Microsoft's Digital Nervous System

As Microsoft continues to refine the theory behind the Digital Nervous System, it's clear that DNS is neither a way to hype a particular Microsoft product nor even aggregate a collection of Microsoft products. Instead, DNS is one of two paradigms around which Microsoft is organizing its business.

As Microsoft continues to refine the theory behind the Digital Nervous System, it's clear that DNS is neither a way to hype a particular Microsoft product nor even aggregate a collection of Microsoft products. Instead, DNS is one of two paradigms around which Microsoft is organizing its business.By linking technology around information, a DNS allows a company to react quickly and effectively to changes in business conditions. By moving data rapidly throughout an organization, a DNS will allow companies to make more informed decisions. It's an unknown at this time whether promoting the DNS vision will help Microsoft. However, it seems clear that implementing the DNS strategy, whether or not it goes by that name, will provide a huge competitive advantage to companies that create and use it effectively.
Over the years, IT executives and strategists have learned to discount their vendors' rhetoric when evaluating new technology. They're often wise to do so. After all, does anyone really want to see Oracle's Larry Ellison step up to a trade show podium and say yet again, "The network is the computer?"

However, it would be a mistake to dismiss Microsoft's touting of its Digital Nervous System (DNS) strategy as just marketing hype. After all, DNS is a business philosophy more than a specific product mix. There is not, and never will be, a shrink-wrapped software product called Microsoft Digital Nervous System. Nor would it be accurate to call DNS simply a strategy for aggregating Microsoft BackOffice and development products. While it's possible to create a DNS for your company exclusively with Microsoft products, most organizations will use a variety of tools and systems from a number of different vendors.

In fact, numerous companies have already purchased many of the technological building blocks necessary to create their own DNS. Microsoft implicitly recognizes this in its proclamation that a DNS will provide "revolutionary results with only evolutionary investments."

In this briefing, we'll explain what Microsoft's DNS strategy means and what the implications are for your IT department as well as your entire organization. We'll also discuss some of the technology required to make your DNS work.

What precisely does DNS mean, and does Microsoft mean it?
At its most basic level, a Digital Nervous System is exactly what the metaphor implies: a data network and feedback system that mimics the actions of the human central nervous system. Rather than relying on your mind to make a conscious decision to start and stop every action your body takes, the body's central nervous system uses feedback from the body to prompt or initiate action without having to wait for the brain to act. For example, if the water's too cold, your foot moves away instinctively.

With a DNS, your company wouldn't have to rely on central management for routine tasks. Even more important, with a DNS your firm would receive automatic feedback that could help both tactical and strategic decision-making.

The Digital Nervous System strategy comes directly from Bill Gates and is one of the two concepts driving Microsoft's business. (The other is the "Web Lifestyle," which is a consumer vision.) Everyone you talk to at Microsoft attests that DNS is a deeply held belief of Gates and is not likely to be discarded anytime soon.

In public presentations on the subject, Gates and others have stressed the need for businesses to link technology around information flow. (In fact, this is the topic of Gates' next book.) For example, last year at Microsoft's Network Operations Executive Summit, Gates said, "Microsoft is talking a lot now about what is called the Digital Nervous System. And this is the idea that every enterprise, whether it's large or small, will need to have its information in digital form and be able to take advantage of that to streamline decision processes to draw more people to make decisions, whether it's people inside the company, or partners, or suppliers. That the digital approach is the best way to do that in the information age."

To further this vision, Microsoft has taken some dramatic steps, including combining the Office and BackOffice groups into the new Applications and Tools Group (ATG), under Senior VP Bob Muglia. Microsoft has also added resources to the design teams for the next generation of ATG products so that they reflect the DNS strategy. According to David Perry, ATG Marketing Director, instead of merely focusing on extending the capabilities of existing products, "We're asking how we can make DNS real. For example, as we work on Office 2000, we're asking ourselves how we can turn it into a knowledge management client, how we can redesign Office to allow people to use it to manage knowledge."

This idea cuts across some of Microsoft's traditional ways of thinking about products. For the past several years, Redmond has viewed the IT world through the prism of SORGs, MORGs and LORGs (Small ORGanizations, Medium ORGanizations, and Large ORGanizations). Microsoft developed its products to meet the perceived needs of these three large segments. On top of this, it also has people dedicated to individual vertical markets such as legal or accounting. By devoting time and resources to DNS in the Applications and Tools Group, Microsoft is attempting to ensure that the DNS message is incorporated into its development and marketing strategies across its entire customer base.

Further, Microsoft's Organizational Customer Unit (OCU) is working with Microsoft's partners and Solution Providers to spread the message about the importance of the Digital Nervous System. As Microsoft's Perry puts it, "We need to stop simply suggesting specific products and start suggesting solutions to a customer's long-term needs."

In response to all this, some people will ask, "Isn't DNS simply a way for Microsoft to aggregate its products?" In other words, won't Microsoft use DNS to offer a whole slew of products in a single package? The answer is "Yes, but more importantly, no." Of course Microsoft would prefer that companies use only Microsoft solutions to create a DNS, but it's realistic enough to know that most companies will use a variety of products. For example, a company that already uses Oracle as its database engine is less likely to consider replacing its customized database development than to make it more accessible to the entire organization.

Even for those organizations that have already standardized on Microsoft technology, the main issues about the DNS are centered less on buying new products than on finding ways to make the existing technologies work better.

Helping the IT executive make the business case for IT investments
In a sense, Microsoft's DNS strategy is designed to help CIOs and other IT executives with one of their toughest tasks: justifying strategic technology investments. While it's generally less difficult to get approval for an upgrade or to fix an obvious security or bandwidth issue, it's harder for the average CIO or IT executive to justify expenditures for longer-term investments where return on investment (ROI) is tougher to calculate.

In general, CIOs and IT executives don't do a good job communicating about technology in business terms. For example, a recent survey of Fortune 1000 CEOs by Computerworld and KPMG showed the following:
  • ·        CIOs and IT executives still don't communicate well: As Computerworld put it, "56 percent of the respondents said they'd like to see their IT folks better articulate-in terms understood by their corporate colleagues-the business ramifications of their IT investments." CEOs believe that their business unit heads do a better job understanding IT (47 percent) than IT professionals do understanding the business units (29 percent).
  • ·        CIOs rarely make strategic IT decisions alone: The need for CIOs and IT executives to understand and articulate the business ramifications of technology become apparent after noting that, according to the survey, less than a third (31 percent) of Fortune 1000 companies give their CIO or IT executives the power to make strategic IT investment decisions on their own. For 27 percent of the respondents, such decisions are made by the executive committee, while the CEO makes the call in 22 percent of the cases, and the CFO or COO decides 21 percent of the time. Interestingly, when asked who should make the decision, the CIO was the highest-rated choice of CEOs.
  • ·        Despite these communication breakdowns, CEOs still understand the importance of technology: Fully 53 percent of all survey respondents believe that "IT is absolutely vital to their business," while an additional 33 percent stated that "IT is key to their competitive advantage."

This survey data indicates that if CEOs had more confidence in the ability of CIOs to understand and express the business implications of technology, CIOs could gain greater autonomy in strategic IT decision making.

The need for business-oriented IT professionals will accelerate. According to the Gartner Group, by the year 2003, IT departments will spend 65 percent of their time recruiting IT professionals with business and management skills, and only 35 percent of their time recruiting IT staff with specific technical skills.

Microsoft's DNS strategy, with its emphasis on linking technology to information flow, will help CIOs and IT executives immerse themselves ever more deeply in daily business operations. Therefore, when it comes time to justify the latest round of IT investments, the CIO can explain how the proposed technology will directly benefit individual business units rather than focusing on, for example, how much additional server storage capacity is needed. As Microsoft's Perry puts it, "We want to help companies get past the view of looking at IT as a cost center and start looking at IT as a catalyst for change."

Business implications of the Digital Nervous System
Since taking over the recently created Applications and Tools Group, Microsoft Senior VP Bob Muglia has focused DNS implementation on three main sets of business functions: Knowledge Management, Business Operations, and Commerce. (Microsoft refers to these as scenarios.)

Microsoft is also pushing this message to its Solution Provider partners. As Sam Jadallah, vice president of Microsoft's Organization Customer Unit (OCU) put it in a recent interview with SmartReseller, "We will have marketing campaigns around these [knowledge management, business operations, and commerce] scenarios. We won't be doing any kind of new certification program, but instead we will be highlighting design wins and areas of expertise among our channel. We will emphasize that DNS is the way we will become a solutions-focused company."

Suppose you're the CIO of a company and your CEO has just asked you to explain how installing a DNS would affect your company. To answer that question, let's look at each scenario in turn.

Knowledge management
Since the theory of the DNS is tied to the flow of information throughout an organization, it shouldn't be surprising that managing that knowledge flow is critical to the success of a DNS.

Of course, knowledge management is one of those terms that mean different things to different people. According to Muglia, it means the ability to combine experience with information to make organizations more efficient. To do so, an effective knowledge management system must incorporate feedback, allow version and project tracking, and provide tools for business planning and analysis as well as employee management and training.

Microsoft has identified some specific tasks as central to knowledge management in a DNS. While the list of functions could vary depending on the size and purpose of a particular organization, these tasks would be important for most firms:
  • ·        Collaboration: Giving employees the ability to share information and resources from individual desktops across a network.
  • ·        Publish and Search: Providing tools that allow employees to distribute information, as well as easily retrieve data, no matter where it exists.
  • ·        Tracking and Workflow: Maintaining control of projects and processes by getting real-time updates on progress.
  • ·        Data Analysis: Finding the correct information and then giving employees the tools to manipulate and query it.
  • ·        Learning: Making employees more productive by providing continuous training.

Later in this article, we'll discuss the technologies that a company would use to implement a knowledge management system.

Business operations
While the knowledge management scenario might seem a little nebulous, this one is straightforward. The role of the DNS in business operations is to make the daily routines and processes of the organization as efficient as possible. Depending on the scope and nature of the organization, a working DNS would improve the following functions, which are also self-explanatory:
  • ·        Finance and Administration
  • ·        Engineering/Manufacturing
  • ·        Procurement
  • ·        Sales
  • ·        Logistics

As one might expect, these are precisely the areas where most companies have already invested enormous sums for IT, not only for hardware and infrastructure but also for Enterprise Resource Planning (ERP) installations.

In today's environment, when IT strategists talk about commerce, everyone thinks about electronic commerce. While e-commerce is included in Microsoft's vision for commerce in a DNS, it's only part of the story. The goal of a DNS in this scenario is to create and maintain stronger relationships with both customers and partners. It can do so by linking technology to information in the following areas:
  • ·        Direct marketing, selling, and services
  • ·        Financial services
  • ·        Information services
  • ·        Business-to-business commerce (purchasing)

As you know, most Fortune 1000 companies have long used some form of electronic purchasing, usually based on EDI (Electronic Data Interchange) systems running over private networks. In the future, you'll continue to see rapid growth in the migration of these private networks to Web-based purchasing systems using TCP/IP.

The technologies behind DNS
Thus far, we've discussed the business implications of Microsoft's Digital Nervous System strategy, since it focuses as much on the way companies envision the role of technology as it does on specific hardware and software products. However, Microsoft has established what it calls the "building blocks of a DNS system." Let's look at them in turn and see which products might help meet the needs for each.

PC computing architecture
While it seems obvious, Microsoft insists that the foundation of a DNS is an array of powerful personal computers linked together by Wintel-based network servers.

Personal computers, Operating systems, Network servers

All information in digital form
While not naive enough to believe in the completely "paperless office," Microsoft stresses that all information should be stored digitally so that it can be shared throughout the organization. It also stresses the benefits of entering data only once, either into a PC or a hand-held computer.

Universal e-mail
In many corporations, e-mail is already the most commonly used application. It has displaced the telephone as the most effective means of internal communication, allowing people to share ideas and information in real-time.

E-mail clients and servers

Ubiquitous connectivity
By this felicitous phrase, Microsoft refers to the necessity of giving every employee access to the network whenever needed. It also points out that more limited access must be available for business partners and customers.

Routers and switches, Internet gateways, Remote access software, Firewall software

Common end-user tools
To allow employees to communicate effectively with one another, share information, and collaborate on projects and presentations, everyone in the organization should use the same set of end-user applications.

Word processors, Presentation software, Spreadsheets, Web browsers

Integrated business-specific applications
Most organizations need to supplement off-the-shelf applications and products with customized software applications. To avoid duplication and maximize access, these applications should be integrated with end-user tools and e-mail systems the company has already established.

Custom programming, ERP modules
  • ·        Act faster
  • ·        React to anything
  • ·        Make more informed decisions
  • ·        Get closer to customers
  • ·        Focus on business, not technology