Monday, December 26, 2011

The Cost-Value Requirement

Dave Bressler has a wonderful blog, if I agreed with him, it would be less wonderful.  His post today on the "Cost-Value Conundrum" is a case in point.  In talking about replacing phone systems, he brought up an interesting and subtle point, what does it mean to meet business requirements.  I know the phone system scenario, because we replaced our phone system last year, so I'll provide numbers to back up my point.

If you do an RFP to look for phone systems, you find there are a number of alternatives and those alternatives have a wide range of prices.  For a seventy person company, there were options over $200K.  They were excellent systems with many intriguing features.  However, we went with a system that cost $34K that is good enough.

There's an interesting question in the IT world, when is a requirement a "nice to have" and when is something "good enough"?  And the follow on is, how much are you willing to pay to move from "good enough" to "nice to have"?

I would put it to you, that in this brave new business reality, "nice to have's" and "best of breed" will vanish from the business lexicon. The future for IT Executives is exactly what is described in the post you linked to, how does an executive cut CAPEX by 50% and increase capabilities?  That author didn't go into details, but I bet OPEX is also being cut.  Hell, any imbecile can cut CAPEX by 50% if no one's watching OPEX...

If you have to cut both, how do you do it?  By using RFPs to clarify requirements, understand the costs and shift power away from the vendor to the buyer.  That's how you buy a new phone system for $34K rather than $200K+.  Another example: A business can buy an onsite ERP systems for $1mm plus, which also requires hiring two employees, each costing $120K a year. Or that business can get a cloud based ERP at $50 per user per month that requires no additional employees be hired.

The cloud based ERP system will cost about $60K per year, which is less than the maintenance costs for the onsite system and you won't hire any additional employees.  Oh, and with the cloud based system, when you need customization, you hire a developer through Elance for $35/hr rather than through a consulting company for $285/hr.

That is the "Cost-Value Conundrum."  Every IT Executive should be given the mandate "Give me better capability than I have today and cut your budget by 50%. It's up to you how you achieve that between OP and CAP.  Oh, and I'm going to cut your budget again next year and the year after that too."

Yes, you have to understand requirements, but also understand that IT is a cost center, just like accounting or HR or building services.  The question is, how to provide the business the IT services or accounting services or HR services they need at the lowest cost?  Unless your IT services can move the dial by increasing revenue, they better move the dial by decreasing costs. In the current environment, there are plenty of options to decrease costs while increasing value and revenue.

That is understanding that doesn't require special training to communicate.

Tuesday, October 4, 2011

Quality or Quantity

One of the downfalls of a democracy is that quantity is more important than quality.  McDonalds is more important than Le Cirque.  WalMart is more important than the corner bakery.  Pile it high and sell it cheap.

Occasionally someone captures this problem and articulates it so clearly, it realigns your vision.  Rob Walker writing about the struggles of Bang & Olufsen captured it perfectly:

"Audiophiles lost out to audio files."

I hope the struggle continues.

Tuesday, June 14, 2011

Why I hate Conan O'Brien

You want to know why I don't watch Conan O'Brien and think he's an idiot?  He's invited to make the Dartmouth Commencement address and he offers this bit of brilliance:

"Today, you have achieved something special, something only 92 percent of Americans your age will ever know: a college diploma. That’s right, with your college diploma you now have a crushing advantage over 8 percent of the workforce. I'm talking about dropout losers like Bill Gates, Steve Jobs, and Mark Zuckerberg."  

Actually, Conan, no.  Only about 19% of Americans get college degrees. But, I understand, you were trying to make a joke.  However, it wasn't funny.  Sort of like you weren't funny on the Tonight Show, which is why you got cancelled (after getting $30mm and crying endlessly).  Just like your show now isn't funny.

How do some people manage to have so many unproductive lives?

Wednesday, January 19, 2011

On Becoming a Leader

Image from: 1.00 FTE

One of my favorite bloggers, Art Petty, has a post about the Nine Key Professional Capabilities Required by Our Times.   While I agree that all of his capabilities are important, they miss what has to come first.  Developing a hard skill.  In this brave new world, managers need to develop (or better yet, have developed before they become managers) a hard skill.

Let me define what I mean.  A hard skill is the ability to do something that takes time to learn (I'll go with Gladwell's 10,000 hours), some measure of talent and some exposure to something that prevents you from being exposed to other things.

For example, coding.  It probably takes about 10,000 hours to become a competent developer.  Also, you need some mental ability and intelligence.  And finally, cultivating your coding skills prevents you from doing other things. [Editor: For you, that would be dating.]

Carpentry, plumbing, wiring a network, becoming a CPA, learning the sales process etc. are all examples of skills.  The days of being a manager (or leader) who has an MBA and can do some analysis in Excel are gone.  The days of middle management are gone.

If you want to be a manager or a leader in this brave new world, you have to be able to deliver something which requires cultivated skills in addition to being an authentic, empathetic manager/leader.

Facts are facts.  Between China, India, the Philippines, Brazil and the rest of the developing world, there are about 3 billion more people that you have to compete with to be a manager/leader.  Americans and Europeans have a much higher standard of living, however, people from the developing world are willing to work much harder and will happily adjust you out on your keister.

If you want to become a leader, first develop a skill.

Friday, January 7, 2011

Progress and Prudence

To move forward, an organization must set goals and and execute projects with confidence.  However, this must be balanced with prudence, the possibility that you could be wrong.  This prudence cannot present itself as waffling or the inability to make a decision.  Nor can it manifest itself in an endless run of started, but abandoned projects.  Instead, it must balance the requirements to drive progress with prudence.  That's why I like Richard Rorty's quote so much:

"To accept our own fallibility is to embrace ‘the permanent possibility of someone having a better idea.’"

— Richard Rorty

Move forward with the best current idea, but be permanently open to the possibility of someone having a better idea.

Tuesday, January 4, 2011

Writing Knowledge

Bas de Bar has a great post about context.  Context has so much to do with meaning and the knowledge a reader gains.

Is the measure of quality writing the measure of transfering context?

If you think about the hierarchy of knowledge:

1. Data
2. Information
3. Knowledge
4. Wisdom

Data and information are supplied by the writer, but the reader has to do the interpretation.

As a creator, you create/write the information.  The better the writer, the easier it is for the reader to clearly interpret and gain knowledge.  You can't write context, but a good writer supplies it.

For example, Ernest Hemingway won a bet in the 20's about who could write the shortest story.  His complete story was six words:

"For sale: baby shoes, never worn"

Everything you need to know is conveyed in those six words, even though all he supplied was information.  He did it in such a way that the reader supplies everything else, yet everyone understands what happened.

Maybe the better one becomes as a writer, the better one can pass context along with the information.  And the better one can pass context, the better chance the reader has of gaining knowledge.