Author: mdegeorge Page 16 of 21

Matthew De George is a well respected management consultant focused on technology-enabled business transformation. He typically wont tell you what your strategy should be. But he'll "get it", and he'll help you execute. Matthew brings 20 years of experience in transforming business and customer-facing processes through the effective implementation of technology and information management practices.

Note to self: do ERP vendors benefit from the sunk cost fallacy and asset specificity?

I’ve never really been very interested in ERPs – so I likely don’t know what I’m talking about…

But over the years there have been many times I’ve heard organisations saying they need to “leverage their investment” in their ERP.  This is usually after they have spent far too much money implementing it in the first place so whenever I hear that phrase I can’t help but hear “we don’t have the expected benefits from this yet so we should invest more in it because we’ve already invested too much not to get any benefits from it”.  This is clearly the sunk cost fallacy at work.

There has been talk of the end of ERPs for some time, and there are certainly many web-based alternatives, much-hyped redesigns, as well as web based versions of classic ERPs.  But at the same time ERPs aren’t going away.  Certainly the companies themselves are far too clever to not evolve.

But I’m more interested in why the benefits aren’t realised.  Because from an enterprise architecture perspective there are certain elements of the ERP value proposition that make perfect sense.  If you think of enterprise architecture as primarily being about finding the capabilities, services, and processes that you want to further integrate or standardise across your organisation (and I haven’t found a better definition) then taking disparate payroll, HR, procurement (etc, etc) processes and standardising them should delivery value.

I’m going to make a leap here and say that ERPs actually do deliver value.  In fact, any critic that suggests otherwise probably has a skewed view of why we use information technology in our organisations in general.  The problem with ERPs isn’t that they don’t deliver value – it’s that they are incredibly overpriced.

Given that organisations pay that price I have to wonder how ERP vendors are able to extract value from organisations so successfully.  Going back to my limited experience with ERP implementations I see three ways ERP vendors extract value from organisations:

1) ERP people are over specialised.  While development and support for software packages from mid-sized vendors, or custom software development can be implemented with a variety of method, tools, and resources, a SAP implementation for example must be staffed with ‘SAP people’.  There are no business analysts, developers, or project managers.  There are instead SAP Project Managers, SAP Developments, SAP Business Analysts.  This of course creates a scarcity of quality resources and the subsequent high price of those resources.

2) ERP vendors force their customers to follow an Ideal Realised Strategy which says your implementation will be simple if you don’t customise your implementation.  However, by virtue of the fact the everybody customises their implementation this doesn’t seem like a feasible strategy in practice.

3) ERP implementation partners take control of both IT change and business change.  However, rather than take the approach that business change is about delivering benefits and increased productivity they appear to take the approach that ‘business change’ is all about making sweeping changes to work practices rather than making small changes to the product.  i.e. by owning business change they are using it to the vendor’s advantage not the client’s advantage.

Long-overdue rant complete.

Ideal Realised Strategies and Enterprise Architecture

There are two important themes in the MWT Model that are used to shift organisational habits.  These are ‘pendulum arguments & something else’ and ‘ideal realised strategies’.  Pendulum arguments are issues like the ‘centralise or decentralise’ debate that cause organisations to continuously cycle through organisational design or financial control models.  These pendulums must be fixed with ‘something else’ – such as an operating model or a collaboration architecture in this case.

Ideal Realised Strategies are a separate category.  These are the problems when a strategy is proposed or in place that only delivers an acceptable balance of benefits and risk if it is implemented perfectly (which of course number happens).  In the context of the MWT Model, these are usually management strategies such as ‘ensure you confirm that you have closed all issues by the milestone date’.

Ideal Realised Strategies often have unstated dependancies or are otherwise unfeasible.  Ideal Realised Strategies also tend to keep people in positions of power because they need to be continuously funded and supported while the strategy endlessly edges towards perfect implementation.

As I spend some time thinking about enterprise architecture I’m starting to see the whole practice of enterprise architecture as an Ideal Realised Strategy.  I was also struck by title of this article (“What to enterprise architecture and socialism have in common”) and as a Mises-head of sorts didn’t like the comparison.

I usually place enterprise architecture (EA) as the anti-thisis of the overtly political approach to organisational design and decision making inherent in the managerial approach.  But not everybody places EA in this context, and it sometimes appears that as EA ‘matures’ to prescribe governance and business architecture approaches it is increasingly making its success dependant on more total control of the organisation.

Any strategy that has its success based on increasingly total control of the organisation that it supports is by definition an Ideal Realised Strategy.

Once I see EA this way I can’t help but think that it’s also evolving into a form of technocracy in the same way I have argued that managerialism is technocratic.  It also risks becoming part of a pendulum argument in the way I have seen organisations swing from sales lead (“if we don’t sell anything it doesn’t matter what we deliver”) to delivery lead (“if our delivery suffers our clients won’t want to buy our product no matter how good our sales people are”).

EA is changing – needs to change – but let’s get this right.

Update: there are some nice hints towards an EA approach less obsessed with centralised power in the Gartner press release I’ve previously referenced.

Game Dynamics and Internal Market Making

I like the idea that Seth Priebatsch is ‘determined to build a game layer on top of the world’ in the same way I like Jane McGonigal’s work to save the world with games.

Seth says in his TEDxBoston talk linked above that while the last 10 years have been about ‘building the social layer… has been building this framework for connections’ the next 10 years will be about perfecting the management of the rules that get the desired outcomes from the connections – the games.

I think this is very close the market-making and collaboration architectures of the MWT Model – so I’m excited and pleased.

I also like the reference in Seth’s talk to Loyalty schemes. Basically he is saying that the rules of Loyalty schemes and airline mile programs can be redesigned into a game rather than as they are now (“that actual do use game dynamics… they are using the game layer… they just suck”).

Dan Pink: Management is a television set (i.e. technology)

From Dan Pink’s TED talk on “The Surprising Science of Motivation”:

“In the 20th century we came up with this idea of management. Management did not emanate from nature. Management is not a tree it’s a television set. Okay? – Somebody invented it. And it doesn’t mean it’s going to work forever… Traditional notions of management are great if you want compliance. But if you want engagement self-direction works better.”

Pink also introduces parts of his “new operating system for our businesses” based on autonomy, mastery, and purpose.

The specifics of Pink’s new operating system are interesting – but I think as values they are almost universally accepted. More interesting is the acknowledgment that you might install a new operating system into organisations to replace ‘management’ itself. This idea has been the premise of MWT from its inception (see here and here for example).

The general principle of the MWT Model is to replace planning, monitoring, and controlling with collaboration architectures, technology-enabled markets, and operationalised brands. The MWT Model also positions management as a technology rather than a class of individuals.

In a sense, Pink’s new operating model fits into the MWT Model by acknowledging management as a technology, replacing it with something else, and operationalising an internal brand based on the values of autonomy, mastery, and purpose.

Awesome!

Watch the full video below:

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What, if anything, is a business architect?

It’s time to add a new topic to this blog – business architecture.  This topic will explore trends in business architecture and how the discipline of business architecture can improve the quality of IT planning, governance, and technology-enabled business transformation programs.

The question is: what is a business architect and where does the business architecture discipline fit in the context or IT architecture?  Or is that the wrong question, and could it actually be entirely the worst place to start?

Over the last 40 years information technologies have been radically integrated into business processes and business models.  At the same time, the relatively new discipline of software development has evolved and matured in order to keep up with the capacity, quality, agility, and speed-to-market improvements that business’s dependence on IT has demanded.

As these two trends collide, the importance of the software development discipline to the average organisation has peaked.  Pure software development, no longer a core competency of the average organisation, is now a commodity.  The paradox is that while software development is now a commodity the need to integrate information technology into business models is more important, and more difficult than ever.  Add to this the oft-sighted failure rates of large corporate IT projects and it could be said that while software development is a commodity, successful software development is scarce resource!  Less cynically, the real lesson that has been learnt is that successful software development is only possible within the context of a clear understanding of the business needs that drive the software development effort and the business changes that are implemented alongside the development effort.

Software development has been commoditized precisely because successful software development, and a successful IT function, must be managed within an overarching continuum of service-based management disciplines, outsourcing contracts, technology-enabled business transformation programs, and business knowledge.

So the history of the last 40 years of the IT industry has been to learn that successful business IT requires an understanding of the business.  Unfortunately, this can be as a profound a lesson as it is practically meaningless.  It’s like learning that a hand must fit a glove or that a successful puddle is made when the water exactly aligns with a hole in the ground.  This is why there are still failed projects and there are very few artifacts being developed that formally describe businesses – even when they are sorely needed.  Practical solutions aside, the lesson is in theory very simple – in order to take the risk out of IT success you need to understand the business with as much of a formal framework as you understand other parts of the solution – you need a business architecture.

It’s a natural question to follow that if you need a business architecture then you need a business architect.  After all, you develop a solution architecture by employing a solution architect.  But if we look for business architects we will simultaneously find them everywhere and nowhere.  Very few professionals with the title of business architect live up to the promise of that name.  Yet there are many who inspire us with business architect skills.  These are the business founders, the innovators of new business models, the entrepreneurs, the so-called leaders who went that one step further and created an enduring legacy in the organisation or the cause that they created.

In short, business architects are hard to find if you look in the wrong place.   You wont find a business architect if you look at your IT team or if you look at a team of architects.  Business architects are more likely to be found architecting businesses.  The only issue may be that those architects may not be sharing in a systematic way.  We must take the step of turning the successes of these people into systematic success.

We may think that business architecture belongs at the pinnacle of IT architecture because business architecture has long been an aspirational end game for IT architects.  Conceptually, business architecture is at the top of the pyramid because we’ve built a model of IT architecture that places it at the top.  In fact, if business architecture isn’t at the top of the IT architecture pyramid then the whole model breaks – and perhaps it must break.

As the software development discipline has evolved the value of the architect skill set has been continuously reconfigured and applied to more business critical domains.  While ‘system architecture’ originally might have referred to the physical systems present in microchip and motherboard design, the architecture skill set was then quickly applied to software domains.  From there it further expanded and segmented into integration architectures, platform architectures, and application architectures.  The term system architecture was then co-opted to include multiple software components – expanded again to integrate the software components and the hardware components because they make up the entire system.  This expansion and segmentation continued.  The software and hardware architectures were combined to become the ‘solution architecture’.  But the ‘solution’ wasn’t just hardware and software so the term ‘solution architecture’ was refined again to encompass the context of what was now the technical solution as well as the business process change, financial modeling, and partnerships that supported the solution.

This continuous expansion and segmentation is as complex a history of a profession as you can imagine and it’s been played out over a relatively short period of time.  The debate on the exact definitions of various types of architectures will likely continue.  But right at the top is business architect.  Unfortunately, this leaves the most important level of analysis and specialization of the architecture discipline sitting precariously on top of a towering bundle of seemingly never-ending debates about architecture artifact, views, meta-models, and architecture governance.

Business architecture is seen as the shining gold at the top of an overall architecture framework.  This is not the place for it.  Those foundations are weak, contain much that is irrelevant, and form an historic edifice that must be climbed with each discussion – losing many travelers on the way.

It’s time for business architecture to stand on its own.  Its value is potentially greater without the supporting infrastructure that has built up below it.  In fact, it’s likely that it’s not even the right foundations for business architecture.  It’s likely that business architecture has a closer relationship with economics and politics than it will ever have with IT architectures.  There is much to learn from business architecture as a type of architecture but never as a type of IT architecture.

People are using business architecture when they are analyzing the dynamics of an existing or imagined business.  But they are likely not to be designated with the role of a business architect.  They are more likely to be planning a large-scale business transformation program, or running a business, or managing risks.  They might also be advising on the same processes – based on both deep experience and deep thinking about organisations.  But even those advisors are also unlikely to want to be called a business architect.

So this blog will be an exploration of business architecture as it standards alone – not built on the foundations of information technology or IT architecture disciplines (but often alongside the application of technology to business), nor will it assume there is a specialised business architect role built into the discussion.

This is a blog about the nature of businesses and the why they create value.  It is also a blog about how this process needs to be understood by multi-disciplinary teams trying to understand, build, operate, or change businesses.  I’ve started by throwing out the misconception that business architecture is part of IT architecture – but we also need to go one step further and build a body of knowledge which doesn’t assume there is a role of a business architect who may or may not exist.  So… Where do we go from here?

Note: the title of this post is from a booked call “What, if anything, is an architect?” (http://catalogue.nla.gov.au/Record/1115632).  Image credits:

http://venturebeat.com/2010/04/22/microsoft-joins-with-dell-to-tackle-e-waste-on-earth-day/e-waste/ and http://internetsiao.com/the-gold-bar-doorstop/.

David Heinemeier’s ‘Unlearn Your MBA’ talk at Stanford

This is nice.

My favourite section:

“There’s no management when we’re three people. There’s no management when we’re 15 people. We still don’t have any managers hired in 37signals. Every single one of us are producers.

I’m still a producer. I still write code. Jason still designs. We still do all the stuff and management is sort of the offshoot of, “Oh, yeah. Sometimes we have to deal with issues that they come up.”

Problem is when you have actual managers, whose sole job it is just to manage, they make up [stuff] to manage because you’ve got to fill an eight-hour day.

And in the beginning, there’s 40 minutes of management every three days. That’s what you need for management. You do not need eight hours of management, which is how you get policies and all this other bull that crops up when people don’t have anything to do.

Idle managers are absolutely the worst.”

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2351

(this is cut-and-paste from the transcript so I can’t remember what particular exploitive they are editing when they say [stuff])

Motivation

If an employee presses a green button and then an alarm goes off you’ll soon have a motivation problem.

– Posted using BlogPress from my iPhone

Note to self – innovation

I think innovation requires just four things:

1. idea management process – i.e. go from suggestion box-to-value creation

2. a reward mechanism – where the ultimate reward is working in an innovative company

3. scanning – i.e. scanning internally and externally for trends and small ideas that need to be nurtured

4. a structured approach to analysing the organisation to determine where to apply innovation

I think the structured approach bit (#4) is often missed and without it how do you grow or evaluate your ideas?

As an IT guy I know enterprise [business] architecture is the answer to this.

However, for a more general audience I think this approach is very interesting (free PDF book extract to download):

http://www.businessmodelgeneration.com/

Why can’t BI tools help develop effective KPIs and measures

Just just woke up at 4am to watch a webinar on business intelligence. (it was about this product but it could have been any product).

The product was fine in the sense that it had a lot of good visualisation and analysis features but it was, as always, disappointing because it didn’t actually provide any features to help define effective KPIs, reports, and measures.

There must be a way of incorporating traceability between measures, balanced scorecard like categorisation, and checklists to link KPIs to management reports such that the BI tool helps you actually populate itself with the reports, dashboards, etc that will be most useful to the organisation.

Given these tools are becoming more ‘self-service’ they will need to do this because there will be no IT/BI consultant engaged at the time of dashboard development to help.

Mobile video conferencing as a safe option

Given the on-again, off-again, on-again (but we wont say) link between cancer and mobile phones, I’m surprised I haven’t seen any mention of the significance of mobile video conferencing.

Surely, the different way you hold a mobile phone when you are video conferencing will reduce the incidence of brain cancer caused by mobile phones (assuming, as I do, there is a link).

Anyway, add it to your list of reasons to upgrade your iPhone to G4 as:

iPhone Video Conferencing All But Confirmed with Latest Leak [IPhone]: “

Another day, another video chat/video conferencing bit of debugging code to throw atop the heap that’s amassed around the coming ‘iPhone 4G.’ Today’s revelation: A menu screen from a ‘field test’ that purports to show video conferencing. More »

(Via Gizmodo.)

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