Technical Architecture Component – Service Delivery Model

In a previous blog posting, I provided an exhaustive list of almost all technical components.  Each one of the component plays a role to enable holistic IT service to support business function.  However,to run a successful IT organization, does the IT organization required to have a handle on each component in the list?

Lately, my former  colleague and good friend, who works for GE now, have been discussing the importance of oral and written communication skills in an executive level job.  During those discussion, it occurred to me that the next generation corporate communication will be much more simplified and tailored to individual audience. An executive from Gen Y, may not have patience to read a document to understand the status of a company or progress of a project.  The type of communication tools and channels will be used by Gen Y executives are yet to discovered but it is  incubating for evolution.

Keeping those thoughts in my mind, instead of using a traditional method like Venn diagram to communicate direct  involvement level in technical components  by an IT organization, I would like to use the  abstract pictures to demonstrate current involvement and transition to a different level by adapting managed service and cloud computing concepts.

When IT organization is  a cost center (it means it does not directly generate revenue for the company), the organization required to focus on technology stack which provides competitive advantage to its core business. It is particularly essential during this challenging economical time to focus on technologies that impacts business bottom line. The IT organization must have no or minimum direct involvement in non strategic technical components.

The figure 1. abstract picture provides current IT direct involvement in four categories. I have seen, still companies have internally maintain and manage payroll systems for its employee. For an instance, if an IT organization is supporting financial service or retail business, there is absolutely no competitive advantage for that organization to manage internal payroll systems. The reason is not just for cost saving, but the key point is focus.

Around fifteen years ago, the options were limited to leverage outsourced payroll service but now, there are lots of options available to receive world class service on common business services. Common business services are, but not limited to, payroll, badge system, email, infrastructure system softwares, infrastructure monitoring, corporate communication tool set, learning and development, pension, benefits,  IT asset management, IT Finance management and etc. These services are readily available from a third party providers as a service. These services are all required for any IT organization but, generally not a differentiator for cost center IT organization.

IT organization’s senior executives and CIO wanted their organization to focus on technologies directly contributes to their business bottom line.  The systems/technologies that  touches the end user of their core business, and the systems directly used to support the business process.

Managed service and cloud computing are two solution available to let the organization focus on differentiator technology and let the partner perform the rest.

Managed service is a concept to leverage partners to provide a pre-term service.  IT organization manages the partner in a SLA level with no or very minimum involvement in solution design. Managed service deals are designed for fixed terms for fixed service portfolio. This deal package limits organization’s agility to fluctuate their service portfolio requirement based on its business needs.

Cloud computing is  an elastic managed service concept and it provides flexibility to scale up or down based on business needs with no prior commitment  on terms and service portfolio.  On cloud computing service offering from various providers like google & amazon, IT organization required to FOCUS on differentiator technologies and manage the rest by managing the SLA but not by technology (technical component)

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.

Bright Future for Auto-Industry

Simplifying a complex problem by breaking into small solvable parts and using knowledge learned in a driving school during a fatal accident are simplification and abstraction techniques widely used in a practical  world. Have you ever noticed the behavior of a person during  a fatal accident? During an accident, provided the person is not seriously injured and able to think to their capacity, the capacity (volume) and capability (strength) of the person is fully utilized to face and over come the situation. The capacity, capability and the effective utilization of it during the crisis or fatal accident increases exponentially.  If some one deeply think about why most of the people become effective during the crisis is due to extreme focus the brain forces itself to get over the situation. That is ultimatum for some of existing meditation techniques and the same reason why some of the adventures sports like rock climbing are very attractive. It is a kind of enforcement mind brings to mind itself. But at the same time, mind does not perform the strategic analysis  to its best during the crisis mode and that is the same reason why the best supreme court lawyer hires another lawyer when they face a crisis.

How this is relevant to current auto industry?

Well, GM and Chrysler both have had faced a separate fatal accidents.  Both are utilizing their capacity, capability and utilizing it effectively. When it comes to survival, as Maslow theory in the management suggests, your basic needs becomes top most priority and enlightenment are out of focus.  The decisions and execution made in last few weeks generally would have taken decades in their corporate culture. Executive management totally understand how to move forward. With assistance with auto task forces, concessions with unions, agreement with debtors ,reduction in  dealer network, dropping a brand, focus on fuel efficiency and quality  are good signs for a great recovery.

Why a great recovery waiting for them?

Four years ago, US market sold 17.5 Million units per year. This year, industry is struggling to sell 10 Million units. The average car age in America today is 9 years old.  Car purchase is the second biggest purchase a consumer would make after the American dream of owning a house.  Consumer confidence is the key and it is and it will continue to gain slowly for next 9 months and rapidly after that.  The credit market is far better than it was 6 months ago with enough capital infusion to credit market. Introducing better credit standards, oversight and governance, the credit market is stabilizing. The moment a person believes their jobs are safe, the consumer confidence in stock market, retail purchase, credit market will raise and the consumer is going to donate their 10 years old car to charity and buy the fuel efficient (Hybrid, Diesel, Electric) car. Both GM, Chrysler are making tough choices now and getting  ready to meet the huge market demand in 18 months.

Until then, sit tight and be part of the touch choices and move Detroit to new 2011++ future.

Yes I hear you.., I have not written a blog for almost a month.. that is mainly due to my last few weeks focus on completing  the graduate course on Linear Algebra. I had my finals yesterday and thinking about, should I take Dynamical Systems and Choas theory in summer. It will definetely help to model the current economical situation!!!