Value

What is information really? If we know that, we can try to understand how we can judge its value, or even start to understand how we can create value with information. In Claude Shannon’s theory of communication, information is about reducing uncertainty. Another way is to say that more information means less noise because if you add noise to information, that information will have more uncertainty and less value. To visualize this, think of a picture that is obscured by a bit of fog or haze. You can still see some of the picture, but not very clearly. You will make more errors when trying to understand what the picture means. ...

Most digital infrastructures are meant to communicate or coordinate, or are in support of other digital infrastructures that communicate or coordinate. That is where their prime value is. The internet is a great example. It is designed to enable computers to communicate by moving data packets between them. Social media is another example, used by people to communicate with each other. Its success is a testament to the fact that communication is a fundamental human need. ...

Automation is a big part of IT, but not all automation brings value. Automation takes time and effort, upfront, and any benefits come later. Think of the IT projects you were involved in, most of those aimed at providing a measurable benefit somewhere. This diagram (from xkcd, a series of webcomics) illustrates when automating repetitive tasks, or even just parts of them, brings benefit. In other words, is there a business case for such an intervention? ...

Consumers of digital infrastructures benefit from not running them themselves, but having a provider who serves more consumers do it for them. Imagine stringing a wire to connect your PC to your neighbor’s PC in order to play a game together. People have been doing these things. How long does it take to string the wires and connect them? What is the cost? Where do you buy the cable? How are you going to run that cable? It is a lot faster to just use the internet for that. ...

Getting to value quickly has value in itself. The faster you get to value, the better it is, generally. We’ll discuss some of the reasons for that elsewhere. Agile development is all the fashion nowadays for getting to digital value quickly. Why is that and what kind of digital infrastructures does that require? Back in the old days, business software was primarily written to automate existing business processes. Those processes might change somewhat as a result, but in the core processes were no different. Think accounting systems, scheduling, “customer relationship management” and so on. ...

Business Model Canvas The Business Model Canvas is a strategic management tool that serves as a visual framework for developing and discussing business models. For additional information, see http://en.wikipedia.org/wiki/Business_Model_Canvas. The business model canvas has nine basic building blocks. These define the interconnections and relationships within a business model. The example used in this section is Amazon Web Services (AWS), particularly EC2 (virtual machines on demand). This is an Infrastructure as a Service offering. The power of the business model canvas approach becomes clear when we see how it can distinguish between various cloud service offerings. ...

Here is a high-level overview of the SaaS provider business model and some of the strategic options that are in there. Business Model Canvas In this unit, we’ll explore examples using two hypothetical SaaS providers: one offering bookkeeping software and the other a project collaboration platform. Customer segments (CS) In the Business Model Canvas, “Customer Segments” are the groups of customers that the company ultimately serves, I.e. the ones that consume and pay for the services. ...

Public cloud migrations come in different shapes and sizes, but I see three major approaches. Each of these brings value in its own way, and they all have very different technical and governance implications. Three approaches Companies dying to get rid of their data centers often get started on a ‘lift and shift’ approach, where applications are moved from existing servers to equivalent servers in the cloud. The cloud service model consumed here is mainly IaaS (infrastructure as a service). Not much is outsourced to cloud providers here. Contrast that with SaaS. ...

A great way to look at how value is created in interactions between autonomous actors is game theory. How do autonomous actors respond to other actors, is the core question here. How do you respond to an offer from a service provider? But also, how do they respond to you? I have found game theory to be an effective model to think about the outcomes of sequences of interactions. This is because it clearly identifies the actors (or players) and their interests. ...