Month: November 2011

10 Things to be Thankful for in IT

    Jim D

I was quite thankful for the Thanksgiving holiday weekend, both for the family time and the downtime. The downtime was especially appreciated as I had a cold from which to recover. Of course, being thankful while being miserable from a cold does not come easily, I thought it would be worthwhile and fun to list out the things in IT we should be thankful for this year:

10. Having far better cell coverage and Wi Fi connectivity in public places, unless you really need it…

9. For our legal teams, having Oracle continue to acquire companies so we can then have our lawyers keep busy and pore over those contracts and figure out how Oracle is going to take advantage

8. Still in 2011, at the typical company, that most colleagues tend to avoid using the low quality video chat screens now proliferating so they don’t wonder if we had just rolled out of bed

7. That HP’s board and CEO have avoided any more bone-headed moves the past few months

6. That we can deliver cool devices to our long suffering business colleagues through BYOD (bring your own device) and ‘sandbox’ approaches like GOOD Technology software

5. That the worst hack of the year impacted a gaming network (Sony’s playstation) rather than financial or life and death systems — though it still impacted over 70 million users and cost Sony nearly $200M

4. That Apple re-introduced simple elegance as a prominent technology feature to marketing and product teams everywhere, thus reducing the number of absurd Swiss Army knife systems requests

3. The internet for once again ensuring everyone on the planets knows all about critical news like Charlie Sheen and tiger’s blood or Premier League footballers and their girlfriends!

2. While the national unemployment rate hovers at 9% all year, that the unemployment rate for IT professionals has dropped below 4% – thank goodness we can still get a job!

1. That all those social media technologies we thought were really only for teenagers, helped usher in the Arab Spring!

Add yours to the list! I look forward to your comments.

Best, Jim

Delivering Efficiency and Cost Reduction: Long Terms Tactics Wrapup

    Jim D

In the last several posts we have covered how you should deliver IT cost reductions with long term tactics that also enable you to build capability and capacity.  If executed well, you will also yield some longer term benefits such as a better workforce balance or elimination of redundant or low value systems. These tactics require relentless leadership and focus by you. You must keep them in the forefront and ensure you are progressing on them everyday. Your patience and influence are required as well. You must obtain business support for efforts that often have a longer cycle than the business team is used to supporting.  If you are both consistent and persistent in your approach, and employ these tactics, you will make a material difference, in some cases a massive difference, that will make your business far more competitive and is simply unattainable through other approaches.

We discussed that these long term tactics are executed by first laying a groundwork for sustainable improved cost through quality. Second, you build a highly productive and well-balanced team in order to meet a world class cost profile. Throughout you leverage metrics-based, transparent framework with continuous process improvement that enables you to progress and achieve world class performance. A concurrent effort with building a high performing team is to migrate to a modern, consolidated infrastructure and well-architected core systems. We will discuss this effort today and wrap up our efficiency discussion.

Nearly every IT shop that has quality or cost problems has a proliferation of archaic systems and fragmented, legacy infrastructure. The causes of this are myriad but generally result from: poor or shifting business vision and sponsorship (e.g., when you have 3 different sales executives in 4 years, IT delivers 2 and 1/2 application systems trying to match the business variances and results in multiple systems that never do what was needed); an inability of the business to invest in a steadfast manner (e.g., IT projects run out of funding, or funding shifts, thus every year projects are half completed resulting in the old systems staying in place with the new systems going in); a stagnant IT team with poor best practices and leadership that allow multiple mediocre solutions where one good solution would suffice.

As the IT leader, you must tackle the business causes first before setting out to fix this area. Draw up a compelling vision of what the systems should provide. Research and gather the facts on the costs, time to market impacts, business productivity, feature loss and quality issues due to the current multiple mediocre systems. Map out a new process and authorization where you get the multi-year business support and sponsorship to execute the vision. Going from three mediocre overlapping business systems to one well architected systems with better quality will enable efficiency and productivity gains across the board — in your shop and in theirs. This is a vision that you should get everyone to rally around. Ensure there is a investment process that enable multiyear funding and review of major projects and conversions that also tracks to ensure the benefits are delivered. The CFO should be your partner in this. It is in his interest to see that everyone meets the costs reductions and other benefits promised. And it is in yours as well, because often you accumulate the layers of barnacles by only doing 80 or 90% of a project and not doing the final steps of decommissioning the old systems. By having a multi-year project process with benefit review or scorecarding in place, there will be far more impetus to ensure projects are completed and old systems removed.

Assuming you address the business sponsorship and project process issues, you must also address poor leadership and implementation on your side. First and foremost, IT cannot be a place for ‘hobbies’. That is, you need to ensure that all those pet technology projects and explorations that are not absolutely critical to a business capability or technology implementation that has real, near term benefits, are killed. Otherwise, they are a distraction and a multiplication of your technologies and thus costs.

Second, require every major application area and infrastructure component to map out current world and a future world where they are consolidated and at best practice. Then sit down with each team and your architectures and lay out the trajectory to get from today to best practice. Estimate the benefits from the transition. Ensure you capture the gains from your productivity and quality improvements. Then pick the top 3 to 5 areas and target them as major transformation initiatives for investment and turnaround. Garner the business support, get the approvals, make it part of your IT goals and communicate the importance to your team. And of course execute them. But also, in the other areas that mapped out their trajectories, work with them to come up with ways to make progress without major funding. Identify and execute the quick ROI projects that enable you to save within the year or almost within the year. Work with vendors to come up with creative ways to overcome the investment hurdle to move your technology to a best in class platform. And every time you can come up with efficiencies or savings elsewhere, turn around, pull the next best consolidation and replatforming project off the queue and get it going. As these projects execute and land, it will drive a virtuous cycle of additional savings and quality that will enable you to more rapidly transform as well as to shift, over time, more and more resources to the point of the spear where you are attacking the business problems and needs.

The long term tactics will take 9 to 12 months to achieve some results and 18 to 24 months to yield impacts, but once you really start executing and implementing, the compound gains can be enormous. Given IT can be a very large cost center within a corporation, IT can often one of the top contributors to cost reductions. And given IT systems availability and quality drive customer service, IT improvements can be the biggest push behind improved customer satisfaction. These are huge wins for you company. So, as you are faced with cost efficiencies demands of todays environment, leverage the near term and long term tactics described to put you and your company in a winning position.

So, we have spent nearly two months covering the very important topic of cost efficiency in IT. Every IT shop today is faced with these demands. You now have the tools to drive this far more effectively. Let me know where things have gone awry or where more detail is need to handle the complexity of your situation.

Best,

Jim

 

Delivering Efficiency and Cost Reduction: Long term tactics II

    Jim D

We have spend the past several weeks covering how to deliver efficiency and cost reduction in IT, and particularly how to do it while maintaining or improving your capabilities. In my last post we discussed some two long terms tactics to drive efficiency but also at the same time to achieve improved capability. In this post we will cover the another key long term tactics that you can leverage to achieve world class cost and performance: leveraging metrics and benchmarking.

Let’s assume you have begun to tackle the quality and team issues in your shop. One of the key weapons to enable you to make better decisions as a manager and to identify those areas that you need to focus on is having a level of transparency around the operational performance of your shop. This doesn’t mean your team must produce reams of reports for senior management or for you. If fact, that is typically wasted effort as it is as much a show as real data. What you require to obtain effective operational transparency is the regular reporting of key operational metrics as they are used by the teams themselves. You and your senior team should be reviewing the Key Process Metrics(KPMs) that are used by the operational teams to drive the processes day-to-day and week-to-week. These would include things such as change success rates by team or a summary of project statuses with regular project reporting behind each status.

The ability to produce and manage using metrics depends substantially on the maturity of your teams. You should match the metrics to be reported and leveraged to your team’s maturity with an eye for the to master their current level and move to the next level.

For example, for production metrics you should start, if a Level 1 or 2 organization, with having basic asset information and totals by type and by business along with basic change success volumes and statistics and incident volumes and statistics. A level 3 organization would have additional information on causal factors. So in addition to change or incident statistics there would be data on why (or root cause) for a failed change or a production incident. A level 4 organization would have information on managing the process improvement itself. Thus you would have information on how long root cause takes to complete, how many are getting resolved, what areas have chronic issues, etc. Consider the analogy of having information on a car. At the lowest level, we have information on the car’s position, then we add information on the car’s velocity, and then on its acceleration at the highest level.

These three levels of information (basic position and volumes, then causes and verification metrics, then patterns and improvement metrics and effects) can be applied across any IT service or component. And in fact, if applied, your management team can move from guessing what to do, to knowing what the performance and capabilities are to understanding what is causing problems to scientifically fixing the problems. I would note that many IT managers would view putting the metrics in place as a laborious time-consuming step that may not yield results. They would rather fly and direct by the seat of their pants. This is why so many shops have failed improvement programs and a lack of effective results. It is far better to take a scientific, process-oriented approach and garner repeatable results that enable your improvement programs to accelerate and redouble their impact over time.

Another advantage of this level of transparency is that both your team and your business partners can now see measurable results rather than promises or rosy descriptions. You should always seek to make key data a commodity in your organization. You should be publish the key process metrics broadly. This will reinforce your goals and the importance of quality throughout your team and you will be surprised and the additional benefits that will be gathered by employees able to now to a better job because they have visibility of the impact of their efforts.

And when you do develop key process metrics, make sure you include metrics that have business meaning. For example, why publish metrics on number of incidents or outage time (or conversely system time availability) to your business partners? While there is some merit in these data for the technical team, you should publish for the business in more appropriate terms. For availability, publish the customer impact availability (which would be the total number of transaction failed or impacted to a customer divided by the total number of transaction that typically occur or would have occurred that month) plus the number of customers impacted. If you tell the business they had 50,000 customers impacted by IT last month versus you had 98.7% system time availability, it now becomes real for them. And they will then better understand the importance of investing in quality production.

In essence, by taking a metrics-based approach, we in IT are then following in the footsteps of the manufacturing revolutions on process that has been underway for the past 60 years. Your team should know about the basics on Continuous Process Improvement and Lean. Perhaps give them some books on Deming or others. We should run our shops as a factory for all of our routine or volume services. Our businesses must compete in a lean manufacturing world, and our work is not handcraft, it should be formalized and improved to yield astounding gains that compound over 12, 24 or 36 months.

On a final note, once you have the base metrics in place, you should benchmark. You will have one of two good outcomes: either you will find out you have great performance and a leader in the industry (and you can then market this to your business sponsors) or you will find out lots of areas you must improve and you now have what to work on for the next 12 months.

 

Have you seen success by applying these approaches? How has your team embraced or resisted taking such a disciplined approach? What would you add or change?

 

Best, Jim

Not Quite Y2K for IT, But Prepare for the London Olympics

    Jim D

Today in a quick conversation with a colleague we discussed the importance of preparing for the London Olympics for those firms serving markets that will be affected by the Olympics. In addition to the expected transportation crunch around London, there will be peaks in many service areas from ATMs to local financial transactions and purchases to inquiries for information. If your firm is serving the London or UK market, or is a 2012 Olympics Sponsor, I have compiled a quick checklist and schedule of activities to ensure your systems and operations are prepared. You can also use this checklist of course if your firm is engaged in similar events such as the World Cup or Superbowl or just for general improvement of performance at peak times.

To ensure you have your services ready and able to operate smoothly during a peak such as the London Olympics, you should you first perform a capabilities analysis of those services and operations that will be under load. This entails having a good set of service volume (both normal and current peak), service performance, and service quality (how many transactions fail or have issue). Your business should have forecasts for the additional peak load during the event. Similar to the recent royal wedding, which was the busiest debit and credit transaction day in the UK, for services used by consumers expect higher load. It is likely that this load will be greater than what systems have previously support, and last thing you (or your business) would want is a failure in the middle of the Olympics with the lost revenue and reputation implications. And remember to not just look at your systems but also ask key suppliers for their plans. This includes higher level services provided by third parties but also basic ones such as network and cell phone carriers. Find out what planning and testing they have done or will do prior.

Once you have gather the data for your systems and operations, and projected a forecast, the next step is to test. You likely will want to do this testing subsequent to the normal business peak of the upcoming season and yearend — so plan for January and February to do extensive testing. Look to uncover at what point your system breaks and what breaks it. If you system shows significant signs of stress at current peaks or fails at only 5 or 10% load above current peaks, you should work quickly to remediate and improve the performance and capacity. Take this time to also address wherever you see significant defect rates in your systems or operations. Is there a high number of retries? Are sessions lost being lost? Are calls being dropped or abandoned? Any elevated level of defect should be addressed as these could skyrocket in a high peak situation, effectively a very public and impacting outage even if the system is still running. Once you have corrected the defect and performance bottlenecks, retest to ensure that there is not a performance issue lurking immediately behind the one you just fixed. And plan to implement you change at least 2 months before the event so you are not trying out an updated system for the first time on highest peak load.

Your final step is event preparation. Here you need to ensure you have adjusted your change practices and schedules as you would for any critical period (i.e., perhaps a change freeze for systems underlying key services at least a week before and throughout the Olympics). Ensure you are fully staffed (the Olympics is during vacation time) so that if something occurs you do not have a gap in key man coverage. Ensure additional capabilities (such as greater language coverage in call centers) have been planned and implemented. Either leverage your current command center of put in place a command centre as you would for a critical implementation. Have the command center manage both a business channel and a technical channel where you report a regular, appropriate intervals, the volumes and performance of the critical services. If you do have an issue, you will improve your time to respond and hopefully to restore as your command center will already be on top of it.

This should lead you to a successful Olympics (and perhaps a gold medal!).

As you wrapup, ensure you capture the peak data so you can understand how your systems and operations behave under stress. This will enable you to pinpoint where you should invest your next set of monies to get improvement (this is always helpful).

I look forward to your success and quiet delivery (staying out of the newspapers).

Best, Jim

Delivering Efficiency and Cost Reduction: Long term tactics

    Jim D

We have spend the past several weeks covering how to deliver efficiency and cost reduction in IT, and particularly how to do it while maintaining or improving your capabilities. In my last post we discussed what are some of the recent technology industry trends that enable reduced costs at the same or improved capabilities. In this post we will cover the first two of the long term tactics that you can leverage to achieve world class cost and performance: quality and a high performance team.

The first and really most important area to tackle is quality. If a factory had a quarter of the output that it produced was defective and became scrap, it could no long compete in the lean manufacturing regime of today’s industry. Yet frequently, IT shops have defect rates of 10%, 20%, or even north of 50%. And much of the time and effort of the IT team is actually spent fixing things as opposed to new work or proper maintenance. You need to regard every defect in your shop as waste and as a cost to you and your business. You should tackle this waste wherever it occurs in your shop. It is not uncommon for more than 50% of large projects or programs to be over schedule and over budget. It is not uncommon to see shops where more than 10 or 20% of the changes result in some other problem, typically impacting production and service to the customers. These areas must be addressed with rigor.
For projects and programs, are you following a robust project methodology? Do you have proper sponsorship and governance? Are you leveraging a strong analysis and requirements management methodology and toolset? Are you taking advantage of modern methodologies that solve the tough parts of a problem first, get good prototypes out early for user review and avoid the big bang and timeliness issues of a waterfall approach? Are you giving your project managers a full toolset along with the industry training and empowerment to make the right calls? If not, then you are likely experiencing issues and delays on more than 25% and perhaps more than 50% of your projects. And that is where your money is being wasted. When a fully staffed project team is waiting for requirements signoff, or when requirements are being changed again, too late in the project cycle, you are burning project monies while the resources idle or have to do rework. By introducing a rigorous process and robust tools and metrics, you will be able to avoid most issues before they start and for those that do occur, you will know precisely why and be able to correct it for the next project.
For your production services, you should insist on at least a 98% change success rate and if you wish to be a 1st quartile shop you need to drive to a 99% or 99.5% change success rate. This means that for every 200 changes only 1 or 2 fail. These success rates can be achieved by ensuring you have an effective but not burdensome change process and you have rigorous change testing and planning (including a backout plan). Have your operations and service management experts participate in and provide guidance to those making the changes (either the application areas or the infrastructure teams). And ensure full root cause on any change that fails with the requisite actions to prevent re-occurance being completed. Publish simple and straightforward reports on change and project success and quality. By measuring quality your team will get the message and place much more emphasis on getting it right the first time. And remarkably, by focusing on quality first, you will get a strong reduction in cost (whereas if you first tried to reduce costs then to improve quality you would make little progress on either). Accompanying this thrust with simple but bedrock true messages such as ‘Do it right the first time’ and ‘Spend it like it is your own money’ go a long ways to get the spirit of what you are trying to get accomplished across. You must mean it though and you must back up doing it right, even if it costs more initially. Remember you are looking to establish a quality culture and achieve longer term returns here.

The other long term tactic we will discuss today is achieving a highly productive and well-balanced team. First, understand that while you are implementing longer term team plans you should leverage some or all of the near term tactics for staffing that I identified in the October 31st post. The long term tactics are straightforward and are based on you attaining a staffing mix that is composed of a balanced mix of top performing individuals who, for your company, are in the right geography and at critical mass sites.

Some key truths that should be recognized and understood before setting out to build such a highly productive team:

– top performing engineers, typically paid similar as their mediocre peers are not 10% better but 2x to 10x better

– having primarily only senior engineers and not a good mix of interns, graduates, junior and mid and senior level engineers will result in stagnation and overpaid senior engineers doing low level work

– having a dozen small sites with little interaction is far less synergistic and productive than having a few strategic sites with critical mass

– relying on contractors to do most of the critical or transformational work is a huge penalty to retain or grow top engineers

– line and mid-level managers must be very good people managers, not great engineers, otherwise you are likely have difficulty retaining good talent

– engineers do not want to work in an expensive in-city location like the financial district of London (that is for investment bankers)

– enabling an environment where mistakes can be made, lessons learned, and quality and innovation and initiative are prized means you will get a staff that behaves performs like that.

With these truths in mind, set about building the team by addressing your workforce strategy (sites and mix); upgrading your recruiting and performance management; and revising your goals and rewards. Then execute these relentlessly while you up the training and coaching. As this begins to bear results you will then need to prune the poor performing managers and filter out the low performing staff.

So build a workforce strategy that matches the size and scale of your company. If your company is global, you will need a global workforce. If it is domestically focused, be domestic but look at near shore engineering locations as well. Establish the proper contractor staff mix based on function (again see the near term efficiencies staff post). Ensure your locations match up to where you can draw talent. For example, minimize expensive in-city locations. Choose instead locations with good commuting, very good nearby engineering universities and vibrant nearby communities. You will be rewarded with better quality engineers and lower attrition. Do you have 12 locations each with 50 to 150 engineers? Consider consolidating to 3 or 4 sites each with 300 to 500 engineers. And one or two should be global or near shore sites. And ensure you set it up so any significant IT function is done in two locations (thus eliminating the cost for BCM and establishing opportunities for work handoff between the sites yielding faster time to market). Establish strong intern and graduate programs with the universities near your key sites. If you are overweight with senior engineers, ensure that your new hires are graduates or junior engineers (even if by mandate). As you compose the plan, engage you senior business leaders to ensure you have support for the changes and potential synergies with other business sites or locations. Ensure they understand you will always locate client-facing personnel with the client, but IT ‘back and middle office’ staff will be where it is best to recruit and retain IT talent.

Make sure your recruiting practices are up to snuff. You should be doing a thorough filtering of technical talent while also ensuring that you are getting someone who can work well with others and has the same key values of quality, initiative and responsibility that you are seeking. Leverage team interview or top-grading practices as appropriate to ensure you weed out those that do not interact well (especially management recruits or team leads). Invariably, management in a IT organization can improve how they handle performance management. Because most of the managers are engineers, their ability to interact firmly with another person in a highly constructive manner is typically under-developed. Provide classes and interactive session on how to do coaching and provide feedback to employees. Even better, insist that performance reviews must be read and signed off by the manager’s manager before being given to improve the quality of the reviews. This a key element to focus on because the line manager’s interaction with an employee is the largest factor in undesired attrition and employee engagement.

Even if you execute your workforce mix and your recruiting and performance management flawlessly and you do not align your goals and rewards (and incentives) you will not get the change you desire. Quite simply, your smartest team members, will observe what you reward, and if you do not reinforce the values you are looking to achieve (productivity, quality, initiative, etc), you will not get the changes desired. So, gather your senior team. Work together to revise and update the vision and goals of your organization. Ensure they are big enough goals (e.g., Not ‘ Save $40M in costs’ instead ‘ Become top quartile in quality and efficiency in IT for our industry and company size by 201x’). And then line up quarterly awards that are very public that reward those who exemplify the values and results you are looking to achieve. The organization will then align their efforts much more keenly to your vision and goals.

Now that you have the foundation in place for long term results, execute and improve every quarter. You will need to begin pruning. And as you add new and better capability to your organization through improved recruiting techniques, you can afford to prune those marginal managers that you couldn’t lose before. This will provide another round of lift for your team productivity as they are replaced with better internal candidates who have grasped the new values and effort or better filtered external talent.

In the next post on long term tactics, we will talk about the metrics and benchmarking you will use to ensure you stay on track an enable you to identify additional and continual improvements. But you are on your way now.

What areas would you change? What pitfalls do you see or have you encountered? Post a comment and let me know. I look forward to your feedback.

Best, Jim

 

Delivering Efficiency and Cost Reductions: Industry Trends and Impacts

    Jim D

Over the past two weeks, I covered how you should deliver IT cost reductions in the near term. And if executed well, you will also yield some longer term benefits such as a better workforce balance or elimination of redundant or low value systems. But how do you deliver material improvements in cost and efficiency that are sustainable and material? First, you must put in place long term tactics that you will relentlessly pursue. I will cover these long term tactics over the next two weeks but first I thought it important to understand the impact of technology trends on IT and how they are affecting how you should tackle cost reduction in IT.

To quickly recap, the CIO must understand the IT business trends of the past several years where:

– Cost reduction and efficiency have become a prevalent drumbeat for almost any IT shop in the past 4 years

– Businesses are becoming more and more reliant on IT to deliver the services and enable the business operations

– Technology, almost without regard to industry, is becoming a larger and larger portion of the product

and thus, cost reduction must be done such that you improve capability to ensure the viability of your business. This is no mean feat.

But there are several technology trends in the past 5 years that enable you to possibly achieve cost reductions while increasing capability. These technology trends include the consumerization of technology, smart phones and mobility, and more automated workflow and application tools, and virtualization.

IT in the ’60s and even ’70s was originally the domain of government, universities and the defense and space industry. From the ’70s, it was truly a corporate domain until the ’90s with the widespread use of the PC and the adoption of the Internet. But even with the greatly increased personal use of computing, technology was still heavily driven by corporate computing. In the past 5 years though this has changed with the growing consumerization of technology. The best chips, the most scalable software, the largest databases and systems are now delivered for the consumer devices, not for corporate systems. So, it is important as a corporate technologist to recognize this trend and to always be looking to leverage the consumer devices and hardware and the approaches to building consumer systems and networks back into the corporate environment. Some good examples are the increasing implementation of bring your own device (BYOD) by large companies. Instead of IT dictating and maintaining a set of corporate client devices, the shift is to allow employees to use the device they prefer and enable corporate computing on their device through a secure sandbox application such as Good Technologies. And IT benefits from reduced cost and maintenance of these devices while employee productivity and satisfaction increase. Small to mid-sized companies can take advantage of cloud offerings of generic corporate services for email and functions such as sales management and HR. The key for large companies is to be able to shed your legacy equipment, systems and processes fast enough to take advantage of such offerings. I am familiar with one global corporate technology company which is currently trying to implement a client computing approach from 2002, complete with physical tokens (instead of software tokens on the employee cell phone), restricted and standard corporate hardware for mobile devices (instead of BYOD) and crippled capabilities (instead of implementing a sandbox and enabling the rest of the device). The result is a disgruntled workforce that thinks IT doesn’t get it and a more costly configuration.

And as far behind as some large companies are in implementing a consumerized and modern client infrastructure, their application areas are often further behind. And these applications have not taken advantage of the dramatically improved capabilities of workflow and application construction. Companies are overloaded with either legacy fully proprietary and custom systems that are often poorly architected and brittle or they have packages implementations that have been overly customized and are many versions back resulting in a massive backlog of feature improvement and update required. And all of this is expensive. To get to a better future with lower costs and greater speed and flexibility, the technology team must be willing to take this application portfolio and do four things:

– identify those core proprietary or customized legacy systems that are critical to the business and offer unique competitive capabilities and work with the business to make the investment to architect them properly and bring them into the modern era

– cull those over-customized package applications or legacy systems that do not provide competitive value and once and for all, stay on the straight and narrow path of a vanilla release of packaged or cloud-based software. And avoid wasting any further resources or time in these areas.

– leverage the advanced workflow and application building tools in a rapid development or scrum approach to go after areas of operations and the business that have been long neglected in terms of automation, workflow and technology. By applying these new tools, where before only very large functions could be automated or addressed by technology, now, functions and their processes as small as 5 or 10 staff can be easily defined and automated with a matter of 6 to 8 weeks. Thus generating a rapid improvement cycle for the business. With this much better and more timely ROI, you can set up small SWAT teams to tackle inefficiencies throughout the business divisions driving operational cost reduction and quality improvements that could have never been addressed with your previous techniques.

The final technology trend is of course, virtualization.  And with virtualization (and TCP-IP) the IT industry is coming is full circle with its roots back to the mainframe constructs of the 1960s. In essence, with virtualization and cloud computing, we are going back to the future, where computing is one utility pool and all end devices can access it. The difference is of course that we have a heterogenous pool with global accessibility versus a homogenous pool within one corporation or even just one department. By effectively employing virtualization (in fact mandating all applications must be virtualized on compute and storage), you can reduce your infrastructure server and storage costs by 30 to 50%. If you are one the few that has not yet begun virtualization, get on the bandwagon. And if you are still below a 50% virtualization threshold (e.g., less than 50% of your compute or storage capacity is virtualized or pooled), then get going.

In sum, the technology trends of the past 5 or 10 years will help you get to lower cost with increased capability. But our legacies, particularly at large corporations, hold us back from leveraging these technologies. This is where IT management leadership is required. You must accelerate the conversions, cull those systems that cannot make the leap and are not critical for the company. And most importantly, ensure your engineers and design leads adopt these approaches with vigor and energy.

My next posts will cover further the long term approach to reducing costs for IT. In particular we will focus on how to use improved quality to eliminate rework and cost for your team.

Best,

Jim

 

 

 

 

 

 

 

Delivering Efficiency and Cost Reductions: Long term approach

    Jim D

In the last 4 posts we have covered how you should deliver IT cost reductions in the near term. And if executed well, you will also yield some longer term benefits such as a better workforce balance or elimination of redundant or low value systems. But how do you deliver material improvements in cost and efficiency that are sustainable and material? First, you must put in place long term tactics that you will relentlessly pursue. To make a material difference here, you must be both consistent and persistent in your approach.

First, you lay the groundwork for sustainable improved cost through quality. Second, you must achieve a highly productive and well-balanced team in order to meet a world class cost profile. Third, you must have in place modern, consolidated infrastructure and well-architected core systems. And then finally, by leveraging a metrics-based, transparent framework with continuous process improvement you will achieve and then sustain the world class cost edge.

Cost reduction and efficiency have become a prevalent drumbeat for almost any IT shop in the past 4 years. I think it is important to recognize that just taking short term actions to achieve efficiencies for this quarter or this year are inadequate for today’s business environment. Because your business, regardless of the industry, is becoming more and more reliant on IT to deliver the services, enable the business operations. If you fall behind here because of cost-cutting, you are now impacting the viability of the business. Most importantly though, the technology, almost without regard to industry, is becoming a larger and larger portion of the product. Thus, if you do not build up better IT capability than you impact the future of your business. So, cost cutting must be done such that you build capability while reducing costs, no mean feat.

I think it is important to recognize that in many industries, the technology approach is now changed forever due to several key factors. The impact of consumerization of technology, mobility and smart phones, the growing scope of pseudo-automated workflow and application tools, and the economic upheaval of the past 3 years have changed dramatically how technology can should be applied. I will review these industry inputs and their impacts further tomorrow.

And then later in the week, I will map out the specifics for each of the four elements of achieving a sustainable and material cost advantage in IT over the long run.