IT Architecture

Rapid Solution Delivery Framework

In this tough economical situation, leading a multi-million, multi-year project to a failure is not an option for any corporation.  Leaders or managers who lead project for years without successful implementation must be watched closely by the executive management for their performance during this economical situation. I totally understand an organization can learn from their mistakes, but successful organization learns from others mistakes but not on their own cost.

The project managers and leaders are seeking the best possible ways to ensure successful implementation in spite of any unforeseen hindrance in the execution. Even for the multi-million dollar projects utilizing the cost effectively solution are demanded. The project managers and leaders are seeking the best enterprise or system architect to provide solution to exceed customer expectation, meet requirements and at the same time provide most innovative and cost effective solution.  Enterprise architects or system architects are required to have a set of tools in their arsenal to provide a rapid cost effective solution with highest possible success rate.

Rapid Solution Delivery Framework is an abstract concept used to rapidly define a cost effective and innovative solution. The key components of the framework are:

1. Cloud computing
2. Open source
3. Social network tools

Cloud computing: It addresses the rapid infrastructure setup or applicaton setup or business rules for any solution delivery. The cloud platform may come from external public cloud provider like Amazon or internal cloud provider or external private cloud provider (like secure24, rackspace for infrastructure) . It is rapid way of setting up the infrastructure for the solution delivery. There may be cases where cloud platform may also provide business solutions.

Open Source: There are lots of commercial software product companies leveraging the open source or supporting or sponsoring the open source to improve their commercial product quality tremendously. For instance, IBM supports Apache product development and leverages the Apache web server and bundles it as a IBM HTTP Server (I H S). The open source concepts are not pertained to system software. The open source concept proliferated to various segments and even in the chemical bonding structural analysis there are lots of open source tools available where the researchers and students easily learn and collaborate. Open source has become an integral of any IT solution delivery model.  Open source provides wide range of solutions from operating system, system software (webserver, database server, application server), application development frameworks (spring, hibernate, struts), security (OpenSSO, Crowd, OpenLDAP) , application development IDEs (like eclipse, Galileo ) and etc. These open source products not only provide quality solutions but also provide cost effective solutions.

Social network tools: Social networking concepts and its implementation matured over the years and it is extensively being used beyond for personal use. There are major corporations like Cisco, Deloitte, IBM uses the social network tools for better collaboration among the employees to provide effective solutions to their clients. The tools landscape in the social network media is vast and deserves a separate blog. To name a few major categories like Video, Video Aggregation, documents, events, Wiki, LiveCasting, Pictures, social bookmarks, Crowdsourced content, blog and etc. There are at least 3-4 popular tools in each of those categories. The social networking technology landscape plays a vital role in leveraging existing solutions, collaborate better among various stakeholder of the projects.

Vivek Kundra implemented few projects in DC state government as a CTO are few practical examples how social networking platform provides a foundation for a rapid cost effective solution.

Along with these key components, depends on the business requirements, there may be other commerical products like SAP, or Flex (for UI) will be part of the over all IT solution.

IT Waste Management..

hmm.. Do you know what is being wasted in your IT organization?

Nirvana (the highest level of maturity) is not reality in IT organization. It is a stretch goal. There are always room for improvement in any IT organization.

Some time back, a set of projects were perceived as a high business value projects and in last few months the business climate or economical climate might have changed and the project could be in the brink of extinction.

Some time back, a set of skills was perceived as a core competency for the future organization and due to the recent merger or acquisition or economical situation, the business strategy changed and hence the IT strategy. The core competency developed few years ago is not core any more in the current environment.

Some time back, a set of tools bought to enable efficiency with in the organization is not really working out due to various reasons..

What ever the situations may be, the past investment made in technology, people, process may not be currently required with in the organization.

IT Waste Management must be part of IT finance management group and IT finance manager/director is responsible for IT waste management function.

IT Waste Management Process:

Trigger:
Change in business strategy, IT strategy,executive leadership (end up by changing the IT strategy) or  merger, acquisition

  1. Clearly understand the current direction of company
  2. Clearly understand the change in direction due to the trigger
  3. Identify the gaps
  4. Assess the impact of directional change in terms of
    • Vendor Contract  – Hardware/software/Purchase service/Professional service
    • Intellectual  capital loss (work with HR and IT senior management )
    • System landscape  (work with Architecture team)
  5. Identify the retirement plan or reusable plan for all IT assets. Multiple teams like architecture, HR, procurement all need to work together to develop the above plans.
  6. Execute the plan. Realize and monitor the benefits
  7. Report the sun downed systems to IT controlling as IT impairment assessment. The IT intangible assets which are in the books can be adjusted and would bring tax benefits to the company.

The systems which are sun downed or retired in the process must be reported to IT controlling as a IT asset impairment assessment to reflect the new IT intangible asset value in the books. It would bring tax saving to the company.

The above steps are part of IT waste management process and must be performed every 3-6 months in every IT organization.  It will bring operational and cost efficiency to any IT organization.

An Evaluation Matrix for an Enterprise Architect

Some times, a simple concept may be crystal clear to you in your mind, but, it may be difficult to grasp by the audience. Enterprise Architects must continuously work on the soft skills to communicate a message successfully irrespective of the audience knowledge level. In that regard, an evaluation matrix for an enterprise architect is given below.

  • Perform the necessary action to meet the given objective and unable to communicate to the necessary stakeholders = FAILED,  as an enterprise architect to meet the mission
  • Does not perform the necessary action to meet the given objective & unable to communicate to the necessary stakeholders = FAILED, as an enterprise architect to meet the mission
  • Does not perform the necessary action to meet the given objective = FAILED, as an enterprise architect to meet the mission
  • Perform the necessary action to meet the given objective and able to communicate to the necessary stakeholders = SUCCESSFUL, as an enterprise architect to meet the mission

A set of soft skill must be possessed by an enterprise architect to be a successful enterprise architect. Enterprise architect must be able to connect to the application team, infrastructure team, IT finance team, IT procurement team, business teams, senior management, executive management and others.

IT Finance Management Framework – Part 1

There is a need to develop an IT finance management framework and I propose a general framework for a specific organization as a starting point.

Some of you may be wondering why EA & IT strategy person proclaims a need for development of a general IT finance management framework and proposes one for a specific organization type.

To develop practical enterprise architecture and receive value from it, understanding the financial management and integrating to the enterprise architecture is a key. IT Finance management plays a vital role in enterprise architecture analysis. For instance, to identify and report the cost drivers for systems with high maintenance cost in the enterprise, enterprise architects required to generate the list of software systems which has high maintenance cost first. If the enterprise system landscape is not integrated with the IT fiancé management, this of kind of analysis becomes manual, laborious and inaccurate.

Current state of IT Finance Management:

IT Finance management function is performed in non-uniform way across the industry. Lack of a general framework in IT Finance Management leads the IT industry to proliferate inconsistent methodology and creates a challenge to collaborate and share knowledge.

For broader utilization of the framework, the framework development needs collaboration and participation from IT financial analyst across multiple industries. As a starting point, I’m going to propose a general framework to manage IT finance for a specific organization type and welcome critiques from others to improve it.

Organization Type:
The proposed framework is for IT organizations which are business enablers, does not directly generate revenue, does not pay cash directly to payables and perform three major functions.

  • Lights on support to IT systems to enable business
  • Perform Enhancement/Discretionary changes to meet business requirements
  • Execute projects to transform/thrive/sustain the business

Key steps in IT Finance Management:

  • IT Financial Planning
  • IT Budgeting
  • IT Finance Reporting

IT Financial Planning: It is a first step in the ITFM. Financial planning must be aligned to corporate strategy. Corporate strategy provides a road map to reach corporation’s vision and corporate annual plan is a step towards reaching the organization vision. Annual corporate plan is an execution step of corporate strategy. Based on annual corporate plan, IT financial plan is developed by the IT Financial analyst, office of CIO in collaboration with financial controllers (Office of CFO) and office of Chief operating officers. The decisions like, invest in more product development, penetration to a new market segment, expand the presence to new country and etc are made, part of the annual corporate plan. IT financial plan is a high level executive plan to support the annual corporate plan. It will consists of major line items like, improve IT spend on new security projects, change systems to support multiple languages, continue the same level of lights on operation , improve the system reliability and etc. IT Financial plan will be created and will be used as base line to develop the IT budget.

IT Budget: Budgeting is a one of key piece of IT Finance management. Budgeting is a development of  IT organization cost plan for the year. Cost plan answers questions like, What is the total cost IT organization can spend and how they are going to spend. Once the budget is approved by CIO and corporate controlling, then the actual cost are tracked on monthly basis and variance analysis are preformed and reported to the various stakeholders like CIO, controlling office, senior management team, managers and others.

There are three different types of budget for different purposes.

  • Capital Budget – Lays out a plan for investment like plant installation, product development and provides a principle for investment life cycle steps like depreciation, amortization. Generally it is managed by a generalized group for the entire company. It is one of the functions under controlling organization under the CFO.
  • Cash Budget – It is a predication of expected cash balances the organization will experience during the forecast period. Cash budget depends on operating and capital budget. It also evaluates if the corporation has sufficient liquidity (like cash in hand, credit) available to meet the expected cash disbursements. It is part of the management accounting. The cash flow and fund flow of the corporation depends on the cash budget.
  • Operating Budget – It is a plan to reflect the daily operating expenses and depreciation. Typically the operating budget is developed annually.

For the organization selected, IT budget will be an operating budget. The major functions performed by the organization are lights on, enhancement and projects. It is so tempting to categorize all the cost under these categories in the highest level. It will become difficult to analyze different perspective of the IT cost structure like by hardware, provider etc.

Cost Categorization:

  • Employee – (On roll employees)
  • Contractors – (includes purchased service, consultants and etc)
  • Sourcing Providers – (in source, out source, multi source and etc for a specific service)
  • Software recurring fee – (includes software maintenance fee, service fee and etc)
  • Hardware recurring fee – (includes all servers, mainframe, disks, network, hardware maintenance fee and etc)
  • Others – (It is a catch all category includes like travel, training, depreciation, office & admin, rent, telephone, stationary, depreciation, rent)

The categorization is not a clean separation. As needed, the items in each category can be shifted between the category.

Direct cost vs indirect cost, project cost vs lights on cost are various categorization of cost structure. Those cost categorization  are just allocation issue. Once the cost are captured in the above categories, then the various other perspective can be easily created. I will demonstrate it specifically how to capture and how to report it.
Any line item in general & administration (G&A) spend in the IT organization should come under in one of the above category. This does not include the capital budget. Any capital project under taking or any new capital software purchase will not be included under IT G&A budget. That will come under capital budget. The scope of the framework at this point is to focus on G&A only. Once the framework is matured for G&A, capital budget can be added at the later stage. However, the capital budget will feed the depreciation value to the G&A.

Let us say the IT organization has the budget of $100. CIO has 4 directors reporting to him and there is a small set of staff in the office of CIO who directly support the CIO in the strategy, architecture, IT financement and etc. Let me show the end result of the budget and walk through the steps involved in the framework. After the budget cycles are complete the budget of IT organization of $100 will look like as given in the figure.

it-finance-mgmt

Let me walk through in part #2 what technique should be followed and each and every steps to develop an IT budget for the $100.

Software System Architecture definition process

Software System Architecture definition process defines solution blue print for a system requirement. The architecture blue print consists of various view points  of a solution. Architecture is not detail design. The blue print is a guidelines for the detail design.  It ensures all the constraints and the requirements are met before any signficant work (like detail design) is done. It is an iterative process. The blue print consists of view points like information, technology,development,deployment, functional, concurrency and etc. The different types of view point of the blue print depends on the type of systems. For instance, embedded system architecture blue print generally emphasis on concurrency,functional, deployment,technology view points and where as a financial system does not emphasis on concurrency view point.  The system architect shall decide the required view points for the system requirements.

 The blue print will be analyzed and validated from a different perspective like security, compliance and it is part of the architecture blue print validation process.