The question then becomes: how do you move more of the capabilities you have offered as a custom solution within your enterprise to a service for your partners or customers?

Q: How does IT as a service speed up the process of innovation and how does it benefit customers?

A: The process of innovation is pretty interesting. Using something like the capability to do your taxes, for example, you would design something, develop it, test it, and distribute it. Then people would install it, and you would need an infrastructure to support it, and finally, that application could be utilized.

I can develop something and almost immediately make that application or utility available to the network as a service, and I can immediately start getting feedback through telemetry about what's working, what's valuable, what's not. This significantly shortens the cycle by getting rid of distribution, the installation process, and configuration. You could even allow some customers to have it before it is finished, to look at and start using.

Google does this. They take new services, toss them up there, often without advertising them, and see how people use them. Google maps started this way. They determine which functions people favor and incrementally improve the value of the service until at some point it's deemed finished.

Q: What are some of the disruptive business opportunities within services?

A: I think the disruptions include closing some of the time gaps as we've discussed, the fact that lifecycles are changing, and the fact that things can be developed and given to consumers more rapidly than in the past. Just closing that gap is very disruptive in that you have faster time-to-market with products and services that you release. Once you start doing that, there are unlimited ways in which you can become disruptive by providing consumers value you didn't know they wanted based on the feedback you've received from them.

Grid computing is a major disruption for small companies to develop new offerings for their markets because it provides the infrastructure they couldn't afford to invest in before.

Q: What are the metrics of the future with regard to services?

A: Traditionally, we've measured ourselves in terms of how much is selling and how satisfied a customer is. While those don't change, the level of granularity for which we can get metrics is new. Using the grid example, you can look at things like CPU-cost-per-hour or gigabytes per dollar. You can determine what the scalable costs of something are and then begin assigning costs per transaction. If I wanted to measure the cost of payroll transactions I could find out that it cost me "X" dollars per payroll transaction. Then my goal over time is to reduce that versus trying to extract that information from a data center which may have aggregated costs, but not costs for given components. That's delivering IT as a service.

You can now also measure how a consumer is using something. What value are they extracting and how often can you sample that? In traditional service models you only hear from the customer when they have a problem. With telemetry, we can do some intriguing things to measure how effective we are in servicing that customer.

If I know a customer's hardware installation, their operating system version or patch level, their application stack, etc., then I know their exact configuration. So if I know of a problem or bug, I can push the patch or solution to them, specific to their environment. They won't be inundated with irrelevant information. And business managers can make better decisions when they can evaluate costs at a transaction or usage level rather than for the entire environment.

About Dan Berg

Daniel J. Berg is vice president and chief technology officer for services at Sun Microsystems. In this position, Berg is responsible for the technical strategy and direction of Sun's services organization. Berg also holds the title of Distinguished Engineer. Berg has had a number of other technical and business roles at Sun, including positions in technical sales, professional services, engineering, and customer service. Before joining Sun, Berg held positions at IBM and Honeywell.