Thursday, May 17, 2007

Open Source: What Companies Are Deploying Now

Finding One
Linux Use is Rising
Of those using Linux, 67% commonly or ubiqutiously use it as a server operating system, but only 23% do as a desktop operating system.

Finding Two
Open Source Software is Becoming Entrenched in Small to Mid-size Businesses
Open source is not synonymous with Linux, and its use isn't limited to the Apache Web server and the Firefox browser. Many SMBs have deployed other kinds of open source software, including database systems, middleware and programming languages. This year, companies are spending, on average, more than half a million dollars to install and maintain open source systems, widening open source adoption to include virtualization software, wikis and business intelligence applications. But perhaps the most significant sign of the depth of open source adoption is that nearly half of SMBs have adopted a full-fledged open source architecture. Open source is not just a trend; it's a permanent presence.

Finding Three
Low Cost, Low Perceived Risk is Driving Open Source Adoption
For many SMBs, the opportunity for free or low-cost software is proving irresistable; very few say open source is proving to be a disappointment there. But the growth in open source would stall if the risks outweighed the gains. So it's important that the main concerns with open source aren't issues like quality, security, stability or legal challenges—problems over which CIOs have little control—but more manageable concerns like compatibility, user acceptance, vendor support and training. And since the experience with open source is proving so positive, vendor support is no longer as great an issue as it has been in previous years. There are no major obstacles to derail the Open Source Express.

Finding Four
Open Source is Redefining What it Means to Work in IT
Open source isn't just a kind of software, but a way of working. And developers and IT staff at small and mid-size companies are embracing that aspect of open source, too. Nearly all CIOs at SMBs allow their staff to participate in open source projects; many also follow the open source model to develop their own software. In general, however, SMBs don't collaborate with other companies in their industry to develop open source applications that might serve them all. That percentage will rise if larger, industry-leading corporations begin to do s0, and ask their partners and Tier 2 and Tier 3 suppliers to take part.

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Sunday, May 13, 2007

How to Market the PMO within your Organization

As I meet with people involved with their Company?s Project Management Office Organization, I consistently hear questions about how to acquire buy-in from within the Enterprise for the services provided by the PMO. The frequency of this question indicates to me that other PMO Leaders might be seeking this answer. In the content that follows, I will present an approach that you may find useful. My intent is to help you get started. I do welcome your feedback.

At the risk of sounding philosophical, I suggest to you that every business, profit and non-profit alike, are unique in how they approach project delivery. Sure they may follow standard methods and policies and sure they may have credentialed and talented project management professionals leading the important project initiatives. We need to focus first on why your business is a business in the first place. It is usually because the business model is unique and/or mature enough to maintain a competitive advantage within the market space your company sells and/or provides services too. Current market conditions have a way of changing, influencing, dictating projects and people within any business model. We all know that when the market conditions are great, project work and the people working them, seem to have less stress than the opposite market model where market conditions are so tight that new product and service revenue opportunities have become significantly less frequent ? this is where we are today.

So how does a Project Management Office or a Project Office market their services in today?s business market environment? I suggest the answer lies in internal customer need for any help they can obtain towards improving project delivery and reducing costs associated with delivery time or what I label as the ?PMO Throughput Model?.

A PMO or Project Office must fall into one of two categories in terms of defining its mission. The categories are the Throughput and Cost Models. The ?PMO Throughput Model? focuses on raising visibility to the project delivery community so that awareness for bottlenecks can be more readily foreseen while simultaneously searching for intra/inter project acceleration opportunities to move projects forward ahead of the project plan. By pursuing the ?PMO Throughput Model? the PMO or Project Office can focus attention on those projects worthy of their help for the benefit of all.

The ?PMO Cost Model? emphasizes compliance to project budget. Typically within this model, any cost correlation to external project dependencies should been planned for in the beginning or provided for within change management during the course of the project.

Thus, who are the customers for the PMO/Project Office? Everyone! The PMO/Project Office Management and Staff are generally recognized as the experts for various project management components within the organization. If you are a member of the PMO/Project Office, how are you marketing your particular service today? Is there a common need? If not, there should be. I suggest you start by creating a market channel for yourself. But how and with what, becomes the next question?

Customers of the PMO/Project Office typically include the following people

1. Project Managers
2. Project Team Members
3. Project Sponsors
4. Project Stakeholders
5. Business Unit Leaders
6. Program Managers
7. Project Support Staff (DBAs, Operations Personnel, etc)
8. Executive Team

In creating a market channel for PMO/Project Office services, my general guidance is to initially provide consistent tactical information regarding the most important project work that involves as much of the target work force that the PMO/Project Office supports.

This information may be a simple monthly project portfolio report of important reported projects that reflects their current health in terms of color, Green for good, Yellow for caution and Red for Jeopardy. By disclosing the state of projects on a regular basis, all of the customers of the PMO/Project Office will begin to use this tool as a way to navigate their work around delivery opportunities and/or delivery threats to their work. As the Project Portfolio is reported over time, visibility for project opportunities to take action becomes more apparent to the project team and those outside the project team. Project progress that is visible to the overall workforce brings about pressure that the PMO can channel their services to help project teams take advantage of or steer clear of, thus raising the need of the PMO/Project Office.

Now I know I am oversimplifying how to set up this initial step, but I am assuming many of you are doing this today or at least have an idea how to proceed with this step. Some projects will deliver ahead of plan and some will fail. In fact, the Standish Group has reported that 70% of all IT projects fail in any given year. So a PMO/Project Office that has been organized to facilitate project delivery (?PMO Throughput Model?) should have a natural internal market to support. Let?s look deeper into how to support and nurture the internal business PMO market.

Figure 1 below illustrates that in most business, there is a strategy to enable the organization or the enterprise. This strategy is usually bound by time such as a fiscal year. These business strategies are usually dependent upon the supply side of the business to achieve the identified strategies. The supply side of the organization forms project teams to work on service/product areas that are part of the business strategy. As you review Figure 1, moving from the top left and down to the bottom, back up through the right side of the diagram, a continuous loop of feedback information is presented to the strategy owners ? those from the business side of the organization and those from the supply side of the organization. This process is normally monthly in the beginning and is required to support the ?PMO Throughput Model? effectively. How does this affect the Project Manager?

If you are a Project Manager, I am confident you can relate to what I am about to state. Project Management is a lonely job. Friendships among project managers and their teammates are often outside the lines of specific work relationships. After all, aren?t you informally measuring each other and protecting yourself from unwanted criticism? Protecting your job and your reputation. Friends don?t worry about these types of things. They help each other. If you have ever been involved in the final implementation stages of project delivery, you know what I am talking about. Nobody is looking to make friends! Everyone working the project is trying to complete their work so they can get out of the way and relax a little. Sure, teams can seem like everyone is a friend, but just wait. If project plans go awry, you can bet everyone remaining in the project will receive some share of the blame. So where can a PMO/Project Office help? A PMO/Project Office can be the best friend of a project team.

This can be accomplished with experienced mentors that project teams trust and have faith in, free from fear of negative management reaction to job performance. In this manner, the PMO/Project Office gains value in the eyes of the project team as a resource that can help out in disparate times.

If you are a project sponsor on a failing project, you may feel like you are very exposed for criticism. Here again, a PMO/Project Office through effective Sponsor Mentoring and Training can provide excellent insight ahead of potential problems. After all, where does a Sponsor go when their project is in trouble if not the PMO/Project Office? A PMO/Project Office can add significant value by educating Project Sponsors how to be a Sponsor. This should include training on roles and responsibilities in their relationship with the project delivery team.

The same beliefs are true for Project Stakeholders as was for Project Sponsors. Enabling the Project Manager to set role and responsibility expectations for Project Stakeholders can help reduce significant expectation gaps later on in the project. A PMO/Project Office can head some of this by providing Stakeholder training as a base course in project management.

Finally, the PMO/Project Office is now ready to begin raising visibility among Project Managers. The benefit of this effort from the PMO to the Project Managers is many. It is certain the Project Manager community will learn what is acceptable in reporting. It will be very important to them if they and their peers are reviewed in a common setting where project health is openly shared. This visibility will often motivate the Project Manager who was seen as ?Red? last time the group met to work hard to change their status towards ?Green?. In Figure 2, a three-step process is illustrated as a model of raising project health visibility. In implementing this model, the PMO starts with a group of selected Project Managers working to clean up data inconsistencies in reporting and project artifacts that may affect the risk perspective of their projects (Step 1). Depending upon the size of the group, 10-25 Project Managers, a PMO can raise the visibility of the collected projects within the Portfolio for members of Management (Step 2). In Step 2, Management Leaders must be able to defend why projects are performing in the manner they are to their internal business customers. Usually, these internal business customers come together to form a Governance Board or a Steering Committee (Step 3) to oversee shifting business needs that may impact the order of project work and resource assignments within the portfolio of projects. As the PMO establishes the Governance Board, several ad hoc meetings may take place to help mature the Governance Board processes before a regular routine is established.

The Governance Board will make adjustments over the course of time. These adjustments represent impact to the development plans for the business year. These changes must be reflected in project work and that involves the PMO. Output from Step 3 loops back to the project teams and thus you have a continuous loop of feedback for the PMO to oversee.

In summary, let?s reflect on what has been stated. So far we have discussed to build a PMO market within your organization, you will need some combination (or all) of the following elements:

1. Utilize a PMO Throughput Model that reflects project delivery status to the general workforce as a means to raise Risk visibility (Opportunities and Threats to delivery).
2. Provide Project Management Mentors through the PMO to the Project. Community to help less experienced Project Teams.
3. Project Sponsor and Stakeholder Training.
4. Conduct regular Project Manager Meetings in groups of approximately 10-25 to discuss overall project statuses from recent project reportings to the Project Portfolio (color-coded for measured Project Health).
5. Establish a Governance Board or Steering Committee of internal business leaders.
6. Meet with individually with Business Unit Leaders to review how their portion of the Project Portfolio is proceeding. In these conferences, you will learn where the PMO might add additional value.

There are many other techniques that can help you with building and implementing your marketing plan for the PMO and its services. Every PMO/Project Office should always be able to answer the question ?How does the PMO or Project Office define its value proposition?? This answer will most often come from the results of how well your marketing plan is implemented. If you do this well, the PMO or Project Office will find its special niche within the organization forever.

[By Steve Rolins, PMP, Chief Project Strategist, EPM Solutions, Inc.]

Monday, April 23, 2007

10 Ways to Search Without Google

  1., where a real live "Guide" takes your query and returns related results tailor-made to your specifications. The service doesn't require any registration, and it's completely free.
  2. StumbleUpon gives you thumbs-up/thumbs-down icons in your toolbar and lets you rate pages and sites you come across. As StumbleUpon learns your preferences, it gets better at directing you to stuff you'll like. There's also a social aspect; you can add other people with similar interests to your friends list, and their preferences will further refine your search results.
  3. takes a different approach to search results. Whereas Google arranges your results in a simple list, Clusty first aggregates the results from several search engines (Google not included), then arranges them in clusters to help you further refine your search.
  4. is a topical search engine that is still very much a beta service. It conducts searches by category, and includes six for searching: Health, Video Games, Finance, Travel, US Politics, and Auto.
  5. Technorati is a blog search service includes plenty of ways to search for the hottest blog content, including a Top Searches list, a list of the most-linked-to blogs, and the music, movies, videos, and games that the most bloggers are linking to.
  6. Draze MetaSearch lets you collect search results quickly from the Big Three search engines: Google, MSN and Yahoo. The homepage is a typical Google-looking page, with a search bar. Once you enter your search term, you get the best results back from all the different search engines.
  7. Ms. Dewey is more of a sexy, playful search engine than a useful one. If you felt weird reading that, I felt even weirder typing it. Ms. Dewey is a personable (read: flirty) interface for Windows Live Search, which uses an actress's canned video responses and phrases to interact with users.
  8. The Search With Kevin search engine is a promotional site built by Prodege where users can win great prizes like an autographed K-Fed CD. Beat that, Google! It's a bizarre little search tool, and includes Web, Image, and News searches, with a shopping search on the way.
  9., short for "Roll Your Own Search Engine," lets users do just that. You can do general searches or category searches (like searching for "iPhone" in the Tech category) to get results from blogs and the Web at large, or create your own search engine (or "Searchroll") to only search specific sites.
  10. netTrekker's a good one for the kiddies. The search engine is aimed at schools and students, and every site that is included in a list of search results has been hand-picked by a staff of educators to ensure safe surfing. A search for "stars," for instance, will include lots of info about constellations and zero about Paris Hilton. The only problem: it ain't free. The service costs a cool $4.95 a month.

Thursday, April 19, 2007

The CIO's Role

It Pays to Be a CIO
Compensation is increasing at large and midsize companies. The Society for Information Management's warnings about an impending shortage of CIOs seems to be coming true. It's the most likely explanation for the 12.4 percent increase in base salaries and bonuses for top IT executives since last year. And with opportunities to boost their pay, many CIOs are looking for, and taking, new positions. That's causing tenure rates to dip—though most CIOs do remain on the job for more than five years. The CIO post, like any executive position, may be packed with pressure, but nearly all agree they enjoy their work. The excitement, challenges and financial rewards of the CIO position more than compensate for the pressures of the job.

CIOs Foresee Big Changes in Their Role
CIOs will be focusing more on strategy and innovation. Some previous surveys found that IT organizations are undergoing radical changes, and CIOs believe their role is changing, too. Setting strategy will become more important, and innovation—in the form of new technologies and new ways to exploit information— will also get more attention. It appears that more CIOs will step back from overseeing day-to-day operations, process improvement, data quality, projects, standards and architecture issues. Since these issues aren't going away, CIOs will need to delegate more responsibility for them to other IT executives. But will these technical and execution issues be adequately addressed if CIOs give them less attention?

CIOs Need A Balanced Definition of Success
While CIOs want to focus on strategy, their bosses need them to pay attention to IT operations. CIOs believe the personal attributes they need for success have changed—and indeed they have. Leadership and business understanding remain essential. However, CIOs today see strategic thinking as far more important than in 2003, while technical know-how and execution are much less critical. In contrast, consider how CIOs are evaluated: While their contribution to strategy is growing in importance, so too is the IT organization's overall performance, successful project completion, and interaction with business peers. CIOs may be emphasizing strategy at the expense of dayto- day performance; their CEOs, CFOs and COOs want them to focus on both.

Most CIOs Play a Limited Strategic Role
Less than half of CIOs now report to the CEO. Since today's CIOs believe they will focus more on business strategy, they recommend that aspiring CIOs gain experience in creating strategy and financial management and take P&L responsibility. However, opportunities to develop strategy may be hard to come by: Most CIOs continue to execute strategy rather than create it. Also, for the first time since 2003, fewer than half of CIOs report to the CEO—and CIOs who report to other executives are less likely to be involved in strategy creation. This is due to many factors, from a rising generation of tech-savvy executives to the weight being given to compliance and process improvement. CIOs may think they will play a more important role in strategy creation, but for most, the job is still focused on operations and strategy execution.

The CIO Background Remains Primarily Technical
But it's now leavened with business experience. Sixty-nine percent of CIOs come primarily from within IT, and have advanced by excelling as project managers or by serving as liaisons, consultants or business analysts. Half spent time as programmers or systems developers. The move to "hybrid" CIO with equal business/ IT experience has leveled off at about a quarter of top IT executives, while the idea of parachuting CIOs with little prior IT experience has been abandoned. CIOs want to move beyond their IT roots to a broader strategic position—but they need to ask whether they are really prepared to play the role to which they aspire.


Thursday, April 12, 2007

Which Type of CIO Are You?

An MIT Sloan School of Management researcher says CIOs fall under four categories: turnaround, operational, business leader and innovative. CIOs have played an especially important role at companies where core business processes are not rigidly defined by stepping in to help reengineer processes, says the researcher. Some CIOs even continue to have responsibility for processes — much like a COO — after they change them.

Turnaround Artrist
CIOs brought in to fix IT problems bring more to the table than basic IT management skills. They're turning things around, which requires more than a dollop of extra leadership and change management skills. So it should be no surprise that of our four archetypes, Turnaround CIOs are the most highly paid.

Operational Expert
Organizations that want more than that typically begin with an Operational CIO, who adds value with his project management expertise and his technology smarts, enabling him to deliver IT solutions faster than before (a.k.a. enterprise agility). These CIOs need to highlight their delivery skills -- and keep delivering -- to avoid being dismissed as utility CIOs. Indeed, this archetype faces the most challenges in terms of business alignment, access to resources and personal rewards.

Business Leader
This kind of CIOs are those who have good interpersonal skills and solid knowledge of business processes and may emphasize IT governance in the way they do their jobs and administer their departments. (They may hire Operational CIOs to do the heavy lifting.)

Innovative Agent
This kind CIOs have the ability to help envision and create new business products and services as though they were one of the business gang. Indeed, these CIOs may be experienced businesspeople enough to find themselves in companies where IT is as highly valued as any other competency, and thus the best and brightest are rotated through IT just as they might move through manufacturing and finance.

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Tuesday, April 10, 2007

Five key benefits of business process management

1. Innovation through analysis
The first key benefit of BPM is that it helps companies realize that allowing a business to innovate existing processes "on paper" (before committing implementation resources) and to project return on investment through simulation analysis are beneficial. Process modeling is the first step of nearly any BPM methodology, and a comprehensive BPM usually include a process-modeling tool that allows business analysts to document the current (as-is) process and specify new (to-be) processes in a structured way, and then project business metrics from those models using simulation analysis.

The analyst does not need to know the technical details of the implementation, just the business-oriented parameters such as who performs each step and what that resource costs, how long each step on average should take, the relative probabilities of taking one flow path versus the other, etc.

Modeling is an important first step because you don't want to simply "pave the cow paths" in your organization. Many companies have no idea what an entire end-to-end process looks like, or why things are done the way they are. In most cases, the processes in place today were put in place long ago, before the Web, virtual teams, BlackBerries, and outsourcing began to affect the workplace.

Modeling gives the business the opportunity to rethink and simplify before plunging into design.

2. Improved operational efficiency
One of the biggest business drivers of BPM today is improved operational efficiency -- shorter cycle times, lower costs, and the ability to handle additional work with no increase in staff. Much of this benefit derives from BPM's workflow automation component. The process engine routes allow users to take action directly from their Web-based workspace, managing task priorities and deadlines, and even automating escalation procedures when exceptions occur or deadlines cannot be met.

3. Compliance and control
Another key benefit of BPM is that it helps deliver improved control over business processes, fostering standardization across the company and compliance with regulations, policies, and best practices.

Today's global enterprises are far from homogeneous; new operating units are constantly being added through mergers and acquisitions, each with its own systems and procedures.

Each division or geographic unit may have its own procedures as well. Because BPM includes a common set of tools used by developers, IT, and business participants to manage business processes, it drives standardization of procedures, policies, and business metrics across the company and ensures there is always "one version of the truth."

Process models can be shared in a repository and reused across the company. Moreover, every step of a running process can be logged, which not only ensures compliance but makes that compliance easily auditable.

4. Agility
Agility is a fourth key benefit of BPM -- helping businesses bring new products and services to market more quickly and respond more easily to changing requirements.

The most common barrier to agility in the past has been the dreaded "IT backlog" -- finding available resources capable of integrating diverse business systems, building custom Web applications, or writing code.

BPM avoids the IT backlog because it does not rely on programming; its process logic is like a flowchart, enhanced here and there with scripting. Executable designs can be created quickly and changed easily. Integration adapters make connecting to diverse business systems simple, again without code. Reusable artifacts in the process component catalogue further enhance agility. With BPM, implementation cycles are typically measured in weeks, not months or years.

5. End-to-end performance visibility and optimization
A final key benefit of using BPM is that it makes end-to-end performance visible to process owners, and provides a built-in platform for problem escalation and remediation.

As processes run, the engine is continuously capturing snapshots of instance data and aggregating them in visible performance metrics, both built-in and user-defined. BPMS provides the ability to measure performance across organizational and system boundaries. It then provides tools that display these metrics graphically in management dashboards, often with drilldown to investigate the root causes of bottlenecks.

Another capability, business activity monitoring (BAM), computes KPIs in real time and monitors them using rules that trigger automated alerts or process actions when they move outside their target range. Process owners can respond instantly to events that affect the bottom line.


Understanding the concept of virtualization

A layman's definition
Virtualization, in layman's terms, is the ability to run multiple operating systems on one computer, whether that computer is a server or a PC.

A more accurate definition would be "virtualization allows you to make logical replicas of machines, software models of physical boxes." Imagine having the ability to run many virtual machines inside one box. The ability to move machines quickly around data centers and around networks because they now exist as [an] image [or] images. A lot of power and flexibility comes once you enter the virtual world.

Why would you want to do this?

Because for years there has been a proliferation of under-utilized boxes in a typical data center stemming back to the IT boom of the '90s.

In some sectors, we still think new applications require new hardware. The new enterprise finds that very, very objectionable. "Hey, why should I bring in a whole bunch of new boxes for a simple solution? When I know I have some hundred [servers] over there that are being used an average of 8 to 10 percent." Why not pool together all the under-utilized servers, virtualize them, and run all the applications my company needs using the infrastructure I already have in place?

Why are enterprises slow to catch on the virtualization bandwagon?

Sometimes it's just a matter of changing the mindset. Virtualization is, for some enterprises, a new platform, a new infrastructure on which they are going to run their services. As a platform technology, it's almost by definition, disruptive.

IDC reports that last year there were over 2 million servers running as virtual machines and this is compared to new box shipments of 7 million. Some analysts report that by 2009 there will be 7.7 million servers running as virtual machines which is about what we're shipping as new boxes today.

What is the right approach to virtualization -- tactical or strategic?

Both, for sure. Strategically, we're talking about 'virtual' infrastructure and that implies that it's going to be far reaching across your data center. But we also have many tactical opportunities and somewhat tactical customers in the early stage.

What I mean by that is it's very typical for an enterprise to bring us [VMware] in as part as of a targeted project, say [for example] a server consolidation project. To actually align with that strategy, we offer a range of solutions.

Solutions, I think, assume a tactical approach to things. A nice package, solution for virtualization, advantages for business continuity and disaster recovery. When you talk about automating and building in availability to virtual machine, we're talking about enterprise desktops running on servers as virtual machines to get the advantages of the data-center class management.

Because virtualization allows you to make machines with mouse clicks, it will grow and typically, that consolidation solution will become a containment practice where virtualization won't be used for a discreet project but will be used as an outgrowing practice.

What are the best practices for executing a virtualization strategy?

Typically, first is to identify the candidates for virtualization. We assess the current infrastructure to see how much of it lends itself to virtualization. We normally leverage a tool like Capacity Planner offered by VMware. It's a tool that actually reaches out across the network, discovers all the servers, takes an inventory of them [and] makes a consolidation recommendation. Once we know what to consolidate, we use migration tool, a converter tool that over a course of an hour takes an under-utilized box and converts it into a virtual machine.

Once a company has taken the virtualization route, it becomes the preferred platform, and all future server provisioning takes on the virtualization layer. What follows is the creation of a containment practice -- something like a virtual first policy.

What is the reaction of IT managers after performing a discovery process?

It varies. I've seen CIOs fall out of their seats at the level of under-utilization for some of these boxes. So yes, it is a great surprise for some. Also, the funny thing is, on a lot of these assessments, we're helping management find that they have 20 percent more boxes than they thought they had. So, it's not just a surprise on under-utilization frequently, but it's also very frequently a surprise of just how many servers they had that they didn't know about.

What are virtual appliances and what trends do you see in this area?

A virtual appliance is a virtual machine pre-configured and ready-to-run with the OS, the application; the entire machine built ready-to-run, built like a physical appliance. You stick them anywhere in the virtual infrastructure layer and they run as designed, simplifying the whole process of deploying the services. No more complicated, long, build cycles with a lot of low value, repetitive tasks. Companies leveraging these virtual appliances are really getting the most out of their virtual infrastructure.

We believe the virtual appliance will continue to grow drastically because we believe that the role of the operating system has changed. And the role of the operating system has changed simply by this great adoption of the virtual infrastructure.

If you have a secure machine you want to build, you'll develop that application, choose a secure OS and wrap it into a virtual appliance and have it ready to run by sticking it anywhere in the virtual infrastructure. You're building a high transaction server, you're going to pick a very streamlined OS, put the app and that streamlined OS together, in a virtual machine, pre-configured it and make it ready to run, wrap it in that virtual appliance and distribute it.

What is a third generation virtualization?

The third generation virtualization technology from VMware has built-in workload management, which means the virtual machines will automatically find capacity, if they need capacity. The virtual machines will automatically boot themselves up on a healthy box, if the box they are riding on goes down. All these tasks -- workload management, designing complicated clusters, etc. -- are very simplified in the latest generation of virtualization.

Virtual machines will automatically and intelligently place themselves on healthy capacity. It relieves IT management of the entire low end, repetitive, low-value tasks. And at the end of the day, that's what IT is all about.


Wednesday, March 28, 2007

The Top Five Technologies You Need to Know About in '07

Five Hot Technologies for 2007
1. Ruby on Rails
Faster, easier Web development
2. NAND drives
Bye-bye, HDD?
3. Ultra-Wideband
200x personal-area networking
4. Hosted hardware
Supercomputing for the masses
5. Advanced CPU architectures
Penryn, Fusion and more

Full stroy from

Wednesday, March 21, 2007

I.T. Outsourcing: Expect the Unexpected

Outsourcing, Offshoring, Insourcing on the Rise
Outsourcing and insourcing aren't mutually exclusive. Outsourcing is commonplace and growing: 81 percent of companies outsource at least one IT activity, and these organizations are devoting a larger share of their IT budgets to these services than they did in 2005. Much of that increase is in offshore outsourcing; for the first time, companies that use offshore and domestic outsourcers are spending more on offshore vendors than domestic ones. While outsourcing is on the rise, far more companies are insourcing, too—the opposite of what might be expected. Why are outsourcing and insourcing going up at the same time? Among the reasons: Most IT executives feel they are successful at outsourcing, so few bring all IT activities back in-house. Also, the most frequently outsourced IT activities—systems development and integration—tend to hire outside talent as projects scale up and cut back as they scale down. But there are other reasons, as later findings suggest.

Outsourcing Is Not a Money Saver
The exception: Offshore outsourcers help large companies cut costs. Most IT executives think outsourcing is overrated as a cost-cutting strategy. That's certainly true in regard to domestic outsourcing: It usually costs more to use a domestic outsourcer than it is to perform the same work in-house. Even offshore outsourcers fail to save money for their smaller clients much of the time. That means most large companies—and many small companies—are often disappointed when they aim to save money by outsourcing. When IT executives do consider their companies to be successful at outsourcing, it's usually because they are achieving other important benefits, such as freeing up management time.

IT Executives Like Outsourcing; It's the Outsourcers They Can't Stand
Hiring domestic outsourcers works out more often than using offshore firms. IT executives aren't jumping for joy, but most are satisfied with outsourcing the 11 IT activities we tracked. In fact, fewer respondents say they're dissatisfied than in last year's survey. That's consistent with the high outsourcing success rate we reported in the introduction, and undoubtedly is helping spur the growth of outsourcing. Yet domestic and offshore outsourcers, in general, get very mediocre grades for value and service. What's more, only 31 percent say offshore outsourcers do a better job than domestic firms. Our respondents consider offshore outsourcing vendors worse than domestic ones. Undoubtedly, poor performance is causing companies to insource work.

Mismanagement Causes Most Outsourcing Problems
Outsourcing vendors do a better job when IT executives know how to manage them. IT executives are dissatisfied with outsourcing vendors, but they concede the vendors aren't entirely at fault. The inability to effectively supervise vendors is the single biggest reason outsourcing fails. IT executives, especially at large companies, admit they must do a better job of managing and selecting vendors; close to half admit they lack effective management processes. At companies with management processes in place, satisfaction rates with outsourcing and vendors increase by as much as 26 percentage points. Educating managers on how to manage outsourcing is clearly a priority for IT executives.

Fear of Outsourcing Is Down, But Not Out
Outsourcing means layoffs at over a third of companies. Fewer respondents than in 2006 say their IT organizations are being disrupted by worries about job losses from outsourcing—even at larger companies. It would be great to give the credit to better management, but there's little evidence that companies have gotten better at managing outsourcing. If the level of job-loss jitters has dropped, it's probably because the U.S. economy remains strong. What is notable, however, is that fear does remain a problem at large companies, and with good reason: On average, big firms eliminated 127 jobs due to offshoring in 2006. Most top offshoring destinations—India, China, Eastern Europe and the Philippines—offer low IT wages, underscoring the fact that cost reduction is the main impetus for outsourcing.


Monday, March 19, 2007

The Seven Roles of Highly Effective CIOs

Key Role 1: Utility Provider

CIOs oversee building and sustaining robust, reliable and economical IT infra-structure services. As businesses expand globally, CIOs will direct the addition of key utility services such as helpdesk and the deployment of communication, collaboration and productivity tools.

Key Role 2: Information Steward

CIOs lead the development of an enterprise architecture that defins the business' information and data needs, estabilishment of enterprise-wide standards for information management and use, and compliance efforts with key regulatory and industry norms for integrity and privacy of information.

Key Role 3: Educator

CIOs rasie the awareness of their business peers about the strategic role and relevance of key informatio technologies and help them become more "savvy" in making strategic IT decisions. Savvy business exces appreciate how IT can be leveraged to drive business innovation and are willing to adopt IT-enabled business initiatives.

Key Role 4: Integrator

CIOs lead enterprise efforts to digitize and integrate processes, information and decision-support so that the firm effectively leverages enterprise information technologies such as customer resource management and business intelligence. In particular, CIOs oversee the implmentation of crucual program management offices and portfolio management systems.

Key Role 5: Relationship Architect

CIOs maintain relationships with top business leaders inside the enterprise and externally with key IT services providers. Both are critical for effective business technology management. CIOs employ formal mechanisms such as IT executive councils and business process steering teams, as well as informal mechanisms such as one-on-one relationships for nurturing collaboration. CIOs also drive the development of sourcing networks through vendor relationship management that is critical, not just in leveraging external partners for cost-effective IT applications development and services, but also in gaining access to new IT skills and knowledge.

Key Role 6: Strategist

CIOs activity serve as innovation catalysts and work with their business peers in discoving opportunities to leverage IT in innovative business models, customer relationships and the pursuit of agility.

Key Role 7: Leader

CIOs lead, design and govern the IT organization, ensuring that the IT organization has the right staff, works actively on developing human capital, and inspires IT professionals to contribute to the organization's mission and achieve their full potential.

Source: Society for Information Management

Tuesday, March 6, 2007

Major technology trends for a happy IT in 2007

Doing business is becoming increasingly more complex as companies need to cope with global competition, multiple jurisdictions, laws and compliance requirements such as Sarbanes-Oxley and Basel II, and the explosion of data.

Information technology (IT) is also becoming increasingly complex as larger applications and operating systems looms, along with more complex networks, including wireless connections causing security concerns created by the challenge of more users in a variety of locations, including mobile access on the road.

A solid IT foundation can help industry CXOs refocus on their core business objectives and become more flexible to ultimately enable growth and manage industry fluctuations. As CXOs begin to create 2007 plans, they would do well to consider the following major technology trends for a happy IT in 2007.

Maturing mobility. In Japan and Korea, where 3G has been established for quite some time, the current devices and applications of mobility are reaching a plateau until the next generation of communications, battery life and human interface technologies emerge.

In Hong Kong and Singapore, where 3G is just beginning to enjoy take-up, businesses can look forward to further advances in these applications, while in China, where 2G is the norm and WiFi hot spots are scarce, the enormous market means that the market for mobile devices is exploding. For example, adding 5.5 million cellphone subscribers per month requires applications to support millions of new users as well as network and infrastructure upgrade.

Expanding edge. In Japan and Korea, the Edge, or the farthest point of IT with application, will continue to extend modestly in terms of devices, and in Hong Kong, Singapore and Taiwan, the expansion will be more aggressive, while in China, the advance will be dramatic. Increased wireless Internet access and 3G take-up will be the key drivers.

Across the region, the volume of IT will expand rapidly. This year, companies will begin understanding the value of context in addition to content, as seen in the quick and widespread adoption of Internet advertising to cellphone and PDA form factors as well as in user-generated content, and, in parallel, personal electronic devices will progress significantly in use and application.

Shift from monolithic to granular applications. This shift is orchestrated by automated business processes and will begin with enterprise applications and expand as part of the shift to Service Oriented Architecture as demand for more customized applications and the market for goods and services moves towards customer empowerment.

Firms in Japan, Korea, Hong Kong, and Singapore are leading the way in this area, as both the existing IT infrastructure and widespread Internet access have already conditioned businesses and customers to change both goods and services purchase habits.

Security and privacy. More sophisticated and subtle attacks on security will continue, and prevention and remediation techniques will mimic the defense mechanisms of the human body. A global study by IDC ranked human factors as the three most important elements in information security. People and their lack of adherence to procedures will remain the dominant security and privacy risk. In APAC, IDC rated wireless security solutions as the top security technology, with forensics, storage security and business continuity and disaster recovery solutions among the top five.

Infrastructure goes virtual. Smaller and mid-sized companies, the predominant business model in Asia, will begin to adopt the rudimentary idea of cloud computing where data services and architecture are on a server and you can access the "cloud" by a PC, Blackberry, or mobile phone. On the other hand, large companies will continue to struggle to understand the how, what, when and why of utility computing, where customers are billed for the actual use of resources.

Decision automation improves. Simulation capabilities will move from engineering to business usage and will drive better decision-making. Advanced companies will begin using multi-chorus chips to build cause-and-effect models to make decisions. Japan, Hong Kong and Singapore are likely to see the earliest deployments to speed up decision-making with customers.

Shift of IT spend from maintenance to development. Application rationalization and modernization, through refactoring business rules, extracting business processes and applying them to advanced capabilities, will cause this shift. System governance requirements will force management to become more aware of the risk associated with old, unsupportable code and demand action. It is likely this shift will initially take place in the more advanced economies in the region.

Personalized services will increase service quality. With concern of identity theft on the rise in the region concurrent with the proliferation of broadband and 3G, anonomyzed personal information will become increasingly available to protect privacy. However, there will be a continued acceptance of trading some degree of privacy for service, price and convenience.

Fast-paced change is the hallmark of modern life and modern business, as globalization forces people and companies all around the world to interact and conduct transactions. To manage life and business in a globalized environment, complexity in IT is something that not only is necessary, but should be embraced. The trend towards complexity in IT enables savvy executives to combine interwoven components into a synergy more than a sum of the parts, empowering them to lead their organizations ahead of changes.


Wednesday, February 28, 2007

Innovation: 10 Cases Where I.T. Raised The Bar

Senior managers are pressing technology leaders to offer new services and grow revenue. What should CIOs do? Here are 10 cases where I.T. raised organizational effectiveness.

How can chief information officers best serve business these days? Many will need to switch priorities, trading an emphasis on cost cutting to focusing instead on making their business become more competitive and grow, according to a study, "Creating Enterprise Leverage: The 2007 CIO Agenda" released this month by IT advisors Gartner Inc. of Stamford, Conn. "CIOs cannot rely on traditional actions—such as improving operational efficiency, reducing I.T. costs and automation that lead to commodization—to meet executive expectations," says Mark McDonald, group vice president and head of research for Gartner's Executive Programs.

In fact, many companies try to do both. By more efficiently delivering and maintaining standard services—such as desktops, networks and back-office software applications—those companies can use those savings to fund new initiatives such as business intelligence, analytics and data warehousing, says Eric Dorr, senior business adviser of the Hackett Group, an Atlanta consultancy.

Some CIOs may not be up to the challenge. Nearly one-quarter of 257 technology managers responding to a CIO Insight survey last year said they were early adopters of technology—one sign that they are likely to embrace innovation. Half said they were mainstream adopters and the remaining quarter were late adopters.

What are companies doing to promote innovation? Learn from these following examples:

Inside eBay's Innovation Machine
eBay retooled its technology platform to scale for rapid growth. Why? It now hopes a thriving community of outside developers will use that platform to keep the company growing into its second decade.

Virtualization: PG&E's Power Play
PG&E helps its customers cut costs in their data centers. But the utility also practices what it preaches, through virtualization software and a review of its energy policies—showing how innovation can help the bottom line.

Amazon at Your Service
The hosting business may never be the same. The online retailer is opening up its technology platform to become a provider of storage, computing and other services.

Boston Red Sox: Backstop Your Business
To help win a history-making World Series title in 2004, the Boston team's owners hired some of the best analytical minds in the business and invested in sophisticated scouting software, computerized video analysis and business intelligence tools for mining the stacks of statistics at their disposal.

SOA: TD Banknorth Is Banking on It
Service-oriented architecture has helped financial firms such as TD Banknorth neutralize integration headaches and make their legacy applications more responsive to customer needs.

Digital Supply Chain: Warner Bros.' Next Big Release
The entertainment industry is rushing to replace an outdated film production and distribution system with a nimble digital supply chain.

Information Sharing: LAPD Starts to Connect the Dots
Can federal, state, county and local authorities effectively collect and share information? An initiative launched in the wake of 9/11 aims to break old habits and better protect the homeland. Digital Networking: Hannaford Bros. is a Cut Above
Retailers including the $3.4 billion supermarket chain are using consolidated, faster data networks to make key business decisions-such as how much ribeye to put out on a Wednesday. Customer Self-Service: US Airways Eliminates Customer Drag
The struggling airline business sees the merger of US Airways and America West-fueled by enhanced customer-service technology-as a strategy for revenue growth. I.T. and Business Alignment: ExxonMobil's Well-Oiled Machine
Exxon looks to homegrown applications to gain a competitive advantage in oil exploration.


Wednesday, February 7, 2007

Apple sets design standard

By Jessie Scanlon
source: BusinessWeek

It's the question every designer has heard too many times to count: "Can you make me the iPod of (insert product name here)?"

And it's not just makers of consumer electronics who ask. "I've been asked to make the iPod of boiler parts," says Paul Bennett, creative director of Ideo.

"Apple is definitely setting the standard for product design today," says John Edson, president of Lunar Design. "We're being asked to create wonderful products, you know, like the iPod. It's still rare, though, that an organization has the force of will to make a product like this happen."

Apple has long been noted for its design prowess, scooping awards and generating buzz with each new product unveiling. Still, not long ago executives at other companies would glance at Apple's sliver share of the PC market and get back to the business of producing widgets better, faster, and more cheaply. The Apple lesson seemed to be: A few people will pay a premium for good design, but it's not a smart business strategy.

Now that Apple's share in PCs is increasing -- helped along by the unprecedented success of its music player -- business leaders across industries are taking note. After all, you can't argue with 90 million units.

Choosing your lessons
Apple's new position as a successful business-case study has had a ripple effect in the world of design, from product and service design to development and branding strategy. Unfortunately, not all companies are taking away the right lessons.

Some have simply tried to channel Apple's minimalist aesthetic, churning out shiny, white products without grasping anything deeper than the iPod's plastic skin. When PC makers E-Machines, Daewoo, and Future Power each began selling computers uncannily similar to the original iMac, Apple sued. More recently, myriad products seem to have been "inspired," by the iPod.

Take the Sonos Digital Music System, with its muted color, minimalist lines, slightly rounded corners, and scroll wheel. "It's a literal copy of the iPod visual language," says Lunar's Edson.

Last year, Apple sued the Korean company iOPS for copying the design of the iPod. And countless other manufacturers -- many in Asia -- have introduced similar players. Not only do these imitators sometimes end up in court but it's not a strategy likely to generate revenues. Apple's success doesn't stem from the style alone.

The king's court
Other companies, seeing the size and financial strength of Apple's markets, have sought to ride on Apple's coattails by creating products that populate the iPod's now $1-billion ecosystem. "Call them the synergists," says Dave Laituri, director of product development at Brookstone. "These companies create original products that represent their brands but also acknowledge Apple's design influence and status."

Brookstone falls into this category, as do Belkin, JBL, and Bose. For these companies, strong iPod sales can bring a nice boost to short-term revenues.

Of the many companies that have tried to emulate Apple's success, few have succeeded. That said, some companies seem to have grasped the deeper lessons to be learned -- that design can't happen in a silo, that designers should have a voice at the corporate level -- and are trying to implement them.

"Certainly its success has drawn attention to the power of design," says Edson. "I suspect that the success of the iPod helped liberate the management team at Motorola in their new emphasis on appearance and design manifest in the RAZR."

Designed for excitement
"Motorola realized that the consumer is more design savvy now," says Ideo's Bennett. "Even at the mass level, people want better design. Products like the Razr or LG's Chocolate reflect other manufacturers' understanding of that."

Like Motorola, BMW was traditionally an engineering-driven company that eventually learned the power design has to create intense consumer excitement and drive sales. Like the iPod, the BMW MINI has an almost cult following.

"Senior management at places like BMW and even Hewlett-Packard (HPQ) has seen the potential in what Apple has done with design in their companies and have 'freed up' their design teams to take bolder design positions," observes Brookstone's Laituri.

Along with this openness to bolder product designs comes, at least sometimes, a recognition that designers have something to add at the strategy level. "We're being asked more and more to apply creativity to holistic business problems," says Edson. "What should we make next? How can this technology make a difference to people? How should we bundle it in a service ecosystem for the best results? How can we apply design cohesively to create consumer loyalty?"

Usability vs power
Some companies have been influenced by Apple's obsessive focus on the customer and on making its products easy to use. Nintendo seems to have taken this lesson to heart in the development of the Wii console and the DS mobile game player.

In a review of the Wii console, New York Times tech columnist David Pogue wrote: "The Wii is not for 'gamers.' Anybody, even 78-year-old lawyers who've never touched a video game, can immediately get into these games."

Like the iPod, the Wii and the DS have less tech firepower than some of their competitors. But most consumers don't care about technology per se, they care about what they can do with it, and that usability is as important as processing power.

With the Xbox 360, Microsoft -- which has famously been "inspired" by Apple innovations over the decades -- seems to have grasped the lesson that the success of the iPod has less to do with the design of the product itself than with the array of products and services -- the iMac, iTunes software, the iTunes store -- that allowed consumers to buy and manage a digital music collection easily. Witness the creation of the Xbox Live site for the gaming community, and the Xbox Live Arcade, where players can buy downloadable games, to fill out the Xbox ecosystem.

Call for help
One of the secrets of Apple's success is its obsession with the small stuff -- cords and ear buds, for example. Every component is held to the same exacting design standards.

Similarly, LaCie has made its name by bringing sophisticated design to USB ports and hard drives, a product category typified by uninspired black bricks. To its credit, LaCie recognized the value of design far earlier than most, hiring its first outside designer in 1992.

"We were doing a lot of work in the Apple aftermarket," says founder Philippe Spruch. "I put all of our brick-like products in a box with a note that read: 'This is the kind of shit we are doing. Can you help us?' We sent it by messenger to Philippe Starck's office, and he called within an hour." Since then the company has introduced drives designed by Neil Poulton, FA Porsche, Karim Rashid, and Ora Ito, and scooped up numerous design awards.

But Spruch is quick to point out just how hard it is for any old company to achieve Apple's design success. "It's not that Apple design is better or worse than the design of the Sony Vaio. But you feel that it's part of the DNA. They are crazy about every detail, and you feel that. Today, many more companies invest in design, but they do it because they are forced to, not because they like it, and I think you can feel that in their products."

Lunar's Edson, too, notes how great the challenge is. "What Apple demonstrates to me is that if we're not working with very senior levels of management, our impact will be limited," he says. "In 1998, a year ahead of the introduction of the first translucent iMac, we created translucent design concepts for SGI's (SGI) computers. Despite SGI's taste for forward-looking design, translucence was too pushy for them. It was a management choice to not go to that extreme."

Famed co-founder Steve Jobs, he says, is arguably a "chief design officer. He's in the design studio on a daily basis and provides the organization with the force of will to make products that great."

About the author
Scanlon is Innovation & Design editor for

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Monday, February 5, 2007

For every new feature you need to ...

  1. Say "No"
  2. Force the feature to prove its value, let requester think more than twice
  3. If "No" again; everybody happy, end here. If "Yes", continue...
  4. Sketch screen(s)/UI prototype and get "approval"
  5. High level design... detailed design...
  6. Code it
  7. Test
  8. Tweak
  9. Loop back to 7 until test passed
  10. Check to see if help text needs to be modfied
  11. Update product demo/tour (if necessary)
  12. Update marketing materials (if necessary)
  13. Update TOS (if necessary)
  14. Check to see if any promises were broken
  15. Check to see of pricing structure is affected
  16. Launch as beta
  17. Hold breath and sit back

[adopted from 37signals' thinking]

Friday, February 2, 2007

Eight rules to brilliant brainstorming

Andrew Hargadon's How Breakthroughs Happen shows that creativity occurs when people find ways to build on existing ideas. The power of group brainstorming comes from creating a safe place where people with different ideas can share, blend, and expand their diverse knowledge. If your goal is just to collect the creative ideas that are out there, group brainstorms are a waste of time. You may as well stick to a Web-based system for collecting ideas. Even an old-fashioned employee suggestion box is good enough for this limited task.

Groups bring out the best and the worst in people. If people believe they will be teased, paid less, demoted, fired, or otherwise humiliated, group brainstorming is a bad idea. If your company fires 10% of its employees every year, people might be too afraid of saying something dumb to brainstorm effectively.

Alex F. Osborn's 1950s classic, Applied Imagination, which popularized brainstorming, gave sound advice: Creativity comes from a blend of individual and collective ``ideation.'' This means building in time for people to think and learn about the topic before the group brainstorm, as well as time to reflect about what happened after the meetings. When I studied the IDEO team as they developed a new hair-cutting device, engineer Roby Stancel told me that he prepared for the session by going to a local hardware store to look at all kinds of cutting machines -- lawn mowers, hedge clippers, and weed whackers -- to inspire him before the group session.

Brainstorming is just one of many techniques that make a company creative. It is of little value if it's not combined with observing consumers, talking to experts, or building prototype products and experiences that provide an outlet for the ideas generated. I've worked with "creative'' companies that are great at coming up with ideas, but never implement them. I once studied a team that spent a year brainstorming and arguing about a simple product without producing a single prototype, even though a good engineer could have built one in an hour. The project was finally killed when a competitor came out with a similar product.

Not everyone can walk into a room and lead a productive brainstorming session. It is not a job for amateurs. In all the places I've seen brainstorming used effectively -- Hewlett-Packard (HPQ ), SAP's (SAP ) Design Services Team, the Hasso Plattner Institute of Design at Stanford University, the Institute for the Future, frog design, and IDEO -- brainstorming is treated as a skill that takes months or years to master. Facilitating a session is a leadership skill that takes even longer to develop.

In the best brainstorms, people compete to get everyone else to contribute, to make everyone feel like part of the group, and to treat everyone as collaborators toward a common goal. The worst thing a manager can do is set up the session as an "I win, you lose'' game, in which ideas are explicitly rated, ranked, and rewarded. A Stanford grad student once told me about a team leader at his former company who started giving bonuses to people who generated the best ideas in brainstorms. The resulting fear and dysfunction drastically reduced the number of ideas generated by what had once been a creative and cooperative group.

Brainstorms are places to listen, learn, and educate. At IDEO, they support the company's culture and work practices. Project teams use brainstorms to get input from people with diverse skills throughout the company. Knowledge is spread about new industries and technologies. Newcomers and veterans learn about who knows what. The explicit goal of a group brainstorm is to generate ideas. But the other benefits of routinely gathering rotating groups of people from around an organization to talk about ideas might ultimately be more important for supporting creative work.

This is true even if you hold only occasional brainstorms and even if your work doesn't require constant creativity. The worst brainstorms happen when the term is used loosely and the rules aren't followed at all. Perhaps the biggest mistake that leaders make is failing to keep their mouths shut. I once went to a meeting that started with the boss saying: "Let's brainstorm.'' He followed this pronouncement with 30 minutes of his own rambling thoughts, without a single idea coming from the room. Now, that's productivity loss!


Wednesday, January 24, 2007

Top 10 Management Fears About Enterprise Web 2.0

Technological Barriers

1. How can I be certain that the information that is gathered and shared behind the firewall stays behind the firewall?

2. How do I control who has access to particular levels of information and databases?

3. How do I protect the integrity of the information from malicious tampering by disgrunted employees or managers?

4. How can I be sure that information is being “tagged” properly for efficient retrieval later?

5. What kind of training do employees need before they can effectively use the technology?

Cultural Barriers

6. How can I monitor the system to make certain that what individuals are saying and sharing reflects company policy?

7. What are the legal dangers in saving and sharing so much loosely supervised input?

8. How do I distinguish “productive” use of the technology from horsing around?

9. How do I “manage” the gathering and disseminating of so much unstructured information?

10. How do I know if I’m getting my money’s worth out of the investment in technology?


Tuesday, January 23, 2007

Finding the hidden costs of outsourcing

Media coverage of IT outsourcing projects abounds but there are too few failed engagements that ever see the light of day. But what causes failures among these massive projects that for all intents and purposes appear like well-thought out engagements by virtue of their dollar value and multi-year lifespan?

According to Jerome Barthelemy, a professor of strategic management at Audencia Nantes graduate school of management, companies choose the outsourcing path for the right reasons – reduce operating cost, focus on core business, reduce risks associated with new processes, and protect against technology obsolescence.

In a survey of 50 companies that outsourced part of all of their IT operations, companies missed out on three key areas: finding the right vendor, drafting an appropriate contract, and managing the engagement throughout its lifecycle.

Marketing hype coupled with forecasts of big savings often blindside management paying attention to the details that should be part and parcel of any purchase. First timers to outsourcing are particularly vulnerable to missing out on the things that would cost the company more than what is written on the contract because there is no information available out there to guide them through the process.

Vendor search and contracts
The Boy Scout motto of "Be Prepared" is apt in outsourcing. It is easy enough to get hold of a list of vendors offering a whole gamut of services. Finding the one vendor that best fits the needs of the enterprise is where failures begin to rear its ugly head.

Enterprises need to spend an appropriate level of time and resources to the selection process after all when you are planning to give away all or part of your operations to an outside firm and be willing to pay millions for that, it's only prudent to investigate all options.

There is an associated to cost to searching for the right party and many enterprises underestimate this cost together with negotiating and contracting costs. Unfortunately there are no industry standards for such because there are too many variables to consider. Anecdotal evidence, however, suggests that by spending appropriately on the search process, enterprises are able to lower the other hidden costs.

It is so much easier to use the vendor that everyone else is using. But Mr. Popular may not be Mr. Right for your business. An agreement with a trusted vendor presents a number of advantages including fairness and flexibility. A trusted vendor, keen on protecting its reputation, is more willing to fill any gaps fairly even if it's tempting in the short term to be opportunistic. Test your vendor. If your vendor can handle a series of contracts involving commodity activities like providing programmers to give the business more flexibility in staffing systems development, it is more likely to be able to handle sensitive IT activities, such as a company's core applications development.

Don't be shy about asking for references – past and present, successful and not-so successful. Your peers are your best resource for information that will be important to pursuing strategic initiatives.

Next to the vendor itself, the contract is probably the most important part of an outsourcing engagement. Many companies go into outsourcing with a vague idea of what they want the vendor to do. But when you deal with technological uncertainties, can you afford to leave your future in the hands of a third party – even a trusted one? While some amount of uncertainty is inevitable – predicting what technologies will be available after five years or the economic forces that will determine the size of your business in three years.

It is always cheaper to stay vague about your expectations and sign the vendor's standard contract than to develop clear expectations and build them into the contract. It is cheaper to go with the convenient vendor, rather than research the vendor's suitability. The true costs for such shortcuts come at the end of the term of the contract or when you want to opt out and you are presented with the bill for early termination.

Consider including these clauses into your outsourcing contract: Evolution clauses apply to both technology and to the price and the scope of the outsourcing contract; and Reversibility clauses gives the company the option to repurchase premises and equipment from the vendor; and allow the company to hire employees from the vendor. Without such clauses, the company or a new vendor may have to rebuild the entire IT department.

Transition costs
Very little has been documented about the cost of making the switch from in-house to the external vendor. It can take months before the vendor becomes intimately familiar with the company in the same way as the IT department. The transition period is usually measured in months and the associated costs are generally unknown. What is clear is that the transition will mean service disruption and productivity loss due to delays in getting back on track. The more tailored the service to specific needs of the company, the higher the cost to pass it to a vendor that must take time to learn the activity.

The best way to reduce transition costs is to be aware of it. Know what you want from the outsourced activity, and clearly communicate your needs to the vendor. Get a guarantee from the vendor that critical employees who are absorbed into the vendor's organization as part of the engagement need to have a waiting period during which time they must remain assigned to the company to ensure appropriate transfer of skills and knowledge.

Managing the effort
Just because you've outsourced part of your operations does not mean you give up responsibility for the delivery of associated services. Service Level Agreements provides guidelines for the delivery of agreed upon services. But only by carefully monitoring such delivery can expectations be ensured. Because of the uncertainty in business model and technology evolutions, you will also encounter periods when you need to renegotiate changes into the contract to accommodate changes in the business. Management costs, including performance analysis meetings, are internal to the vendor and only get highlighted when the bills are presented.

Experience is the best remedy for reducing the cost of managing the relationships. Another way to reduce cost is to cultivate trust in the vendor relationship. You do this by making that both sides' objectives are clearly understood. You also need to foster good communication through discussion of potential problems as they arise and through collaboration on problem solving.

Transitioning after outsourcing
So months or years after the contract was signed and services delivered, you've decided its time to call it quits and you need to move on. When a company decides to outsource to a specific vendor, little regard is given to the idea of bringing back staff that migrated to the vendor or moving to another vendor. Either move is conceding failure. Regardless, if you do decide to bite the bullet and move to another vendor, the costs involve will cover finding the vendor, drafting the contract and transitioning resources. If you decide to bring back the services in-house, the costs involve building a new internal IT team to take up the activity.

Again the best defense against post-outsourcing transition cost is awareness. Ending an outsourcing contract is expensive – make no mistake about it. How do you reduce the cost? Calling back employees that have moved over to the vendor will reduce the cost. Keeping a sufficient level of IT expertise in-house will also help reduce the costs.

Hidden costs occur somewhere between the point when managers first conceived the idea to outsource and the end of the project, when a company is looking to bring back the services in-house or switch to another vendor. Understand what goes into the costs and when to expect these, and you get an idea of the trade-offs before deciding to outsource. Manage the four costs proactively and holistically, and spend the extra time and resources in the early stages of the outsourcing effort. Companies that spend the time and resources early on will fair better in achieving successful outsourcing projects.


Friday, January 19, 2007

E-Commerce 2.0: Architecture

There are three architecture elements that define E-Commerce 2.0 sites and help break the virtual store (everything under the same roof) mentality:
  • A composite front end that integrates disaggregated services into a coherent, fluid user experience. How is this different from a portal? In a portal, the various pieces of content are often independent of one another. Here, everything is highly integrated from a data and user experience standpoint. The front end will initially run in parallel to the existing e-commerce 1.0 site because etailers will experiment and make the switch to e-commerce 2.0 gradually. Pieces of the front end will be embeddable in other sites. (Yes, even as MySpace widgets.)
  • A backend suite with three main purposes: (1) tying into existing e-commerce functionality that doesn’t need to be replaced such as the catalog, order processing and customer service, (2) creating an intermediate data layer optimized to support the user experience and (3) maintaining interaction state, a task which becomes a lot more complicated with disaggregation.
  • A sophisticated battery of tools for brand managers, merchandisers and analysts that takes IT out of the equation. Control of content, promotions, design, layout, interactivity and analytics should be firmly in the hands of business users and the creative types. IT should worry about scalability, reliability and security.
"E-Commerce 2.0" – The Velvet Revolution by Simeon Simeonov

New Trend : E-Commerce 2.0

TREND #1: Rich Internet Apps Are On the Rise
First, expect a significant move to more interactive user experiences delivered through rich Internet applications (RIAs).

The early signs are everywhere: from Gap’s QuickLook to Amazon’s & Angara’s Diamond Search to MyRatePlan’s phone chooser to Harley Davidson’s bike configurator. This is just the beginning. With E-Commerce 2.0, RIAs will dominate. The main goal will be reducing shopping cart & checkout abandonment which, believe it or not, is sometimes in excess of 50% and is the key ingredient of low conversion rates (some of the best etailers are in the 3-4% range). In a world where shoppers can increasingly get the same product from ever more etailers, innovation will also target search integration and optimizing consumers’ browsing & product selection experiences to attract a bigger audience.

TREND #2: Disaggregation is Accelerating
The second trend is accelerating disaggregation, brought about by the dual forces of focusing on core competencies and leveraging network effects.

Disaggregation is not foreign to E-Commerce 1.0. Some businesses have pushed it to the extreme, outsourcing their entire online operations to Amazon, GSI Commerce and the like. For years, Amazon’s affiliate Web services have allowed businesses to build sites using the Amazon catalog and backend. That’s nothing new, though even more highly-customized, audience-specific sites will serve the Long Tail of consumer interests.

What’s new in E-Commerce 2.0 are network-wide services that provide only a portion of the e-commerce experience yet benefit from focused network effects. Ratings and reviews are a good example. E-commerce 1.0 has aggregators such as NexTag and Epinions. E-Commerce 2.0 has BazaarVoice and PowerReviews, which bring ratings & reviews capabilities to all sites. Payment is another good example. E-Commerce 1.0 has PayPal while Google Checkout belongs in 2.0. The key distinguishing features of the 2.0 services are tight integration with the e-commerce experience and the ability to go beyond simple hosting and leverage network effects. The most successful services will reduce the barriers to purchase across sites. Google Checkout and ARPU are two early innovators that merit keeping a close watch on. It is also interesting to ponder whether there is a 2.0 version of e-commerce analytics driven by the following trend.

TREND #3: "Social Commerce" is Emerging Fast
The third trend is social commerce, which comes in two flavors: content-driven and interaction-driven, or passive vs. active.

Examples of content-driven social commerce are already present, albeit not automated. Our purchase choices are influenced by those in our social networks. Brands know that. That’s why promotion on MySpace is the cool new thing. What about being able to see what products your friends have viewed or purchased? It’s coming to an e-commerce site near you.

Interaction-driven social commerce is different yet, again, a new spin on an offline idea—multi-level marketing. Remember Tupperware house parties? Well, the company has started hosting these online. Why can’t iTunes start offering incentives to people who recommend songs to others? And, since any individual can become an Amazon affiliate, anyone can have product links in their social network profiles that reward them for sending interested buyers to Amazon. With E-commerce 2.0 these types of social interactions will infiltrate the shopping experience. Combined with disaggregation, it means that social commerce will happen everywhere, not just on the e-commerce sites.

"E-Commerce 2.0" – The Velvet Revolution by Simeon Simeonov

Thursday, January 18, 2007

Seven best practices in oursourcing

What timeline can we expect, and what kind of partners do we need? Which processes should we outsource, and which should we keep? How do you structure the deal to allow for changes in the business environment over the course of the arrangement? Can you outsource a business function whose processes are broken, or do you need to fix it first and then outsource?

How does an outsourcing arrangement impact our relationships with our people? We have projects going all the time; how do you juggle all those projects and introduce outsourcing without the disruption?

Outsourcing conjures more questions than there were available answers. This is particularly true in Asia where there is a scarcity of insight on the subject as it relates to specific businesses. What scares first-timers to outsourcing is the trial and error process that often precedes adoption of new technologies or change processes.

A survey of 565 experienced [in outsourcing] executives by Accenture sheds some light into the hidden best practices. Their experience allows us to minimize the potential loss to businesses that so often come part of a trial by fire exercise.

While the experiences of these outsourcers are as diverse as is their needs, what is a constant matter-of-fact is that "the longer a company engages in outsourcing, the better it becomes at managing outsourcing ventures, and consequently the more satisfied it becomes."

This naturally implies that the few first attempts will always be the most painful and expensive. But as long as the company learns from the experience and change as it moves forward, the continual experimentation should yield the right combination that best fits the business.

But why reinvent the wheel? Below is a seven-piece skill for managing outsourcing arrangements learned from the survey.

Build in Broad Business Outcomes Early and Often: Outsourcing is not only about cutting cost. Companies that integrate desired business outcomes into the exercise early on [and constantly tweaked to reflect changes in the business environment] are able to reap benefits that go beyond pure profitability metrics.

Hire a Partner, Not Just a Provider: Look for a provider that brings a wide set of skills and strengths, and a long-term track record of delivering results. Competitive pricing should not be the only criteria upon which an outsourcing deal is concluded. Experienced outsourcers weigh both "soft issues" and "hard issues" in the selection process.

It's More Than a Contract, It's a Business Partnership: Contracts are the natural guidelines used in the execution of an outsourcing engagement. However, as this is a long-term journey and a path towards a goal, it is equally important to consider performance measurements and the relationship between you and your provider if success is to be attained.

Leverage Gain-Sharing: Use risk/reward incentives to spur performance. This is particularly relevant where special circumstances, such as taking on challenging situations, where circumstances demand the pursuit of unconventional methods to achieve the desired outcome.

Use Active Governance: It is not enough to sign a contract and leave the execution to the provider. In many instances active governance is necessary to ensure that projects stay on course.

Assign a Dedicated Executive: The decision to outsource is only the beginning of a long journey. Successful outsourcers often assign an executive especially adept with people skills to ensure optimized performance.

Focus Relentlessly on Primary Objectives: Companies engage in outsourcing for specific reasons. The pursuit of those objectives, whether cost reduction, process improvement, or the focus on core business, should be taken with unrelenting determination. This above all else defines successful outsourcing projects.


Thursday, January 4, 2007

What's on CIO agendas in 2007: A McKinsey Survey

Web exclusive, January 2007

Two trends in information technology will become increasingly important to CIOs in 2007: a migration to service-oriented architectures and the introduction of lean-manufacturing principles to data center operations. These are among the results of our most recent survey of senior IT executives. The survey asked CIOs and other senior executives in North American companies about their plans for the coming year.1

New technologies and trends constantly compete for a share of the enterprise IT budget, and during each cycle, one or two rise above the others to become a major focus for CIOs. In 2006 two areas of critical focus have been software as a service and server consolidation and virtualization—two trends that CIOs, a year earlier, had cited as important.2

As those technologies gain traction, executives are also signaling interest in two further trends to improve efficiency and effectiveness. Sixty-four percent of the respondents to the 2006 survey told us they plan to implement service-oriented architectures in the coming year. This strong response suggests that the thinking about IT architectures is shifting to embrace global standards for interaction, both internally and with external partners and suppliers. Advocates of service-oriented architectures expect them to make IT more flexible, open, and efficient by facilitating communication and interaction between systems. Under this design, common IT tasks, called services, can work smoothly together, regardless of an organization’s underlying technology platform. The concept has been around for years, but as more organizations adopt Web services standards, interest in these architectures has grown. That interest persists even though many executives have been unclear about the precise meaning of the term—a confusion made worse by some vendors’ propensity to label every product as “service oriented.” Despite this confusion, the compelling benefits of service-oriented architectures—easier communication and interaction among applications—and the increasingly mature offerings from vendors are enticing more IT executives to give it a close look.

Just as interesting to us, 48 percent of the CIOs we surveyed in 2006 said that they plan to implement service-oriented architectures for integration with external trading partners in 2007. Traditionally, companies pilot any new integration technology within the firewall, and broader adoption for integration with trading partners follows a few years later. The fact that so many IT departments are already moving beyond the internal pilot stage means that enthusiasm for this trend is high. What’s more, the wide-spread adoption of software as a service promises to encourage the spread of service-oriented architectures, because they make it easier to integrate enterprise systems with applications from third-party vendors.

The second trend poised to strengthen in 2007 is the application of lean-manufacturing principles to data centers. In our recent survey, 28 percent of the respondents said that they had already applied or decided to apply lean principles to improve their data center operations. Lean, of course, isn’t a technology but rather a methodology applied to processes—originally in manufacturing operations but increasingly within services, including IT.

Data centers have grown tremendously over the past 10 to 15 years as IT spending has increased and cost-conscious CIOs have consolidated smaller centers into fewer and larger ones. A data center for a typical large enterprise has hundreds of millions of dollars in capital equipment (server farms, mainframes, networking gear, and storage devices), consumes large amounts of electricity, and requires hundreds of highly skilled engineers and technicians to operate. In particular, the labor costs have grown significantly with the commitment of resources to processes such as incident response, problem management, and change management. Applying lean principles can help reduce waste and improve labor productivity by as much as 40 percent in some processes. Nearly one-third of our survey respondents aim to apply lean principles in these centers—a significant share, suggesting that the initial positive results from early adopters are encouraging a wider field of IT organizations to explore this methodology. We will continue to track these trends—and their implications for business and IT leaders—during 2007.