Enterprise Initiatives

In part 1 of this series I asked the question, "Are you running IT like it's your business?" Then I highlighted five barriers for preventing IT leaders from being able to transform their IT shop into a well oiled, cost effective machine?

• Resistance to change
• Lack of resources (time, money, and human capital)
  
• Lack of tools
• Lack of metrics
• Lack of process

In part 3, I will focus on Lack of Tools.

If you owned your own construction company, would you equip your workers with hammers or nail guns? Many IT shops create budgets that focus mainly on business demands and infrastructure but forget about funding tools and initiatives that increase the staff's overall productivity.

Human labor makes up a large part of IT budgets. So why not invest in tools to allow your IT professionals to deploy faster, provide more visibility into operational efficiencies, provide better access to information, and automate administrative and repetitive tasks?

If you don't want IT to be viewed as a cost center, then look for ways to make your resources more efficient. There are vendors like Mercury, Rational, and many others that provide a suite of tools from project management, to development, to testing, to change management. These tools allow you to enter requirements, automatically generate test cases, and provide visibility into requirements traceability. These can be time consuming and error prone tasks without the use of tools. If you are a .Net shop, investing in MSDN, Visual Studio Team System, and the new Silverlight product provide tremendous productivity gains. If you are developing with Java, Ruby on Rails, or a variety of other open source technologies there are a ton of great development tools and they are free! But don't stop there. There are tools for configuration management, source control, defect tracking, modeling, and the list goes on and on. If you have home grown systems to perform these duties then you don't understand the term Total Cost of Ownership (TCO). Why build and maintain these types of applications when there are companies and open source communities that have massive amounts of resources and R&D efforts to continually improve these products while ensuring they meet standards and keep abreast of modern technologies? Although some of these tools can be expensive, nothing is more expensive then having IT professionals performing tasks that can be automated by these suite of tools. And let's not forget testing automation. If done right, regression testing can be fully automated and executed as part of your daily build process. How many times has development delivered a build to SQA only to have it fail simple regression tests? I have seen several days wasted as build after build is failed by SQA and returned to development. With automation, all builds should have already passed regression testing before even showing up on SQA's door step.

Investing in PPM (project portfolio management) and problem management tools gives IT professionals the ability to proactively manage projects and production support. By having visibility into the progress of projects and the health of production systems, IT can prevent issues from occurring or at least address the issues early before they become catastrophic.

Access to information is an extremely valuable tool. This is often known as Knowledge Management. Tools such as portals, collaboration, wikis, blogs, and knowledge bases, are great tools for sharing best practices, training materials, standards, and various other forms of documentation. Investing in quality search technologies can be a huge productivity enhancer. Here is an article that claims that employees performing ineffective searches and wasting time looking for information can cost companies up to 10% in salary expenses. Ten percent of your staff's salary can easily justify the costs of search technology. Some enterprise portals, like BEA's Aqualogic UI, are implementing many of the new Web 2.0 features like tagging and ranking which are an extremely effective way to present relative information to IT professionals.

And finally, how many times have you seen your development staff rapidly develop and test some new feature only to have it take days or weeks to labor through a whole host of manual processes and procedures in an effort to deploy the functionality. All of these processes should be automated through work flow, including the approvals and audit trail. The work flow provides visibility into the status of the request and can automatically deploy the features if designed correctly.

In summary, when looking at tools think about the TCO. The more effective your staff is, the lower the cost of deployment becomes. In addition, by increasing speed to market you also create more throughput. More throughput means more business value. One last note. If you are still scared of using open source for enterprise applications, there is no better place to test open source's value at low risk then with development tools.

In part 4 of this series I will discuss metrics. Stay tuned.

I spent the last two days in Weston, FL. attending various BPM and SOA related lectures. One session I enjoyed was George Paras's "Connecting the Dots: Establishing THE Enterprise Perspective". George is the editor-in-chief for the Architecture and Governance Magazine.

George reminded us that as architects we should think, act, and behave as business people. Everything we do as architects should be geared around value creation by affecting change in the name of product innovation, process transformation, technology transformation, and business transformation. In other words, we need to enable the business to be better, faster, more efficient, better informed, etc.

He then went on to point out that one of the reasons that it is so hard to create business value these days is because our technology and our business processes have become so complex. He showed us one slide that states, "Complexity INHIBITS Change....Complexity consequently INHIBITS Business Value". In my opinion, as we begin to model both our operational and technical architectures, we must make it a goal to minimize the complexity and subscribe to the KISS (Keep It Simple Stupid!) methodology.

The last golden nugget that I took away from George's presentation was about maintaining balance. George talked about how companies struggle to make progress towards establishing an enterprise architecture because the business demands so many tactical projects yielding only short term gains. The chief architect or architecture group must figure out how to get the company to start thinking strategically which yields long term gains. But be careful, you need to strike a balance between tactical and strategic. The business cannot stop while you go off for 6-12 months to create an enterprise architecture.

George's answer to the "Balancing Act" is the Managed Portfolio. The Managed Portfolio combines :

• Enterprise Strategy & Planning
• Project Portfolio Management
• Enterprise Architecture

The leaders of these three groups need to be in sync and must have shared goals geared around value creation.

During a break, I had a chance to speak to George (us Greeks need to stick together). I discussed my project and our approach to implement SOA only for the services required to support our BPM initiative, as opposed to creating a full blown SOA implementation. He agreed that we were on the right path which will make me sleep a little better tonight. I then handed him my last business card which was crumpled and stained with spaghetti sauce. Talk about great first impressions!

There were many other meaningful lectures at the show, but this was the best one to blog about.

A good buddy of mine forwarded me this article from eWeek by Deborah Perelman. The following quote from the article summarizes the content: “In the simplest terms: too many IT workplaces have become Dilbert-ized—micromanaged, bureaucratic and stifled creatively. It's become an environment where busy work is praised and morale is low.” The article talks about IT as a commodity with trends in outsourcing. Flextronics CEO, Michael Marks, goes one step further in this Businessweek Online article Design is a Commodity. He recommends outsourcing the engineering process for electronics.

How did we get here? In my opinion, IT has done this to itself through the years due to the following reasons:

1) Not working closely with the business

2) Inability to successfully manage projects

Let’s talk about the first point. In the 60’s and 70’s, the business was dependent on IT for information. There were no high powered PCs and the Internet was not for commercial use. Most of what IT worked on in the public sector was business enabling applications. During the 80’s and 90’s, huge advancements in processor speed, memory, and disk technology enabled personal computers to do the work of the massive mainframes from the previous decades. Then the internet came of age which changed the way people and businesses interact with one another. These two important technology advancements changed business for the better but not without consequences. The days of IT being in control with centralized and reliable systems gave way to the complex, distributed, and multi platform environments that we live in today. This in turn, directed a lot of IT’s attention towards infrastructure projects. In today’s world, a large portion of IT budgets go into projects and services that keep the lights on for the company (email, voice & telecommunications, security, compliance, etc.) and do not contribute to additional revenue. In addition, software vendors started delivering shrink wrapped solutions (ERP, CRM, Financial applications, etc.) that was not feasible for companies to build internally. I believe these factors have all contributed to the fact that many IT shops have become disconnected and/or out of touch or alignment with the business. IT has become perceived more as a cost center then an enabler. Employees have become known as what Catbert calls “Headcount”.

Point #2. The PMI Institute states that 72% of IT projects they studied were late, over budget, lacking functionality, or never delivered. Of the 28% “successful” projects, 45% were over budget and 68% took longer then planned. These numbers are frightening! Lack of project management best practices have caused many companies to lose faith in IT. Many business units have started buying their own software packages or paying outside vendors to solve their business problems. This is another reason why IT and the business have become unaligned.

When a company views IT as an expense and not as an enabler, the IT shop becomes a poster child for Dilbert cartoons. Companies tend to look for ways to reduce or eliminate expenses. Once you view your employees as “headcount”, the creativity, passion, and drive gets drained right out of you.

So is IT doomed? Many experts believe that in order for companies to stay competitive and survive in the upcoming years, IT needs to focus on business processes. In the article, The How, Why, and Where of Future I.T., Mark Gibb’s states that, “I.T. has to be able to show that it delivers a real return on investment.” To accomplish that, I believe that IT should start embracing:

1) Project management – to improve delivery and communication

2) Portfolio management – to maximize IT investments, align priorities w/business, and control workloads

3) Business process management – to optimize and automate business processes

4) Enterprise architecture – to align technology with corporate goals and strategies

5) Change management - to manage change and impacts on people and processes

6) Agile development – to deliver value early and often

What are your thoughts?

Many companies in the early phases of the project management maturity model rely totally on ROI (or sometimes gut feelings) to prioritize their projects. But does ROI tell the entire story? The ROI is just one piece of the business case that should be presented before a project gets approved as part of a company's portfolio. There are at least four categories of business drivers that should be considered:

1) Financial Analysis
2) Strategic Alignment
3) Tactical Importance
4) Risk Mitigation

When looking at the financial aspect of a project, key metrics like Net Present Value (NPV), ROI, Payback Period, Cost Avoidance, Cost Reduction, and Opportunity Costs should be considered. Things to consider in the Strategic Alignment category are business fit, customer retention or growth, revenue growth, new markets, customer satisfaction, or other important business drivers that come straight from the company's goals & objectives. Then there are the tactical drivers like improved performance or quality, longevity, competency enhancing, competitive impacts, improving time to market, or first to market to name a few. The fourth category is for business drivers that mitigate risks for business issues. Regulatory compliance (SOX, HIPAA, etc.), business continuity, disaster recovery, security, and patent protection are a few that come to mind.

Each company should have specific business drivers that fall into these four categories. All of these drivers should be evaluated in the business case that gets presented to the business owners of the portfolio. The business should tailor the specific drivers within each category to meet the overall company goals and objectives. Then weights should be assigned to each business driver.

Here is an example: Let's say that Strategic fit is a driver you wish to measure. You can apply a weight of 1 for low, 2 for medium, and 3 for high. For ROI or NPV, set some thresholds for low, medium, and high (low < $1M, Med < $10MM, High >=$10MM for a small company). After entering in all the weighted business drivers, sum up the total for each project and you get the Net Weighted Portfolio Value (NWPV).

If your company does not own robust portfolio tools, you can simply use Excel. To test this out, take what you think are the top 10 projects in your company and enter all of this data in the spreadsheet. Then sort by the NWPV and see how this compares to the original top 10. You might be surprised.

Keep in mind that the NWPV is for guidance purposes only. The CFO's pet project may still be #1 but at least you gave him visibility into the value of all of the projects in your portfolio. The intent is to put all projects on a level playing field so you can use more then the standard ROI or gut feel to prioritize your IT investments.

References
Kaplan, J. (2005). Strategic IT portfolio management: Governing enterprise transformation. PRTM,Inc.

Handler, R., & Maizlish, B (2005). IT portfolio management: Unlocking the business value of technology. John Wiley & Sons.