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Managing IT As An Investment
For far too long, the authors argue, IT has been incorrectly viewed as a separate part of the enterprise; a distant silo, relegated to the status of a âoecost center.â Instead, the authors make the case for transforming IT into a âoevalue centerâ â" a mission-critical member of the business enterprise, managed as a strategic asset.
In order to get there -â" and to maximize IT value -â" the authors say organizations must realize that âoeIT is inseparable from the business and requires complete alignment with business goals.â Then, they have to admit that thereâ(TM)s âoeno such thing as an IT project.â
âoeIT is no longer a cost center and a growing number of highly successful firms are recognizing this,â the authors say. âoeIT is an investment and should be managed as such to increase revenue and profits. No matter what size project, IT is a member of the business team and should be accountable and responsible.â
Getting past old-world ways of thinking can be difficult for business and IT-minded folks alike; such transformations are often riddled with unexpected organizational change management issues. Moskowitz and Kern do a nice job of exploring some of these difficulties at a high level, but leave plenty of room for in-depth exploration by other authors.
They introduce readers to âoeConsequence-Based Thinkingâ in Chapter 2, a concept that promotes decision-making based on desired business results, rather than on the IT problems you face. The authors explore ways you can avoid âoethe Right/Wrong trapâ (situations in which humans forfeit the desired consequences for the privilege of being right), develop jointly produced business cases (âoea technology case is not sufficientâ), and help each department in your organization contribute to the success of the enterprise mission.
In Chapter Three, âoePartnering,â the authors illustrate the importance of creating a team that will support the goals of the enterprise. âoeIt is key that members of IT teams see themselves and their work as core to the business itself, and not view the IT function as an appendage of the business.â As this happens, the authors say, âoeothers will view them (IT) as critical and necessary partners that can be trusted to provide solutions that donâ(TM)t merely serve a process, but truly serve business outcomes.â
Business partners must change the way they think of themselves as well. Business must think of itself as âoea partner with, rather than a customer of IT,â the authors say. They recommend the development of formalized contracts that spell out responsibility and accountability for all involved; a âoecommon vocabularyâ (to help get everyone in your organization, regardless of role, on the same page); and provide words to the wise for management: âoemanagers will never have as much information as people on the front line.â
Sizeable emphasis is placed on the importance of jointly developed business cases, which the authors say, âoeforces IT and business to engage in continuous dialog in order to ensure success.â Jointly developed business cases can help align IT with business objectives, and have the additional benefit of âoemoving the business agenda forward and creating partnerships and understanding.â A sample Business Case template is provided as an appendix.
Chapter Five, âoeStrategyâ makes the case for building a big-picture strategy that âoestresses an enterprise point of view over seat-of-the-pants, silo thinking.â Organizations without an enterprise strategy often end up creating what the authors call âoeislands of automationâ that will later need to be integrated.
Strategic thinking is a skill and not something that comes easily. It involves adopting new processes and changing the way we think about our jobs. By adopting a âoeBusiness Strategy Formation Processâ that relates an enterprise-to-an-individual and an individual-to-an-enterprise, the authors say organizations can make âoeconsistent decisions that incorporate foresight.â
Chapter Six, âoeThe Small Picture,â provides guidance on communicating the âoebig pictureâ to âoesmall pictureâ folks by answering the question: âoeWhatâ(TM)s in it for me?â Chapter Seven discusses ideas for setting up and managing IT departments as âoevalue centersâ while Chapter Eight, âoeHuman Capital Managementâ deals with issues of people management, individualism, and job satisfaction.
Chapter Nine, âoeInvesting In Values,â provides a brief overview of the importance of values, which the authors define as the âoeguiding principles and basic beliefs that are fundamental assumptions on which subsequent actions are based.â The authors provide several models to help you make which value decisions. They also discuss how to reap âoethe hidden harvestââ"the rewards delivered through collaborating with others toward a common, understood and measurable goal, benefits not realized through traditional, inside-the-box thinking.
While Managing IT as an Investment is indeed a value-added resource, reading the book is not enough. Youâ(TM)ll need to do a little homework before you go tackling a major change in your organization. Youâ(TM)ll need additional guidance not provided in the book to help you decide whether your IT and business staffs should work in the same physical space to help reduce communication barriers and establish a sense of âoeteamâ; if you should re-organize your management structure so both IT and business team members report to the same manager; how you should communicate information about your project in order to create project evangelists; and whether your reward structure needs some revamping (is IT currently rewarded for âoeon timeâ delivery as opposed to delivery of quality solutions that deliver the highest return on investment possible?).
Despite these weaknesses, Managing IT as an Investment: Partnering for Success is an excellent addition to both business and IT literature. At only 150+ pages â" 10 chapters, followed by 4 value-added appendices â" you can read the entire book in an afternoon. The book is well worth the effort. Includes case study information and references to other published works. Perfect for those involved in paradigm-shifting projects where strengthening the relationship between IT and business can help ensure success.
Scott Abel is a content management strategist. Look for his column, The Content Wrangler, on ePrairie.com. You can purchase the Managing IT As An Investment: Partnering for Success from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
Outsource. Always Outsource to Asia or India. Duh!!!
Life is not for the lazy.
It's good to see IT getting increased recognition as an asset, as opposed to a necessary evil. Hopefully this book will find its way into the hands of a lot of PHBs, and we'll start to see some improvement across the industry.
The old attitudes about IT have done a lot of damage, but with some effort, books like these, and a little mutual understanding, I think we'll reach a point where IT workers will be free to flourish in businesses and achieve their goals (to become real programmers).
Boromir, son of Faramir, King of Gondor and Minas Tirith
You'll be sorry. There is a reason Bill Gates is f'ing rich. Vulture mentality when it comes to competition.
The biggest problem with managing IT as an investment is measuring ROI. Sure, you can see "this process costs us n dollars and the process before costs us n*2 dollars" but then how much of that is taken up by the fact that you need to maintain additional IT resources? In many cases, IT projects end up being cost shifting rather than cost savings.
In theory you'd just figure in the IT costs, but many PHBs don't do that. All they see is the *business* side and tend to look at the IT department as some separate thing.
It sounds like this book handles that scenario. I'm eager to take a look at this book in the future.
My journal has hot
This reviewer can't even write like a human being; it's all consultant-speak and management jargon. The review is a value-subtracted blather center.
I'm sure the topic of how to build computing into a business is timely, and interesting, but it doesn't sound like this book or this reviewer have anything useful to say. Otherwise they would have used English.
Shame on Slashdot for giving this consultant a front-page post to pad his resume with.
A customer service representative will be with me shortly.
BN can't find the book -- Link to amazon
The ISBN is 013009627X
If you blog it...
That's right, buy your Cowboy Neal bonds right now!!!
Hurry, supplies are limited! Shipping and handling not included, some assembly may be required , always drink responsibly.
Slashdot, the site where everything's made up and the points don't matter
To achieve the highest levels of profitability, the authors say, IT organizations must be well-tuned and in alignment with the goals of the enterprise to which they belong."
To achieve the highest levels of profitability, commercial software (and its csam 20% maintenance) must not be purchased. Open Source all teh way!! Think about it: profit = revenue - cost. So, to increase profit, most people try to increase revenue. It is much easier to bring cost to 0 by going open sores.
Nicholas Carr, writing in a recent Harvard Business Review article, probably wouldn't agree with Moskowitz and Kern.
Man, I just got back from Philadelphia for business and I cannot tell you how much businessspeak and cliche's I heard. Reading this post was like a flashback with phrases like "Partnering for Success" and "cost center" and "consequence based thinking". I can't tell you how sick I get from hearing folks spout off tripe like "world class" etc... And most commonly I hear this stuff from folks that are absolute knuckleheads, but they have mastered the businessspeak vocabulary so they sound good to people who are not looking for real meaning.
I know all businesses are not like this, but what is wrong with simply working hard and producing your product with craft and skill and not resorting to all sorts of "strategies for success"?
Visit Jonesblog and say hello.
The blurb for this contained so much drivel-doublespeak I couldn't bring myself to read the rest.
To achieve the highest levels of profitability, the authors say, IT organizations must be well-tuned and in alignment with the goals of the enterprise to which they belong. Who'd have thought, eh?
...look at IT as a cost center (a liability, an expense) and never as an investment. You'll never be able to convince them that IT infrastructure is like the bolts that hold the wings onto the aircraft they're flying. I've been trying for 15 years and 4 different companies and it's just an exercise in futility.
IT is often looked at with a frown because of what it tends to be in most organizations: a very expensive division whose responsibility is to provide critical tools to perform business, with the ultimate goal being to produce a result, typically profit. Unfortunately, there are plenty of decision-makers who don't think far enough to recongnize the link from tool to result. Sales is seen to generate revenue. Marketing is seen to create and position the products for sale. Finance bills and spends. IT ties those pieces to one another and allows them to function, but you have to think creatively to draw a line from revenue to IT spending.
Now that I think about it, I wonder how many parallels you could draw between HR and IT. HR is the machine that provides people and benefits to those people, without which the company ceases to function. In a more abstract sense people are tools (whoa), and HR can certainly be viewed as a cash drain with no direct revenue...
So long, michael. Don't let the door hit you...
I almost have to agree. One of the first things I learned about writing book reviews is to never give a chapter by chapter summary. He even outlines it chapter by chapter.
Makes me wonder if he read the book, or skimmed it over.
To win at business, you must perform better than your competition. Better. Stronger. Faster.
Little. Yellow. Different. Better.
Your courageous and selfless spelling corrections have made me a better person.
A little too much Harvard Business Review and not enough real-world day-to-day...
So long, michael. Don't let the door hit you...
Therein lies the key issue - developing coherent, scalable strategies that not only deliver ROI, but drastically reduce time to market with clear innovations for VARs, wholesalers, and channel merchants.
It is in fact adaptation to the ecosystem of outsourced infrastructure solutions that is the key delivery point for CIOs across America, to whom the enterprise and the costs centers it addresses are ultimately the de facto element for partner satisfaction.
This brings up the point of data, capital, resource management, and vertical integration as a key driver of ROI and coherent scalability. How will IT management address these issues in a pervasive redundant fashion which bolsters net throughput? This is the question our generation must face.
(This was supposed to be humor)
People with their heads down writing books fail to look around them, they are inevitably 3-4 years out of date, and their advice always smells like old socks.
This book would have been great in 1998, but in 2003 it's useless. More and more software is a commodity, and not an investment any more than electricity or coffee is. "Treat your coffee machine as a partner". Well, maybe.
The truth is that commercial software companies still live by over-selling their wares, and it's an untenable business.
"Heironymous' Law", which I proposed a day or so ago, states that software costs fall by half every 18 months. That ERP system which cost $1M in 1998 should now cost 32K$.
And that's the truth, folks. Only asses still pay $1M today. And for those asses out there, I have this great coffee from 1998 too, only $500 per cup!!
Ceci n'est pas une signature
As soon as I see a reviewer or a book talk about 'overcoming old-world ideas,' it enters the garbage pile.
Businesses need to change, yes. They need to grow and adapt, undoubtedly. HOWEVER, it seems like every quack who can string two sentences together is writing a book on somehow integrating or embracing IT into your company, in a way that damages the long term outlook for the company. In fact, business "management" for the past three years seems to have been nothing more than destroying companies for the sake of bumping up the short-term stock value.
But I digress.
Trying, as this book and this reviewer do, to place IT as either a special division or a profit centre without looking at the individual company is silly. It's very simple:
1) If you're an IT-based company, then IT is (part of) your core business.
2) If you're not an IT-based business, then IT is infrastructure.
Maybe what we REALLY need to do is stop looking at IT as a single department, and slice the appropriate IT roles into the existing departments when they fit. For a car company, web development has a whole hell of a lot more to do with the advertising department than it does with the internal service call tracking group. Why are we sticking them together, then?
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
Over time, and working with places that (frankly) spent far too much fscking money on useless crap, I've boiled down IT to three things:
1. We provide access to data to those who need it.
2. We deny access to data to those who do not need it.
3. We increase the efficiency of access to the data in compliance with rules 1 and 2.
That's it. Now, I'm not saying computers shouldn't be used for entertainment, etc - but in the workplace, those are the 3 things that IT should be focusing on.
When I recieved requests for "Well, we need a bigger computer here!", I bring up the three rules above. Does it increase access to the data that much better? Would another alternative work?
It's not about being "cheap" - sometimes you have to spend money to do things. But an IT staff should be going out to their customers (aka - the business they work for) and saying "All right, what do you need access to. What do you do in your day? Do you fill out the same data over and over again? What can we automate for you so you're spending more time on things the computer can be dealing with? Is there a way to give you better access to your information without compromising security?"
The more you involve users (and their managers) in the Three Rules of IT, the more they come to see IT as an asset - not just an expenditure.
In the end, I consider IT to be the janitors of data. They don't make the crap - but if they weren't there to keep it neat and clean and organized, the business would go to shit in a real hurry.
That's just my view - I know, I could be wrong about it. But it's served me pretty well.
52 Weeks, 52 Religions with John Hummel
That's the real problem facing programmers today. Management was at the mercy of IT in the late 90s and pledged that it would never happen again. They did not like the fact that their underlings were making more money than them and management did not understand the technology. Programmers themselves are largely to blame for putting technology and their own interests ahead of business functionality - nevermind the posers impersonating as programmers to collect good pay. What was management's solution to all this mess? Cut their own IT staff and hire large consulting firms like IBM to take over all their IT infrastructure. Sure it ends up costing 2 to 3 times as much - but so what? Management only cares about self-preservation and the feeling of being in control. Outsourcing to large corporations provides that ego boost.
As soon as I see a reviewer or a book talk about 'overcoming old-world ideas,' it enters the garbage pile.
Overcoming old-world ideas... sounds a lot like "P/E ratios of 90+ are the way of today! The rules have changed! It's all about potential and thinking OUTSIDE OF THE BOX!" That was just four years ago...
The meat of it is that there's a valid need for management to analyze how IT spending itself is being analyzed. As time goes on infotech plays a greater and greater role in the fabric of the whole business, and where the return is on that investment needs to be carefully determined. Hasty analysis will always lead to fingers pointed at IT's budget.
And as far as fragmenting IT... IMO that just makes it much harder for things to get done efficiently, company-wide.
So long, michael. Don't let the door hit you...
Is that they all have a faulty premise - how to trick people into doing work. As if employees are mindless sludged that have to be beaten or fooled into submission. How about actually respecting people to do the right thing for a change? Poor morale is ten times as effective in destroying productivity as letting a few perceived wasteful slip through the cracks (like personal online banking at work). Motivated employeed will go the extra mile for your company and suggest and implement procedures to save time and money. An unmotivated employee will do the bare minimum and simply watch the clock and collect a paycheck.
Outsource to Asia or India. Duh!!!
What continent-thingy is India in?
Duh!!!
Ah Yes, Bingo!! I got Bingo!!
SCO case is getting like the Arab/Israeli conflict.
I don't care what happens just end it because I'm sick of hearing about it!
At first it's disturbing and troubling and we all want a good outcome, now I don't even care any more just end it somehoiw cuase I am fucking sick of hearing about the shit you fuckers.
My synergy meter went off the charts on that review... Can someone abridge it to a TPS coversheet, please? :-)
Where I work, we are overhead and are treated as such. Yeah, we do important things, but if we can't bill our IT work, we're foam on the business ale.
T.
This space for rent.
Why, specifically, should one never give a chapter by chapter summary?
Belief is the currency of delusion.
A very good way to increase IT productivity is to block slashdot in your filtering software. That way your IT professionals won't waste all their time reading about SCO
As x approaches total apathy I couldn't care less.
1: Buy some Unix IP
2: Unilateraly decide that you own Linux.
3: Extort some money from a few naive users.
4: Stomp your feet.
5: ???
6: Bankruptcy!!!
Trolling is a art,
Dude, if a front page /. article is a pad for his resume, then his is a pitiful resume indeed.
... this page might help to explain...
Need to type accents and special characters in Windows? Use FrKeys
Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture.
To win at business, you must make a profit. That's it. You don't have to kill your competition; you don't have to fuck anyone over.
You just have to be able to pay the people who work for you, accomplish what you set out to do, and maybe make a little bank in the process.
It's this stupid "Business as competition" mentality (with "Business as war" at the most extreme), coupled with plain old greed, that led to Enron, WorldCom, Microsoft, and the RIAA/MPAA.
I'm not saying, "C'mon, can't we all just get along?" I'm just saying, winning isn't measured by how much more profitable you are than the illusiory "competition." It's measured by the good you do versus the bad you do.
Microsoft is to software what Budweiser is to beer.
...who has today done just that. Except for my own workstation, of course.
Because this isn't 5th grade and you aren't writing a book report. Hell this wouldn't even pass for a book report. If I wanted a summary of the book I would look at the table of contents. I want to know how well it is written, how easy it is to read, does it provide accurate and complete information, who is it geared towards, what do I need to know before reading it, is there a better alternative book, does the author convince you that he is a subject matter expert, etc.
That is a review. This article is a summary and a poor one at that.
Those that can do, those that can't strategize ... for synergy, etc.
Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture.
I hate this kind of truism, because people don't challenge them. The trouble with this approach to business is that it causes businesses to converge on the same thing - Hey, the restaurant next door is now selling tacos as well as burgers! We need to sell tacos too, only, erm, bigger ones! They also start to put more effort into competeting than actually thinking about their own business - Hey, they're selling bigger tacos than us next door! How should we compete with that? In my little illustration here, you end up with two restaurants selling nearly identical products, rather than two completely different restaurants, which is probably what most people walking past (the customers) would prefer.
It is interesting that this business mentality is very prevailent in the US than europe. In most cities in the US there are lots of chain restaurants which are very similar, but in Europe (or at least France, Italy, Spain and places like that) all the restaurant tend to be different and there are fewer chains. And personally, I think Europeans get the better deal.
We really provide crap.
We had been doing something more resembling XP. We had prototypes. The client used these prototypes to figure out what he really wanted.
The investment model, is better suited to the waterfall method with development going forward, and there, quality is killed. Don't get me wrong, what we deliver works, if there's a bug, it gets fixed.
But, excellence is lacking for sure because once we figure out what we need to get excellence, we've exceeded our budget, which oh by the way, has been gobbled up by all the mgmt consultants etc. trying that want to make it look like there's very little overhead in the IT org, when there's just frankly too much fat.
We pat ourselves on the back for having a "Portfolio". BUt look at what we've produced since.
Actaully, only a few small scale systems (but with the latest greatest J2EE, Portal, and Web Services. from IBM. The legacy systems run the show and get no recognition. I work on both.
Here's an example. We're currently working on an application that's probably comprising about 120 tables. There are about 20 people on this project including the BA's, PM's, ARchitects.
Then, there's another system I work on, with 1,100 tables, 1 million lines of code (including triggers, stored proc, client code, etc) We just provided an additional amount of functionality that eclipses the new system with the 20 developers.
All this, with two developers, a dba, and a PM. 4 people.
Things are weird here, this IT Investment philosophy has really made things strange.
What do you mean? I always look for "value-added appendices" when shopping for books. More importantly, I never buy a book without value-added indices and tables of contents.
First: Feh! on the business-speak drivel.
Second: The author is just plain looney. IT is not an investment any more than sticky notes are, and for precisely the same reason: Most of your IT hardware will need replacement in very short order (only a few years).
If any part of the IT department is an investment it is the expertise of the people you employ to administer your IT, but either you (as a company) already know this (by treating all your employees as investments) or you don't (which, it appears, is the far more common attitude). Even the employess are not a very good investment, since there is damn little you can do to make sure they don't leave (you can't own your employees, at least not in most places) and they require a huge amount of maintenance (salaries, benefits, training, etc.).
Everything else about IT is obviosly a simple cost (possibly amortized over a short period of time): All the hardware will be obsolete within only a few years. All the data you collect has an almost equally short shelf life (how long are individual customer demographics good for? how about marketing materials? maybe financial data has a reasonable lifespan, but it's not much more than 5 or 7 years) and have a continuing cost of maintenance in order to keep them up-to-date.
The longest lived part of your IT infrastructure is probably the network cables, which can last 10 years or so. None of these items have the lifespan of a building, however, which is the canonical example of an investment item.
Detachment seems to be a common theme. Rule your company at such a high level that you don't see the details, right?
It really is weird, the trend I'm noticing... bosses get managers to handle certain projects, not caring how they're done as long as they're under budget. I know this isn't the same as replacing "being responsible" with "consequence based thinking", but the trend does seem to be all across the board.
~Dalcius
Rome wasn't burnt in a day.
I guess MS has a lot to do with solaris, oracle and java/jsp!
Whew... I was nervous there for a minute.
"It's no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture."
Nonsense. There are plenty of ways to "win" (I take it this means "succeed" here) in business. You can be innovative and first-to-market. You can take advantage of your opportunities. You can distinguish yourself from your competitors by targeting and appealing to a different audience. There is no one formula for success in any industry.
"Better/Stronger/Faster" is typical lame management/MBA hype. I wouldn't trust a book review from someone who speaks in these kinds of cliches and rash generalizations.
At least he understands the concept that having a PC on every desktop in a business setting is bad in several ways (upgrade treadmill, wasted resources, increased administration). But IT service hasn't reached a "commodity" level, just as other services haven't, which is something that people born in an office tend to forget.
I consider IT support to be, at its core, a blue-collar job. Like other "trades" people, it is largely forgotten by many "business" people (at least until it doesn't work), and quality of service varies widely.
If your network is set up and maintained by people who really don't know their stuff, productivity will suffer. Are operating system updates tested before they're applied? Are they applied at all? Does your IT staff try to adapt the system to fit the needs of the users? Do they even talk to the users? Are you losing productivity to viruses when they should have been stopped by a mail gateway? Does the network "randomly go down"?
Similarly, if the HVAC, electrical, plumbing, etc. systems in your building are poorly maintained, that will have a real impact on your business. Someone who really understands their chosen trade can make all the difference in the world, whether you're in the planning phase or maintaining a 100-year-old building.
While it's true that many companies today spend too much on IT _equipment_, the value of good support staff should never be underemphasized. Great techs can do wonders with even a tiny equipment budget.
WMBC freeform/independent online radio.
There is appears to be a fundamental flaw in accounting methods when they totally miss productivity loss due to having crap like Windows 9x or NT and PCs with double-digit failure rates.
It is not uncommon to see someone with 32MB (or even 128MB) of RAM in their ancient PC, swapping all to hell, wasting hours upon hours of time, when "there is no budget" for a new PC. It really is sick.
Not only that, after five years, stuff wears out. Replacements? "There is no budget for replacements."
Healthcare article at Kuro5hin
To achieve the highest levels of profitability, the authors say, IT organizations must be well-tuned and in alignment with the goals of the enterprise to which they belong
Well duh...
Whatever happened to the days when the boss man would quiver in fear at the demands of the IT force.
;)
"WE DEMAND PINBALL! Uh, it will make us work harder."
We got soft I tellz you!
-makoffee
It looks like you define it as crushing competion, or perhaps achieving monopoly.
I could define "winning at business" to be something else entirely; for example, making a sustainable system that makes the maximum number of people (employees, stockholders, neighbors) happy and fullfilled. An example could be the Yuengling brewery.
The reviewer reveals his devotion to the dominant cult of "economic warfare" in the first line. Just because it worked for Bill Gates doesn't mean I want to follow that road.
Growth without limit is the philosophy of a cancer cell --Ed Abbey
managementspeak is here to stay.
as someone else noted, so is geekspeak.
but here's what i want to respond to:
"but what is wrong with simply working hard and producing your product with craft and skill and not resorting to all sorts of "strategies for success"?"
b/c superior product doesn't always win. remember betamax?
i don't know what kind of businesses you 've worked in but IMX, management always wants to be the top dog in the field. i used to work at a large financial services company and every single one of those execs is driven by that objective.
management (particularly upper management) wants to examine any tool to develop and maintain market share dominance. doing anything less is bad for your shareholders (assuming you're a listed company). nobody wants to be the betamax of their industry.
i think we should use betamax as a verb: e.g., "ah, apple's got some great technology but they've betamaxed". this isn't to say that anything apple does is bad: on the contrary, i like what i read, but marketshare is something it doesn't really have, and since profits come w/ marketshare...
ed
Crap, to win at business one simply has to make a real genuine profit.
Look at Morgan Cars. They have about the most atiquitated auto factory in the world, using some of the most obsolete production methods arround (such as pushing rolling chassis from one plant to another plant across the yard for fitting on body work). They have a virtually nought marketshare & even then can't meet demand & don't even bother marketing their product. But guess what? They make a genuine real profit & actually have increased production (from 9 cars a month to 10 cars a month) This means Morgan's doing better business-wise than the many billion dollar car plants arround the world that don't make a profit (For example all the of Ford US's car divisions which are kept alive by the huge profits of Ford's small truck division).
At the end of the day, the point of business is making a profit, everything else are just s'pose to be ways of doing it.
& this is why IT's now failing, business wise.
The IT segment still locked into past expectations from the 'tulip boom' caused by venture capital gambles, the dot.bomb share price pyramid schemes & the Y2K scams. Consequently IT employees & management expect too much money, relative to the profits the IT segmant actually makes (afterall considering the amount of time IT personel spend bumming on the web, LANing counterstrike, wasting time on office gossip, making coffee, going for promotions, etc; & taking into account the fact that when IT personel are actually doing some real work, more often than not it's on a project that's not really genuinly productive, do IT people really deserve to be paid anymore than brickies labourers, panelbeaters & council road workers)
What's needed is for 25+% of the IT industry to go belly up. This would couse a flood of IT labour & bring down their unrealistic wages. Ontop of which the remain 75% of the industry will gain in marketshare, turnover & economies of scale, making them more productive at less costs per revenue dollar. This brings profits, IE real business success.
This phrase ... "Instead, the authors make the case for transforming IT into a âoevalue centerâ â" a mission-critical member of the business enterprise, managed as a strategic asset." is very interesting.
If the author gives clear concise examples of how to do this with FULL ROI models and detailed analysis, this book would be of a tremendous value for IT and business people. It seems that certain IT projects are more difficult to quantify in a P/L statement vs. a typical business project. Thus, IT is a difficult beast to get a handle on.
For instance, how do you value data security? We'll there's lot's of "ways" to do this, but a lot of the valuation is in the risk vs. cost. And cost many times is only valued IF something happens, such as a breach. (With certain laws, requirements are given - but this then falls into the cost section not the value-center) The point is that when running a business project, the costs (salary, overhead, materials, inventory, insurance, etc.) can be nailed down to the penny and the price can they be set to make a profit.
As for "strategic asset" is your network a strategic asset? Most likely not, it's like the buildings you work in, a requirement to do business. At least managers can see the building and space. Many have a tough time with the things you "can't see" like bandwidth. So, it would seem that IT is broken down into an "infrastructure" or cost area and a strategic area. A strategic area being something that can drive value (e.g. CRM, DataMining) and even these things have dubious ROI. Read CIO or any type mag and you have CIO's claming 110% return on investment. I've seen some of "ROIs" and they are more subjective and art rather than fact and science, between the NPV used to nailing down the true costs over time.
If there was a standard, consistant, true ROI model, then the author's can move towards the "value-center". If the author also goes into how to manage and IT portfolio, this is of value. If they haven't done either of these things, then it's still just piled higher and deeper. I'll reserve judgement until after reading the material.
It's not about getting the PHB's to leave the nerds alone - it's about the nerds coming out of their shell and understanding exactly how business needs and technical solutions come together.
All fine and good, but many of us nerds think the suits are often clueless about IT. Most commercial organizations are heavily sales-based. Sales-oriented people rise to the top, and they in turn hire others like them to run IT and other departments.
The problem is that being an expert at persuasion often does not translate into being good with computer technology. For example, they may try to talk you into adding features that they find neat or cool because that is what sales-people do, but these don't necessarily help the front-line end-user who may have a different set of priorities. IOW, they are doing a sales job on their own organization, often out of shear habit or inborn nature.
Another example, many organizations *refuse* to prioritize system requests/features. That is because they *want* the wiggle room and want to be vague in order to play the sales-card when they need it. (Note that I did not suggest a non-changing list, so this is not about flexibility.) Salespeople are often non-commital because they want to use persuasion power to control and change things on a whim instead of linear schedules and rankings. If they think of the right "sales pitch" later on to get a higher priority for their agenda, they want to be able to use it immediately without having The List in the way. They want people buttons to play with instead of clear-cut logic rules.
In other words, what makes them good at sales and people management often backfires in IT where being concrete and specific really helps a lot. You cannot just persuade and lecture Java, VB, or Oracle to behave based on vague but lofty notions or buying it a good lunch.
You can't program computers the same way you program humans, and IT is stuck in the middle of this impedence mismatch.
Table-ized A.I.
Personally, I see it as IT's task to commit to quickly building inexpensive sources as well as to professionally network effective information while maintaining the highest standards.
or maybe:
strive to assertively pursue diverse meta-services because that is what the customer expects.
I'm sure these books are just generated by automatic management speak generators.
1. IT is not a panacea. IT will not solve world hunger or help your products sell better if they're crap.
2. IT is infrastructure. A good IT department will keep things running without fanfare, but like most infrastructure, its ROI is hard to compute. After all, how valuable is the interstate highway system to US commerce? Most people can acknowledge its value but few can actually quantify it. IT can provide solutions to problems but the success and value of solutions is dependent on the nature of the problem. Sure, an IT department can automate TPS reports and save productivity, but the business question should be whether TPS reports are necessary and the best solution to its problem.
Well, there's spam egg sausage and spam, that's not got much spam in it.
"Achieving Business Value from Technology : A Practical Guide for Today's Executive" by Tony Murphy
A *really* good book that addresses the whole "how to measure ROI" when so many of the returns of an IT investment are soft.
"Corporate Information Strategy and Management: Text and Cases" by Applegate &c.
A textbook, but a good one. The cases teach some really valuable lessons. The text is, itself, a good overview of the different business-technology challenges that occur.
Having used these both at school and at work, I think they are far better at explaining (a) how to explain the hard (cash) aspects of an IT project as well as (b) helping to show the value of the soft (architectural, organizational, etc.) benefits that can't easily be transferred into financial terms.
If nothing else, they are both good for one other reason: they can both help you decide which project or option would be better...even if money is not involved. The simple ability to decide which project will be better in the long run and the ability to explain this in clear terms is an important skill that these books will also help readers develop...
Well, by all means, give them feedback using Slashdot Trolling Phenomena
(Found using google with the interest of telling google what google knows)
If you blog it...
"Software" is a commodity.
"Software you want" is not, especially for businesses, especially for businesses using the software as a skeleton to hang the rest of the business off of, which is basically every business over 50 employees. Oddly, they just don't sell Major University In A Box, or World-Class Automobile Company In A Box, and you sure as hell can't download it from Sourceforge.
"Heironymous' Law" is more like "Heironymous' Really Idealistic But Wrong Idea"; don't hold your breath waiting for it to appear in the Jargon Dictionary.
Just how do you think you sound to a manager when you speak of pointers and references??
Just because managers many times are ignorant doesn't mean that you have to be.
"Heironymous' Law", which I proposed a day or so ago, states that software costs fall by half every 18 months
First of all, it is Gates' Law.
Second, it is "software speed falls by half every 18 months".
EVERYBODY wants their department seen as an 'investment' rather than 'cost center'. Why? Because cost centers are the first things to get cut. While it's refreshing to see someone mentioning IT as an investment [as opposed to marketing, HR, advertising, etc., which have all been written about], it's probably better to look at all departments as investments in the whole company.
In my experience, the relationships between departments are very symbiotic in successful companies, and if cuts are needed [to meet financial goals, etc.], it's looked at on a project basis rather than departmentally, e.g., the portion of each department's budget tied to a specific project goes away if the project is killed [not just IT or advertising or whatever].
Interesting aside...anyone notice that the Finance department is usually immune from this tag? I don't know if I've ever seen the pencil pushers called a cost center.
hmmm...maybe I chose the wrong career.
Who put this thing together? Me, that's who.
I was part of a large project that involved 20 people, PM, BPMs, architects etc. Took years and cost millions. The resulting application worked, but its internals made me cringe.
The next project was supposed to be a tweak of the original project for a different target market. I essentially reimplemented the bulk of the application in 6 months with 1 PM, 2 hard core developers and an outstanding DBA.
In my experience, the best way to accomplish projects is to have a small squad of 4 people (at the most). One PM who understands the business and technical aspects of the project, and can also do some hard coding. 1 to 2 hard core developers who also have some business sense. 1 great DBA with some business sense.
If a project is too big for such a squad, then it should be broken down into chunks that the squad can handle. And it will end up being the same squad, since putting together another such squad will take too much money :)
One expensive, good developer is better than any number of cheap, mediocre ones. One good PM who understands the business and the technology and is able to architect a solution is worth his weight in gold.
Just me $0.02
Measuring the benefits of many IT projects costs more than benefit margin itself. They often lack simplistic metrics like widgets per hour or customer complaints per month. Suppose you measured them by user complaints per unit of time. This would encourage the developers to only put in basic features so that there is less to go wrong.
How do you measure the fact that a better query or reporting system allows managers to study the data from more angles and make better decisions as a result? About the only way I have ever seen is to give the system to half the regions/locations only, and see if that half improves sales. However, by the time you have enough time and data to measure, new requirements or needs often pop up. Good measuring is often a rather slow process, but organizations often want *quick* strategic advantages.
Table-ized A.I.
Outsourcing simply reduces the cost of your man-months. Even if you achieve a high level of efficiency per man-month or function point or however you measure your IT output, the real question is are you producing income or improving efficiencies in other areas. I've worked on large (200 + man-month) projects that have produced neglible income gains (my employer is probably still paying for them). I've also worked on small projects (1-2 man-month) that paid for themselves 12 times over within a year.
Unfortunately, very few business people are good at using IT to improve their business. Moreover, few IT people bother to look outside their own domain of expertise.
IT Doesn't Matter
Nicholas G. Carr
HBR
5,622 words
1 May 2003
Harvard Business Review
41
0017-8012
English
Copyright (c) 2003 by the President and Fellows of Harvard College. All rights reserved.
As information technology's power and ubiquity have grown, its strategic importance has diminished. The way you approach IT investment and management will need to change dramatically.
In 1968, a young Intel engineer named Ted Hoff found a way to put the circuits necessary for computer processing onto a tiny piece of silicon. His invention of the microprocessor spurred a series of technological breakthroughs--desktop computers, local and wide area networks, enterprise software, and the Internet--that have transformed the business world. Today, no one would dispute that information technology has become the backbone of commerce. It underpins the operations of individual companies, ties together far-flung supply chains, and, increasingly, links businesses to the customers they serve. Hardly a dollar or a euro changes hands anymore without the aid of computer systems.
As IT's power and presence have expanded, companies have come to view it as a resource ever more critical to their success, a fact clearly reflected in their spending habits. In 1965, according to a study by the U.S. Department of Commerce's Bureau of Economic Analysis, less than 5% of the capital expenditures of American companies went to information technology. After the introduction of the personal computer in the early 1980s, that percentage rose to 15%. By the early 1990s, it had reached more than 30%, and by the end of the decade it had hit nearly 50%. Even with the recent sluggishness in technology spending, businesses around the world continue to spend well over $2 trillion a year on IT.
But the veneration of IT goes much deeper than dollars. It is evident as well in the shifting attitudes of top managers. Twenty years ago, most executives looked down on computers as proletarian tools--glorified typewriters and calculators--best relegated to low level employees like secretaries, analysts, and technicians. It was the rare executive who would let his fingers touch a keyboard, much less incorporate information technology into his strategic thinking. Today, that has changed completely. Chief executives now routinely talk about the strategic value of information technology, about how they can use IT to gain a competitive edge, about the "digitization" of their business models. Most have appointed chief information officers to their senior management teams, and many have hired strategy consulting firms to provide fresh ideas on how to leverage their IT investments for differentiation and advantage.
Behind the change in thinking lies a simple assumption: that as IT's potency and ubiquity have increased, so too has its strategic value. It's a reasonable assumption, even an intuitive one. But it's mistaken. What makes a resource truly strategic--what gives it the capacity to be the basis for a sustained competitive advantage--is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can't have or do. By now, the core functions of IT--data storage, data processing, and data transport--have become available and affordable to all.1 Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production. They are becoming costs of doing business that must be paid by all but provide distinction to none.
IT is best seen as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries--from the steam engine and the railroad to the telegraph and the telephone to the electric generator and the internal combustion engine. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their
and I can't take credit for it:
"American Democracy is where you want a cup of coffee and they offer you Coke or Pepsi."
so maybe you find this book more interesting: american psycho by bret easton ellis. it also has tons of businessspeak, but it's a lot more entertaining. it's about how you can be a successful businessman during the day, and an imaginative women murderer during the night.
>> The IT segment still locked into past expectations... uh, no? have you tried to GET a job in IT since 9/11/01 ? The wages ARE down, but the market still values IT workers higher than "brickies labourers, panelbeaters & council road workers" because the supply-demand ratio for IT is higher (not to mention the education and commitment levels required.. duh..).
>> relative to the profits the IT segmant actually makes You're a bank. How much profit does your IT dept generate? Probably around zero. How many days could you operate without a well run IT dept? probably about 0 days. Oversimplifying the situation isn't going to change the fact that modern businesses often cannot *exist* w/o IT.
>> What's needed is for 25+% of the IT industry to go belly up. This would couse a flood of IT labour & bring down their unrealistic wages.Ontop of which the remain 75% of the industry will gain in marketshare, turnover & economies of scale, making them more productive at less costs per revenue dollar. This brings profits, IE real business success. Wtf are you on. there IS a massive excess of IT labor and the wages Have decreased. What do you think is appropriate for a senior network engineer, 6.25/hour??! wake up. Whose going to put in that kind of effort for 6.25? Zombie slaves? what are you, a HR droid?
>> Ontop of which the remain 75% of the industry will gain in marketshare, turnover & economies of scale, making them more productive at less costs per revenue dollar. This brings profits, IE real business success.
Great plan, o leader. Let's put some people out of business, thereby increasing the profits of those not removed, thus creating success! Whee! you've found the secret of life!
Step 1: force 25% of companies out of business (how? court order?)
Step 2: thousands of highly skilled workers are forced to compete for less jobs, reducing the asked wage.
Step 3: remaining businesses save on employee costs without changing their business models, yet magically cover the open market segment. Profit!
I have an equally sane proposal: let's force 25% of accounting firms out of business, forcing accountants to accept lower wages. Business will save on accountants and the remaining firms will have more business, therefore more profits, therefore they will "win at business".
What's the point of having "winners" if you have to rig the game?
PS: IT is not failing. IT is necessary to business. It is not going anywhere, though it is changing.
Cost centers are not "measured upon eliminating cost".
Cost centers are an accounting term, typically based on the charter of accounts. As an example from the SAP definition:
Organizational unit within a controlling area that represents a defined location of cost incurrence. The definition can be based on:
Functional requirements
Allocation criteria
Physical location
Responsibility for costs
EVERY organization that does any accounting does this. Whether it's submitting a reciept for a rented car for a sales trip, ordering up chinese food for a late night at the office, or even sometimes photocopying costs... They all get charged to a "cost center". In modern accounting (you know double-entry AR/AP) - a cost center is an AP for a particular chunk of the organization. EVERY chunk of the org has one - sometimes all the way down to a individual level.
It just so happens that most IT depts bill a lot of purchases (those servers, that software, etc) to their cost center. So it appears in most organizations that they spend a lot of money w/o necessarilly saving any - it's just the "cost of doing business in the modern day". When in reality if the IT dept could get a matching A/P entry for the time they save, and services provided, the ledger wouldn't look quite so unbalanced.
More informative than this review, or this book! (oops, I mean "value-added.")
sulli
RTFJ.
Software adds value when it matches the business process. The closer it is to the business process and the more accurately the business process is modelled in the software the more efficiencies it adds to the process and hence greater value it gives to the ultimate customer.
This also means that anytime the software is out of sync with the business process it is adding inefficiencies into the system. This is one way of determing the value the software and IT investment adds to a business process.
This is why Agile Methodologies are so important they allow software to remain up to date with the ever changing business processes. Even getting a new customer can change the business process drastically.
Shrink wrapped software and big-ass CRM packages etc, except in the most commoditized uses such as word processing add little value to a system and more often add inefficiencies into the business process. I know the company I am with has an accounting system and crm system that add woeful inefficiencies and cost an arm and a leg.
It would be cheaper to hire a full time developer for each system and get a barebones oss system and say we need this, this and this and let the system have pieces added as the companies business processes need it. This makes the software and the developers immediately accountable to the business process. Which is a good thing.
For instance, how do you value data security?
We have contractual obligations with our customers for data security. Anything less than the contract stipulates means we are liable.
As for "strategic asset" is your network a strategic asset?
Dont think of the IT components as chunk of atoms. Draw up charts of the business processes that need to be supported. Then determine the most efficient manner in which IT infrastructure can support those business processes.
Think of the business process first, it is IT's role to increase the efficiency and value of the services and contracts represented by those business processes.
cam
To be accurate, that is Gates' First Corollary to Heironymous' Law. Gates' Second Corollary is "software reliability falls by half every 18 months".
I agree that "software you want" is always pricy, but this applies to cars, clothes, women, and most everything. No-one really wants commodity items. That does not make them less cheap.
Let me list some of the drivers of Heironymous' Law:
- cheaper hardware
- cheaper communications
- software portability
- standardization
- state of the art (but this is a minor one, sadly)
- level of abstraction
The most obvious manifestation of Heironymous' Law is OSS, but it's only one. Software by wire is more subtle but just as real. Cheap developers from across the world ($200 per month for an Indian developer) is the way to get that luxury feel at a knock-down price.
Ceci n'est pas une signature
You're correct if you swap "data" with "services".
1. We provide services to those who need it.
2. We deny services to those who do not need it.
3. We increase the efficiency of access to the services in compliance with rules 1 and 2.
Otherwise, you have made some excellent points.
-jason m
Carr's article will influence thousands of CEOs and CIOs and thereby, the lives and livelihood of millions of developers. In contrast this book will be just another insignificant bit of marketing garbage that won't make it onto the bookshelves of the local Barnes & Noble.
Go figure...
You want a pic? I've got an Apple G4 Tower, Sun Ultra 5 and 5 linux boxes.
"Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster." -
Sometimes, you americans really lose sight of the facts.
Firstly, there is no 'winner' in business; at any one time, in any given market, on some particular scale, someone is ahead of their rivals - but it never stays that way for very long.
Secondly, is 'winning' actually the point of being in business? Surely it must be just as important to look after your staff and customers? Without them, you can't 'win'.
To use a pair of americanisms, give us a break from this total bullshit.
Outsourcing programming does not work either. You get some code, but if you don't have a continuing relationship with the guy who wrote it or quality control there is no point. Most places I have even minimal respect for outsource menial stuff to co-op students. If you need it done right do it in-house.
Brings up an interesting point, though. Most companies I've seen outsource (eg Nortel and HP), have tried and failed to run things inhouse. They outsource because they figure it can't fail worse (or more expensively) than it did inhouse. They are wrong, of course, things can always get worse if you don't fix the real problem (bad HR, bad management, bad priorities).
You got me into this! You were the ideologue! I'm only a poor assassin! - Twenty evocations, Bruce Sterling
1. We only care about our core business
2. We can change our core business any time.
You have to concentrate on what brings in money, but if you ignore the stuff that doesn't your company will die. HR may not be core business, but if you do it badly, or leave it to people outside your company (eg headhunters), you can expect failure.
Most forms of downsizing fail. Remember about 5-10 years ago when every department had a secretary? The secretary usually made peanuts considering the work she did, and s/he saved time for more highly paid employees. Now the secretaries have been downsized and you have coders, engineers, and other technical people writing stuff up (often in different standards or formats with varying quality of English) at 3-5 times the cost/hr. But it saved money, sure it did.
Outsourcing truly generic stuff, like payroll, works. Outsourcing company-specific stuff, like IT is foolish.
You got me into this! You were the ideologue! I'm only a poor assassin! - Twenty evocations, Bruce Sterling
IT REQUIRES continuity.
You got me into this! You were the ideologue! I'm only a poor assassin! - Twenty evocations, Bruce Sterling
Ford made the mistake of paying employees enough so that they could become customers. He should have outsourced, raised prices, laid off people, and changed his core business to include stock market manipulation.
Trying to get good employees and sell goods and services is hard. Manipulating results and grabbing investors money is much easier. It also means that the people who do work suffer, not the people who mismanage.
You got me into this! You were the ideologue! I'm only a poor assassin! - Twenty evocations, Bruce Sterling
This book seems to be arguing (from an IT centric standpoint) the same thing. Integrate with the business. Be a profit center.
Have you read many marketing books, or sales books?
IT has come of age. It isn't some bolt-on side project. It _is_ about time it becomes part of Just Doing Business.
No, it isn't so cool anymore, but this is what being sucessful means, in the business world. That means work, and jobs, and stability. There are still cool things to be done. And yes, I do know that, because I'm playing with instability, and sometimes no work, and I don't have a job outside of my company. Oh, and really cool new projects that are terribly risky. Don't come here unless you can lose everything. And your car. And your penis. <family guy> hehehehehe</familyguy>
I forget what 8 was for.
"Cost center" means something that doesn't generate revenue. Much of the (horrible annoying things we bitch about here is) business of business is turning cost centers into something else that generates money.
Of course IT is part of the business. If it were extraneous, that would be a pretty poor business to keep supporting it.
I'm a big fan of internal value exchange for large businesses. Engineering and Sales have to buy IT services within the company. Cost controls have an interesting property in that the focus the mind.
Another of Buffet's axioms, which you're not using, is "keep everyone accountable".
I forget what 8 was for.
Slashdot: Mission critical best of breed News for nerds, Total Quality Managemented synergizing stuff that matters.
Melius mori in libertate quam vivere in servitute.
You clearly don't work for yourself.
If you did, you'd have a notion of competition.
Competition is about providing best value. Sure, sounds trite, right? Try to offer a service in NYC, or San Francisco without a justification of why you're the best. Honestly, try it - I've done it in both cities. Please, report back here.I'll share mime if you share yours.
You don't have to fuck your competition, but you have to be bloodthirsty. That's a fact.
So, the question is, when do you stop? I don't exuse any of the creepy dealings of these corps(es) - but I do wonder where "expanding your market" meets "being hated". We're tiny, and try to be nice, and so far all clients agree. Is there something that looks like Microsoftian behaviour in me? (We offer source to all clients, retain all copyrights, don't ever stop anyone from using our ideas, sometimes tell people they can't reuse source. I don't like that, but perhaps we shouldn't have been in business with them in the first place.)
OK, anyone want to pile on, I supose the is the place.
I'd be interested in responses.
I forget what 8 was for.
ITIL [itil.co.uk] (Information Technology Infrastructure Library) -- on which COBIT was partly based. It's a best practice framework for how to manage your IT shop.
> I wonder how many parallels you could draw between HR and IT.
In the last re-org, I.T. just got put under H.R.
I smell death.
Same reason why people bring me broken staplers, since, after all, I fixed a corrupted database and debuged a ven-duh's code.
Policy makers, like users, are morbidly imbecilic and tend to clump unlike things together.
Broken code BAD! But Ken Fix
Stapler jamed BAD! Ken Fix code so Ken fix stapler too...(grunt)
It's a complete logic disconect.
If you like spaghetti because your house is made of bricks, then you to can be a policy maker.
"What do you mean? I always look for "value-added appendices" when shopping for books. More importantly, I never buy a book without value-added indices and tables of contents."
Somebody mod this guy up please! I think he picked a good example, the 'review' is dribble he found a good example of the useless superlative dribble used and was actually funny.
Is, imho, a much more important piece to read, as it highlights the ways in which IT does matter, and how Carr's article is dangerous.
-Stu
Coming soon: http://www.bpm3.com/hbr/ Early draft extracts available at that site. Howard