OMG = Outsource, Manage, Groan

My CIO friend was looking glum, really glum if you know what I mean; and he is not the type who normally gets harried by issues, always cheerful, and willing to help others. He goes around telling people about thinking positive and choosing your attitude. It was surprising to see this side of his demeanour. So I asked him about the root cause of his worries.

He has always been a proponent of outsourcing over his illustrious career spanning more than two decades, more like a trendsetter than a follower. In that he had worked with outsourcing companies large and small, local and global, structuring large deals that were acknowledged and appreciated by the companies he worked for as well as the vendors. When someone needed advice on managing tricky situations or contracts, he was the person they approached.

Building on an existing contract that did well he had extended the scope of services and support for a longer tenure. Considering that the outsourcing vendor had been working with him for a long time it was seen as a natural and logical extension. There was merit and value in the deal for both sides.  It was like a no brainer deal. Going into execution he did not foresee any challenges barring the initial teething troubles when any new service is commissioned.

The slip between the lip and the proverbial cup or intent to execution started going awry very quickly. Process review and tool deployment planned, the timelines slid with consistency that was expected of improvements. Existing services that had been working well for many years also started deteriorating. Monthly review meetings attended by increasing levels of management made the right noises but delivery failed to align to commitments. Whatever happened to ITIL led SLA and global best practice ?

I was surprised to hear of his misery considering that the relationship with the vendor preceded his arrival into the company and that successful outsourcing was child play for my CIO friend. Large deals have a way of coming to life on their own; they do not always follow a predictable pattern, instead they find their own lowest common denominator in which they settle down before improvements begin. He acknowledged this hypothesis and queried how should he respond to adverse business impact or disruptions to critical business processes ?

This was discussed in the review meetings and the team said they were committed to making amends. Reality being different, he was exasperated with selective and partial information sharing. It is not the way relationships are built and sustained. What causes this gap ? I do not believe for a moment that there is mal intent present; but how to bring the train back on track ? Was it about transition from courtship to marriage predicament where partners take the relationship for granted ? The nuptial agreement spelt out everything, but … Not wanting to proffer advice to the wise, I sought his game plan.

Forget the SLA, the contract, that can come back later; it is people who make things happen. For the situation to change, the people have to be brought back to the table with a rigour to the review that sticks accountability to senior leaders and individuals. Review and monitoring by the day on the plan by everyone and change people if they are unable to run with the required speed. Keep the pressure up until they deliver or want out of the relationship. It is critical and important to keep the end objective in mind, and that is linked to business expectations and improvements.

I wished him luck and promised to connect back in a few weeks again.

Murphy at work !

Any festive season brings with it a sense of joy, bonhomie and general feel good factor. After all, there is a planned celebration, friends getting together, family reunions, and if nothing else, some quality time with the family. We all look forward to such occasions to come. Different reasons across the world make for such gatherings, be it festivals, commemorations, faith; however, the world unites together to bring in the New Year.

Now, imagine this scenario:

New Years’ eve, and the day begins with an outage notice from the network team citing a company-wide network outage for causes unknown. The team gets down to figuring out the cause and fix, but the problem appears to be more than just a router failure. It is evident within a few hours that it’s going to be a really long day, maybe a night too, before the situation comes back to normal. So what do you do? It is evident that vendor support will be limited, and global support skeletal.

In a not too dissimilar scenario on a Saturday morning, I have seen the Operational CIO get off a meeting not to return. On another occasion, a balanced CIO keeps tabs periodically, and on the other extreme a “strategic” CIO continues with his life as usual, knowing that the team will finally resolve the situation.

Murphy strikes when everything appears to be nice and bright with the world at large. He has a way of unsettling the best of plans of good men. These are the times for which all the plans are created, the maintenance contracts signed, and the service levels (SLA) monitored. The machinery has to crank itself up on such moments to deliver. Everyone in the team has to know what they are expected to do, including communication within the enterprise, of the situation and plan remedial action. Beyond the explicit, on such occasions, relationships work their magic. Teams with passion, understanding of the impact and ownership will always rise to any occasion.

So in such an eventuality, what is the role of the CIO? It does not matter whether the CIO is operational, strategic or balanced. Should the CIO continue with preplanned celebrations while the team toils the midnight oil? Or lend a moral shoulder to lean upon? Just get out of the way lest he becomes a pain for the team trying to solve the problem? It is important for the CIO to understand the value he will bring to the situation and decide what works best. But one of the key actions required is to communicate the impact if any to business, what are the measures being taken to minimize the adverse impact, and keep information flowing periodically to keep shortening tempers at bay.

Post incident resolution, acknowledgement of the effort along with words of merit and appreciation are definitely worth engaging in. The message it sends will ensure that when Murphy strikes again, the team will be up to the task.

IT Chargeback, gain or pain ?

Every so often, the subject of chargeback raises its head, and challenges (un)conventional wisdom. In the recent past, it has been in the news as a critical requirement for deployment of cloud computing. Many reports have been written on why IT chargeback makes sense—especially in a diversified enterprise, with multiple business units using IT services provided by a corporate function. Almost everyone uses the rationale that chargeback helps IT allocate fair (?) cost to consumers of these services, and thus possibly provides the budgeting framework for KTLO (Keeping the Lights On) or BAU (Business As Usual).

I looked up IT chargeback on Wikipedia, and found the paragraph below as the closest definition:

“IT Cost Transparency is a new category of IT Management software and systems and that enables Enterprise IT organizations to model and track the total cost to deliver and maintain the IT Services they provide to the business. It is increasingly a task of Management accounting. IT Cost Transparency solutions integrate financial information such as labor, software licensing costs, hardware acquisition and depreciation, data center facilities charges, from general ledger systems and combines that with operational data from ticketing, monitoring, asset management, and project portfolio management systems to provide a single, integrated view of IT costs by service, department, GL line item and project. In addition to tracking cost elements, IT Cost Transparency tracks utilization, usage and operational performance metrics in order to provide a measure of value or ROI. Costs, budgets, performance metrics and changes to data points are tracked over time to highlight trends and the impact of changes to underlying cost drivers in order to help managers address the key drivers in escalating IT costs and improve planning.”

A mouthful indeed! Now, I agree that IT cost transparency matters, but chargeback? Having been part of enterprise IT across industries and IT models that included chargeback systems or none at all, my perspective:

1. Chargeback systems are important if IT is a “service provider”, and needs to justify every expense; innovation will have limited scope in this context
2. Chargeback systems will always be challenged by the majority of business units, as being an unfair practice
3. You will be required to reduce costs year-on-year irrespective of volume, and especially when business goes through recessionary cycles
4. Even after automation, the effort required for maintaining and managing data can be humungous. This will have the IT team on a defensive stance, churning out unusual associations of metrics in reports

So why is chargeback coming back again? Does virtualization, cloud service, or the next disruptive technology suddenly turn the tables in favor of chargeback? Does it really matter which specific function or business unit pays for the service, considering that it’s a zero sum game for the enterprise? So why should you bring in the complexity of managing unit costs for transactions, memory, CPU, storage, bandwidth, man hours and licenses?

When IT shops struggle to get incremental budgetary support, the practice of chargeback is typically seen as a vehicle to justify the high cost of KTLO or BAU. This is evident if you consider that with the exception of manpower cost, all other metrics have been on the downward spiral over the last decade. Thus, marginal reductions in these KPIs help in sustenance of inflated budgets, while keeping the attention away from metrics that matter (like contribution to business growth, profitability or customer retention).

CIOs should carefully evaluate why they need to implement IT chargeback mechanisms. After all, if they have aspirations to move to the next level of evolution, they should be enamored by business, and not expend energies counting pennies.

ITIL and aligning Business to IT

Earlier this week I attended a seminar titled "ITIL and Aligning Business to IT". I wondered what the connection was and how can ITIL facilitate the nemesis of all CIOs "IT-Business alignment" considering that ITIL has been around for over 20 years and rarely this connection has been made.

Information Technology Infrastructure Library developed in the UK for controlling the chaos in IT services and creating a consistency in what IT does remained a good case study for long until it became obvious to many that there were indeed a few good practices that could be adopted by other IT Organizations to improve their internal ratings with their customers. Consultants created practices, Software organizations started talking about ITIL compliant tools and suddenly a market for ITIL certified professionals began to appear.

Having implemented ITIL practices across two different companies in the last 3 years, I was wondering how the SDIM (Service Delivery Incident Management) and other formalized practices like Change management, Configuration management etc will help create a better business alignment if the underlying technology or solution is not compliant to business requirements or if your customers don't like the way you look.

As the seminar unfolded, we had the vendors' view of how their tools bring you closer to the holy grail and then a consultant from the big consulting organizations presented his perspective. It was but fortunate for me that the subsequent panel discussion between CIOs, the vendor and the consultant had one dropout and thus creating an opening for me to be called upon to fill in the gap. It's becoming a bit irritating to be pulled off the audience onto the stage regularly with no preparation.

So I asked the question to the panel braving brickbats from the audience for asking such a stupid thing.

ITIL provides consistency in service delivery that comprises typically 70-80% of the activity carried out by most IT organizations. It ensures that the experience does not have elements of surprise irrespective of rank and order in the enterprise. ITIL defines everything explicitly and expects commitment to deliver which some IT shops do extremely well and a few even with internal Service Level Agreements (SLA).

The underlying assumptions being that the systems, hardware, networks etc are well crafted and architected, services and service levels promised are in line with expectations and effective usage of these systems by the users, ITIL will create harmonious co-existence between IT and business. There you are !

Now you know how ITIL will help you align IT with business ? No ? Then if you find the answer let me also know.