ITM

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.

Cloud Computing Architect

Due to the information over load and power full search engines like google.com, bing.com, the authentic information is freely available for almost any topic ranging from quantum mechanics to cloud computing. An average person can have a decent conversation about any topic with a minimum effort. It is real challenge to determine a real expert in any field in the current information over load.

Experts are not born but they are made. Before an expert becomes an expert they are beginners searching information to get familiar with the topic. In the information over load, a beginner can easily be represented as an expert.

Cloud computing has lots of attention in the current business environment, and IT executives really struggle to differentiate the cloud computing architect with a person JUST knows the right buzz words. A guidelines to differentiate an cloud computing architect and a person JUST knows the right buzz words with basic knowledge about cloud computing.

Cloud computing Architect:

1. In depth understanding of cloud computing tool box –

  • Understands the existence and usage of various technical and business cloud environment
  • Understands the technical and business stack type in each cloud and usage of those stack for cloning
  • Understands each logical and physical unit of the stack (like storage, database, BPMS, OWL, UML, business services like loan origination, consultative service, collection and etc)
  • Understands behind the scene technology (like cloud operating system, virtualization, storage area network, data transfer rate, raid type, data redundancy, disaster recovery plan and etc). Some argue, understanding behind the scene technology is not required for an architect. In my strong opinion, that is the differentiator between an architect (expert or evangelist ) and novice (quick concept exposed person). It helps the expert to pick right solution for the right problem.

2. Enterprise view of the cloud –

  • Various possible integration of cloud solutions
  • Latency between each cloud solutions

3. Solution design –

  • Various possible instantiation of the enterprise view of cloud

4. Solution delivery

  • This is the most important aspect of a cloud computing architect. First 3 area focuses on the various solution design and its components. The solution delivery focuses on solving a business problem using the packaged cloud solution. It is business problem and solution matching exercise. To illustrate the role of an cloud computing architect let me take a very practical simple example. Let us say, a company wants to sell loan (retail or lease)organization as a service to a smaller banks or credit unions.  For this business problem, the solution provider (let us say the company name is FinCo) has to understand the common business process involved in loan organization and customized loan organization for each customer (bank or credit unit) and both common and customized loan organization needs to be implemented using the technology stack like LAMP, Messaging, persistence database and etc. The common loan organization also be imaged for deployment. Common loan organization can be an cloud solution and it is ready to use. When a Finco, get a new customer, it can deploy the common solution in the cloud and made necessary modification to customize the customer needs.Deploying a solution using the loan organization cloud can be done by a sales or presale technical team. The architecture of the loan organization stack in the cloud will be done by the cloud computing architect.

Amazon cloud – A practical experience..

Being a strategist, enterprise architect, chief architect and a leader, I do not believe in setting direction without knowing or approximating the n th step. In one way, it is very mathematical in the approach as similar to dynamic programming. As dynamic programming used computer programs like computer chess programs, estimating the n th step is based on probable choices using intuition and facts. The facts has the highest probability for success than intuition and I prefer to use the fact when fact can be searched and found. Use intuition only when the facts can not be found.

Cloud computing is in every practical enterprise architect’s or IT strategist’s technology road map and the implementation of the cloud computing for any IT organization is the question of when. Cloud computing has enough cloud in the sky and in some area it is already drizzling and in some area it is more than drizzling. It is going to rain and as people say, when it rains, it pours. Same thing is applicable to cloud computing. It is going to rain all over and when it rains, it is going to pour.

To be proactive for any future requirement for the organization (like I did with google apps on gmail), as an enterprise architect leader, I subscribed to the amazon cloud to set up an infrastructure for web hosting.

I would like to summarize my findings in an executive level.

  1. Set up an elastic amazon cloud for a web site is very easy and designed for a non technical person. (Obviously, it is very very easy to set up for a technical person)
  2. Select the stack you would like to have in the cloud. There are numerous infrastructure stack already available and ready to use (like wordpress, LAMP, Identity management and etc). It is also easy to create a custom stack for your use or promote it your stack for a public use.
  3. Create an elastic IP address for the stack created.
  4. Login to the clone (or instance) using ssh and do the necessary configuration
  5. Load the application
  6. Map the domain address to the elastic IP address
  7. If the traffic to the site increases, increases the number of clones (or instances) associated to the dynamic IP address
  8. It cost me $2.18 and my 30 minutes time (cost for my 30 minute is priceless!)

All the above steps were done in less than 30 minutes with out any prior training. The site was launched in 30 minutes. The above steps make me think, why an organization has to have an army of people to set up and support an infrastructure? CXO, if you are reading this blog, do not spend any more of your significant G&A budget on the infrastructure, ask your enterprise architect to look into cloud computing and save significant cost and divert your G&A into innovation, investment management and enterprise architecture!

Cloud Computing Architecture and its future..

Cloud computing concept continue to receive acceptance and its adaption increases exponentially.

I heard today from one of vendor representative that he grew up in the farm and growing up in the farm means he had to learn whatever required in no time to do farming. He confirmed my thoughts on how farm boys grow up in the farm. Cloud computing basically took the farm boy approach. Do whatever is required to do the job!

Fifteen years ago, the PC support team use to install the operating system (windows 3.11,MS-DOS ) in each and every PCs and PC support cost use to be a significant cost in the IT shop. As repetitive mundane tasks mandates  innovation, solution like Norton Ghost solution were emerged and hence deployment made easy and drove the PC support cost down.

Cloud computing took the Norton Ghost solution to the server environment.  Like me, I can imagine most of the IT members spent significant time in  building the development, testing, staging and production environment for each application and spent  time to ensure that all the environment were build alike and still had environment behaved differently for unknown reasons. Cloud computing solves all theses problems.

Key components of cloud computing:

Utilizing the external storage in the server environment has been in use for quite a while. In some cases, like manufacturing production databases, selecting the apt external storage platform including hardware, storage operating system, connectivity and raid types plays a vital role in the system architecture.  Likewise, in the cloud computing, the storage and processing unit are physically separated and logically connected as and when required. It includes the boot volume too.  To manage both processing units and storage units, an external operating system called cloud computing operating system is used. There are vendors like vmware sells cloud computing operating system like vmware vSphere and there are open source cloud computing operating system like eyeOS

  • Processing Units
  • Storage units
  • Cloud computing OS
  • Network units

Architecture of cloud computing:

For external users

Have a OC3 or OC12 or OC48 internet link based on your requirement to connect to the internet for your data center. Have a cisco 7200 series and cisco ACE series for your first and second layers of your network. Have netcahce or ssl accelerator or intrusion prevention devices based on your requirements. Connect the internal vlan with blade server (HP) and storage units like EMC. Slice the EMC luns to have a preload images like Redhat, Windows with preloaded system software like application server, web server, domain name server, database server, director server and etc. Install the cloud computing operating system in the external boxes and link both processing and storage units. The cloud computing operating system manages both processing and storage units.

If there are requirements to connect stand alone servers, it can be connected in the internal vlan.

The architecture is straight forward and purposefully I’m not drawing it.

For internal users:

The same architecture expect OC3 internet link.

Cloud Computing Future:

The concept is very cost effective and efficient. Instead of building images for production servers with application server, web server, database server and etc.. the image will be elevated to more business unit image. Loan processing image, collection and customer service image, delinquency image, skip tracing image,  bankruptcy, treasury, securitization, point of sale and etc.  The technology cloud is in the phase of reaching maturity and business cloud is emerging. There is a huge potential for the players who get quickly into the business cloud.

Think about for a minute, if you are bank, why do you want to spend time on building IT infrastructure to process loan. Banks JUST want to focus on getting good papers, good customers and not worry about how the assets are stored, retrieved and processed. Whoever get into business cloud will lead that market segment for a while!!


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.

IT Finance Management Framework – Part 2

Understanding how the IT budget process fit into the overall corporate finance is essential to grasp the big picture.  The following figure illustrates how the IT G&A operating budget fits into the over all corporate finance.

it_ga_budget2

IT organization must decide the technique suitable for the budget cycle. To select the best suited techniques the organization must make them self familiar with the available options. Let me list the various widely used technique available to create the IT G&A operating budget.

  • Static Budget – Presents one forecast for a given time frame and does not change for budget cycle
  • Flexible Budget – Budgeted Revenue and cost are adjusted during the budget cycle
  • Incremental budget – Previous year actual are taken as the base line and added or deleted additional cost for current year
  • Zero Based budget – Begins from ground up
  • Top Down budget – Each directors are given a budget task to align to CIO budget target
  • Participatory Budget – Developed as a collaboration with all directors (generally very difficult to make it practical)

There are other budgeting technique like activity based budgeting, Kaizen budgeting and etc. Kaizen  is a type of incremental budget with cost effectiveness target are given to each directors. To make the framework complete, I understand the widely used budgeting technique must be captured and it will eventually.

For this version 0.1, I want to start with zero based budget since I like the concept. It is very practical and gives an opportunity to each director or even senior manager or manager level to challenge every activities and look for some level of business case. Zero based technique can be used if it is top down budget and budget task are given by CIO to each director. Let me start with ZBB.

Zero based budgeting must be done in the manager or team leader level and rolled up to director and CIO level.  It requires the manager or team lead to understand the business and forecast the work required to keep the systems lights on, enhancements and G&A project.

it-finance-mgmt-how-to

The cost for lights on, enhancement and projects are will be incurred by employee, contractor, purchase servie, software cost & hardware cost. Each manager or team lead under each director will forcast for lights on, enhancement and project in terms of employee, contractor, purchase service, software cost and hardware cost.

The training required to perform the forecast will be the starting session of next part of this initial IT Financial Framework.

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.