Formula One IT

Congratulations for being the chosen one ! The business likes your solution and we are also fine with the technology, functionality and customer references. Now that we have an agreement on the price lets quickly get legalities and other formalities out of the way. The process for PO creation and other paper work will take another couple of weeks. The question is how quickly can you allot resources to our project ? I do not believe that we need 3 months to get the solution off the ground into a pilot or for that matter go-live.

Any objections to aggressive timeline expectations from the customer are brushed aside citing urgency in business need and the dynamic business environment. Software vendors sheepishly accept the modified forceful project plan which assumes turnaround of all documentation from users with no delay or for that matter existence of clean data. Idealistic as it may appear both sides approach the project with enthusiasm that is outward for the vendor who is happy to get the business. D-day arrives and the project kicks off with much fanfare.

This situation has occurred a lot more often than gets visibility; time to market expectations from commercial-off-the-shelf software implementations (leaving aside ERP type solutions) are getting shorter. Most of them offer standard process automation or functionality that is typical across companies. Thus with basic configuration and some integration the anticipation is that the solution will be up and running in no time. Reality however bites every time with outcomes that do not live up to such expectations exposing the fallacy in the approach.

Analyzing scores of such projects undertaken by many of my peers the discovery was not very surprising. The facts were largely consistent and created a picture which when played back to the CIOs made them cringe and accept it. There were reasons and there were reasons; they were not the usual that have been published by various groups who track challenged projects. In almost all cases these failed to achieve timelines as well as deliver the functionality expected and the CIO ended up with the short end of the stick.

To begin with the evaluation of available options extended to eternity with high business expectations wanting to select the perfect solution. Comparing apples with pineapples creates a situation where the end result morphs from being a custard apple to a jackfruit. Moving from one demo to another scope expands to encompass all exception conditions. Sanity prevails after some time with CIO or business CXO intervention to bring back expectations closer to reality. Elapsed time through evaluation now puts pressure to achieve results in impractical timelines.

What started as a city street drive has now converted into a formula one race ! We need to finish the journey in the fastest possible time; get your experts, put more people on the job, why does hardware delivery take so much time, put it on the cloud. Configurations cannot take that long, it should be possible to reuse expertise from other customer projects. We are not that different but we are different; what we meant is not what you have understood, you don’t know our business and we don’t have time to educate you.

Time keeps ticking with business participants unable to adhere to unworkable timelines resulting in missed milestones and angst on all sides. Reviews soon become infrequent with everyone wanting to just finish the project with redoubled effort. The cascading effect leaves everyone frustrated and wondering why they accepted the stretched targets or ever got into the project in the first place. The formula one race with no equipment, trained drivers and crew suddenly is back to being what it should have been, a street car race.

Accepting reality brings everyone back to what they should have done to begin with; plan with real assumptions, acknowledge dependencies and the need to follow a workable model with good project management practices. It is good to take time to find the right solution which needs to be given due time for deployment too. I believe that CIOs need to continuously educate business users not to apply consumer principles to enterprise software deployments. They need to push back even at the cost of being unpopular or appearing unaligned.

Sometimes they should also be ready to go to a formula one race !

And they lived happily ever after !

I had this interesting debate with an aspiring CIO on my earlier blog “The Perennially Dissatisfied User”; he talked about some organizations not really having this problem where the users kept on finding faults with everything that IT did. They are a satisfied lot if not delighted; at least they do not berate IT on everything and there is an equilibrium and harmony between the teams. The camaraderie lends itself to discussing what works and finding opportunities to solving business problems or creating new ideas to explore.

Though far and few there are such organizations who have found peace and a process design to make things work collaboratively rather than be at each other’s neck all the time. IT is seen not just as a service provider, but as an enabler and partner who can help them achieve success. Not that they do not have conflicts, they are healthy debates and resolve them to move ahead or agree to disagree. There is mutual respect for the profession and competency each brings to the table. How does this state of being come into existence ?

The foundation of any such partnership is laid over a period of time; it is about creating an engagement process which outlines the boundaries and acknowledges expertise where it exists. The governance is democratized in a way that everyone understands the implications and there is a platform to resolve open issues. Across organization layers exceptions are discouraged and do not have to become you versus us; there is no across the table creating two sides, there is only one side which benefits the function and company.

Business processes and customer expectations are open to discussion and so are technology choices; the final decision and accountability are clear in their design. Sign-offs is achieved in time or if there is a delay everyone is agreeable to the rationale. It is not about whose budget it is or who is funding the project or purchase; it is about what is the value the solution creates for the enterprise. It requires consistent maturity on part of everyone to ensure that this works. Thus success rates are higher than industry benchmarks.

There is clear communication of expectations, be it hardware standards for new devices or restrictions on access to applications or internet. Decisions on solutions are based on merit and agreement on the metrics used with everyone collectively aligned. Thus everyone works towards the common goal and thereby leaving no room for fault finding should things not work out. Whenever priorities are competing with each other for budgets or resources, the group is able to reason it out and come to an agreement on the way forward.

Escalations for exceptions are pushed back to the business and IT leaders to resolve. Policies are simple yet effective in their intent and well understood by everyone. They are living documents which are frequently reviewed against changing business environment as well as dynamic technology landscape which shifts expectations and the way of working. This keeps IT infrastructure and environment simple to govern and manage. Shadow solutions are rarely seen in such organizations with high levels of engagement being the norm.

Sounds too good to be true ? Organization culture plays an important role in facilitating this. I have seen some enterprises embrace this so well that they become the poster boys of how to use a specific technology or solution. Business CXOs talk about success stories and benefits accrued acknowledging the role IT played in their ability to win. The CIO persona and behaviour plays an important role and s/he shuns pure technical discussions and focuses on how to help the company stay a leader. IT vendors love doing business with such companies.

Is a transition to such a nirvana state possible ? Can sustainable change be made for good ? I would say “conditions apply”. To begin with the organization culture has to be collaborative and progressive; the company should be profitable with the appetite to spend, else the discussion will always be on cost. The CIO should be articulate, know the business and have skills to keep his team cohesive and motivated. When all these factors come together then you have a recipe for success that everyone talks about !

Squeezing the last drop

One of my CIO friends narrated an interesting anecdote about his meeting with a CEO of a mid-sized IT services company. They were talking about the extension of a contract that had run through 3 successful years. The CEO was relatively new to the company and not party to the original contract. He was berating the fact that they were losing money on the current deal and needed to turn around the business and the fact that the global HQ was fast losing patience.

The contract was signed in times when growth was good and business expectations were stratospheric across industries. The then CEO was exploring local expansion as well as captive services for global operations that would have given Indian entity a firm standing. The downturn took everything away including the CEO. Business growth did not revert despite the economy stabilizing. The pressure to turn around the business thus became paramount for this IT Company.

As the negotiations stretched over a few days, the CEO began demonstrating discomfort. In an open book costing he was justified in his pricing but unable to acknowledge that the company had built up higher running cost which could do with pruning. As the customer, my CIO friend was unwilling to pay a substantial increase to accommodate. The choice to the vendor was to cut costs in a hurry and acquire new customers, and to the CIO it was about continuity or moving to another vendor.

Companies set up specialist functions to negotiate deals, sometimes within Finance and at times as an independent charge or within the function equipped with experts who justify their existence with great sounding deals. Some of these may be win-win, but many end up with bickering over legal contract terms or lose-lose unless you are an 800 pound gorilla who nobody can ignore. So how does one define the limit for negotiation ? How do we know that the deal is great for both of us and not a win-lose or lose-win ?

Conventional way is to negotiate hard, drive a bargain that is best value for the customer. It does not matter if the supplier makes money or not; they can always recoup their margin in the next deal or with other customers. This belief has survived and done well for many. Suppliers recognize it and so do customers who play the game. The industry has adjusted prices accordingly so that nothing sells for full price anymore. Everything has percentage off going all the way to 90%. Can we get it free ?

There is a need to change some of these paradigms to bring the dance of the discount to a stop or at least reduce it to realistic levels may be linked to volume of business. CIOs too need to set fair expectations internally and externally to create win-win scenarios and work upon long-term relationship building. Rarely any deal now is tactical. It is also important to remember that people churn across companies. The spurned, scorned or bitter salesperson may turn up a few years later in another company which is critical to your business operations.

People buy from people, so don’t squeeze the lemon too hard, you may end up with a bitter taste.

P.S. my CIO friend concluded the contract with the vendor who did reduce his overhead costs.

The Art of creating IT budgets

Budgeting starts around this time of the year for most CIOs, along with the exercise of defining operations cost and investments for the coming year. This process typically lasts from four weeks for the agile to four months (in some cases). Almost every year, there is an expectation to do more with less, until you reach a scenario where “there is no more left to do more with”. During this time of the year, the CFO is at his peak of influence, since all the other functions which want funds try the level best to justify their investments and plans.

Recently, I was asked to present to a group of CIOs on “How to make your CFO your best friend”. Such a subject can be a hair-raising experience for most seasoned players, as it requires a strong financial background and understanding of the business to put across acceptable metrics and KPIs for the management team. This is where a skilled CIO can get budgets approved without the proverbial scissor’s side effects — it’s possible to avoid typical across the board budget slashes (of, say 20%), especially on the operational side of things.

Long time back, I decided to separate the operational budget and the investment (read capital expense) budget. My intention was to let the business decide the projects that they wanted to invest in. This ensured that business created the P&L for their projects.

Obviously, IT had to help the business with the figures and merits of each solution. In most cases, business would choose the best possible solution and succeed in justifying them to the CFO and CEO. This shift signifies that we will help implement and execute the project from an IT perspective, but you (business) own it. Many cases required the creation of innovative KPIs rather than the conventional ROI or IRR models to help the business justify its investments.
While setting the operational budget is relatively easy, the expectation to reduce budgets year on year remains an interesting discussion. In one of the cases, I took a menu card approach to operating expenses. If you want good speed of response from your network, you have to pay higher, like a toll paid to travel faster. Hardware refresh can be analogous to replacing cars every five years, a common corporate practice. Why? Mainly since the cost of maintenance goes up, and availability of spare parts is also an issue.

It’s possible to have the CFO as an ally, if the CIO understands the compulsions and metrics that the CFO has to manage. After all, CIOs are also responsible for managing the cash flow and acting as conscience keepers for the company.