World Class IT Organization

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World Class IT Organization

• Dr. Subbu Murthy

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Discussion Topics

• Framework, CSFs and SFFs
• People
• Process
• Products Services
• Real World Issues, Real World Metrics

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Scope itself is a thesis

• I guesstimate upwards of 4 million companies
  claiming to be experts in IT (more than 50 are
  one person shows)
• A majority want our dollars
• gt 60 do business in/with US
• 20 of the companies are located in California
• Everyone knows IT and how to design, fabricate
  and manage IT (!ha ha)

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World Class IT Organization (WC IT)
Domain
In source
Skills
Communications
Out source
Off source
Business
Sourcing
People
.NET/J2EE
Architecture
Legacy
XP
CMM, ISO
CUSTOM
Process
Products Services
COTS
Delivery
Audience
Organization
Mixed
Anthony
External
Autonomy
Internal
Governance
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People (Sourcing)

• Sourcing depends on
• Cost
• Capability
• Culture

Critical Success Factors
Sure Failure Factors

• Understand all parties involved (look for hidden
  motives)
• Project based - not T M
• Clear understanding of expectations
• Protect IP

• BBS (The Big is Better Syndrome)
• Three mismatches to look out for
• Sourcing and Strategy
• Sourcing and Governance
• Strategy and Governance

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People (Skills)

• Skills depends on
• Complexity of IT
• Target audience
• Strategy

Critical Success Factors
Sure Failure Factors

• Balance between heterogeneity and homogeneity of
  skills (algebraic, domain, communications)
• Balance between intrinsic and extrinsic
  motivators

• Focus only on Technology lack of business
  skills
• Focus only on Business forgetting it is still
  bits and bytes
• Dormancy of skills not keeping up with changes

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Why is offshore attractive?

• Dont be fooled by any rhetoric - saving is
  the number 1 reason
• Dollar currency is still Numero Uno and offshore
  businesses want it
• Heavy competition between offshore vendors has
  cut prices (please look into how travel agents
  from India who operate here BPO is nothing
  different It has become a commodity)
• Heavy subsidies from offshore governments
  (particularly places like China)
• Round the clock coverage

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Cost
Outsourcing
Offshore Outsourced Vendors
Managed Development Centers
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Why are the costs lower?

• Buying power of US
• Education is much cheaper
• Heavy emphasis by all governing bodies
• Cost of living is lower
• Perhaps the West is wrong about the epistemology
  of life Theory of Karma is a fact

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Are we all out of a job?

• The total number of U.S. IT workers currently
  stands at 10,129,000 (10 million) compared to
  9,896,000 in January of this year. In other
  words 1 out of every 30 persons in US is in the
  IT field The fact remains that by 2005 only
  less than 2-5 of US jobs will move overseas -
  not a lot considering the talk you hear about
  India, China, etc. Off-shore outsourcing is
  still a small fraction of IT expenditures. For
  example, all of India's IT and IT enabled
  services is only 10B . This is a very small
  fraction (lt 2) of the IT expenditures in US.

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Process (Organization)

• Organization Structure depends on
• Industry type, size, age
• Management maturity
• Business maturity

Critical Success Factors
Sure Failure Factors

• Customize to fit your IT culture
• Flexibility in management style
• Incremental
• Build on small successes
• Manage change

• Use same strategy for all projects
• Lack of analogical data (metrics)
• Rely only on anecdotal decisions
• Rely only on analytical decisions
• Oversimplify complex problems
• Assume that 80 80 160 IQ

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Process (Delivery)

• Delivery models depend on
• Maturity
• Flexibility
• Adoptability
• Adaptability

Critical Success Factors
Sure Failure Factors

• Customize to fit your IT culture
• Flexibility in tools, people and processes is
  critical
• Proper training and acceptance (people and
  process must enjoy a love affair)

• CMM will do the trick (Remember that CMM is
  tautological)
• Lack of project modularity
• Mismatches between Architecture, Process and
  Staff
• Assuming that a good process can overcome a weak
  staff

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Methodology

• Process Based
• ISO Do as you say you do and say what you do
• CMM Process maturity
• CUSTOM Substance/Hype ratio is very low
• Technology Based
• Code generators/modelers
• Rapid Prototypes
• Extreme Programming

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How to implement methodology?
Identify Problem Areas and Fix
Change the Process
Continuously Monitor the Process and Improve
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The Mythical Man Month (revisited)

• Governance, Security and increasing IT awareness
  is making IT organizations top heavy
• Aging IT population coupled with radical
  technology changes is contributing to this
  reversal
• The 80-20 rule is reversed most of us in IT are
  spending time on 20 of the issues

D O E R S
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Software Evolution (example)

• Requirements From 1 to 10,000 page documents to
  DFDs to UML to repositories
• Design From ad hoc and paper napkins to
  functional and object oriented
• Coding From procedural to object to zero coding
• Testing From I tested to structured testing to
  risk based testing

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Products and Services (Audience)

• Know your audience
• Internal Cost focus
• External Revenue focus
• Mixed Spiritual focus

Critical Success Factors
Sure Failure Factors

• Treat internal customers as external customers
  from service point of view
• Build rapport with users
• Manage user expectations

• Customer is always right!
• Overstate gains and understate losses
• Nagging users
• Transferring risk

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Products and Services (Architecture)

• Architecture depends on
• Your expertise and comfort
• Your bosss expertise and comfort
• Your staffs expertise and comfort

Critical Success Factors
Sure Failure Factors

• Treat internal customers as external customers
  from service point of view
• Focus on the present
• Divide and conquer

• XYZ is the Silver Bullet
• SAP will fix it
• Large Systems
• Designing for systems into the future

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Real World Issues - Technical

• Requirements
• Volatility
• Inability to define and establish scope
• Information explosion
• Gaps between Users and IT
• Technology
• Vendor hype
• Lack of true standards
• Evolution

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Real World Issues - Management

• Management
• Gaps between IT, Sponsors and CFO
• Gaps between strategy, governance and sourcing
• Lack of introspection, metrics
• Forgetting that hindsight is 20-20 forecasting
  is not!
• Forgetting that code is the blue-print
• Heightened Ego (or stupidity if you prefer)
  Everybody knows IT

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World Class IT - Defined !

• WC IT produces and manages information based on
  Audience subject to Strategy, Governance,
  Skills, Architecture and Competition and
  constrained by Strategy, Governance, Sourcing
  and Delivery Models
• Existing metrics do not address WC IT, rather
  they address bits and pieces of this complex
  entity labeled WC IT

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WC IT Metrics

• Information analogical models, Function Points,
  Customized Function Points, LOC, of web pages,
  etc.
• Sourcing cost based, OCM
• Financial ROI, time to break even, reduce
  operational costs
• Market based improve customer service, increase
  revenue
• Risk Based Cost of not doing
• Integrated metrics balanced score card

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OCM

• Off-Sourcing Cost Model
• Suggests whether off-sourcing makes sense or not
• Dependent variable True Cost of Off-Sourcing
• Independent variables
• Number of projects, type, size, schedule
• Duration of relationship
• Architecture
• Skills (fuzzy)
• Organization (fuzzy)

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OCM Curves
Net Benefit
Early Gains (Honeymoon, Giveaways)
Period of Adjustment (Finger-Pointing, Cancellatio
ns, CIO changes, Litigation)
Maturity (Partnership, Trust, Excellence)
Time
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IT Support (Scope)

• IT Infrastructure
• PCs
• Network
• Telephone?
• Software
• Office Applications
• Core Applications
• Custom Applications
• Process
• Overlaps technology and business

Call Center
Managed Services
Size
Simple Helpdesk
Ad hoc
Scope
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The Seven Rules from CRM

• Rule 1 CRM Relationships
• Rule 2 Proactive Executive Empowerment
• Rule 3 Know Your Business
• Rule 4 Know Your Users
• Rule 5 Use Products You Can Support
• Rule 6 Small Successes
• Rule 7 Ongoing Evaluation

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Seven Barriers

• Internal focus
• Short-term approach
• Command and control culture
• Inadequate customer data
• Too much customer data (Un-optimized customer
  knowledge)
• Believing that technology is the solution
• Rewarding the wrong things