IT Sourcing Risk Management

Risk in general can not be eliminated but it should be managed. The likelihood of geo-political risk and security exchange  risk of any IT sourcing partners located at India was very low three months ago. It is not low any more due to the recent terror attacks at Mumbai and last week financial scandal by the Satyam services and recent world bank backlists Wipro

Terror Attack:

Tension between India and Pakistan has been there for past 45 years and Kashmir is the center piece of the conflict. Three wars were  fought between these nations after their independence.  Yearly, there were thousands of people died on both sides for so many years. Both nations have nuclear weapons tested in last ten years. This is a known fact and the likelihood of any major conflict that would impact the out sourcing business was not ignored  but, before few months ago, the probabability of occurence was assigned as low as zero.

Mumbai terror attack caught many corporate America’s attention because the attack was strategically planned by terrorist  mainly to get corporate America’s attention.  It was executed during the Thanks giving holiday when majority of the American people spend their time with family eating turkey and watching TV (Lions and Dallas cowboys football games). Unlike terror bomb blast attacks, this attack was prolonged for three to four days and constanly the progress of the attack was updated in the television. (Human mind believes what it sees more) The geo-political risk what was considered as low as zero before in selecting the sourcing partner from India has increased significantly after this terror attack. It is not as low as zero from any out sourcing assessment.

Financial Scandal:

Satyam scandal is India’s Enron scandal. What happend after Enron collapse?  There were more regulation introduced, more stringent fedral, SEC policies and resulted in SOX. Does SOX will ensures that Enron similar debacle will never repeat in US again? In my opinion, I do not think so. It created more regulation and audit controls on IT general controls including processes, procedures, policies and etc. It is not guranteed to never repeat the similar corporate collapse, but it will make the corporate executives not easy to make the similar mistakes. Taking the reaction to Enron’s situation into consideration, I speculate, the similar steps will be taken by SEBI (similar to SEC in India) to tigthen the regulation in India.

How this is related to IT sourcing risk? Coincidently, Satyam is one of the top 5 sourcing provider to major clients in US. Had a client in US picked Satyam as their souring partner, they need to go through the motions and cycles to over come the Satyam’s situation which will not help the client in any form or shape to increase their productivity or their bottom line. In some case, if a client depends on Satyam for major core business functions, there are potential risk that their core operation would be interrupted due to this astronomical scandal by a sourcing provider. What happend to Satyam could happen to any sourcing provider or to any company managed by SEBI ? Adding fuel to the fire, world bank back lists Wipro, another major sourcing provider from India.

Based on the sourincg strategy and solution design, the risk management plan of sourcing strategy should consider these recent risks which are made visible to corporate America.

Vivek – New IT Role Model

Vivek Kundra is a new role model  for me and he will be a role model for any ambitous enterprise architects and IT strategiest. For the enterprise architects who enjoys their job to make an impact to organization’s bottom line, Vivek would be one of a good role model to them.  It is encouraging to me that he has been able to push IT innovative solutions to a Government organization by over coming the office  politics,why can’t the Enterprise architects in the corporate America be able to push those kind of innovative, cost effective solutions. It is encouraging!!

I wish good luck to Vivek and inspire more innovative minds  of future economy.

High Demand IT jobs in 2009

In the recent well know IT industry research firm’s study, analysts (the authors of the paper)  identified list of IT roles hard to fill even in this market. In the  paper, the top most of list is enterprise architect. EA role is  hard to find even in this poor job market. The report also stated that the demand of enterprise architect in 2008 grew and predicted that the demand of enterprise architect will continue to grow in 2009. The sample taken in the study is in the range of 250 companies.

Why companies hire enterprise architects even in this poor job market and here are my rationale.

  1. Enterprise Architect is not like programming or administration skill. It can not be mastered by under going a certification process. It is a good balanced combination of  IT  and business knowledge to assist the senior executives to identify the discretionary and mandatory  spend of organization.
  2. Cost optimization ideas are most needed and common in this economic climate and enterprise architect would play a significant role. Enterprise architects would be able to come with out of box ideas to sustain in the market condition. The specific ideas are based on the industry. Just to amplify the above point, let me take BFSI industry. A seasoned enterprise architect in BFSI industry will understand the major driver of the business and propose an investment strategy to the office of CIO.  Even to be more precise, in this credit market, consumer leading companies shall look for a refined credit score cards and EA would provide recommendation to executive management office that the systems in the IT landscape should be flexible to accommodate the changes to support the credit score card. Influence the executive steering committee of investment strategy team to assign more weights to credit scorecard project since it has direct impact to the bottom line of the lending business. Even in some cases, based on their business knowledge depth, EA are in good position to even recommend the credit risk management team in the lending company  various options available to non traditional credit score card fit the current economical situation. In stead of traditional logistic regression credit scoring model, they would be in better position to recommend how the joint time frequency analysis (like wavelet analysis, Gabor transformation, short time Fourier transform and etc)  can be applied particularly in this economy. There is no standard scoring model available which analyze the behavior of the credit market in the joint time and frequency domains and it is very appropriate in this economic situation.

How EA can assist in the global economical crisis?

Economist and financial analyst says the current economical condition is the worst since great depression. The crisis exist in all fronts. The magnitude of global issues are very high. The financial & economical growth are not bright in near future. Companies are looking for cost optimization and eliminating discretionary spending in all areas.

Enterprise architects can play a signficant role in any organization to optimize the current spend and provide facts based data to eliminate the discretionary spending. Enterprise architects are the best qualified and well suited person to perform this role since they understand holistic view of organization from financial, organization, application, business, information and infrastructure perspective.

Potential cost optimization areas where enterprise architects can assist an organization

  • Contract negogiation with existing providers (software, hardware, maintenace and enhancement, right sourcing, contractor, professional services)
  • Application portfolio assessment – Sundown or eliminate applications in the landscape does not add signficant value to core business processes
  • Technology simplification – Eliminate and reduce the technologies in the landscape
  • Sourcing strategy – Bundle the applciation for cost effective service offering
  • Reduce technological complexity – Migrate the enterprise software (like IBM websphere or BEA weblogic, IBM DB2, Oracle, Portal server and etc)usage to open source software
  • Maximize  Web 2.0 technology for corporate colloboration- (Use Wiki, Blogs, youtube and etc)
  • Assist business teams in optimizing the business processes – reduce steps in return reduce head counts
  • Explore to migrate current licensing models to the term based licenses to improve the cash flow of organization

Enterprise Architecture – Team Size Analysis

I believe there has been increased clarity on the information architecture roles in the recent years. Particularly there are few good healthy discussions on how to develop an enterprise architects and what should be their roles? and what is the value proposition to an organization? In general, there is a better awareness in the senior and executive management teams to differentiate an enterprise architect with other architects (system architects, information architects, business architects, process architects and etc). It has been a challenge for the executives to define the apt size of the enterprise architects for their organization.

The question is: What is the apt size of an enterprise architecture team for an organization?

Consultant Answer: It depends..

Consultant answer is correct.

The real question is: What are the factors used to determine size of an enterprise architecture team in an organization?

The list of enterprise level factors used to determine the size of an enterprise architecture team.

  • Number of products/service provided by the organization
  • Revenue of the organization
  • Profit of the organization
  • Business Process maturity of the organization
  • Finance & controlling maturity level

The list of IT factors used to determine the size of an enterprise architecture team.

  • Number of people (including employees, contractors, consultants, out sourced) and their ratio
  • IT budget and Finance management controls
  • IT Process and system maturity level
  • Enterprise architecture adaption rate (or EA maturity assessment)

Based on the above factors the EA team can be classified as large, medium and small. Large is of team size of 50+, medium is of team size between 15-50 and small is of team size less than 20. Let me emphasis the small EA team. I believe majority of the corporation will come under this category and let me expand on the small size of EA team.

Organization structure for a small size EA Team:

Chief Architect (or manager of EA team) should directly report to the CIO. Along with EA function, IT Finance management, IT Security, SOX controls, vendor management functionalities also should come under the same small size EA team.

(Double click the image to zoom..)

When and how to use BPMS?

Business Process Management Suite (BPMS) is a set of tools truly enables the following key strategic objectives

  • Business – IT alignment
  • Time to market (Agile software development)
  • Adaptability
  • Process Efficiency – Foundation for Six Sigma
  • and lot more

If BPMS is in the technology road map and the organization is following the road map to move towards the vision, BPMS must be articulated to the executive management teams both in IT and business. The executive management teams may ask high level questions to understand how the BPMS fit in the organization landscape and how it will assist the organization to move towards the vision. When you deal with executive management team before you make them understand some concepts, ensure you erase the misconception they might already have. What BPMS can not do?

BPMS is going to replace all ERP like SAP, PeopleSoft?

BPMS will not replace the existing ERPs, portfolio systems. BPMS will stay top of it and orchestrate any new system development involving all key enterprise systems like ERP, portfolio

BPMS can be used for technology migration projects? Example, From database version 1 to version 2?

BPMS purpose is not to use technology migration project. First of all, BPMS can not add any value in the technology migration projects.

Few frequently asked question by the executive management team related to BPMS direction are listed below.

When to use it?

Use for a new system development if – the business processes changes frequently and they are core business processes, services provided by the new system can be used across different products, the requirements of the systems are relatively vague and would change frequently, involves multiple teams to complete the life cycle of the system function.

How to use it?

From get go, approach the BPMS will be used by both business and IT teams. Get the business teams involved from the beginning, engage them in the initial market research, selection & evaluation and financial commitments in procuring, establishing the foundation like infrastructure, competency centers. Bottom line, it should not be perceived as IT tool. It is a tool used by both business and IT team. How to use it? Capture all the business process flow, analyze the business processes, implement and manage it. All done in the same tool.

How the teams from IT and business work together? (particularly how the IT architects and business process designer work together)

The tool, methodology and approach brings both the IT and business teams (IT – Business alignment, partnership) together by design. The business team will be using the tool to document the business processes (for any project requirement), business analyst/consultants from both IT & business will analyze the business requirements using the tool (like simulation, identification of bottle necks etc), IT architects will build the connectors (to the ERP, Portfolio, enterprise database ware house), IT architects/consultants will auto build (code generation) the application using the tool, business analyst will using the same tool to perform business activity monitoring (let us say, the requirement is to build the credit decision engine and BAM will used to monitor the approval rate by state, product, type of loans etc)

What are the core competencies the IT organization must have to move in this direction?

Business consulting to business, innovation, business process management, business process modeling, business architecture, enterprise architecture, strategy, IT finance management, SLA management, vendor management, etc

How the development partners (like out sourcing partners) play a role in this setup?

Like any software system, the quality of the software systems are not guaranteed until verified/tested. Out sourcing partners can a play major role in verification (testing) of the newly build software system. They can play a role in building the connectors in BPMS. They can play a major role in maintaining the enterprise systems like SAP, PeopleSoft, CRM, etc They can play a role in assisting in capturing the business processes in the tool (the percentage should be very low in this category)

Different types of architects

Architect defines the architecture. Broadly the architects are divided into the technical and business architects. The business architect are focused on the economical change of the market and devise  a set of  business process  for enterprise or systems adaption and to attain enterprise or system’s mission and vision.  The technical architects are  focused on implementation of the business architecture defined to meet enterprise’s or system’s mission and vision.

The technical architects are broadly divided into

    System/Product architect
    Domain Architect
    Solution Architect
    Applied Architect
    Enterprise architect

Based on the architect characteristics, the types of technical architects shall be divided into the generalist and specialist. The specialist focus on one specific area and the knowledge acquired and possessed by the architect is deep. Where as the generalist, knowledge acquired and possessed in a set of areas is broad.
System/product Architect

System/Product architect are the generalist, responsible for the cohesive architecture solution of the system or product. They have equal strength in the both technical and business area. Plays a vital role to bring all the stake holders together and ensure all the stake holders concern’s are captured methodologically, formally documented and validated. Assist the project manager to make the management decision and makes key technical decision for the project/system/product. Brings all the technical architects, development teams, system analyst, and support teams together to ensure the cohesive architecture is defined to meet the stake holders concern and ensures the defined architecture is implemented. The system architecture validation is done by using the user case scenarios. +1 view of the architecture. The architecture verification is done through reviews.

Domain Architect

Domain architects are the specialist, responsible for the architecture solution for that domain. The domain architect is an abstract definition and there are various domain architects. The domain architects specific to the web development projects are

  • Application architect
  • Data architect
  • Information architect
  • Integration architect
  • Security architect
  • IT Process architect
  • Infrastructure architect
    • Network architect
    • Server architect
    • Web run time architect

Solution Architect

Solution architecture team is the set of specialist working together to research and seek solutions for a specific problem.

Applied Architect

Applied architects are match makers. The applied architects have the known set of problems, solution and context. The architectural patterns are applied to the system or product. The architectural patterns includes to the process solution or methodology for the implementation and its style.

Enterprise Architect

Enterprise architect are responsible for defining the holistic architecture solution for the entire enterprise.