>Customer-driven IT Management

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For many years, we have witnessed the failures of excessively product-driven management, where companies focus on the development and sales of products (from automobiles to toaster ovens) to their customers—whether the customers really want those products or not. This was epitomized by the “build it and they will come” mentality.

Numerous companies faltered in this over-the-top product mindset, because they were focused not on satisfying their customer’s needs, but on selling their wares. Think GM versus Toyota or the Days Inn versus The Four Seasons.

Now however, organizations are moving from product- to customer-focused management, with the basic premise that organizations need to engage with their customers and assist them in getting the most value out of whatever products meet their requirements best. In the world of IT, this is the essence of user-centric enterprise architecture, which I created and have been advocating for a number of years.

Harvard Business Review, in January-February 2010, has an article titled “Rethinking Marketing” that asserts that “to compete, companies must shift from pushing individual products to building long-term customer relationships.”

· Product-driven companies—“depend on product managers and one-way mass marketing to push a product to many customers.”

· Customer-driven companies—“engage individual customers…in two-way communications, building long-term relationships.”

The old way of doing business was to focus on the products that the company had to offer and “move inventory” as quickly and profitably as possible. I remember hearing the sales managers yelling: “sell-sell-sell”—even if it’s the proverbial Brooklyn Bridge. And the driver of course, was to earn profits to meet quarterly targets and thereby get bigger bonuses and stock options. We saw where that got us with this last recession.

The new way of doing business is to focus on the customer and their needs, and not any particular product. The customer-driven business aligns itself and it’s products with the needs of its customers and builds a long-term profitable relationship.

“In a sense, the role of customer manager is the ultimate expression of marketing find out what the customer wants and fulfill the need), while the product manager is more aligned with the traditional selling mind-set (have product, find customer).”

The new model for a customer-driven enterprise is the epitome of what social computing and Web 2.0 is really all about. In the move from Web 1.0 to 2.0, we transformed from pushing information to stakeholders to having a lively dialogue with them using various social media tools (like Facebook, Twitter, blogs, discussion boards, and many more)—where customers and others can say what they really think and feel. Similarly, we are now moving from pushing products to actively engaging with our customers so as to genuinely understand and address their needs with whatever solutions are best for them.

In a customer-focused organization, “the traditional marketing department must be reconfigured as a customer department [headed by a chief customer officer] that puts building customer relationships ahead of pushing specific products.”

I think that the new organizational architecture of customer-driven management is superior to a product-focused one, just as a emphasis on people is more potent that a focus on things.

Similar to customer-driven management, in User-centric enterprise architecture, we transform from developing useless “artifacts” to push out from the ivory tower to instead create valuable information products based on the IT governance needs of our customers.

Further, by implementing a customer-focus in information technology management, we can create similar benefits where we are not just pushing the technology of the day at people, but are rather working side-by-side with them to develop the best solutions for the business that there is.

>From Pigging Out to Piggybanking

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Recently there was some media interest in the government system of funding allocation, which essentially rests on one principle: “Use it or lose it.” Unlike in the private sector, where unused funds may be reserved for future use, money that is not spent in a given appropriation year is simply returned, for the most part.

In our own personal financial worlds, in fact, it is a primary lesson that we should not spend every dollar we earn. Rather, any financial adviser will tell you that money must be managed over many years, including saving money for the proverbial “rainy day” (the recent financial meltdown and recovery act not withstanding).

In business as well as in our personal lives, we are taught to do three things with our money:

·      Spend some—for business operating expenses or living expenses in our personal lives.

·      Save some—for unexpected needs like when a economic recession negatively impacts business cash flow or in our personal lives when a job is lost and we need savings to tide us over; or the saving could be for opportunities like to accumulate funds to get into a new business or to save up for a deposit on a home.

·      Invest some—for longer-term needs like research and development, potential business acquisitions, and so forth or in our personal lives for college education, weddings, retirement and more.

My question is why in government is there not an option #2 or #3—to save or invest funds for the future, like we have in our personal lives and in business?  Why can’t agencies and lawmakers plan longer-term and manage funds strategically instead of tactically—beyond the current year here and now?

The Clinger-Cohen Act of 1996 called for the development and maintenance of an IT architecture, since interpreted more broadly as the mandate for enterprise architecture, where we plan and govern investments strategically (i.e. no longer based on short-term gut, intuition, politics, or subjective management whim).

Managing for enterprise architecture necessitates that we manage business and IT investments with the ability to spend, save, or invest as necessitated by agency mission and vision, customer requirements, and the overall investment climate (i.e. the return on spending versus the return on saving or longer-term investment).

Managing money by driving an end of year spend-down seems to negate the basic principles of finance and investing that we are taught from grade school and that we use in business and our personal lives.

By changing the government budget process to allow for spending, saving, and investing, we will open up more choices to our leaders and hold them responsible and accountable for the strategic long-term success of our vital mission.

>You Can Lead a Horse to Water

>When we architect change, we have to build in the transition plan for how to get from point A to point B. The problem with most enterprise architectures though is that they begin and end with the equivalent of “Thou Shalt” and never does the architecture deal with the behavioral elements of how to actually motivate people and organizations to change the way we plan/want them to.

Maybe that’s one reason why architectures so often remain shelfware and never actually get implemented.

This is reminiscent of the adage, “you can lead a horse to water, but you can’t make him drink” or can you?

With the Obama administration elected on a platform of change and major problems facing our nation in terms of the economy, healthcare, the environment, and so on, we are seeing the government confront the dilemma of how do we get the change we promised?

Time Magazine, 2 April 2009 has an interesting article “How Obama is using the Science of Change.”

The administration is using it [behavioral science] to try to transform the country. Because when you know what makes people tick, it’s a lot easier to help them change.”

Similarly, this knowledge can help enterprise architects effect change in their organizations. It’s not enough to just put a plan to paper—that’s a long way from effecting meaningful and lasting change.

So here are some tips that I adapted from the article:

  • Bottom-up or Top Down: We can mandate change from the top or we can grow change from grass-roots. If we can do both, the change is swifter and more likely to succeed.
  • Carrot and Stick: Change is not easy and usually will not happen without a nudge—we need help. We need to motivate desired change and disincentive obstinate clinging to failed status quo behaviors that are hurting the mission and long term success of the organization.
  • Make change clear and simple: Explain to people why a change is important and necessary. “In general, we’re ignorant, shortsighted, and biased toward the status quo…we procrastinate. Our impulsive ids overwhelm our logical superegos.” So change has got to be clearly articulated, easy to understand, and simple for people to act on. “Cheap is alluring; easy can be irresistible.”
  • Accept that change is painful: We need to keep our eye on the goal, and then accept that we have to work hard to achieve it. President Obama “urges us to snap out of denial, to accept that we’re in for some prolonged discomfort but not to wallow in it, to focus on our values.”
  • The way of the herd: When implementing change initiatives, we need to build community “creating a sense that we’re all in this together.” “We’re a herdlike species….when we think we’re out of step with our peers, the part of our brain that registers pain shifts into overdrive.”
  • Keep the focus on long-term success: Weight the benefits of long-term planning and change to short term status quo and gratification; constantly remind people that most worthwhile organizational goals are a marathon and not a sprint. But together, we can support each other and achieve anything.

With behavioral science principles like these, we can make enterprise architecture transition plans truly actionable by the organization.

>IT Planning, Governance and The Total CIO

>See new article in Architecture and Governance Magazine on: IT Planning, Governance and the CIO: Why a Structured Approach Is Critical to Long-Term Success

(http://www.architectureandgovernance.com/content/it-planning-governance-and-cio-why-structured-approach-critical-long-term-success)

Here’s an exrcept:

“IT planning and governance undoubtedly runs counter to the intuitive response—to fight fire with a hose on the spot. Yet dealing with crises as they occur and avoiding larger structures and processes for managing IT issues is ultimately ineffective. The only way to really put out a fire is to find out where the fire is coming from and douse it from there, and further to establish a fire department to rapidly respond to future outbreaks.”

>Weapons or Troops and The Total CIO

>Should the CIO focus on day-to-day operational issues or on IT strategic planning and governance issues?

From my experience many are focused on firefighting the day-to-day and putting some new gadget in the hands of the field personnel without regard to what the bigger picture IT plan is or should be.

In many cases, I believe CIOs succumb to this near-term view on things, because they, like the overall corporate marketplace, is driven by short-term results, whether it is quarterly financial results or the annual performance appraisal.

The Wall Street Journal, 30 October 2008, had an article entitled,
“Boots on the Ground or Weapons in the Sky?”—which seemed to tie right into this issue.

The debate is to which kind of war we should be preparing to fight— the current (types of) insurgencies in Iraq and Afghanistan or the next big war, such as potentially that with Russia or China.

Why are we facing this issue now?

“With the economy slowing and the tab for the government’s bailout of the private sector spiraling higher…lawmakers are signaling that Pentagon officials will soon have to choose.”

And there are serious implications to this choice:

“The wrong decision now could imperil U.S. national security down the road.”

The two sides of the debate come down to this:

Secretary Gates “accused some military officials of “next-war-itis,” which shortchanges current needs in favor of advanced weapons that might never be needed.”

In turn, some military officials “chided Mr. Gates for “this-war-itis,” a short-sighted focus on the present that could leave the armed forces dangerously unprepared down the road.”

From war to technology:

Like the military, the CIO faces a similar dilemma. Should the CIO invest and focus on current operational needs, the firefight that is needed today (this-IT-itis) or should they turn their attention to planning and governing to meet the business-IT needs of the future (next-IT-itis).

But can’t the CIO do both?

Yes and no. Just like the defense budget is limited, so too is the time and resources of the CIO. Sure, we can do some of both, but unless we make a conscious decision about where to focus, something bad can happen.

My belief is operations must be stabilized–sound, reliable, and secure—today’s needs, but then the CIO must extricate himself from the day-to-day firefighting to build mission capabilities and meet the needs of the organization for tomorrow.

At some point (and the sooner, the better), this-IT-itis must yield to next-IT-itis!

>Treating the Root Cause and Enterprise Architecture

>All too often, when there are issues in our organizations, we treat the symptoms instead of the problems. Just like this is bad medicine in treating illness and healing patients, so too it is ineffective in architecting our organizations.

The Wall Street Journal, 22 September 2008, has an article entitled “Making the Most of Customer Complaints.”

The quick-fix problem resolution:

“Companies have customer service sort out the immediate problem, offer an apology or some compensation, then assume all is well. This approach does nothing to address the underlying problem, practically guaranteeing similar failures and complaints.”

This “has enormous impact on customer satisfaction, repeat business, and ultimately profits and growth.”

The three actors and their conflicting approaches:

The customer—“can be left feeling their problem was not addressed seriously, even when they’ve received some form of compensation.” Customers are fairness-minded; they want to know why the problem occurred and that it will not happen again.

The service rep—“can start seeing complaining customers as the enemy, even though they point out flaws that need fixing.” Customer service reps are yelled at and abused by frustrated and angry customers who hold the service reps responsible for failures that are out of their control.

The managers—“can feel pressure to limit flows of critical customer comments, even though acting on the information will improve efficiency and profits.” Managers need to learn from failures and reengineer the processes to correct problems, but instead they fear reporting negative customer satisfaction and shun reporting these. In essence, they are taught to just make the problem go away!

The result:

“Fewer than 8% of the 60 organizations” in the wall Street Journal study did well integrating these actors and their perspectives to resolve problems at their root cause.

The focus unfortunately is on short term results instead of architecting long term success.

“Our experience with managers interested in improving service recovery indicates that most hope for a quick fix…but quick fixes only treat the symptoms of underlying problems. Real resolutions should involve closer integration among the three stakeholders, such as gathering more information from customers and sharing it throughout the company, and adopting new structures and practices that make it easier to spot problems and fix them.

There is an important enterprise architecture lesson here:

While executive management often want to achieve a quick turnaround and show results ASAP, and getting the low hanging fruit is often quite tempting, it is not often going to lead to substantive improvement in our organizations without a commitment and plan to address root cause.

Sure, in architecting the organization, we need to start somewhere, show progress, and continuously build on initial success (i.e. it’s an evolutionary process). However, there must be a long term plan/architecture that deals with genuine, deep-seated organizational issues, improves our underlying processes and their technology enablement, and leads to fundamental growth and enterprise maturation. A quick fix just will not do!

>What Goes Around Comes Around and Enterprise Architecture

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As an enterprise architect, I have always wondered about the trend of outsourcing our manufacturing jobs out of country– where as a nation we erode our manufacturing base and ship this capability to China, India, Mexico, and other countries where labor is plentiful and cheap.

Yes, in the short term we are taking advantage of the lower costs of manufacturing in other countries, but long term, I always questioned the viability of this strategy thinking that surely every nation needs to maintain a core of critical manufacturing and service capabilities and infrastructure to guarantee self-sufficiency, protect itself from eventual global disruptions, and ensure the continuity of its existence.

I believe that some day (and maybe relatively soon), we will regret the near-sightedness of our decisions to move production abroad for the sake of the dollar today.

Interestingly enough, I read in the Wall Street Journal today, 13 June 2008, that “stung by soaring transport coasts, factories bring jobs home again.”

“The rising costs of shipping everything from industrial-pump parts to lawn mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send even more work oversees.”

I thought to myself—Hallelujah!

No, I am not happy that oil prices are soaring and that inflation is looming everywhere, but I am cautiously relieved that perhaps, we as a nation will wake up in time to secure our economic interests at home and not send our entire manufacturing base and capabilities out of country.

Ironically (da!), the further we move our factories away, the more it costs now to ship the goods back home.

“The movement of factories to low-cost countries further and further away has been a bitter-sweet three-decade long story for the U.S. economy, knocking workers out of good-paying manufacturing jobs even as it drove down the price of goods for consumers. But after exploding over the past 10 years that march has been slowing. The cost of shipping a standard 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel…In the world of triple-digit oil prices, distance costs money.”

The other thought that always kept coming to mind was that as we continue to move manufacturing abroad, the increasing demand for labor would drive the cost of labor up, and eat away at the cost differential making the overseas move a moot point.

Again, I read today in the Journal the story I always felt was bound to be told and to continue to unfold: “The cost of doing business in China in particular has grown steadily as workers there demand higher wages and the government enforces tougher environmental and other controls. China’s currency has also appreciated against the dollar…increasing the cost of products in the U.S.”

One problem with trying to bring the jobs back home…

“Much of the basic infrastructure needed to support many industries—such as suppliers who specialize in producing parts or repairing machines—has dwindled or disappeared.”

What goes around, comes around. The jobs (some) are coming home (although net-net, we’re still losing manufacturing jobs). As a country, we‘ve benefited in the short-term from outsourcing, but in the long-term, I believe we’ll have done ourselves a good deal of harm.

Does this sound unfamiliar?

Think national deficit—big time. Think gargantuan problems with social security, Medicare, health care, and so on.

All too often, we behave with short-sightedness and like infants, the desire for immediate gratification. But as enterprise architects, I believe we need to think long term and often defer gratification for long-term competitiveness, self-sufficiency, and survival.

>The Marines and Enterprise Architecture

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Traditionally, the Marines are known for their rapid, hit hard capabilities. They are a highly mobile force trained to transport quickly on naval vessels and literally “take the beachhead.” However, with the war in Iraq, the Marines have assumed a more non-offensive deployment posture in “conducting patrols.”.

The Wall Street Journal, 12-13 January 2008, provides an interview with the Commandant of the Marines, General James T. Conway about the need for “the Corps to preserve its agility and its speed.”

“It’s the future of the Corps not its past that dominates Gen. Conway’s thoughts…that in order to fight this war, his Corps could be transformed into just another ‘land army’; and if that should happen, that it would lost the flexibility and expeditionary culture that has made it a powerful military force. The corps was built originally to live aboard ships and wade ashore to confront emerging threats far from home. It has long prided itself in being ‘first to the fight’ relying on speed, agility, and tenacity to win battles. It’s a small, offensive outfit that has its own attack aircraft.” However, in Iraq, the Marines are performing in a “static environment where there is no forward movement” Additionally, there is a feared culture change taking place, the marines “losing their connection to the sea while fighting in the desert” over an extended period of time.

When we think about enterprise architecture, most people in IT think about technology planning and transformation. However, EA is about both the business and technology sides of the enterprise. Change, process reengineering, and retooling can take place in either or both domains (business and technology). In terms of the Marines, we have altered their business side of the enterprise architecture roadmap. We have radically changed their business/mission functions and activities. They have gone from service and alignment to the long term mission needs of this nation for a rapid, mobile, offensive fighting force to accommodate the short term needs for additional troops to stabilize and conduct counter-insurgency and peace-keeping operations in Iraq. Whether the business functional change ends up hurting the culture and offensive capabilities of the Marines remains to be seen. However, it does raise the interesting question of how organizations should react and change their functions and processes in reaction to short term needs versus keeping to their long term roadmap and core competencies.

Of course, when it comes to the Marines, they must adapt and serve whatever the mission need and they have done so with distinction.

In regards to the long term affects, General Conway states: “Now, it is necessitated that we undergo these changes to the way we are constituted. But that’s OK. We made those adjustments. We’ll adjust back when the threat is different. But that’s adaptability…You create a force that you have to have at the time. But you don’t accept that as the new norm.”

As we know, in EA and other planning and transformation efforts, change for an organization—even the Marines—is not easy and resistances abound all around. How easy will it be for the Marines to return to their long term mission capabilities? And how should EA deal with short term business needs when they conflict with long term strategy for success?