Monday, April 29, 2013

Software for free ?

In the good old days IT organizations developed software; the development initially began with an army of developers working for the EDP/MIS/IT organizations and they did deliver customized solutions for each business unit or function though not always in the time that business wanted these solutions. But back then we did have the luxury of time. As momentum grew, it gave birth to software development and maintenance companies who will do it better, faster, cheaper.

Disruption arrived in the form of packaged Commercial-Off-The-Shelf (COTS) solutions with three letter acronyms (TLA) that took everyone by storm. ERP, CRM, SCM, BPM, ECM, the TLA multiplied creating frenzy amongst companies. Fed up with delays and the slow pace, most embraced the new wave; the investment was justified for speed and standardization. IT transformed itself to adapt to the new paradigm while consultants laughed all the way to the bank.

All software have list prices and ironically no one buys at that price; everyone depending on their leverage and volume negotiated discounts. These varied from the low 10% to in a few cases high 70-80% for global and large deals; more so in cost sensitive markets which could not digest Dollar or Euro pricing. And then the slowdown at the turn of the century and another one not too long ago coupled with a market that was drying up for new licence deals created interesting scenarios.

I have been hearing some interesting news from my CIO friends; it would appear that many solution providers are demonstrating desperation to sell to meet monthly, quarterly and annual targets. The discounts are getting bigger and especially so when any of the calendar milestones are close. CIOs know this and leverage this to their advantage. A vendor signed up an existing customer for an add-on solution at 98% discount just to ensure that a competing product does not make inroads.

In current times it is evident that every buy decision goes through higher rigor and diligence than it did in the good old days. Evaluation cycles are longer and purchase decisions deferred to align with vendor financial calendars. Even vendors play the game fully knowing that the CIO and/or the buying team will close the deal once they believe that the discount level is apt. I am not sure anymore if prices at current levels are artificial to give the mental satisfaction to the customer of getting a great deal.

A friendly CIO talked in hushed tones of a solution he got free ! No licence fee, no implementation cost, only support charges payable after go-live ! This was not a small solution provider, but a leader in the segment in which they operated. I probed further to find why would someone want to do that ? The only insight that I could gather was about creating new market segments and a case study. The project worked well and the CIO was a hero in his company albeit it created challenges for him for future purchases of any solution.

New delivery and service models coupled with cloud based delivery have created new operating principles for everyone. Pay as you use, scale up or down based on load and number of users, dynamic pricing linked to revenue or business benefit, are some examples. How do these impact purchases ? Does it take away the charade of negotiations ? Does this start leading to standard pricing ? So far, I think not, but the future may be different.

Consumers today are willing to pay whatever the marketplace asks as a price; the same individuals in a corporate setting expect a different reality. Maybe it is to do with micro-payments versus large cash outflows. Maybe it is to do with task specific applications on the mobile to general purpose solutions that require large implementation efforts. I think if enterprise application vendors started breaking down their apps in a way similar to consumer apps, the sum of parts would be larger than the whole.

But then we will not need large monolithic applications to run our business and that is something worth thinking about, and most applications would have free versions !

Monday, April 22, 2013

What is your ERP strategy ?

Technology evolution has created many opportunities and challenges for IT departments. The pace of change in recent times has been going up exponentially with obsolescence setting in faster than the adoption curve maturity. Each new flavor  trend and hype creates a flurry of activity which forces the CIO to react. Despite claims of various consultants, there is shallowness of expertise to get some real stuff done. Today it may be difficult to find COBOL programmers; it is equally difficult to find UX or Big Data experts.

Every company and function wants to retain talent and leverage the years of experience and expertise rather than losing them. This is more so if the person is really good at what s/he does; which is why we have retention plans, fast-tracked development, high potential identification and many other financial and non-financial incentives. We also face the challenge of managing a few members who have failed to change with the times and are unable or unwilling to adapt to the new world.

The technology treadmill keeps some of us running to explore and evaluate how and what could be potential uses that will create a differentiation. We embrace the technologies when something works and soon you find the trend becoming main-stream with everyone following. Consultants, vendors and tech media keep the hype high with new buzzwords and technology lead disruptions. The already scarce resources end up stretching to explore the opportunities over and above their operational activities if any.

Operations are necessary and critical to ensure that business as usual continues while the new stuff keeps the excitement going. Most enterprises have teams that either built the systems a few decades back or were part of the teams that conceptualized the implementation. If you are lucky they have been able to re-skill and stay current while managing the legacy. It is also possible that some have not been adept. Many organizations outsource the legacy sustenance and thereby the BAU operations.

The challenge that many face is to find productive use for the team members that failed to stay current with technology or business. These old-timers built the legacy that did well for the business contextual to the need at that time. With evolution their inability to adapt makes them dead weight in the current hyper-competitive business environment. The quandary for the CIO is to find useful work for them or find a humane way for their easing into other functions or out of the company.

One of my CEOs in the past had remarked of this phenomenon “We offer employment to qualified people on merit, we do not guarantee employment”. With profitability pressures and economic uncertainties this is true even for the better ones with work not just shifting to lower cost but also adding on to existing staff. Do more with less is here to stay and the bar keeps rising every year. Discussing this with a CIO, when she asked me “What is your ERP strategy ?” I was stumped.

ERP is presumably the new term for Early Retirement Plan, effectively created and deployed with HR. Her company had moved off the legacy technologies that had survived more than two decades and through the planning process she had attempted to re-skill the old workforce offering those positions that would have created a graceful exit over a period of time. Most took the opportunity clutching straws and made the grade. A few who did not had to be offered the new ERP !

In some companies old tech still stays, so do people; the pressures of current technology enabled disruptions will require them to sooner or later transition to newer and contemporary solutions. Recent times have seen many transitions from custom legacies to COTS systems to compete in the new normal. The eventual will arrive; CIOs need to hasten their people strategies to ensure that they are not left with a situation where they are pushed to a wall to take a decision.

All ERPs require planning, so why wait ?

Monday, April 15, 2013

Chief Interrogation Officer

Last week when I wrote about selling projects, there was a flurry of responses on what is wrong with the overall approach proposed; according to many, I painted a picture of a CIO who is subservient to business and not proactive in his/her approach to creating change and transformation using IT. Some were of the view that if the CIO does not sell, it will lead to CXOs creating a shadow IT organization which will be available at beck and call to do their demand thereby side lining the CIO.

I met with a senior IT leader who postulated that the “order taking” CIO will not find success as s/he is waiting for the business to define what they want. Most of the time business does not know what they want and in such a situation there will be little progress and lot of dialogue and frustration. According to him the business friendly CIO will explore opportunities and propose the solution to what business may desire and then deliver a solution. He summed up with “know your customer and the industry and get deep into the business”.

I do not disagree with him on knowing the business or proposing a solution; I disagree with the statement that business does not know what they want. Often they presume that lack of technology knowledge creates a gap in how they need to define the business problem. They do need help in articulating the problem statement such that it clearly states the market, the process and the outcomes. It is imperative that the ownership stays with the business stakeholders lest it become an IT project.

A friend and CEO of a mid-sized company joined the discussion on what should be the terms of reference and engagement between IT and business. He is known to be “IT friendly” and good customer who uses IT effectively. He acknowledged his inability to provide a well-defined problem statement that can be translated into a system. So I probed further to give an example of what he implied. He warmed up and started talking about his current situation and his information needs.

The company was entering a new market and with commencement of commercial operations needed systems to enable the business. Local regulations being tough and demanding, the competition fierce, the CEO needed end to end visibility across the supply chain and customers while addressing the needs of the regulators. He defined the need, the growth, and the ecosystem going on to say that he had no clue what IT systems will solve the problem while throwing some available options from experience.

To me the problem definition was quite clear and so was his information needs. The point is that the questions you ask will determine what you get. We did not discuss any technology options; neither did we get into details of hosted, cloud, or solution options. Clarifying some of the finer nuances it was clear that he was at ease on my overall understanding of the need. I then turned to the CIO and signalled that despite the starting point where the CEO stated he did not know what he wanted, he actually did.

When you meet business leaders, what is the approach ? Do you probe based on your knowledge of the situation or do you expect the business to come up with a formal requirement document ? Is it a discussion or is it a template given to the business to fill and define what they want ? What kind of engagement model do you practice ? For any discussion to be fruitful, involved stakeholders have to have a common ground and assumptions to make sense. I don’t know what I don’t know, let’s collaborate.

The answers you get is a function of the questions you ask; if you start with “What reports you want”, that’s what you will get without the background context. If you ask only about the process, you will hear that; take a detached and a connected view simultaneously to get the information required. You will be surprised at the insights you can garner. I believe that CIOs and the IT teams need to be trained on how to ask the right questions; and that is also a function of how well you know the business.

Monday, April 08, 2013

Selling Projects

It’s been 2 years in the role and I have been reasonably successful in changing the IT landscape modernizing the applications and infrastructure; many new applications have done well and have been acknowledged by the Management. The IT team some of which had spent decades in the company too has undergone change with skill upgrades and their alignment to the new way of working. However I have been finding it difficult to make big moves which I know will create business transformation.

I met an old teammate after a long time who had blossomed into a first time CIO. He had done well for himself and the company by taking them from what he described IT 1.0 to IT 2.0. He took the journey step by step reviewing the existing architecture and creating a roadmap that he systemically executed with ease. I remember him having an eye for detail and scrupulous in his approach. Proudly he explained his and his team’s handiwork which was achieved despite the lack of overtly enthusiastic support from the business.

As he narrated his story, I could not help drawing parallels from a decade back when he worked in my team. He and imbibed the principles well and upgraded the team to deliver; he was now struggling to move to the next level where he was unable to find support from his peers or his Management who did not share his enthusiasm for the new initiatives. The company with a strong legacy and loyal customers had grown with the founder driving the business skilfully not just locally but globally as well.

My CIO friend had many ideas based on his understanding of the business; networking with peer CIOs and taking help from vendors, he had come up with a few projects which he had been attempting to sell to the leadership team. They did not share his excitement on the change and resultant outcomes; everything is working well, business growth is better than it was in the past. Why upset the applecart ? He found it incredulous that despite a clear ROI no one was willing to take up the cause.

I dug deeper to figure out the key business drivers (inorganic growth), the makeup of the people (loyalists), the culture (conservative), the connect and receptiveness (cautious), and finally the sense of shared urgency (none). The business perceived the new initiatives as unnecessary and a distraction; they saw no need to change; why fix something that isn’t broken ? It was evident that he was unable to make it their priority or convince them of the merits. So I pushed back and asked him to stop selling.

The current approach appears to be desperation from your side with an automatic pushback response. It is your project, your idea and not theirs; they don’t see any value in your projects, so stop selling and start asking questions. Take a different approach and start engaging them in a conversation on new possibilities that open up to them and make their lives simpler or make them winners. You have to stimulate and connect with different stakeholders across the chain to kindle interest.

In the current scenario even if the project were to get started, the possibility of successful deployment and effective use is relatively low; because it is an IT project and not a business project. I have observed many projects floundering when key process or business owners were not aligned to project deliverables. A challenged HR project where the CFO and CIO pushed the decision on better ROI; an ecommerce portal with reluctant or indifferent business stakeholders, a CRM disconnected from field operations !

Why do CIOs sell projects ? There’s the hypothesis about being proactive and partner to the business, something to do with alignment. I believe that situation belongs to the past as it ends up in a situation where the wooing is all left to IT, business playing the role of a reluctant partner. Unless there is connect on both sides and endorsement from senior management, the CIO begins to appear desperate while others wonder why. So stop selling and start collaborating; proceed only if you find reciprocal acknowledgement of need.

Monday, April 01, 2013

That Critical Resource

He was passion personified and loved what he did; on most days he would be the first to arrive and the last to leave. For him there were seven days in a week which just rolled along, rarely he took even the weekends off. Meal times whether breakfast, lunch or supper happened on the move whenever a few minutes presented themselves in between fixing issues or changing code. He was in perpetual motion and yet tireless like an ideal state machine.

Users loved him as he always smiled and never said no to any request or demand. Technically he was good and working 16 hour days he almost always delivered to promise. Not that the rest of the team complained, in fact they passed on some of their work to him which he took on with no qualms. The CIOs attempts to slow him down did not change his working style until one fine day nature took its toll and he was down with illness and out of commission for a month.

A decade and more later, in another company a similar story played itself again. I don’t remember if it was the first job for the person, she had already spent a decade in the company and had been part of the IT evolution from the first set of large investments. Having spent so much time, she knew every aspect of the business and the system; when the principal vendor had a problem which they needed to validate, they would call her and she always had an answer. If there was one, she was the subject matter expert.

The company was growing in leaps and bounds which lead to increase in workloads. Unable to retain a team of professionals due to her nature of micro-managing every aspect of the work, the pipeline started getting clogged leading to delays in the regular stuff; the urgent always got priority and was addressed. The bottle-necking required drastic steps and the CIO moved her laterally to the business and distributed the work to the team. Very quickly there was no pending work and everyone was happy.

Every company has this scenario playing out in some way or the other. There is always a set of resources that are deemed critical to the functioning of the company that they end up getting overloaded. Some get into such situations by default because they are good at what they do and some create such situations because they love being the center of attention and attraction. In either case their false sense of importance leads to the person and the company suffering as observed in the above anecdotes.

A long time back one of my Managers told me “In every company there is one individual who is indispensable, s/he should be fired”. Curious and naive I asked “Why?”; to begin with apply the Red Bus theory, if a bus runs over the individual, what happens to the company ? And how to prevent and minimize any minor or major disruption ? The second reason is to address the growth aspirations of the person. If s/he is critical to a position, task, process or function, then s/he cannot get elevated as s/he is critical.

So whenever such a situation presented itself, I have used a step by step approach to de-risking the individual as well as the enterprise.
  1.  Discuss the situation with the individual to create awareness; ensure that s/he understands the implications to self and the company
  2. Explore growth aspirations and personal goals and how they may be restricted by the current reality. If this has been the situation for long, cite peer examples of growth
  3. Work with him/her to find a workable solution which could be lateral or upward move, changing role or addition of resources
  4. If none work, outplace the person

You also have the option to let the situation be and do nothing; not that anything has happened in the last so many years, so why should it happen now ? That is a choice to make. Have you faced such a predicament either yourself personally or within your team ? What did you do ? I would love to learn from your experience.