Concerning strategies for Global IT ...
Something that I have noticed over the years - as consultant in many companies - is that in spite of the fact all IT departments are really doing basically the same they all seem to function diffently. Some well work well, efficiently and are a joy to work with. Others seem to smell wrong the moment you walk in the door, like a mold infected damp house. Maybe it is just me - maybe you have witnessed this as well. I've been thinking about this for several years - trying to put together the signs, the patterns, the traits that characterize the difference been high performance IT and that which has gone definitely wrong. This section is based on my experiences and is peppered with examples from the realms of PLM - product lifecycle management, but I am sure many of the findings are universal.
Reference: Abbie Lundberg: The CIO's Dilemma - Efficiency or Innovation
Current Links / Reading ......
Susan Cramm: What Does the Future Hold for IT?Susan Cramm: How to Encourage Smarter Use of IT
The role of Enterprise (IT) Architecture ...
Architecture is essential in enterprise IT. Architecture brings structure and order. It enables many characteristics needed for corporate IT: secure, stable, performant, plannable, integrative, cost effective, efficient, scalable etc ... But as with software development it is essential to find the appropriate balance between agile and structured methodologies (see section on software development): the correct balance between structure and chaos; between rigidity and flexibility; between dogmatic fixed constraints and ability to rapidly respond to business needs. The balance is difficult to get right. It requires not only a deep understanding of the real needs ot the business - but also a complete mastering of the available software and infrastructure technologies and it is very rare that both are mastered by the same persons. And the balance becomes particularly critical when it comes to deployment of large commercial software packages (such as SAP, PLM systems, etc ...). Immediately we are confronted with the seemingly contradicting needs to ensure flexibility+low cost maintainable solutions through deploying out-of-the-box with minimal customizing with the needs to fit within a pre-given strategic corporate architecture. Who wins ? Do we change these packages to fit the required architecture ? Or adapt the architecture to fit the applications ? In reality IT architecture is rarely static and so painful as it might be, architecture must be continuously re-evaluated and refined to fit with obtaining the maximum benefit from the deployed strategic commercial software packages. And it remains essential to keep on considering SOA (inspite of possible set backs in past implementations), open standards for data exchange and open source as an enabling solutions (methodological + technological) for IT architecture. Solutions that can possibly help tame the apparent contradictory needs of structure and flexibility in the complex corporate environment.
Reference: Abbie Lundberg: The CIO's Dilemma - Efficiency or Innovation
The role of Solution Architecture ...
Designing and understanding solutions - from an end-to-end business process point of view - belongs together with IT architecture. The solution architect must understands not only the needs of the business users, but also the strengths and weaknesses of the commercial solutions available. No software package is ideal. Every deployment must be wisely assessed. The business costs and beneifits realistically weighed-up. Sometimes less is more - see below.
Radically simple IT, Grassroots IT, Pragmatic IT ...
Reference: Prof. Alfred Katzenbach, Leiter Engineering IT, Daimler AG, ProductLife 2010
The core message: IT must become simpler !
See Radically Simple IT, by David M. Upton and Bradley R. Staats, Harvard Business Review:
- Instead of building systems that are legacy from the day they are turned on, managers can and should develop systems that can be improved—rapidly and continuously—well after they’ve gone live.
- Develop your system over time, using these principles:
- Forge your business and IT strategies together--so your IT platform supports your strategic objectives.
- Strive for simplicity--so you can reuse elements of your system and save money.
- Invite users' input--so they'll quickly embrace the new system.
- ...
Reference: Abbie Lundberg: The CIO's Dilemma - Efficiency or Innovation
See also: The Business Application of the Decade: And the Winner Is...
Signs of dysfunctional IT ...
Why does IT work in some companies and not in others ? Why are some companies extremely efficient and maximizing the benefits of IT and others not ? We start off here with typical signs, symptoms of dysfunctional IT. This is not a comprehensive list - you probably have your favorites - let me know ! Borrowing from 5 Signs of a Dysfunctional Information Technology Environment and 7 Traits of a Dysfunctional IT Department ...
- Your Projects Don’t Move; incomplete projects declared finished
- Most of the IT budget is devoted to keeping software working
- You Have IT Lurking in the Shadows - shadow IT
- Corporate profits are flat or decreasing
- Widespread despondency
- Excessive bureaucracy; onset of IT Paralysis
- Pinching the pennies, spending the pounds - wasted IT - money thrown away in the wrong initiatives
I certainly do not envy the CIOs out there - it is definitely not an easy task in today's economic climate to get IT right; to determine and execute the best strategy: does IT really matter ? does IT improve productivity ? how much IT is right ? how to get the optimal benefits ? how much governance ? how much do we give in to business' wishes ? how to measure our performance ? how to motivate the staff ? how to get high performance IT ?
Does IT really matter ?
The basic theme of Nicholas G. Carr's book Does IT Matter is that IT is a commodity, it provides no strategic advantage, and there is no correlation between investment in IT and increase in productivity. In my view there is something not quite true with this thesis - it is missing something, it is too simplistic. I have been in engineering and manufacturing industries for over 30 years. I have experienced times before IT. Applied with consideration IT can ensure that we can harness the complexity inherent in the processes and data for the design, manufacture and supply chains of today's products. And in the process provide the mechanisms to ensure better product functionality, improved quality, lower costs and faster time-to-market. Done wrongly, IT can achieve the complete opposite. And done without, manufacturing industries would be thrown back to pre-historic times.
See the paper from MIT's Peter Weill and Sinan Aral IT Savvy Pays Off: How Top Performers Match IT Portfolios and Organizational Practices or the newer book from Peter Weill IT Savvy: What Top Executives Must Know to Go from Pain to Gain Also see Joe McKendrick's SOA blog at ZDNET Why IT can't seem to deliver measurable productivity. The bottom line is that there has never been an expectation that IT would be solely responsible for a company’s rise or fall. Adroit management, supported by the right IT tools, makes the difference. A company that smartly and innovatively leverages its IT in new and creative ways will move to the head of the pack. And, thanks to IT, you don’t need a workforce of thousands to do so. And we need to measure these changes in more holistic ways.
The Limits of IT, Limits of Automation, Less is more ...
Have you ever thought that perhaps we have reached the limits of IT ? The limits of complex enterprise applications that no one person can possibily understand. Of "business intelligence" and too much data (not information). The symptoms are easy to recognize - the continued use of MS-Excel - the rejection by business of the newly rolled out strategic application. It is not seldom that you observe young clever Phds, consultants from all the big companies - you know the ones - who develop ever complex applications to meet every eventuality - but not realizing that the chosen - the "end-users" - lack their skills - they fail to master it's genius complexity - they are frightened by it - frightened to enter data or to admit their ignorance and they don't touch it and continue to work around the system, keep their Excel sheets, or fudge the data, and wait a year or so before admiting defeat and then it is too late to save the business from the damage done. So remember your end-users, appreciate their needs, and keep it safe, simple - and they will love you ! See also the classic from Robert N. Britcher: The Limits of Software: People, Projects, and Perspectives.
The risks of failure in IT ...
As a sobering thought - see Worldwide cost of IT failure: $6.2 trillion. This comes as no surprise to me. See the original white paper The IT Complexity Crisis: Danger and Opportunity. A White Paper by Roger Sessions. ... independent estimates that 68% of IT projects fail yields a compelling and frightening story of IT failure as we approach the start of a new decade. See The CHAOS Report 2009 0n IT Project Failure. Perhaps IT project failure is not inevitable - but the risks are very high - and the more complex, ambitious, political or controversial the endeavour, then the higher the risk. There are many well publicised examples, and there are vastly more non-publicised failure projects. There is too much pressure on those responsible in management to provide success - that many failures are sugar-coated and sold as "green" in traffic light reports inspite of severe limitiations for the end-users, and falling far short of the promised vision, benefits and ROI.
Centralized vs. Local IT, Business should drive IT ...
This is an enternal question - balances must be met. The onset of shadow IT is definitely a sign that something is going wrong at HQ. The true needs of business have somehow been left at the wayside. You have not understood the key business processes and their needs for IT support.
Self-built or out-of-the-box ?
One size fits all ? Or custom built to meet our specific needs. This is an extremely tricky decision. The choice is often between:
- Low risk, low customization costs, easy upgrade path (hopefully) and
- Get exactly what business want (also hopefully), flexibility for the dynamic enterprise (business requirements are rarely static !)
IT is primarily a People thing ...
I am pretty sure that most agree that IT success is about people and not just technology /software. And that the success of IT - the difference between mediocracy and excellence - is determined by:
- availability of the necessary skills: understanding the business, the applications and the technologies; in fact it may be the people who have been in the company 30 years who may in fact know what IT is best for the business - they are the ones who may have been in business before and know what IT support makes best sense;
- ability to innovate: your IT department will be the people who innovate, who can sell to business, who can ensure success;
- an environment that ensures motivated staff: give them responsibility, do not remove descision taking from the lower levels;
Reference: Hartmut Ball, Heidelberger Druckmaschinen AG, ProductLife 2010
Lessons learned: Build up internal know-how !
Outsourcing: win-win or lose-lose ?
Outsourcing is an essential element of IT strategy. However, applied without careful consideration and risk analysis, outsourcing can also cause the downfall of any enterprise. See following articles from Susan Cramm at Harvard Business Review - The Satyam Truth: Outsourcers Don't Work For You and from Beth Bacheldor at CIO - Got Outsourcers? Get Deep and Broad IT Talent In-house, Too. .
It would appear that often the true short and long term costs of outsourcing are omitted from calculations. The loss of internal skills, the increasing dependencies on externals for mission critical applications. The negative effects on staff motivation and the dramatic loss in flexibility, innovation and speed of response from the IT organization are not to be under estimated. The jobs offered by the outsourcers themselves rarely attract the top people. Turnover - especially in offshore companies specializing in outsourcing - is often high - hence motivation to help is low resulting in sub-optimal service. Complete application outsourcing brings it's particular risks. Internal IT are more often in touch with business and their needs - and can respond rapidly to accomodate fast changing business scenarios. External IT will most often block. There is no contact with business - no motivation to help. A ticket culture prevails.
Article from Gartner's Mark Mcdonald IT is a global industry - Put the work in the right place, not just with the cheapest people - Global CIOs make decisions about where to locate the work. Surprisingly the best place is not always in the lowest cost country. In fact, recognizing the limits of international labor arbitrage seems to be one of the indicators of CIOs adopting a global rather than multi-location mindset.
Perhaps it is the time to honestly assess/benchmark the different models of outsourcing.
Efficiency: Bureaucracy, Control, Governance...
Much has been disguised, justified under the banner of governance, without really knowing what was orginally intended by this word.
Quoting the classic book by Peter Weill and Jeanne Ross:
IT governance: specifying the decision rights and accountablity framework to encourage desirable behavior in the use of IT
... Effective IT governance must address three questions:
See also the article in Harvard Business Review from Susan Cramm - How to Cut Through IT Bureaucracy And within every company, there is an IT department struggling with how to make business leaders love them while pushing the bitter pills of strategic alignment, value realization, integration, standardization, self-sufficiency, and risk management. Over the past 15 years, virtually every IT department has focused on aligning with their business partners, only to find that, in the process of marketing to a unit of one, costs have escalated and systems don't talk to one another. Staff functions and oversight committees make a hard job even harder. Think about it. You're on the front lines of the business, breaking your back making product, schmoozing customers, and booking sales. In the midst of another busy day, some bureaucrat lobs another email, reducing your authority over what you do and how you do it. ... Thus, IT investment boards, architectural review committees and risk management councils are formed to protect ourselves from ourselves. They are a necessary evil, but you can make your hard job a little easier if you know the rules and how to play the game.
And stangely enough there is almost always in each enterprise a bunch of dedicated professionals in a basement who holds the whole thing together - making it do what it is supposed to do and most likely with a stack of Perl scripts. Those who really understands what IT is about - who can tame the beast - make sure it runs - who knows how the bits fit together - how to keep them all happy and working. Then above and around them are layers of project managers, process architects, consultants, business partners, governance, CCBs, process diagrams, committees, meetings, workshops, specifications, blueprints, metrics, dashboards, reports - to ensure that what is required is done - even though by this time nothing can be done since the budget has long ago dried up. Symptoms of IT Paralysis.
What CIOs are saying ...
It is always interesting to find out the focus of different CIOs and try to correlate these to an IT strategy.
Airbus-CIO Guus Dekkers: Understand your key processes, technology is irrelevant ... Airbus-CIO Guus Dekkers: Kernprozesse verstehen - Technologie ist irrelevant. For a change, not sure if I 100% agree with Guus here. Understanding the core business processes is of course essential - but ignore or fail to understand technology and the limitations of purchased applications at your peril. I have seen enough large endeavors slide into obscurity not least through the fault of crummy or inept applications or technology. Performance, stability, usability and misleadingly sold functionality can even today trip you up.
VW-CIO Klaus-Hardy Mühleck: Concerning his five aims of SOA ... VW-CIO Mühleck über seine fünf Ziele mit SOA. Given that the hype of SOA is waning, it is interesting that VW is sticking with this strategy. Having worked for some time in Wolfsburg I have come to appreciate the German common sense engineering approach, with a defined strategy and long term planning. Even though Nicholas G. Carr may be correct and IT may be a commodity - there are certainly differences in how different companies in the same markets apply IT to reach their goals. There are, for example, marked differences in the IT strategies of the big three automotives: GM, Toyota and VW. However, I am not sure how much of a role their IT strategies have in influencing their respective product successes.
Daimler-CIO Michael Gorriz: Innovation is a primary task of IT ... CIO des Jahres 2009. I would agree here 100%. In the end I think that innovation drives high performance IT and high performance companies. That only in a climate that allows and encourages innovations - is it possible to ensure that we make optimal use of IT; get the best benefit from the resources we have.
Books / Blogs / References ...
- Nichals G. Carr: Does IT Matter ? Information Technology and the Corrosion of Competitive Advantage
- Peter Weill and Jeanne Ross: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results
- Susan Cramm: 8 Things We Hate About IT
- Erik Brynjolfsson, Saunders. Adam: Wired For Innovation: How Information Technology Is Reshaping the Economy