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My new article on the value of being connected to the core business of organization has been published by Techrepublic.com
Here is how it starts:
“There is a reality TV show called Undercover Boss, where a senior executive of a large company takes a position at the bottom of the corporate pyramid. The executive discovers daily operations at the level of detail unknown in the executive suites. Epiphanies abound.
While the show is highly staged and predictable, and its entertainment value is questionable, few viewers are surprised that senior management knows so little about their core business. How do they run the company? Shouldn’t executive decisions be based on the knowledge of operations?
The distance between the executive suites and the front lines is often of galactic proportions. Because customers are found at the front lines (if you want to order a meatball sandwich or open a savings account, you don’t call head office), being light years away from the front line translates into being light year away from the customer.
The way I see it, the demand for management consulting services is not likely to go away any time soon.”
This short video is a great illustration on how IT departments often communicate with other functions within their organizations. Same language, same office, same coffee… yet a world apart…
A local photographer decided that he does not like selling and marketing as much as he liked taking pictures, so he outsourced it to a small local firm. We received a call from them today, which in its abridged version went something like this:
Saleswoman: “Hi, this is Brenda from Such-n-such Photography. We would like to come to your home and take a picture of your baby – free of charge.”
Kim: “Sounds good. How many pictures are included?”
Saleswoman: “Oh, just one pose, one picture”
Kim: “Can additional pictures be ordered?”
Saleswoman:”Yes, packages start at $120″
Kim: “What is included in a package?”
Saleswoman (miffed): “I have no idea, I just book appointments”
Kim: “Thank you. Not interested”
Outsourcing is as old as the hills and we all do that – I don’t deliver my correspondence in person but the postoffice and courier companies do – but remember that judgement needs to apply.
You should consider outsourcing non-core activities that others do either better or cheaper (while maintaining acceptable quality) than you do in house. For the vast majority of businesses, relationship with clients is a core activity and should never be outsourced. The issue in this particular case is therefore twofold: not only a third party is retained to perform a core activity but, also, they cannot do it well.
You may be reading this and saying to yourself, “but of course, it’s asinine!” You may feel that what I am saying is just common sense.
The trouble is, even large and sophisticated business often make outsourcing decisions that seem to be against this very common sense.
It turns out that common sense can be remarkably uncommon…
I was interviewed for an article on CIOZone:
Editor in Chief of Techrepublic, Jason Hiner, recorded a video based on my earlier article on the subject.
It is an interesting experience to hear your ideas vocalized by somebody else. Jason does a superb job of it.
I recently answered this question and then thought it may be worth posting in the blog.
Question: What quality frameworks (ISO, CMMI, ITIL, etc.) have you used in your organization(s), and what pros/cons from each have you found in your experiences?
Answer: There are three key issues that I encounter time after time:
- Faulty belief that a framework (any of these) is a silver bullet for all and any problems. I have seen them applied to correct personality conflicts and dysfunctional leadership. I kid you not!
- Failure to customize. You gotta make it yours to work for you. An IT services organization I know lost customers because third line support found themselves compiling case documentation 80% per cent of their time. Resolved that, but not before some changes at the top.
- Falling in love with your methodology. This is not set-it-and-forget-it deal and you have to test your approach for relevance all the time. Is there a better way to do it? Are our assumptions still valid? A bank I know implemented user account management policies which require faxing (this was in 2008!) of a change form to the support centre. It takes 2-3 weeks to have a user set up. Meanwhile, the business has to put these people to work, so passwords are shared as a matter of standard practice. Formally, they have adopted ITIL. In reality, they are providing poor (if not dangerous to the business) service, having failed to re-evaluate their approach.
I came across this video which demostrates so wonderfully how diverse English language really is. I find that some people understand different accents well, while others become lost in no time.
Similarly, in business, you will find that there are people (I am happy to be one of them) who can understand the language of any organization, diagnose issues promptly and suggest correction. In often find myself acting as a translator between IT departments and the rest of my clients’ businesses. I wrote an article on this for CNET (link to article).
Perhaps, I’ve just learned to listen.
In my post about Sun Microsystems from yesterday, I alluded to a decade-long trend of commodization of hardware, pointing out that Sun failed to reposition itself away from the narrow hardware focus.
Today, we are learning that Apple is beefing up its hardware capabilities, looking to start designing its own chips. Today, they are supplied by a third party.
Why would they? Don’t they know that hardware is a commodity?
This is a classic decision point of buy/make or outsource/insource. Here is why the chosen direction makes sense for Apple:
- microprocessors are not the Apple’s final product, so commodization does not matter at all;
- the potentially higher price of a chip will be eclipsed many times over by the revenue generated by new device functionality made possible by precise customization;
- there is a potential for shortening the time to market metric, due to improved communication between the hardware group and other functions (software, sourcing, design, etc);
- reduced “seepage” of ideas and innovation to rivals;
- continuos improvement of chipsets becomes possible because, unlike with vendors, there is no meter running. Tinkering is inherently important to technological innovation;
- and finally, strategically, hardware is important to Apple because all of its products are unique in their own way.
So, based on my experience in consulting on strategic decisions, I think it makes sense for Apple.
While answering an enquiry from a jour, nalist last night, I referred to Sun Microsystems as an example of precipitous decline.
I cast my mind back to 1998-1999 when Sun’s hardware was all the rage. The E10K series servers, capable of accommodating several domains, cost a fortune and you often couldn’t get them when you wanted. Then, newer servers came about, which many customers gladly bought; then, Storage Area Network (SAN) devices, which gave IT Managers the coveted flexibility in data storage management and sent the good old just-a-bunch-of-disks (JBOD) approach into the oblivion.
But then we found that Fujitsu made perfectly compatible hardware at half the price. I suppose, other people did so too, because soon enough, Fujitsu started to make hardware for Sun. Today, we talk about cloud computing and it is clear that hardware is a commodity. It all happened in a space of a few years and Sun has just missed the inflection point in the curve. The rise became a precipitous fall.
There was Java of course and OpenOffice and MySQL, all too little too late. Just ten years ago, Sun Microsystems was larger than life. The once great company was acquired by Oracle a few weeks ago, after half a decade of vacillation.
Sic transit gloria mundi.
Today, GM announced some drastic steps of its Viability Plan, undertaken in a bid to restructure the company. Among other things, GM is looking to:
- reduce its hourly US workforce from 61,000 to 40,000 by 2010
- focus on four core brands – Chevrolet, Cadillac, Buick and GMC
- reduce the number of US plants from 47 to 31 by 2012
- reduce the number of US dealerships from 6,246 to 3,605 by 2010
The change is drastic, as nothing less would do, and will affect every division, department and group within the organization. The IT management at GM and the CIO Ralph Szygenda are seeing their fair share of change.
What would I do if I were the GM’s CIO today? I think my three top priorities would these:
- Dedicate all of my experience, knowledge and talents to the Viability Plan. Participate actively in its development and implementation and endorse it.
- Ensure that my IT strategy and my project portfolio are fully aligned with the direction of the company.
- Support my people more than ever. Communicate clearly and timely, avail myself to questions. Instill the feeling of unity and a common purpose.
I would also take a realistic look at the new requirements for this job and assess whether I am the best person to lead the GM IT at this point.