Transcript Managing Technology in a Dynamic Business Environment

An Agile Culture?
Niel Nickolaisen
COO, Deseret Book
[email protected]
Agenda
Introduction
Historical Environment
Today’s Environment and Results
The Model
Examples and Caveats
Introduction
Main Points:
We are in an environment of rapid change and increasing
business and technology complexity.
To be adaptive, we need to pick our battles and
simplify our methods.
The following approach is based on study and
trial and error (and it seems to work).
Historical Environment
In the good old days . . .
Customers had fairly stable expectations.
Technology did NOT drive change.
IT (if it existed) was entirely in the backroom (data
processing).
Technology was, at worst, vertically integrated.
Today’s Environment
Change happens quickly.
Increasing vertical and horizontal complexity.
Technology is now involved in many (most?) business
activities.
IT supports almost all known business processes.
Technology is (and it is worse) horizontally integrated.
Results
What worked yesterday no longer works.
What works today might not work tomorrow.
Between 75 - 90% of all IT projects are “challenged”.
Technology has undelivered (perhaps because it was
over-promised).
“IT Does Not Matter”
The high impact benefits are rarely achieved (we
“crash on the shores”).
The Reality of Value?
Expected
Benefits
Actual
ROI
Planned
ROI
Expected
Costs
Real
Benefits
Real
Costs
What Then Do We Do?
Do things differently in order to:
Create an adaptive culture (that can keep pace with
the dynamic marketplace).
Choose our battles (in order to simplify).
Define and use metrics aligned with value.
Align technology both strategically and tactically
with the business.
Properly allocate resources.
Methodology
Define and use a decision framework (for example, the
following model).
Filter existing and potential business processes and
initiatives through the framework.
Based on the filtering, prioritize initiatives and changes.
Allocate resources accordingly.
Use adaptive design and implementation methods to deliver
results.
Re-filter and re-prioritize frequently (to match the dynamics
of the marketplace and to resist the urge to complicate).
As An Aside
If it were only that easy!
A Possible Decision Framework
Purpose
Use a set of criteria to simplify, filter, and prioritize
decisions about business processes, technology,
resource allocation, et cetera.
The following “Nickolaisen” model seems to work
reasonably well.
The Model
High
Market
Differentiating
Low
Low
Mission Critical
High
General Approach
High
Partner
Focus and
Allocate
Resources
Market
Differentiating
Who Cares?
Achieve
Parity
Low
Low
Mission Critical
High
Example of Differentiating and Parity
As a publisher and retailer, Deseret Book’s differentiating
processes include product development and selection.
Our parity processes include the mechanics of product
development and acquisition (and a lot more).
In our case, WHAT is differentiating, HOW
(the mechanics) is parity.
This approach allows us to pick our battles, simplify plans,
and properly allocate resources.
Application / Infrastructure Model
IT
Management
Analysis
Tools
Tools
(Parity)
(Differentiating)
Applications
(Differentiating and Parity)
Infrastructure
(Parity)
What is the
organizational
analogy?
Applied to Applications
Supplier /
Fulfillment Interface
Supply /
Fulfillment
Chains
Customer
Interface
Transaction “Core”
(FIN, MFG, HR,
PR)
Goal is Parity?
What is the
organizational
analogy?
Customer
Goal is Differentiation
Goal is Parity
What This Means In Practice
What is the
organizational
analogy?
Supplier /
Fulfillment Interface
Supply /
Fulfillment
Chains
“Vanilla”
Customer
Interface
Transaction “Core”
Customer
“Vanilla”
Mostly “Vanilla”
Even Within Customer Interface
Example, E-commerce Channel
Registration / Log-in
Shopping Cart
Promotions
Ease of Business
Credit Card Processing
User Interface
E-mail
Result
Standard
Standard
Customize
Customize
Standard
Customize
Standard
80 – 90% of stack can be standard (and
simple)
All Together Now
Example: ERP Software Selection and Implementation
My belief: ERP is an “operating system” - we maximize the
benefits of the ERP if we select and implement the applications
as quickly and cleanly as possible.
Mapping business processes onto the model yields parity for ERPsupported processes.
Adopt business processes to best practices (example drop
shipping).
Associate a measurable value with each proposed
customization or complexity.
Ideally (although it has not been done), do a three-week
implementation.
Example – Application Development
Use a decision framework (I am biased towards the Nickolaisen
model) at a component level to align to and define strategic
purposes and goals.
Do not design to extremes in parity processes (what value
will this provide?)
Use adaptive development methods to achieve the tactical
results of the development project.
Example – Application Development
Document Management and Collaboration System
Initial Development Budget = $2M and 18 months.
Filtered desired functionality through the model with the
results:
Two differentiating components.
Twenty-seven parity components (re-use or license).
Reduced function points from over 7000 to 240.
Final Budget = $350K and 4 months
Building Strategic and Tactical Plans
Identify all known and desired business processes.
Define filtering criteria (differentiating and mission critical).
Segregate processes onto the quadrants. For processes that are
split, break into components.
Define current and desired process states.
Perform a weighted gap analysis (gaps between current and
desired states.
Identify and prioritize business initiatives (and associated IT
projects).
Example
Process
Process
Type
Evaluation Criteria
eCommerce shopping
cart
Parity
One click shopping
Track customer across
channels
Differentiating
/ Parity
Current
Score
Desired
Score
Difference
Weight
Score
3
3
0
0.5
0
Recall past
transactions
1
3
2
0.5
1
Price in advance of
check out
3
3
0
0.5
0
2
5
3
0.5
1.5
3
3
0
0.8
0
2
5
3
0.8
2.4
1
3
2
0.5
1
4
3
-1
0.3
-0.3
2
3
1
0.3
0.3
Identify customer at
transaction site
Common business
rules
Shop here, ship there
Purchasing
Parity
Three way match
Drop ship to sites
Consolidate site
purchases to
single order
Differentiating / Parity Criteria Guidelines
Customer facing processes are likely the only real candidates
for differentiation.
Analysis can be differentiating
Value-justify every complexity.
Treat exceptions like exceptions.
There may be significant work to achieve parity.
What This Requires
At macro and micro levels:
Value-based decision criteria
Consensus (or obedience) on what differentiates
On-going prioritization process
At a macro level:
Credibility and relationship of trust
among management peers
Caveats
This changes the culture of the organization.
Changing cultures involves changing behaviors. Changing
behaviors requires leadership (not management).
Changing behaviors is a pain, however, the ability to adapt
might be one of our most important characteristics.
What differentiates today can be parity tomorrow (i.e. fast pay).
Constantly evaluate and re-evaluate previous decisions
and priorities.
There are no complexity initiatives (they happen by themselves).
Think in terms of “future perfect” to define and design phases.
Summary
I am not sure we have a choice about developing
an adaptive organization.
To be adaptive, we need to have and rigorously use
a metrics-based method for filtering and prioritizing
at both the strategic and tactical levels.
This requires leadership and a methodology!
Summary
At the 2004 MIT CIO Summit, 88% of the participants rated
corporate agility as highly important. 72% said that IT was
an enabler of corporate agility.
The three fundamentals of effective change management are
Focus, Execution, and Leadership.
- Lou Gerstner