One of the main tenets of Buddhism is mindfulness – the ability to be totally aware of the moment. Adherents of all branches of Buddhism meditate daily to train their minds to have "clear comprehension" and see things objectively and impartially.
After 20 years of involvement in IT, I can safely say that mindfulness has not been an inherent trait of most IT organizations. Sadly, from many perspectives, it can be said that "mindlessness" has been a better description of IT.
Many costly strategic decisions have been made based totally on technology prejudices, zealous preferences or knee-jerk reactions, without analyzing the true business impact. Many companies have wasted a good deal of time, resources and money on the latest IT “project of the day”. Data warehouses sit idle with data that hasn't been updated in years. Expensive Asynchronous Transfer Mode campus networks have been implemented, only to be ripped out before they are fully depreciated and replaced with Gigabit Ethernet. Budget-breaking CRM systems have been implemented that are rarely used because of their complexity and high support costs.
Unfortunately, we haven't learned from these mistakes. Companies still make knee-jerk IT decisions without analyzing the overall finances, risks and business impact. With the current need for companies to focus on their returns on investment, it's even more crucial that IT decisions be made objectively and impartially.
Take virtual private networks (VPN) as an example. VPNs can generate substantial savings in many situations – especially in the areas of remote access, corporate office connectivity, Intranets and connectivity to lower-revenue generating locations; however they are not an across the board panacea for lower network costs. Being Internet-based, VPNs can't offer the same availability, redundancy and quality of service that dedicated connections provide. So while VPNs might be acceptable for small branch offices, they probably aren't the best choice for situations requiring mission-critical connectivity – yet many companies are doing wholesale replacement of their dedicated WAN links with lower-cost VPNs. Instead of being mindful of the business impact in terms of extended mean time to repair, degradation of network performance, lower user productivity and potential lost revenue, they are blinded by the lower cost and make a knee-jerk decision.
Along with avoiding knee-jerk cost-cutting decisions, IT personnel need to also guard against making zealous technology-based decisions. It's easy to be blinded by a technology's technical elegance. An open-source PC-based IP virtual call center solution with skills-based multi-location routing is very elegant. However its business value can be questionable if the skills needed to design, implement, support and manage the platform are not available. It may be easier, faster and more cost effective to utilize a third-party call center service – especially one that has proven skills in customer service.
LAMP-based Web architectures (Linux, Apache, My SQL, and PHP) are very elegant but may bring limited value if your developers are Microsoft-centric with experience in .NET, C+/C# , SQL Server and IIS.
IT departments need to be impartial in their analysis to understand where a technology will fit and where it won't. A technology's only value is in the need it will meet. If the need isn't there, the technology -- no matter how elegant -- has no value.
And to complicate matters, technology is rarely a question of “either/or”. More often than not, the most appropriate strategy is a hybrid mix of new technology and legacy infrastructure which requires even more objective and impartial analysis to insure optimal value.
IT managers need to be mindful of the all the benefits, risks, costs and business impacts of their decisions. IT planning needs to be objective and impartial to ensure the technology architecture is not the product of the latest vendor-driven fads, but rather is a cohesive, business-focused strategy that focuses on the overall goals of the business. Now excuse me as I go meditate.
Showing posts with label Strategy. Show all posts
Showing posts with label Strategy. Show all posts
Monday
Sunday
Do No Harm
Recently while reading a book by the Dalai Lama, I came across a passage that said the essence of his teachings is to help others if possible, and if that is not possible, at least do no harm. While Tibetan Buddhism and technology have little in common, this passage can also be considered the essence of good technology planning.
The goal of a business is to increase profitability. A profitable company creates jobs, purchases more equipment from vendors and adds overall value to the community. Any tool used by the business - whether it is in technology, manufacturing or office service - should enhance a company's revenue stream or at the least do no harm.
Technology is a valuable tool for enhancing the bottom line, but it also can affect the profit margin negatively. Good technology planning has to include a thorough financial and risk analysis to determine the true value of a technology, for often there is more than meets the eye.
A good example of this is Internet-based VPNs. Many companies are using VPNs as alternatives to costly dedicated circuits as in many cases, they can reduce network costs by 20% to 30%. At first glance, this would appear to meet the goal of enhancing a company's profitability. However, this is a case in which technology planners need to consider the risk.
Internet-based VPNs do reduce cost; however they often carry a lower service level from the vendor. Most Internet-based VPNs utilize DSL and most DSL providers have a minimum mean time to repair (MTTR) of 24 to 48 hours. Often this is only Monday through Friday which means an outage on Thursday afternoon might not be resolved until Tuesday - a five day disruption to the revenue stream that can more than eliminate any network cost savings. If the downtime happens during a company’s busy season, the result could be financially devastating. Granted the risk can be reduced by providing additional dial or ISDN backup, but then the overall cost of the solution might reduce the potential savings to a level that is not financially justifiable.
Internet-based VPNs can be the network of choice for locations that generate little or no revenue; however the risk to the revenue stream needs to be considered before migrating any revenue-generating location away from dedicated connectivity.
VPNs are not the only technology that needs to be analyzed in this manner. Any network, systems or application technology that has the potential to affect a company's revenue stream needs to be evaluated thoroughly to ensure it enhances profitability or at least does no harm.
The goal of a business is to increase profitability. A profitable company creates jobs, purchases more equipment from vendors and adds overall value to the community. Any tool used by the business - whether it is in technology, manufacturing or office service - should enhance a company's revenue stream or at the least do no harm.
Technology is a valuable tool for enhancing the bottom line, but it also can affect the profit margin negatively. Good technology planning has to include a thorough financial and risk analysis to determine the true value of a technology, for often there is more than meets the eye.
A good example of this is Internet-based VPNs. Many companies are using VPNs as alternatives to costly dedicated circuits as in many cases, they can reduce network costs by 20% to 30%. At first glance, this would appear to meet the goal of enhancing a company's profitability. However, this is a case in which technology planners need to consider the risk.
Internet-based VPNs do reduce cost; however they often carry a lower service level from the vendor. Most Internet-based VPNs utilize DSL and most DSL providers have a minimum mean time to repair (MTTR) of 24 to 48 hours. Often this is only Monday through Friday which means an outage on Thursday afternoon might not be resolved until Tuesday - a five day disruption to the revenue stream that can more than eliminate any network cost savings. If the downtime happens during a company’s busy season, the result could be financially devastating. Granted the risk can be reduced by providing additional dial or ISDN backup, but then the overall cost of the solution might reduce the potential savings to a level that is not financially justifiable.
Internet-based VPNs can be the network of choice for locations that generate little or no revenue; however the risk to the revenue stream needs to be considered before migrating any revenue-generating location away from dedicated connectivity.
VPNs are not the only technology that needs to be analyzed in this manner. Any network, systems or application technology that has the potential to affect a company's revenue stream needs to be evaluated thoroughly to ensure it enhances profitability or at least does no harm.
Monday
The Best Laid Plans Of Mice And Men
"The best laid plans of mice and men often go awry, and leave us nothing but grief and pain instead of promised joy." These words form the great poet Robert Burns' sum up the sentiments many managers have about projects that started strong but ended miserably.
IT has its share of best laid plans that go awry. From complex CRM implementations that come in grossly over-budget to resource-consuming data warehouses that lie dormant to costly vendor-touted technologies such as ATM that are quickly superseded by newer and faster products, IT often has an inordinate amount of highly visible projects that end miserably.
The issue is not that these technologies are overrated (with the possible exception of ATM); rather the problem is that the IT planning process is often anything but best laid.
In the late 1990s, there was a growing focus on strategic technology planning. Many organizations created in-house technology architecture groups that focused on integrating the application, system and network planning. These groups were tasked with ensuring that the networks being deployed facilitated the applications being developed, which in turn were analyzed to ensure the correct systems were being deployed. The entire process was business-driven, ensuring the overall IT architecture met business goals.
After the dot-com bubble burst in the early 2000s, companies downsized IT and many architecture groups were disbanded. The planning focus of many companies shifted to point solutions that met short-term operational needs - which in itself isn’t a bad strategy. Unfortunately, many IT managers associated point solutions with "no planning needed," so the IT planning process diminished drastically.
Now don’t get me wrong, IT organizations still make plans. Most IT departments have a strategic vision and develop detailed individual project plans. But what's missing is the crucial planning step that occurs between the strategic vision and the project implementation plans. This is the area I call the "IT blueprint." The strategic vision states where IT is going. The blueprints detail how IT gets there: what initiatives need to be implemented, when they need to be implemented, what resources will be needed, how much funding will be required and how the various projects fit together to reach the overall IT strategic goal.
This level of planning is critical to the successful implementation of new technologies. Take VoIP as an example. Many companies have VoIP as a strategic goal and most of these companies have specific project implementation plans for VoIP. However, without an overall IT blueprint that shows where VoIP fits into the overall tehnology architecture, what applications will utilize it, what business units will benefit from it, what vendors will be utilized, how it will interface with the data network, and what the overall financial implications are in terms of timing and deployment, VoIP may wind up being another best laid plan that ultimately goes awry.
An IT blueprint is similar to the blueprint of a house. An architect might have a wonderful concept and each subcontractor might have individual detailed plans for plumbing, electricity and carpentry, but without a blueprint showing how everything fits together, the house will never materialize.
An IT infrastructure built without proper planning - whether from mice or men - is doomed to become another plan gone awry.
IT has its share of best laid plans that go awry. From complex CRM implementations that come in grossly over-budget to resource-consuming data warehouses that lie dormant to costly vendor-touted technologies such as ATM that are quickly superseded by newer and faster products, IT often has an inordinate amount of highly visible projects that end miserably.
The issue is not that these technologies are overrated (with the possible exception of ATM); rather the problem is that the IT planning process is often anything but best laid.
In the late 1990s, there was a growing focus on strategic technology planning. Many organizations created in-house technology architecture groups that focused on integrating the application, system and network planning. These groups were tasked with ensuring that the networks being deployed facilitated the applications being developed, which in turn were analyzed to ensure the correct systems were being deployed. The entire process was business-driven, ensuring the overall IT architecture met business goals.
After the dot-com bubble burst in the early 2000s, companies downsized IT and many architecture groups were disbanded. The planning focus of many companies shifted to point solutions that met short-term operational needs - which in itself isn’t a bad strategy. Unfortunately, many IT managers associated point solutions with "no planning needed," so the IT planning process diminished drastically.
Now don’t get me wrong, IT organizations still make plans. Most IT departments have a strategic vision and develop detailed individual project plans. But what's missing is the crucial planning step that occurs between the strategic vision and the project implementation plans. This is the area I call the "IT blueprint." The strategic vision states where IT is going. The blueprints detail how IT gets there: what initiatives need to be implemented, when they need to be implemented, what resources will be needed, how much funding will be required and how the various projects fit together to reach the overall IT strategic goal.
This level of planning is critical to the successful implementation of new technologies. Take VoIP as an example. Many companies have VoIP as a strategic goal and most of these companies have specific project implementation plans for VoIP. However, without an overall IT blueprint that shows where VoIP fits into the overall tehnology architecture, what applications will utilize it, what business units will benefit from it, what vendors will be utilized, how it will interface with the data network, and what the overall financial implications are in terms of timing and deployment, VoIP may wind up being another best laid plan that ultimately goes awry.
An IT blueprint is similar to the blueprint of a house. An architect might have a wonderful concept and each subcontractor might have individual detailed plans for plumbing, electricity and carpentry, but without a blueprint showing how everything fits together, the house will never materialize.
An IT infrastructure built without proper planning - whether from mice or men - is doomed to become another plan gone awry.
Wednesday
Hearken To The Past
In the book The Life of Reason, the American philosopher George Santayana states that “those who cannot remember the past are condemned to repeat it.” Those of us who want IT to be viewed as something more than a “utility” need to hearken to these words, for many IT groups are on the verge of repeating the past and being condemned to the role of “commodity”.
In 2001 I wrote a column for Network World stating the strategic role of IT was in jeopardy because IT groups were not understanding the business uses of new technologies. Prior to this IT had started to gain a seat at the strategic table as companies implemented new technologies at a feverish pace. However, with the dot-com bust and the slowdown in new implementations, that role was at risk. In addition, IT departments weren’t helping matters by continuing to focus solely on how technologies worked and not understanding how companies could technology to increase profits, reduce costs, or gain competitive advantages.
In my column, I used the Web as an example. IT knew how the Web worked, but they failed to understand the strategic value the Web could bring. Instead of being viewed as the leaders in Web strategy, the IT groups were relegated to a support role with non-IT departments such as Marketing assuming the lead in defining Web strategy.
Fast forward seven years and the IT department in many companies is on the verge of making the same mistake with Web 2.0. Web 2.0 applications can provide a “richer” user experience which will create new ways for companies to use technology; yet how many people in IT really understand the business value of Web 2.0?
Most developers probably know how mash-ups, RSS, Wikis, and Blogs work; but how many IT departments are working to understand how these applications can bring value to the company? How many IT groups are actively leading the discussions with Sales, Marketing, HR, Training, and Legal on how these technologies can provide competitive advantage, reduce costs, or create operational efficiencies?
Now don’t get me wrong. I know there are IT groups out there taking the lead in Web 2.0. However, I also know that there are just as many – if not more – IT departments that are not involved in those conversations. As with Web 1.0, many of the Web 2.0 business strategies are being developed by non-IT departments. In many companies IT has already lost its seat at the strategic table and is viewed as a utility that “powers” the business strategy. The primary involvement of these departments in Web 2.0 is to provide the hardware, infrastructure and computing services to support the business strategies set by others.
Before I get a rash of comments, let me state that I agree wholeheartedly with the service/support component of IT. The provisioning and support of computing services is an integral part of any IT department and I am a proponent of ITIL, COBIT, and other disciplines that will enhance the service and support that IT provides.
But IT can be more than just a utility. As technologists, the IT group can and should be driving the adoption of new technologies and not just supporting them. CIOs and CTOs should have a seat in both the computer room and in the boardroom. And they can, if they remember the past and not repeat it.
(This is an update to a column I originally wrote for Network World. The original article is copyright 2008 by Network World, Inc., 118 Turnpike Road, Southboro, MA 01772. Reprinted from Network World.)
In 2001 I wrote a column for Network World stating the strategic role of IT was in jeopardy because IT groups were not understanding the business uses of new technologies. Prior to this IT had started to gain a seat at the strategic table as companies implemented new technologies at a feverish pace. However, with the dot-com bust and the slowdown in new implementations, that role was at risk. In addition, IT departments weren’t helping matters by continuing to focus solely on how technologies worked and not understanding how companies could technology to increase profits, reduce costs, or gain competitive advantages.
In my column, I used the Web as an example. IT knew how the Web worked, but they failed to understand the strategic value the Web could bring. Instead of being viewed as the leaders in Web strategy, the IT groups were relegated to a support role with non-IT departments such as Marketing assuming the lead in defining Web strategy.
Fast forward seven years and the IT department in many companies is on the verge of making the same mistake with Web 2.0. Web 2.0 applications can provide a “richer” user experience which will create new ways for companies to use technology; yet how many people in IT really understand the business value of Web 2.0?
Most developers probably know how mash-ups, RSS, Wikis, and Blogs work; but how many IT departments are working to understand how these applications can bring value to the company? How many IT groups are actively leading the discussions with Sales, Marketing, HR, Training, and Legal on how these technologies can provide competitive advantage, reduce costs, or create operational efficiencies?
Now don’t get me wrong. I know there are IT groups out there taking the lead in Web 2.0. However, I also know that there are just as many – if not more – IT departments that are not involved in those conversations. As with Web 1.0, many of the Web 2.0 business strategies are being developed by non-IT departments. In many companies IT has already lost its seat at the strategic table and is viewed as a utility that “powers” the business strategy. The primary involvement of these departments in Web 2.0 is to provide the hardware, infrastructure and computing services to support the business strategies set by others.
Before I get a rash of comments, let me state that I agree wholeheartedly with the service/support component of IT. The provisioning and support of computing services is an integral part of any IT department and I am a proponent of ITIL, COBIT, and other disciplines that will enhance the service and support that IT provides.
But IT can be more than just a utility. As technologists, the IT group can and should be driving the adoption of new technologies and not just supporting them. CIOs and CTOs should have a seat in both the computer room and in the boardroom. And they can, if they remember the past and not repeat it.
(This is an update to a column I originally wrote for Network World. The original article is copyright 2008 by Network World, Inc., 118 Turnpike Road, Southboro, MA 01772. Reprinted from Network World.)
Monday
Strategy: Red or Blue?
Does your company swim in the Red ocean or the Blue ocean? This is the intriguing question asked in “The Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne – professors at INSEAD, the worlds second largest business school located in France. In the “Blue Ocean Strategy”, Kim and Mauborgne develop an alternate view of business strategy that goes against the grain of the accepted notions of strategic planning.
At the risk of being over-simplistic, traditional business strategic planning - which is heavily influenced by the writings of Michael Porter – focuses on creating competitive advantage through either cost reduction strategies OR product differentiation strategies. This type of strategy, according to Kim and Mauborgne, puts a company in the Red ocean – the known marketplace. Red ocean companies aggressively compete against each other for a larger piece of the existing market. As more companies enter the Red ocean the potential for increased marketshare is reduced which creates increased competition and turns the water “bloody” or Red.
The Blue ocean, on the other hand, is wide open. There is no competition because the marketplace is not defined. Companies create consumer demand instead of fighting for it. Blue oceans are not new. As Kim and Mauborgne note, just think of the industries that exist today that did not exist thirty years ago: mutual funds, DVDs, cell phones, digital cameras, juice bars, express delivery, etc. Companies jumped into the Blue ocean and created the markets for these products that many of them now dominate. And they did it with an emphasis on BOTH product differentiation AND cost reduction.
Kim and Mauborgne cite Cirque du Soleil as an example. Cirque du Soleil re-defined the concept of “circus” to provide a new entertainment experience at a lower cost than a traditional circus. By doing this, they created a new marketplace that was totally unique with no competition – a Blue ocean. As the only swimmer in that ocean, the marketplace was theirs.
The Blue Ocean Strategy is a thought-provoking book for anyone involved with business strategy. I can’t think of many strategists who would deny that creating demand is a much better strategy that competing for limited marketshare. But the question I have is how realistic is this strategy for most companies? How many Blue oceans can there be? How often can you re-define an airline, computer, camera, shoe, radio, television, refrigerator, car, shirt, etc.? Granted there will be innovators, but can every company be an innovator?
Kim and Mauborgne themselves state that Red oceans and Blue oceans have always coexisted and always will. There will always be Red oceans. However, Kim and Mauborgne make the argument that the Blue ocean strategies in the past have been largely “unconscious” and by raising the awareness of the underlying logic of these strategies, companies will be able to create more Blue oceans.
The jury is still out on Blue Ocean Strategy. On one hand I see a lot of value in this type of thinking and on the other hand I question how much real value most companies can truly obtain though this type of strategy. Can you really formalize into a logical process the unconscious innovative thinking that creates Blue oceans? Or are these “Eureka” moments the result of creative intuition that defies logic?
At the risk of being over-simplistic, traditional business strategic planning - which is heavily influenced by the writings of Michael Porter – focuses on creating competitive advantage through either cost reduction strategies OR product differentiation strategies. This type of strategy, according to Kim and Mauborgne, puts a company in the Red ocean – the known marketplace. Red ocean companies aggressively compete against each other for a larger piece of the existing market. As more companies enter the Red ocean the potential for increased marketshare is reduced which creates increased competition and turns the water “bloody” or Red.
The Blue ocean, on the other hand, is wide open. There is no competition because the marketplace is not defined. Companies create consumer demand instead of fighting for it. Blue oceans are not new. As Kim and Mauborgne note, just think of the industries that exist today that did not exist thirty years ago: mutual funds, DVDs, cell phones, digital cameras, juice bars, express delivery, etc. Companies jumped into the Blue ocean and created the markets for these products that many of them now dominate. And they did it with an emphasis on BOTH product differentiation AND cost reduction.
Kim and Mauborgne cite Cirque du Soleil as an example. Cirque du Soleil re-defined the concept of “circus” to provide a new entertainment experience at a lower cost than a traditional circus. By doing this, they created a new marketplace that was totally unique with no competition – a Blue ocean. As the only swimmer in that ocean, the marketplace was theirs.
The Blue Ocean Strategy is a thought-provoking book for anyone involved with business strategy. I can’t think of many strategists who would deny that creating demand is a much better strategy that competing for limited marketshare. But the question I have is how realistic is this strategy for most companies? How many Blue oceans can there be? How often can you re-define an airline, computer, camera, shoe, radio, television, refrigerator, car, shirt, etc.? Granted there will be innovators, but can every company be an innovator?
Kim and Mauborgne themselves state that Red oceans and Blue oceans have always coexisted and always will. There will always be Red oceans. However, Kim and Mauborgne make the argument that the Blue ocean strategies in the past have been largely “unconscious” and by raising the awareness of the underlying logic of these strategies, companies will be able to create more Blue oceans.
The jury is still out on Blue Ocean Strategy. On one hand I see a lot of value in this type of thinking and on the other hand I question how much real value most companies can truly obtain though this type of strategy. Can you really formalize into a logical process the unconscious innovative thinking that creates Blue oceans? Or are these “Eureka” moments the result of creative intuition that defies logic?
Subscribe to:
Posts (Atom)