Financial Understanding

In 2013 I wrote a series of posts about what to do as new CIO. My thinking continues to evolve on this topic, but I’ve come to rethink the need to understand the financial model for IT in your organization and to put greater urgency on that understanding.

In an enterprise, an IT organization and associated investments are made to facilitate the operations of the enterprise and to protect the enterprise. We don’t make investments just because they are fun or just because we want to do them. There is a driving force behind these investments.  Those forces are things like: operational improvements (reduce waste, speed, reduced friction, etc.), financial control, collaboration improvement, security, etc.  The benefits of these investments are mostly outside of IT. Yes, some investments benefit IT, but most of what we do benefits other organizations. Saying it differently, the costs might reside in IT but the benefits reside elsewhere.

That is the central problem/opportunity to understand. How does your organization account for this fact of life? This simply must be understood by all parties and it must be clearly highlighted to all parties and that takes a lot of help from Finance. This is probably one of my biggest failures. I should have done more in this area.

Projects in IT can save tens of millions of dollars in operations or across the supply chain yet cost millions in IT to make that happen.

M&A activity are particularly dangerous to IT in that unless the costs of integration are budgeted and called out and planned for as part of the go/nogo decision on the acquisition, IT can appear to spending a lot of money to integrate that that is not really an IT cost, it is an acquisition cost. I read a while back that the two biggest risks in M&A efforts is merging cultures and IT complexity/integration risks. A company board might decide to spend $600M on an acquisition but that decision should upfront account for the cost to integrate the companies together.

IT spend is a cost to do business. Probably, the best answer to this problem is to work out a clearly understood, above board way to charge costs back to business units that are driving the investments. That chargeback would include the startup costs for sure, but also might include the sustaining costs to run or support the capabilities. In any case, the costs need to be clearly visible and either chargeback or shown back to the business and across the business. Tools like Apptio might greatly help in these conversations too.

 

 

Haves and Have Nots

Last week I had a chance to spend time with a group of CIOs hosted by a well known information technology company. During the course of the 2.5 day session, the host company took some time to tell us about their IT operations and strategy.

The differences between what they are doing and what I see others doing was dramatic as the difference between black and white. Most of us, in the meeting could probably barely, barely, not at all, relate to this IT shop.

I see the same when I see the average IT spend as a % of revenue between different industries with some industries spending perhaps 15% or more of their revenue on information technology where manufacturing companies might be spending less than 2%. That difference is just staggeringly huge and it manifests itself across the whole spectrum of IT investments between those industries.

The haves and have-nots I think.

It might be that the incumbents in industries, those who have been around for a long time with embedded bases and IT foundations that just work, are going to slip behind and perhaps not be able to catch up? Start-ups who don’t have that base in place are free to startup on the newest, the latest, the cloud, the simpler, etc.

If a company is in the former situation, they need to double down on prioritzation, careful investment decisions and very strategic thinking about their IT infrastructure and operations. It is not easy.

 

Homogeneous Environments

Dear IT Vendor,

Don’t show me presentations that are just about your eco system of tools and how well interconnected they are and how all are problems are solved with your complete set of tools or systems.

You need to understand that nobody has an IT environment that is 100% your systems. You might want us to have only your ‘stuff’ but it isn’t going to happen. And I’m not going to write a check for you today to replace all my other systems with just your systems. You don’t know all my constraints and prior decisions and poured concrete so don’t show me a magic fairy tale.

Instead, you’ve got to talk to me about interoperability. You must talk to me about how I can connect your messaging tool with the one I already have in place. Further, you’ve got to show me examples of where this is working. And you’ve got to convince me that this is what you want to support. You’ve got to talk about openness, open standards, APIs, etc. And don’t try to steer me in a direction that is going to lock me in. I’ve got enough of those lock-ins and I’ve grown tired of them so I’m on to you.

If your story is only about you, then I’m going to tune out.

Thank you,

Mark

[wrote this post long ago and it never got published for some reason…]

Cloud Platforms and M&A Work

So I’ve been wondering if having a system in a cloud platform makes it easier to do M&A work, i.e. integrate an acquisition into your company’s environment. Is it easier to merge them into a cloud platform than to an on premise platform?

I know of what case where an acquired company and the acquiring company were both using the same cloud service. One might think it would be easy to merge them together, i.e. the provide could flip a switch or run a script or press a button and the domains would be merged. Not so fast, doesn’t work that way, actually very hard to do. In fact, a 3rd party is needed to merge the domains. Weird, strange and dumb.

In another case, three different companies that were merging used the same cloud service. In this case, it was easier, not because they could easily merge domains, but because all three companies had the same skills and knew how to use the systems and thus merge the systems. In this case, the new combined organization had lots of expertise that could be applied to consolidate the systems. However, one might argue that this would be true even if they were not a cloud platform, i.e. a on premise platform.

It seems to me that the advantage of having a cloud platform like Salesforce.com is that all the companies are on the exact same version. The cloud integration completely avoids the problem of being on the same software but different versions. That would seem to be the key advantage. Less variables to control.

What other advantages can you see? Is it an advantage at all? What do you think?

All About Project Management

I’m starting to think that IT is mostly about crisp, smart project management. IT teams are really teams that are trying to smartly implement technology solutions that have become so complex that they are hard to completely understand. Business processes and complicated software solutions are all about project management.

And wrapping around all of that is increasing need for information security. Protecting supply chain, technical and people information is becoming very hard.

Project management and security.

A few productivity ideas…

Thought I’d do a post, or several, on some personal productivity ideas. There are literally billions of lists or sites that will share with you the 11 things, or the 12 ways, or the 10 habits and I don’t want to add to that list. But resistance is futile and I must share some things that I use. So, here are some habits or methods or tools that I recommend. Feel free to ignore.

  1. Use Evernote. Get in the habit of saving receipts, pdf files, great articles, things you write, key things to remember, etc. to Evernote. Spring for the premium version and turn on 2-factor authentication and then use it as part of your memory. I can’t stress enough the benefit of using tools to remember and find things instead of depending on your memory. Change how you remember and find things and use Evernote.
  2. Use collaboration centric tools instead of stand-alone tools. Start using Google Apps(or similar) for work with others. Presentations, documents, lists, etc. No offense intended, but if you are doing things with the old office productivity tools and not using tools that are designed for teams, then you are locked into the past. There is a risk that you might be a dinosaur. Don’t be a dinosaur. Use the Google tools or similar.
  3. Manage your calendar and don’t let it manage you. Keep it correct and be looking ahead the next few days. If you can’t do something, even months in the future, then cancel it off your calendar. Respect those you deal with by honoring their time and yours. Be there on time and finish on time. If you are late to an appointment, then apologize. If you know of something years in the future, go ahead and put it on your calendar.
  4. Use a todo app on that smart phone in your pocket. Then everything you need to do, or must happen, or is related to an important deliverable, etc. is recorded on that todo application. You can use Reminders on the iPhone or you can use something far more powerful like OmniFocus which I use.
  5. Use https://www.instapaper.com(or an app like it) to save articles you want to read later. Install the app on your smartphone and you can read on the go.
  6. Use Feedly to aggregate all the web site you want to read. Then go there to catch up on the sites you want to follow instead of visiting all the different sites. You can use Feedly on your smart phone or Reeder to then read articles offline. Highly recommend. Then use Instapaper to save things you want to read later or send things you want to keep to Evernote. I use Evernote to save articles I want to save indefinitely. I use Instapaper as the holding place where I want to think about it further or I want to think about saving it longer. Evernote is only for the gems.
  7. If your todo app can accept email actions and put them in an inbox (like Omnifocus) then learn how to use this feature to forward emails that might require action later and turn them into todos.

There you go. Some thoughts on getting things done and staying organized.

Constraints

Been reflecting lately on Goldratt’s constraint theory books and ideas which I read years ago. The Goal: A Process of Ongoing Improvement was the famous one, but he wrote several others and they are pretty good. I’ve thought about managing to the constraint ever since.

I am amazed how we forget these ideas over and over again. We ignore the constraints and just blindly plan to execute assuming a miracle will happen. Projects (and teams) that don’t even consider where the bottle neck is located in the process.  Not even one second of thought is given to the constraints.

If you’ve not read the The Goal, I recommend you read it. It applies to everything. Critical Chain is another good one.