SPICE for Business Transformation

Imagine an organization where people, business processes, products, services and technologies are in sync. Where an organization performs at its most optimal levels and miraculously everyone is happy and contributing for the wellbeing of the organization. No, I am not talking about a fictional scenario in a far off land. I am talking about an organization harnessing all the power of its capabilities to achieve Business Transformation. And I believe that there is a lot organizations can achieve if they view Business Transformation as a holistic and all-encompassing endeavor. So, today I am going to talk to you about how SPICE can make your organizations better.

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I help organizations pursue a better version of themselves. In this pursuit, I collaborate with front-line employees, middle management and the C-suite to understand issues beyond the obvious so that individuals and organizations can achieve their objectives. Over the years, I have held many titles but the underlying theme is to always do and look for Business Transformation opportunities.

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Business is “the activity of making, buying, or selling goods or providing services in exchange for money” for corporations. For non-profits, business is the pursuit of social causes. For educational institutes, business is the pursuit of knowledge. For governments, business is the pursuit of citizen services and for military business is national security.

Transformation is “a process”.

Now, that you have a baseline understanding of what Business Transformation is and how it helps, the next time when you hear this term you would be aware that it is not just another buzzword and not just another business initiative that would disappear with time.

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Now, imagine a person named John who is walking through an unknown and dark tunnel with just a flashlight in his hands and he is carrying some baggage behind him. John does not know what is in the baggage. He continues to use the flashlight to look ahead to find his way out. His resources are limited. Thus, his objective is to reach the correct end of this unknown and dark tunnel as efficiently as possible.

Would John make it?

According to some experts, if this person were an organization pursuing Business Transformation then he would have failed 70% of the time. Think about this for a second, this means that only 30% of Business Transformation endeavors are able to achieve their full potential. Why is this?

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While there could be a variety of reasons for this high failure rate, I have observed that the number one reason for this is related to a typical conversation within organizations.

How many times have you said or heard someone say, “the business” wants this and “the business” wants that and that “the business” doesn’t understand that systems cannot be developed overnight. Ingrained in this sort of thinking is the idea that somehow IT is different from “the business”.

Somehow there is this “Us” vs. “Them” mentality.

If we think about it, all organizations take advantage of technological advancements. Paper, which was once considered a technology itself, is now used in every organization today in one way or another. Today, all organizations are digital in one way or another even if they don’t realize it yet and to think that they are not stems from this “Us” vs. “Them” mentality.

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Perhaps it is time to change the conversation! Perhaps it is time to think about IT as not something that is outside of “the business” but it is part of “the business”. To have this conversation, there has to be mutual understanding that neither “side” should downplay the importance of the other. This requires an understanding that all technical and non-technical aspects of the organization are there to support the end objectives of business transformation and that collaboration works much better than just mere animosity.

When I started assessing and improving organizations in 2003, I didn’t know what it was called. All I wanted to do was help organizations apply the full potential of their capabilities beyond what they perceived them to be which included but not limited to IT capabilities. Over the years, this took on new meaning for me as the conversation quickly changed from just doing my duties to fundamentally reshaping organizations inside out.

A couple of years ago Business Transformation, IT Transformation and Digital Transformation started to pick up steam and it took off. A lot more individuals and organizations started to pay attention when they saw their bread and butter business models being shattered in light of the new economy. Startups like Uber took on the Taxi Services around the world and now are expanding into other means of transportation as well. In response, Taxi Service companies pushed back hard by either through legislation and government policy or creating their own taxi mobile apps. If the taxi service companies think that they can compete with Uber with just their own taxicab apps then they are hugely mistaken. This is just one example that illustrates how one industry became complacent and within a short period of time a competitor emerged with a new business model that directly tied its operations to technology and the rest, as we know it, is history.

So, if you think about it, Business Transformation is not a standalone activity but a holistic one. Thus, if the people, business processes, products, services and technologies are ignored or not paid enough attention then Business Transformation becomes just another pipe dream.

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As I see it, organizations that are committed to figuring out the Business Transformation journey have to ask 5 fundamental questions from an internal perspective and an external perspective. These questions are:

  1. Who is helped by Business Transformation efforts? Is it management? Is it employees? Or maybe its customers and shareholders? Perhaps answering this entails understanding customer experiences issues and long-term value propositions to shareholders.
  2. What does Business Transformation teach us? Is it better internal communications? Is it Governance and Standardization? Or is it Branding? An organization that showcases and does actual Business Transformation has better stories to tell about improvements and thus can attract customers who see value in an organization that is trying to do better.
  3. Where does Business Transformation start? Does it start in IT? Does it start in Marketing or Operations? Or does it start with customers, vendors and partners? When a customer comes to you and requests a system to be developed, do you ignore this request since your organization does not develop these types of systems or do you explore this further and figure out how you or a partner could help your customer?
  4. When should Business Transformation be considered? How about when an employee has a conversation with a customer? How about when established competitors are eating your lunch? Or should it be considered when new innovations and methods arise?
  5. Most importantly, why do Business Transformation in the first place? Is the organization looking to become optimized and have better cohesiveness? Or is it better long-term value and creating positive societal ripples such as the creation of Corporate Social Responsibility groups that look into Green Technologies to save electricity and in turn save the plant as a consequence.

These are all important questions to ask before, during and after the Business Transformation journeys. But if there are no effective feedback loops then most Business Transformation journeys would be just a one-time initiative and not something that makes organizations become self-improvement entities.

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By this time, most of you might be thinking “well ok I get it that Business Transformation is more than what meets the eye but so what?!!”

What does Business Transformation really have to do with Business Architecture?

A valid question. I want you to think about this…

Do you see Business Architecture as just a plan, as just a design or a model, maybe perhaps a guide, or a way to create documentation, or for the purposes of alignment? Or do you see Business Architecture as a way to accomplish a vision and even to improve an organization’s mentality.

The fundamental reason we do Business Architecture in the first place is to fully leverage the technical and non-technical capabilities of the organization to transform itself. You don’t create a plan or a model or a guide to just document it but you do create it so that these insights can be used to make the organization better otherwise why do it in the first place anyways!

Thus, Business Architecture and Business Transformation are highly intertwined. An effective Business Architecture would open up avenues for Business Transformation so that when it comes to responding to market demands, strategy does not get lost in translation when it comes time for execution.

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I have spent many years recognizing patterns in my own engagements, academic literature and case studies and have determined that there are fundamentally 5 factors that affect the journeys towards Business Transformation.

These 5 factors are Strategies, Politics, Innovation, Culture and Execution or simply called the SPICE Factors.

I represent these factors in a pentagon shape. On its edges are the 5 factors which start from Strategies on the left hand corner and going clockwise until Execution. In the middle of the pentagon shape, there is a loop in yellow indicating that Business Transformation is a continuous process and not just a single project or initiative. Besides each SPICE factors there is a performance indicator to represent that each of the factors have to be measured. This measurement can entail Key Performance Indicators and even Service Level Agreement checks.

The red pentagon indicates where the organization is today (aka the current state) while the green pentagon indicates where the organization wants to be tomorrow (aka the future state). In the middle, the yellow arrow from the red pentagon to the green pentagon indicates transition and indicates what the areas that need to be taken into consideration namely people, business processes and technologies. By extension, these areas influence the products and services provided by the organization.

I am going to go through each of these 5 factors and make you think about how each of these factors can affect Business Transformation within your organizations.

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The first SPICE factor is Strategies. Strategy is a careful plan or method for achieving a particular goal usually over a long period of time. Depending upon how far out your organization can think, a long period of time can be 1 year, 3 years or even 10 years. Of course as you go further out in time, your strategy gets complex as you might not be able to anticipate what is going to happen.

There are many levels of strategies within the organization such as Financial Strategy, Marketing Strategy, Operations Strategy and IT Strategy to name a few. Additionally, strategies can be top down, bottom up, cross-functional and hybrids. But fundamentally, I put strategies in three big buckets namely Organizational Strategy which affects Executives (e.g., performance compensation, M&A etc.), Team Strategy which affects Middle Management (e.g., Operational Improvement, Tool Selection etc.) & Individual Strategy which affects front-line employees (e.g., career trajectory, hiring etc.).

In addition to these strategies and the types of people that they affect, it gets more complex and the real relationships actually look more complicated. Upon further depth, we realize that all of these types of strategies have an internal perspective and an external perspective.

For example, from an internal perspective, organizational strategy looks at things like the type of organizational structures such as functional, matrixed, product-based or hybrids. Depending upon what structure your organization has or wants to evolve into, there would be repercussions. In a functional organizational structure, focus on areas of expertise is increased but what is lost is the cross collaboration which leads to silos. On the other hand, in a matrixed project-based structure, the individuals are only needed for the duration of that project and then they go back into a pool to be picked up or not. What incentive do people have in this type of structure to get the job done efficiently? Something to think about.

Depending upon what the end goal is, these strategies can

  1. Affect performance compensation for executives
  2. Create or destroy middle management fiefdoms
  3. Affect Hiring, Training and Layoff of frontline employees
  4. Create and destroy bloated expectations

The last point is interesting since a strategy with bloated expectations or no expectations at all can lead to misalignment namely between IT Strategy and other Organizational Strategies. Lets think about this…

  1. Was this misalignment always there or somehow it evolved over time?
  2. Why did this misalignment happen in the first place?

A root cause understanding from technical and non-technical views can reveal something that might have been taken for granted. For example, IT teams creating and acquiring tools that have no relationship to the Organizational Strategy or perhaps revealing the purchase of technology by non-IT teams which again has no relationship to the Organizational Strategy.

In short, there are 3 key points to consider for Business Transformation in terms of strategies:

  1. The real an unreal organizational structures matter more that you might like to believe
  2. Plan to plan and measure performance both at an organizational level as well as at individual levels
  3. Alignment is a two-way conversation that is not a top-down demand but should be a collaborative approach

Having said that, as corporate citizens of the organization, we have to realize that Strategies are not shelf-ware.

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Merriam Webster defines politics to be the complex of relations between people living in a society. For our purposes, here society would refer to your organization. No one wants to talk about politics in the organization and yet there are decisions made everyday that are political in nature. 

Politics in organizations is about power; the power to frame a problem; the power to influence decision and the power to make decisions. While we are all aware of the official power that is the power of your superior within the organization but most have also encountered unofficial power where regardless of the title an individual is able to persuade others. Some people call this leadership while other call it manipulation.

In organizations, while it may seem that all similar titles should hold the same power but that is certainly not the case. Even with VP titles, not all VPs are the same. Some have more power based on the number of people they manage, based on the revenue generated by their teams and even based on the relationships they have with others within the organization. So, the next time you look at an org chart and see all VPs at the same level you will know that an organizational chart is just a fairytale representation and not reality. Why this matters? This matter because the next time you are looking for champions to support your projects keep a vigilant eye on who has power and how much of their power is used to make decisions.

The display of power is more relevant today in the age of big data than ever before. As you know, most Big Data initiatives revolve around gathering massive amounts of data and then finding patterns. The thought behind is that once we can figure out patterns then we can make better decisions. This however is not the complete picture. Beyond the usual Vs of Big Data, I believe there are 4 Vs that are critical but missing in most conversations.

These Vs are Vitality meaning how important the data is, Versatility meaning how data could be applied to various scenarios, Vocality meaning the supporters of data-driven approaches and lastly Veto meaning the ultimate authority to accept or reject big data conclusions. As you might have noticed, Vocality and Veto are about Power.

The idea of power also applies when you are creating an ERP System. The executives who have official and unofficial powers can become champions or become obstacles. One way to remedy this is to get them involved early on; have a discussion, find out pain points and get feedback. So, when it is time to standup an ERP system, the people have been engaged from the begining and it is not a surprise. Also be prepared that business process optmization should be done first prior to any large scale systems because otherwise all you are doing is automating broken business processes and thus when it is time to optmize them it would become much harder to do so. Other examples of displaying of power would be in Cloud Computing and Shadow IT.

In short, there are 2 key points to consider for Business Transformation in terms of politics:

  1. The official and unofficial power considerations matter and can make or break a project
  2. Create a Power Map to know where a power resides, assign quantitative values to them to set a baseline and then verify with projects that those baselines are correct

Remember, politics needs to be understood especially in the case of organizations.

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Innovation is defined to be the act or process of introducing new ideas, devices or methods. Innovation can be a new product, a new way of hiring people, a new way of doing business processes, a new service and it can also be a new technology. If there are so many ways of being innovative, why organizations and individuals struggle in this area?

For most, innovation is something that is considered difficult since people don’t know where to start or how to continue. Innovation comes from inspiration and I believe that organizations and individuals can be inspired by things around them. The left picture represents the possible sources of organizational inspiration for innovation. These sources include:

  1. First, the organization’s internal customers. By internal customer, yes I do mean anyone who is within the boundaries of your organizations and yes that includes your employees. Employees who can see beyond the immediate needs and are able to connect the dots should have an avenue to express it. Thus, there should be some sort of innovation process that captures the wisdom of these employees.
  2. Second, the organization’s external customers. We are all aware of the external customers who are outside the boundaries of your organization but they too can provide feedback to improve your products and services.
  3. Third, within your own industry, which includes looking at what competitors, partners and/or startups are doing something that could be applied internally.
  4. Fourth, outside your industry. Think about the field of Project Management that emerged from the construction industry but now it is used in Software Development.
  5. Lastly, the integration, customization and combination of inspirations from the above four ways. Think about the evolution of writing from cave walls to stone tablets to paper and then eventually to computers.

The picture on the right represents the possible sources of individual inspiration for innovation. These sources include:

  1. First, your direct circle of influences namely your friends and family. Have you considered talking with them about problems that you might be facing and what they would recommend?
  2. Second, your indirect circle on influence namely your co-workers, educational and professional associations. Perhaps what you are having trouble with they have already solved or at least they can give you a nudge in the right direction.
  3. Third, increasing your understanding of areas that interest you which includes reading books, blogs, news articles and talking to people who have experience in that area.
  4. Fourth, increasing your awareness of areas that you are not that knowledgeable in which includes different types of readings, experiencing cultures beyond your own, conversation with diverse people, observing the plant kingdom and observing the animal kingdom.
  5. Lastly, the stitching, applicability and combination of inspiration from the above four ways. Think about the invention of Velcro by observing cockleburs in the plant kingdom.

Thus, it would be naïve for organizations to think that they cannot fully take advantage of innovation at the organizational and individual levels.

They have to remember that innovation is the lifeline.

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Culture is a way of thinking, behaving, or working that exists in a place or organization. Often times when there is a discussion of culture within organizations we immediately think this is something fuzzy and it is only equated with people. While people definitely create a culture but there is more to this than meets the eye.

You see culture is not just one thing but a combination of things. Most organizations don’t have one culture but they have a mix of sub-cultures. The way people are treated creates a sub-culture. For example, how are people within the organizations at all levels incentivized and rewarded? The way people dress creates a sub-culture. For example, if executives dress differently vs. non-executives this visibly creates the culture of in-crowd vs. outsiders. The posters in public locations, the discussion between Mac. Vs. Windows, IT behind closed doors and even an individual can create sub-cultures within an organizations.

All of this matters because culture is not just having a foosball table or other “perk”, it is creating an environment where employees are appreciated not just by talk by the executive but by tangible actions through incentives, rewards and performance goals.

Culture is at the base of the SPICE factors for a reason.

Culture can make a strategy just another paper-exercise, culture can drastically affect politics, culture can resist organizational innovation, and culture can prevent effective execution of operations and all of this means that culture can diminish any hopes for Business Transformation.

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Execution is the act of doing or performing something. If you notice in the above-mentioned factors, all of them need to be executed; measured and performed otherwise all we are doing is just wasting our breath and paper. As I see it, execution also has an organizational level and an individual level. Both of them are highly intertwined. If there are no structures and processes to determine and quantify execution issues then how would you know where your baseline is and if you don’t know where your baseline is then how would you know if your Business Transformation efforts have been successful or not.

Note that execution is highly based on biases and perceptions of organizations and individuals as discussed earlier. They have to be considered and if needed be persuaded to be changed.

Rewards and incentives can not only change behavior but it can enhance cohesion and collaboration across the organization.

Lesson learned are useless when all they are is a paper exercise of capturing what happened wrong or right but not an input for other projects so that they can avoid similar mistakes or repeat successes.

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All the factors that have been discussed are not something that are done in isolation but they all come together to create an organization that is able to transform it self based and stay ahead of the game.

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As we can see from the live survey, the most important area for Business Transformation is People and the most important factor for Business Transformation is execution.

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Now, let’s go back to our dear friend John (aka your organization). With his understanding of the SPICE Factors and his awareness of how the SPICE Factors can affect people, business processes, products, services and technologies, don’t you think he would have used his flash light to find out what was in the baggage. Perhaps some of the baggage was dead weight that he needed to get rid of and perhaps in the baggage there were additional resources he could use such as food, liquids and even a map. But the only way John would find out would be to look behind and just check his baggage!

All I am saying is…help John find his way and help him succeed!

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5 Questions to Ask About Your Business Transformation

Business transformation is the process of transforming (1) how things are made, (2) how things are bought, (3) how things are sold and/or (4) how services are provided. It has been pursued by organizations ever since the first organization came into being and would continue to be pursued in the foreseeable future. It is the way for organizations to know their current state (i.e., know where they are), their future state (i.e., know where they want to be) and their transition (i.e., what steps to take) by considering the people, business processes, services, products and technologies that can help them achieve their objectives. To be clear, business transformation is not merely a “business” only pursuit but rather it is an organizational pursuit that encompasses Information Technology (IT) and digital transformation journeys as well.

While the promise of business transformation is great, it is still something that organizations consistently struggle with. There are multiple factors that can lead to failed business transformation efforts but the number one reason seems to go back to a typical conversation within organizations. In the 21st century, technology for organizations is not just an enabler but paramount to their success. But how many times have you said or heard someone say, “business” wants this and “business” wants that and that “business” does not understand that systems cannot be developed overnight. Ingrained in this sort of thinking is the idea that somehow IT is different from “business”. Somehow there is this “us” vs. “them” mentality.

It is time to change this “us” vs. “them” culture. It is time to think about IT as not something that is outside of “business” but is part of “business”. To have this conversation there has to be mutual understanding that neither should downplay the importance of the other. This requires an understanding that all technical and non-technical aspects of the organization are there to support the end objectives of business transformation and that collaboration works much better than just mere animosity.

When organizations’ bread and butter business models are shattered in light of the new digital and sharing economy, “business” and technical folks have no one else to blame but themselves. As such it becomes imperative that organizations don’t get lost in complacency and infighting. These organizations should view business transformation as a holistic endeavor by paying enough attention to people, business processes, products, services and technologies that directly and indirectly affect them otherwise business transformation is just a pipe dream. In order for organizations to figure out their own business transformation journey, they need to ask the following questions from internal and external perspectives:

 

Currently

In the Future

1. Who is helped by business transformation? Who should be helped with business transformation? (E.g., management, employees, customers, shareholder etc.)
2. What does business transformation teach us? What should business transformation teach us? (E.g., better internal communications, governance, standardization, discipline, branding etc.)
3. Where does business transformation start? Where should business transformation start? (E.g., IT, marketing, operations, customers, vendors, partners etc.)
4. When is business transformation considered? When should business transformation be considered? (E.g., customer-employee conversations, competitors’ disruption/re-imagination of business models, new innovations, new methods etc.)
5. Why is business transformation is being done? Why should business transformation be done? (E.g., optimization, cohesiveness, long-term value, positive societal ripples etc.)

When you ask the above questions, keep in mind that without effective and unbiased feedback loops most business transformation journeys would be just nearsighted one-time initiatives and not something that would make organizations self-improving entities. Smart organizations have realized this and are taking advantage of not only technological changes but also setting themselves up for the future before they themselves get disrupted.

Business Transformation 5Ws

Lessons Learned in Creating a Corporate System

EXECUTIVE SUMMARY

This article discusses the various strategic, political and cultural factors that were associated with the decision to develop an online employee portal at SmFedCon. The cause and contributing factors that led to the software development project are explored in detail. Focus is placed on SmFedCon’s decision processes to make the initial decision not to develop the employee portal.

Examples are included that show how factors such as person biases and financial conservatism influenced SmFedCon from realizing the potential of the online employee portal.

ABOUT SMFEDCON AND THE PROBLEM REQUIRING A DECISION

SmFedCon was a small US Federal government contractor that provided Information Technology (IT) services in the areas of strategic planning, project management and software development. It had approximately 240 employees and 98% of these employees worked onsite at various government locations across 14 states and Washington DC.  It was growing rapidly and was involved with multiple high-level projects. Due to this rapid growth, a decision needed to be made if SmFedCon was going to spend time and resources to create an online employee portal.

HOW WAS THE PROBLEM IDENTIFIED

Within a few months of joining SmFedCon, CIO noticed a pattern where quality of documentation deliverables was declining due to lack of a version control system and no central document repository. What broke the camel’s back was an incident where one of the federal clients was about to receive different versions of the same document from the main office, project manager and the project team member. Although this was stopped in time, CIO realized that this as an issue and needed to be addressed. This issue was also confirmed by some of the employees who worked on site at federal client facilities.

ACTORS AND ROLES

The following table shows the reporting structure, roles and actors involved in the decision making process for creating an online employee portal:

Actors

Roles

Reported To

Chief Executive Officer (CEO)

  • Corporate priorities decision maker
  • N/A
Chief Financial Officer (CFO)
  • Corporate Financial Management
  • CEO
Chief Information Officer (CIO)
  • Corporate Technology Management
  • US Federal Government Projects Management
  • CEO

In regards to the online employee portal decision process, (1) the CFO’s role was to determine if new project budget requests made financial sense, (2) the CIO’s role was to provide a 2-page business case document to the CEO and (3) the CEO’s role was to decide.

BACKGROUND

Strategic Factors – Not in the Technology Roadmap

Although the initial decision not to develop the employee portal was overturned due to changing circumstances but at the beginning it was based on SmFedCon’s technology roadmap. The technology roadmap was written some year back before the company started to see rapid growth and did not take into account potential issues that might occur due to mismanagement and miscommunications.

Political Factors – Power

The CFO and CIO reported to the CEO however the CFO had more power at SmFedCon. CFO could easily influence the CEO in certain decisions. The CFO’s power came from the 20-year friendship with the CEO and as a trusted advisor to the CEO. The CFO was also responsible for IT prior to the CIO joining the company.

Cultural Factors – Small Business Mentality

While costs should be kept under control in all organizations but small businesses are especially sensitive to this. However, this sensitivity can blind the small businesses from what is possible. This was the case with SmFedCon. Even though they saw how an online employee portal could help solve some of the issue they had it was just not in the budget to pursue this direction.

SMFEDCON DECISION PROCESSES – The 2-Page Business Case

After the issues were identified, CIO met with the CEO to discuss that an employee portal could be the answer. CEO requested a 2-page business justification document to show if the employee portal could address the current and perhaps future needs.

The 2-page business case linked current issues with quality degradation, loss of productivity and eventually loss of clientele. It also listed the various types of options that were considered to stand up an online employee portal. These options included proprietary software vs. open source, existing application customization vs. software development and associated costs. The document listed the only option that was most feasible for SmFedCon.

The CEO discussed the 2-page business case with the CFO during one late hectic evening. The next day CEO informed CIO that the company had decided not to move ahead with the online employee portal project.

Next week, the CEO was working on a federal solicitation response when the computer died. At that time CEO was the only person who had the latest version of the document. CEO was also collaborating with other writers but they only had previous versions. Although the documents were retrieved but CEO realized how the online employee portal with the documentation management system could have saved time and would have been beneficial. The next day SmFedCon won a contract that they were working on and the CEO asked the CIO to go ahead with managing the development of the online employee portal.

The following diagram shows the decision-making process at SmFedCon.

Decision Making Process at SmFedCon

Decision Making Process at SmFedCon

ANALYSIS

In hindsight, there are a number of things that could have been handled better.

As companies grow, they have to realize that what worked in the past when there were only a few employees would not be sufficient in the future. Processes and tools should be in place and scalable to the growing needs of the organizations. In regards to SmFedCon, this was not the case. Although the company was growing rapidly it did not invest in processes and tools that could have helped it become a well-oiled machine. In the case of an online employee portal it was a necessity not a luxury since a vast majority of the employees were not on corporate locations but they still needed to access correct version of documentation and be able to collaborate with other team members.

Framing the Problem

When CIO joined SmFedCon, the problem with documentation management, project management and team collaboration was not defined. There was no framing of what was going on. Although CIO was were not hired to improve operations but suspected that it might have been one of underlying Blink moments that the CEO had. CIO suspected this because CIO had worked with CEO as a consultant and helped one of SmFedCon’s clients improve operations. It would have been advantageous to the company if they had given CIO the opportunity to conduct a thorough study of the company to see what other areas could be improved upon.

Biases – We all had them

In the decision-making process for the online employee portal there were definitely some biases from all actors. CIO’s bias came from working with small business in the past where cost was always a major issue. Additionally, in those organizations CIO was responsible for recognizing patterns and improving operations and thus tried to do the same with SmFedCon. Due to CIO’s background in technology, CIO believed that most operational issues can be solved through well thought out management and technology systems which was another bias. CIO’s decision not to get buy-in from the CFO prior to giving the 2-page business case and not getting CFO involved in determining the project budget stemmed from an unpleasant experience working with a previous CFO. All of this played into the CIO developing the business case without working with the CFO.

There were some biases from the CFO as well. Since CFO handled IT before CIO joined, it seems like CFO was reluctant in giving up control. As CIO looks back, s/he remember an incident where the CEO had to have a closed door meeting with CFO so that CEO would give CIO login credentials for a corporate system. CFO was skeptical about IT projects and was quick to make judgments about them. CFO was also double the age of the CIO and might have not understood/accepted why SmFedCon hired a young CIO at the company only in their 20s. In regards to the online employee portal, all these biases might have played a role in the CFO convincing the CEO that it was not feasible to start this project.

Although the CEO was not quick to make judgments but the 20-year-old relationship with the CFO might have played a role in the decision. Additionally, the decision not to be move ahead on the project might have been exacerbated by that hectic late evening.

Alternatives to Recommended Direction

The 2 pages CIO chose to concentrate on stated what issues SmFedCon was having and how they could be solved through the online employee portal. The document did not have any alternatives to select from. It only listed that SmFedCon can create the online employee portal (1) using open source technologies, (2) CIO would guide the developers and vendors in the design and (3) CIO would manage its development.

CONCLUSION

Although a decision-making process was followed but initially it did not result in the desired outcome. As discussed earlier, while there are many reasons for this however establishing good relationships and getting buy-in would certainly have helped.  Some of the other decision-making processes that could have helped include:

  • Nominal Group Technique – This technique could have been helpful in determining the various issues employees were having. Since the online employee portal was the CIO’s idea even though s/he had been with the company only for few a months versus other employees who had been around for a long time. This might have created some resentment towards the idea. The Nominal Group Technique could have helped to make idea generation and problem solving more collaborative.
  • Framing – Proper framing of the issues would have helped too. CIO did not frame the issues correctly and jumped to the solution. It would have been great to just step back, frame each issue individually and then see how issues could be resolved.
  • Personality Types – CIO assumed that most people are people are like him/her. However, if CIO had understood the various personality types and their motivations then his/her recommendations could have appealed more to CEO and CFO.

 

CEO and Service Orientated Architecture

EXECUTIVE SUMMARY

This article discusses what is Service Orientated Architecture (SOA), how it is used, what are its benefits and what are the challenges when adopting it for your organization. It explores the business and technology perspectives of where SOA can be applied internally and externally by showing the following benefits of SOA to your organization:

  • Enhanced Operational Insights
  • Increased Business Agility
  • Better Customer Experience
  • Reduced Technology Costs
  • Creation of New Business Models

Keeping the benefits in mind, your organization has to also assess the following challenges that SOA brings for your organization:

In a nutshell, SOA is a framework that allows business processes to be highlighted to deliver Information Technology (IT) interoperability and rapid delivery of application functionality. A successful adoption of SOA would result in enhanced alignment between Business and IT. So, while there are challenges to overcome by your organization but overcoming these challenges would make your organization aligned from top to bottom and across people, processes and technologies.

1. WHAT IS SOA?

1.1. What is a Service?

In order to understand SOA, lets first explore the concept of a ‘service’. Depending upon the context, Merriam-Webster defines a service in 11 different ways. These include a service being “the occupation or function of serving”, “the work performed by one that serves” to many other religious, military, public utilities and organizational definitions (“Service.” Merriam-Webster. Merriam-Webster, n.d. Web.). In economics and marketing, a service is the exchange of non-material equivalent of a good.

In organizations, a service can have business contexts and technological contexts. From a business context, a service can be activities that are performed inside the organization (e.g., Accounts Receivables), outsourced to another organization (e.g., Payroll Processing) and performed for the internal or external customers (e.g., Helpdesk Support). From a technological context, a service can be provided within an operating system (e.g., Windows EventLog), for software (e.g., log service) and where a user exchanges messages with a program to interact with it.

1.2. What is Service-Orientation and Service-Orientated Architecture?

Now that you have an understanding of what a service is, lets define what is service-orientation and what is service-orientated architecture. Microsoft defines SOA to be “a design philosophy independent of any vendor, product, technology or industry trend” (Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web.). Oracle on the other hand says SOA “provides a unified approach with a single interface for all of your current and future integration requirements” (“Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web.)

In light of the varying definitions from vendors and practioners, a working group was established in 2009 to remove the confusion. This working group had a mix of practioners and vendors and came up with the SOA Manifesto that states “service-orientation is a paradigm that frames what you do” and that “SOA is a type of architecture that results from applying service-orientation” This group also prioritized SOA as a business initiative rather than a technological initiative and thus states the importance of (1) business value over technical strategy, (2) strategic goals over project-specific benefits, (3) intrinsic interoperabilityover custom integration, (4) shared services over specific-purpose implementations, (5) flexibility over optimization and (6) evolutionary refinement over pursuit of initial refinement. (Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web.)

As you can see, SOA is an organizational journey that spans across business and technology. From a business perspective, business objectives drive the integration of applications within the organization and between business partners. From a technological perspective, integration of applications is modeled using loosely coupled services that can be combined and orchestrated to achieve business objectives. Thus, you can say that SOA is a framework that allows business processes to be highlighted to deliver interoperability and rapid delivery of functionality.

1.3. How does SOA work?

In SOA, you have three roles that include the Service Provider, the Service Requester and the Service Registry. The Service Provider role (1) describes what the service does, (2) deploys the service over the network and (3) publishes service in a service registry. The Service Requester role (1) finds service in a service registry and (2) uses the service description to invoke the service. The Service Registry advertises the availability of a service that is published by the Service Provider. The interaction between Service Provider, Service Requester and Service Registry is shown below:

Business Objectives and SOA

From the above figure, you can see that business objectives are the drivers for SOA within an organization. While the main idea behind SOA is the reuse of generalized software components modeled as services, but due to its ability to encourage collaboration between business and IT, it can create alignment and can help the organization respond to the rapidly changing business environments.

2. WHAT ARE THE BENEFITS OF SOA?

In order to understand how SOA can help your organization, you have to explore some of its benefits and how other organizations were able to use SOA for their strategic advantage. Following are some of the benefits of SOA:

2.1 Enhanced Operational Insights:

It is often observed in organizations that the left hand is unaware of what the right hand is doing. This type of disconnects cause organizational silos where the approach to developing business processes and the technologies that support it have a very narrow focus. Due to this, the business processes and technologies are tightly coupled with the functional needs at the time when they were created. While this gets the job done for a particular functional need but now if you multiple this scenario across the entire organization and its various functions then you start to see a spaghetti of business processes and its enabling technologies (“Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013.)

The ‘spaghetti architecture’ can result in duplicative business processes and technologies across different organizational divisions. These business processes and enabling technologies are rarely documented which increases the risk of costly mistakes when these business processes change and when the underlying technologies that support these business processes become outdated. In spaghetti architecture, there is also rarely any thought put into the future needs of the organization as whole, this can also result in using technologies that might become obsolete for future needs.

SOA addresses the spaghetti architecture head-on by creating operational insights into the different organizational processes of the organization. Since the main driver of SOA is business objectives that encompass business processes, your organization can start to view the various unique, duplicative and interdependent business processes holistically across the entire company. This holistic view gives your organization the ability to see which business processes can be completely eliminated, which ones can be combined and which ones can be used to make rapid decisions. An example of an organization that used SOA to address its spaghetti architecture is FedEx, a $32 billion multinational organization. By overhauling FedEx’s entire spaghetti architecture to SOA, within 3 years it was able to better manage acquisitions and process changes (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. b.)

2.2 Increased Business Agility:

In today’s competitive business environment, business agility is the ‘holy grail’ that organizations strive to achieve. This business agility can entail many things and can range from bringing a product/solution quicker to the market to providing efficient troubleshooting support for customers. This also implies that business agility is a moving target and can be achieved partially and holistically depending upon the business objectives. The underlying thought behind business agility is the idea of continuous improvement to get better and better at what the organization does.

As your organization looks to be agile, SOA provides the foundation to do this. Due to operational insights and an understanding of the shared services within your organization, SOA can help accelerate what you are trying to achieve. An example of an organization that used SOA to become agile was Wachovia Bank. Using SOA, Wachovia was able to promote a product engineering mentality and make IT an advisor to the business (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.). In 2008, Wells Fargo bought Wachovia for $15.4 billion and when in 2014 Wells Fargo became the highest earning bank in the United States, its CEO gave credit to their smooth acquisition of Wachovia due their cultural similarities (Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web.). You can extrapolate that Wachovia’s SOA might also have been a factor in the smooth acquisition since most acquisitions fail due to cultural and technological differences.

2.3 Better Customer Experience:

If customer is king, then customer experience must be the only priority. Traditionally, organizations have considered customer experience to be the point of transaction when a purchase is made. But a more holistic view of customer experience entails the pre-sales and post-sale processes as well. Due to the many touch points (e.g., physical, website, mobile, social media etc.) of the customers with business; customer experience is not a point of transaction anymore. Forrester® goes on to say that in today’s era of empowered and always connected customers, organizations need customers more than the customers need organizations. [9] Forrester® goes on and talks about creating a “customer experience ecosystem” that entails the people, processes, policies and technologies. (Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web.)

When you talk about customers, you have to take into account both the internal customers and the external customers. The ease by which internal customers can provide customized and quick services to external customers can increase productivity and improve the bottom line for your organization. An example of an organization where SOA was used to improve customer experience was The Hartfort Group, a $26 billion organization. By implementing SOA, The Hartfort Group was able to enable its agents to create, assemble and complete transactions with the external customers (Ganesan, Suresh et al., “What Business Executives Must Know About SOA”).

2.4 Reduced Technology Costs:

As discussed earlier, “spaghetti architecture” can prove to be costly to the organization due to duplicative business processes and the underlying technologies. These costs can quickly add up and start to affect the bottom line of your organization. On the flip side, since SOA allows reuse of services across many functional domains, this can free up money for other endeavors that your organization might be interested in pursuing. An example of this would be Starwood Hotels who are on their way to saving $20 million per year simply by moving from tightly coupled mainframe applications to loosely coupled SOA services (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.).

2.5 Creation of New Business Models:

In today’s competitive business landscape, organizations are continuously looking for ways to differentiate themselves from their competitors. This differentiation can also come in the form of determining new business models enabled by SOA services that would not have been possible in the past. Due to SOA, your organization can look across the various services and make intelligent decisions on what services can be combined to create additional value for the customer that in turn can increase the bottom line. An example of where SOA is best used and enforced is that of Amazon, a $74 billion online retailer (“Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web.). In 2002, Jeff Bezos of Amazon issued a mandate that stated, “All teams will henceforth expose their data and functionality through service interfaces” and “anyone who doesn’t do this will be fired” “The Secret to Amazons Success Internal APIs.” The Secret to Amazons Success Internal APIs. API Evangelist, 12 Jan. 2012. Web.). Bezos’s commitment to SOA and betting the entire future of the company speaks volumes about what SOA can do for an organization.

3. WHAT ARE THE CHALLENGES OF SOA?

So, while SOA provides great promise for your organization, it is by no means a panacea. Thus, you have to also carefully assess the following challenges that SOA brings to your organization:

3.1. Governance & Organizational Maturity:

Governance in a way is the policy of how things ought be done. It provides a framework in which business processes can operate under regulatory, time and other constraints. Thus, governance is an organizational responsibility even for SOA and not only an IT activity. In order to accomplish this, your organization should setup a governance board that consists of a cross-functional team from both business and IT. Additionally, governance should not only include the overall organization and management of SOA activities but also creation of success and failure measurements. These measurements should be used to actually determine the state of SOA within your organization instead of people doing vaporware measurements that have no grounds in reality.

3.2 Not Only an IT thing:

If the burden of implementing SOA across your entire organization is on IT then it takes away the business-side’s responsibility and involvement. While IT is responsible for creating SOA services but business has to work collaboratively with IT to define what those services are. Additionally, the business-side has to understand how did the current state of misalignment between business and IT came into being and how this can be avoided in the future. Thus, SOA is not an IT issue but an organizational endeavor that affects all parts of your organization.

3.3. Organizational Processes Need Reevaluation:

While the presence of too many point-to-point integrations in your organization can reduce your ability to be agile but there is a bigger perspective that you also have to consider. This perspective revolves around your organizational processes that led to misalignment in the first place. These organizational processes not only entail IT but also the business-side. Typically, IT does what business asks but then there has to be some mutual understanding that the requests for services have to be understood holistically. Even after SOA migrations, if your organizational processes are not optimized they might still result in ad-hoc requests from the business leading back to point-to-point tightly couple services that you try to avoid in SOA.

3.4. Long-Term View of Legacy Systems is Needed:

In the short term, it may seem like a good idea to not replace your organizational legacy systems but in the long term there are issues when you do this. These issues entail the constant “patching” to upgrade underlying hardware and software in addition to overburdening legacy systems where new services are being added on top of systems that should be replaced rather than being continued to extend their life. While it may not be possible to replace legacy systems altogether but you should have a plan to retire these systems with new systems eventually.

3.5. No Measurement Means No ROI:

If your organization does not measure pre-SOA activities then how would you know if what SOA promised for your organization is what you really wanted to achieve. So, since SOA often requires long-term commitment from both business and IT, you have to develop performance metrics upfront before you embark on your journey towards SOA-fication.

4. CONCLUSION

Due to your organization’s desire to compete in today’s competitive business landscape, you have to carefully weigh the benefits of SOA’s value in terms of operational efficiencies and organizational improvements. Based on the information provided above, using SOA will help your organization have enhanced operational insights which can increase your organization’s agility to provide better customer experiences, reduce technology costs and explore new business models. Also, you need to keep in mind that SOA presents the challenges of honestly looking at yourselves in terms of maturity and business-IT collaboration by having a long-term view of what you want your systems to accomplish and how you measure what success looks like. Consequently, if you lack foresight into how SOA can be used as a business transformation effort then your desire to be the best would just be a pipedream.

References:

  1. “Service.” Merriam-Webster. Merriam-Webster, n.d. Web. <http://www.merriam-webster.com/dictionary/service&gt;.
  2. Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web. <http://msdn.microsoft.com/en-us/library/bb833022.aspx&gt;.
  3. “Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web. <http://www.oracle.com/ca-en/products/middleware/soa/overview/index.html&gt;.
  4. Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web. <http://www.soa-manifesto.org/&gt;.
  5. “Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013. Web. <http://www.youtube.com/watch?v=qDI2oF1bASk&gt;.
  6. Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web. <http://bloomgroup.com/sites/all/files/Cognizant%20SOA%20paper.pdf&gt;.
  7. Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web. <http://blogs.wsj.com/moneybeat/2014/01/14/as-wells-fargo-hits-profit-milestone-ceo-gives-credit-to-wachovia/&gt;.
  8. Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web. <http://blogs.forrester.com/nigel_fenwick/13-06-27-why_customer_experience_will_become_the_1_cio_priority&gt;.
  9. “Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web. <http://www.digitalbookworld.com/2014/amazon-booms-in-2013-with-74-45-billion-in-revenue/&gt;.
  10. “The Secret to Amazon’s Success Internal APIs.” The Secret to Amazon’s Success Internal APIs. API Evangelist, 12 Jan. 2012. Web. <http://apievangelist.com/2012/01/12/the-secret-to-amazons-success-internal-apis/&gt;.

 

Understanding and Applying Predictive Analytics

Executive Summary

This article proposes looking at Predictive Analytics from a conceptual standpoint before jumping into the technological execution considerations. For the implementation aspect, organizations need to assess the following keeping in mind the contextual variances:

Strategies

Tactics

Operations

  • Top Down
  • Bottom Up
  • Hybrid
  • Organizational Maturity
  • Change Management
  • Training
  • Practical Implications
  • Pros and Cons of Technology Infrastructure
  • Providing Enabling Tools to Users
  • Best Practices

Describing Predictive Analytics

Predictive Analytics is a branch of data mining that helps predict probabilities and trends. It is a broad term describing a variety of statistical and analytical techniques used to develop models that predict future events or behaviors. The form of these predictive models varies, depending on the behavior or event that they are predicting. Due to the massive amount of data organizations are collecting, they are turning towards Predictive Analytics to find patterns in this data that could be used to predict future trends. While no data is perfect in predicting what the future may hold there are certain areas where organizations are utilizing statistical techniques supported by information systems at strategic, tactical and operational levels to change their organizations. Some examples of where Predictive Analytics is leveraged include customer attrition, recruitment and supply chain management.

Gartner describes Predictive Analytics as any approach to data mining with four attributes:

  1. An emphasis on prediction (rather than description, classification or clustering)
  2. Rapid analysis measured in hours or days (rather than stereotypical months of traditional data mining)
  3. An emphasis on the business relevance of the resulting insights (no ivory tower analyses)
  4. An (increasing) emphasis on ease of use, thus making tools accessible to business users

The above description highlights some important aspects for organizations to consider namely:

  1. More focus on prediction rather than just information collection and organization. Sometimes in organizations it is observed that information collection becomes the end goal rather than using that information to make decisions.
  2. Timeliness is important otherwise organizations might be making decisions on information that is already obsolete.
  3. Understanding of the end goal is crucial by asking why Predictive Analytics is being pursued and what value it brings to the organization.
  4. Keeping in mind that if the tools are more accessible to business users then they would have a higher degree of appreciation of what Predictive Analytics could help them achieve.

Relationship of Predictive Analytics with Decision Support Systems or Business Intelligence

University of Pittsburg describes Decision Support Systems as interactive, computer-based systems that aid users in judgment and choice activities. They provide data storage and retrieval but enhance the traditional information access and retrieval functions with support for model building and model-based reasoning. They support framing, modeling and problem solving. While Business Intelligence according to Gartner is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance. These descriptions point to the fact that Decision Support Systems or Business Intelligence are used for decision making within organization.

Interestingly, it seems like Predictive Analytics is the underlying engine for Decision Support Systems or Business Intelligence. What this means is the predictive models that result in Predictive Analytics could be under the hood of Decision Support Systems or Business Intelligence. It should be noted that organizations should proceed with caution with regards to the Decision Support Systems or Business Intelligence since if the underlying assumption are incorrect in making the predictive models then the decision making tools would be more harmful then helpful. A balanced approach would be to create expert systems where Decision Support Systems or Business Intelligence is augmented by human judgment and the underlying models are checked and verified periodically.

Implementation Considerations for Predictive Analytics

As the descriptions above have indicated that the aim of Predictive Analytics is to recognize patterns and trends that can be utilized to transform the organization. This requires organizations to firstly educate themselves on what value they want and what can be derived from Predictive Analytics. Predictive Analytics is about business transformation and it needs to show what value it brings to the organization. In this regard, we have to assess people, processes and technologies of the organization in terms of current state (where the organization is right now) and future state (where the organization wants to be). Typically, this revolves around Strategies, Politics, Innovation, Culture and Execution (SPICE) as shown below.

SPICE Factors

SPICE Factors

The assessment of people for Predictive Analytics means to understand what users will be leveraging Predictive Analytics and if they understand that simply relying on Predictive Analytics is not enough but in order to have an effective system they need to be part of the system. This means that the analytics insights need to be augmented by human expertise to make intelligent decisions. The assessment of processes for Predictive Analytics entails looking at how organizations make decisions right now and how future decisions would be made if Predictive Analytics is put into place. This includes having appropriate governance structures in place. The assessment of technology entails looking at what technologies exist within the organization and if they could be leveraged for Predictive Analytics. If not then looking at what Predictive Analytics products are in the market that would work for the organization and are they flexible enough in case the underlying assumptions for the predictive models change and when predictive models become obsolete.

The advanced techniques mentioned in the book, Seven Methods for Transforming Corporate Data into Business Intelligence would be applicable to Predictive Analytics. These methods are:

  1. Data-driven decision support
  2. Genetic Algorithms
  3. Neural Networks
  4. Rule-Based Systems
  5. Fuzzy Logic
  6. Case-Based Reasoning
  7. Machine Learning

Technologies Used for Predictive Analytics

Gartner has been publishing their Magic Quadrant on Business Intelligence and Analytics Platforms since 2006. Due to the increased importance of Predictive Analytics in the marketplace, Gartner decided to create a separate Magic Quadrant for Advanced Analytics Platforms which focuses on Predictive Analytics and published its first version on February 2014. Since it is the first version of the Magic Quadrant, all vendors listed are new and no vendors were dropped.

 

Gartner's Magic Quadrant for Advanced Analytics Platforms

Gartner’s Magic Quadrant for Advanced Analytics Platforms

As we can see from this Magic Quadrant that it includes well-known vendors but also vendors that are not as big or as well-known. It is interesting to note that open-source vendors such as RapidMiner (a Chicago company) and Knime (a European company) are in the same Leaders Quadrant as well-established vendors such as SAS and IBM. While there are some issues with these open-source vendors as stated in the report but perhaps this Magic Quadrant is also an indication of where the next generation of analytics would come from. Due to the very nature of open-source, there are more opportunities for cheaper customization which would give the organizations the flexiblity to be as granular as they want to be. Ofcourse code stablity and lack of proper documentation are issues that organizations need to be cognizant about. Organizations may also want to “try out” these open source tools before they make a big commitment to propertary software to see if Predictive Analytics is something they want to invest heavily in.

Using Predictive Analytics in Specific Industries

There are many industries that utilize Predictive Analytics. The organizations in these industries either use Predictive Analytics to transform their business and/or to address certain areas that they would like to improve upon. Following is a list of some of the industries that utilize Predictive Analytics:

Industry How is Predictive Analytics used?
Retail
  • Customer Retention
  • Inventory Optimization
  • Low-Cost Promotions
Oil and Gas
  • Well and Field Asset Surveillance
  • Production Optimization
  • Equipment Reliability and Maintenance
Automotive
  • Adjust production schedules
  • Tweak marketing campaigns
  • Minimize Inventory
Food
  • Human Resources Allocation
  • Supply Chain Optimization
Healthcare
  • Electronic Health Records
Government
  • Nation-wide Blood Levels
Social Media
  • New Business Models

While there are many examples of industries that have embraced Predictive Analytics but there are other industries that have not fully accepted it as a new reality. These industries have many excuses for not considering Predictive Analytics but typically revolve around scope, quality, cost and fear of the known. However, the tide might be changing for these industries as well since industry bloggers are beginning to insist how Predictive Analytics could be leveraged for competitive advantages.

My Opinion

Predictive Analytics can come in handy in making organizations analytical and becoming a better version of themselves. However, Predictive Analytics can be a deal-breaker if organizations have attempted and failed in the past and for this very reason Predictive Analytics should start as a discussion first. This discussion should revolve around asking which areas need improvements and among other things determine if Predictive Analytics could be something that could help. After a successful Predictive Analytics initiative other areas could be potential candidates as well.

An important thing to note is that Predictive Analytics is an organization-wide initiative that has touch points across the organization and thus the maturity of the organization has to be seriously considered prior to going on a Predictive Analytics journey. No matter how good Predictive Analytics can be for the organization but if the organization is not mature enough and it does not have the right governance, processes and feedback mechanisms in place then it might turn out to be another attempt at glory but nothing to show for it.

References:

  1. Predictive Analytics for Dummies
  2. Seven Methods for Transforming Corporate Data Into Business Intelligence
  3. IBM Journal Paper on A Business Intelligence System by H.P. Luhn
  4. Gartner report (G00258011) Magic Quadrant for Advanced Analytics
  5. Gartner IT Glossary on Predictive Analytics
  6. Gartner IT Glossary on Business Intelligence
  7. SAP Predictive Analytics
  8. Decision Support Systems by Marek J. Druzdzel and Roger R. Flynn
  9. 5 Questions to Ask About Predictive Analytics
  10. 5 Factors for Business Transformation

Identifying Organizational Maturity for Data Management

The maturity of an organization is determined by how that organization can collect, manage and exploit data. This is a continuous improvement process where data is used to make strategic decisions and strategic decisions are made to collect data that creates competitive advantages. But in order to create strategic advantages through data, an organization needs to have data management and related processes in place to discover, integrate, bring insight and disseminate data within the entire organization. In terms of data, organizations need to understand where they are currently and where they want to be in the future and thus they need to ask the following questions:

Currently

In the Future

Who receives the data? Who should received the data?
What happens to data? What should happen to data?
Where does data come from? Where should data come from?
When is the data being shared? When should data be shared?
Why data is collected? Why should data be collected?

After an organization understands and documents the above then they need to develop metrics to measure the relevance of their data as it pertains to the entire organization. Since being a data-driven organization is a continuous improvement journey, organizations can use the following adaptation of the Capability Maturity Model (CMM) to determine their maturity of data management and related processes:

Data Management Maturity Levels

Data Management Maturity Levels

Additionally, organizations can have governance and processes that can help them assemble, deploy, manage and model data at each level of CMM as shown below:

 

Governance

Governance

References:

  1. Khan, Arsalan. “5 Questions to Ask About Your Information.” Arsalan Khan. WordPress.com, 16 May 2014. Web. https://arsalanakhan.wordpress.com/2014/05/16/5-questions-to-ask-about-your-information/

How to select an Enterprise Architecture Framework?

EXECUTIVE SUMMARY:

This article provides in detail the elements of an Enterprise Architecture (EA) framework that would be selected and deployed at a fictional United States (US) Federal Government contractor called FedCon. FedCon is divided into 3 Business Units (BUs) that are focused on providing Management Consulting, Information Technology (IT) Consulting and Systems Integration (SI) Services in Healthcare, Environment and Finance.

This article analyzes FedCon in terms of Strategies, Politics, Innovation, Culture and Execution (SPICE) as shown below:

  Stakeholders Domains
Strategies CEO, COO and CIO Business-IT alignment
Politics BU SVPs, PMO and program/project managers Technology products and services
Innovation Employees directly interfacing with customers Technology products and services
Culture PMO, HR and Accounting/Finance Leverage the massive intellectual property
Execution All employees Organizational performance

Based on the above, it is determined that The Open Group Architecture Framework (TOGAF) would be the appropriate EA framework at FedCon since (1) it is supported by multiple vendor tools (2) it is constantly being improved upon and (3) it has an Architecture Development Methodology (ADM) which can be used as a guide.

ABOUT FEDCON:

FedCon is a fictional 30 year old large publically traded US Federal Government contractor that provides Management Consulting, IT Consulting and SI services to civilian agencies. It has over 5,000 employees nationwide and it is structured into three Business Units (BUs). Each BU has domain expertise in Healthcare, Finance or Environmental information systems. This structure allows the BUs to work directly with the civilian agencies based on their missions. Each BU has its own account/business development (BD) team that reports to the BU Senior Vice President (SVP). The Program/Project Managers report to the BU SVP and provide status updates on programs/projects to the corporate Program Management Office (PMO). The PMO conducts weekly meetings to provide guidance on corporate standards, compliance and general project templates.

Organizational Structure

Organizational Structure

PROBLEM STATEMENT:

Over the past couple of years FedCon has lost 20% of its business. The CEO has been under pressure by the shareholders to turn the company around. Thus, the CEO hired a management consulting firm to determine what were the pain points within FedCon that were preventing it from staying competitive in the marketplace. The management consulting firm’s report revealed that due to inefficient business processes and outdated technologies FedCon’s BUs were not able to collaborate efficiently to manage business and technology changes. Based on these findings in the report, the CEO mandated the Chief Operation Officer (COO) and Chief Information Officer (CIO) to work together to find areas that they can improve in the next 12 months.

ANALYSIS:

In order to address the CEO’s concerns, the COO and CIO came to the conclusion that in order to help FedCon create a disciplined approach to managing strategic intent and its execution they had to look into the field of Enterprise Architecture. Thus, the COO and CIO decided to standup an Enterprise Architecture Program Management Office (EAPMO) that would report directly to the CIO. Initially, the EAPMO is tasked with determining the high level criterions to select a framework. This task includes providing elements of the framework to be used and how the framework would be applied within FedCon..

In this article, we assess the feasibility of an EA framework that can be used in FedCon by making observations about Strategies, Politics, Innovation, Culture and Execution (SPICE) factors. These factors would focus on understanding the people, processes and technologies at FedCon to create an effective EAPMO.

 

SPICE Factors

SPICE Factors

Strategies at FedCon:

At FedCon, there are multiple levels of strategies that are developed. These strategies include: (1) the corporate strategy determined by the CEO, (2) the operational strategy determined by the CFO, COO and CIO, (3) the BU strategy determined by the BU SVPs and (4) the PMO strategy determined by the PMO office. This is shown below.

Multiple Corporate Strategies

Multiple Corporate Strategies

As we can see from the above figure, each strategy layer addresses different domains for the various stakeholders. Even though these strategies are developed to increase the bottom line and decrease costs, they are created in isolation. Additionally, since each BU is somewhat autonomous it can create technology products and solutions for the civilian agencies that overlap with corporate products and solutions. This is a problem since not leveraging the corporate assets where applicable for client delivery can result in program/project delays and duplicative systems.

The primary strategic concerns in choosing an EA framework are:

  1. Stakeholders – CEO, COO and CIO are the strategic stakeholders and the executive sponsors of the EAPMO.
  2. Domain – Strategically, FedCon is interested in alignment of business and IT operations and efficient processes.

FedCon has never stood up an EA practice and thus it would be wise to select an EA framework that could guide them in what to do and that it has been proven in the industry to be useful for organizations that are just starting out their EA journey. These high level strategic criterions are fulfilled by The Open Group Architecture Framework (TOGAF) that provides an Architecture Development Methodology (ADM) as a step-by-step guide and includes how to do stakeholder management.

Politics at FedCon:

Generally, when we talk about the politics in an organization we are referring to the negative connotations attached with it. But for our purposes we will define politics to mean the formal power or informal power of an individual or group within an organization. The power exhibited by these individual and groups can turn into obstacle or support to bring about organization-wide changes. In this sense, here we refer to formal power as the reporting structures while informal power refers to the influence yielded based upon size of the BU, revenue generated by BU, headcount of BU and close relationships of BU leadership with the executives.

At FedCon, even though the BU SVPs have the same title, they don’t have the same power. Taking this into account and the emphasis by the US Federal Government Executive Branch to focus on healthcare issues, the largest and most profitable among the FedCon’s BUs is the healthcare BU. Due to this reason the healthcare BU SVP has more informal power among its peers. This means that if the healthcare BU can be convinced of the merits of the EA practice then we can come one step closer to a FedCon-wide EA practice.

The primary political concerns in choosing an EA framework are:

  1. Stakeholders – BU SVPs, PMO and program/project managers are the political stakeholders. The BU SVPs have formal power to bring change within their respective BUs. The PMO is a well-established office and it has visibility into the various kinds of projects and has informal power by pushing down changes to the project level within different BUs. Lastly, the program/project managers within BUs are stakeholders as well since they have to indoctrinate their teams on how EA can be used as leverage when developing client technology products and services.
  2. Domain – Politically, agreement, collaboration and coordination across BUs and the corporate team seems to be the area of focus to rapidly bring technology products and services.

Due to the “friendly” competition among BUs to become bigger and yield more influence in FedCon, politics has to be carefully considered. Sometimes BUs are not willing to share if there are possible overlaps with what they are developing and what is already available in a different BU or at the corporate level. Convincing BUs to work together could be hard and caution has to be taken in which players to involve in development of the EA practice. Additionally, there has to be some sort of collaboration between the EAPMO and PMO for lessons learned and organizational improvements. These high level political criterions are also fulfilled by TOGAF where it recommends how Architecture Governance and Architecture Boards should be setup.

Innovation at FedCon:

Broadly speaking, innovation in organizations is disruptive, incremental or a combination of both. Disruptive innovation as described by the world-renowned management theorist Clay M. Christensen’s institute is such that it “transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high costs are the status quo.” This disruption can come in the form of unique business models, products and/or services that can give rise to new industries and improve existing industries. On the other end of the innovation spectrum, incremental innovation is where small changes are made to existing business models, products and services to improve existing industries.

Being a US Federal Government contractor, innovation at FedCon is mostly incremental since it tries to improve upon its existing products and services that are provided to the civilian agencies. FedCon accomplishes incremental innovation by obtaining customer feedback and assessing the competitive landscape. However, since BUs only focus on their own expertise, there are less opportunities for collaboration across BUs, which means technology products and services, are being developed without leveraging what already exists in the organization.

The primary innovation concerns in choosing an EA framework are:

  1. Stakeholders – FedCon employees that work directly with customers are the stakeholders that need to be considered since improvement of existing technology products and services are highly dependent upon customer feedback and conveying of the feedback to FedCon.
  2. Domain – In terms of innovation, FedCon is interested in creating technology products and services that meet customer expectations and exceed what the competition can offer.

EA is a disciplined approach to accomplishing enterprise objectives through alignment between business and IT. This disciplined approach can also be leveraged to make FedCon more competitive, which can result in bringing technology products and services quicker to the marketplace. This high-level innovation criterion also point towards using TOGAF since it is constantly being improved upon based on the feedback from technology vendors and solution providers.

Culture at FedCon:

The “father of modern management” Dr. Peter Drucker once said that, “Culture eats strategy for breakfast.” Culture can affect the ability of any organization to adopt or resist changes to the organization. While culture is typically considered a fuzzy attribute of an organization but there are tangible things that we can observe to decipher corporate culture which include (1) corporate values, (2) employee recognition and risk taking, (3) salaries, commission and hourly rates, (4) location, (5) clothes and (6) domain expertise and product/service subcultures.

At FedCon, the culture is such that change is welcomed as long everyone who is affected by it understands its purpose and there is no disruption to normal business processes. This is a two-pronged issue for the selection of an EA framework since even if the value of EA is understood by senior leadership but it is not understood at the BU, program/project and individual levels then it becomes just another information collection exercise.

The primary cultural concerns in choosing an EA framework are:

  1. Stakeholders – FedCon has a process-driven and metrics-monitoring culture. This is one of the reasons that Program Management Office (PMO) is an important part of FedCon since it provides a consistent process by which program/projects can be evaluated. In order to incentivize employees to change their behavior for the organizational transformation, human resources and accounting/finance offices are also stakeholders in EA success.
  2. Domain – Culturally, FedCon is interested in creating an atmosphere that encourages employees to take risks and leverage the massive intellectual property it has developed over the years to stay competitive.

One of the reasons for the success of the PMO within FedCon is its process-driven culture. So for the selection of an EA framework we have to consider what plays into strengths of FedCon. This high level cultural criterion leads us to TOGAF that provides a methodological approach for EA within an organization. The EAPMO would make use of lessons learned from the PMO to create a successful EA practice.

Execution at FedCon:

Intention without execution is simply thoughts without results. An organization can have great intentions but if it does not operationalize those intentions then all the strategy discussions and documentation it did just an exercise in futility.

At FedCon, execution has two views. One view is the execution based on winning a government contract to deliver technology products and services. The second view is execution of the corporate strategy that looks into entering new markets, mergers and acquisitions and creating superior technology products and services.

The primary execution concerns in choosing an EA framework are:

  1. Stakeholders – All employees of FedCon at every level are stakeholders in the successful execution of EA.
  2. Domain – In terms of execution, best practices have to be applied/created for all of FedCon and metrics developed that assess organizational performance.

STANDING UP AN EAPMO:

After assessing the business environment of FedCon to determine an appropriate EA framework, next we have to determine people, processes and technologies needed to standup the EAPMO. These needs are discussed below:

People:

In order to assess the skillsets needed to run the EAPMO, we have to look at the current skillsets available, skillsets that people need to be trained on and hiring of people with the necessary skillsets at FedCon. The hard skills needed to join the EAPMO require the knowledge of the chosen EA framework (i.e., TOGAF) and the ability to find common themes to enhance collaboration. The soft skills needed to join the EAPMO require (1) being politically aware, (2) ability to create bridges/connections and (3) high emotional intelligence. Additionally, metrics will be created to evaluate EAPMO team members based on their hard and soft skills.

Processes:

The business processes followed by EAPMO would be determined by TOGAF best practices and what has worked within FedCon. At a high level this would be the architecture governance process and at the lower lever this would the cross-functional teams processes for being advocates and collectors of information across FedCon. The various processes would be tested in the first 6 months to work out any wrinkles and get a baseline understanding of what needs to be done.

Technologies: 

Now that we have selected the FedCon’s EA framework to be TOGAF, we have to select a tool that supports this framework. This tool can be selected by looking at Gartner’s Magic Quadrant for Enterprise Architecture tools.

 

CONCLUSION:

Due to FedCon’s expertise as a technology company and for all the reasons stated in the analysis section, TOGAF is the right EA framework since it provides a roadmap of what needs to be done. One thing to keep in mind is that a framework needs to be flexible enough so it can adapt with changing organizational needs rather than the organization becoming a slave to the framework.

References:

  1. Khan, Arsalan. “5 Factors for Business Transformation.” Arsalan Khan. WordPress.com, n.d. Web. https://arsalanakhan.wordpress.com/2013/07/16/5-factors-for-business-transformation/
  2. “Stakeholder Management.” ADM Guidelines and Techniques – Stakeholder Management. TOGAF, n.d. Web. http://pubs.opengroup.org/architecture/togaf9-doc/arch/chap24.html
  3. Schekkerman, Jaap. Enterprise Architecture Good Practices Guide: How to Manage the Enterprise Architecture Practice. Victoria, BC: Trafford Pub., 2008. Print.
  4. “Architecture Governance.” Architecture Governance. TOGAF, n.d. Web. http://pubs.opengroup.org/architecture/togaf8-doc/arch/chap26.html
  5. Christensen, Clay M. “Christensen Institute.” Christensen Institute Disruptive Innovation Comments. Christensen Institute, n.d. Web. http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/
  6. “The Business Executive’s Guide to IT Architecture.” The Open Group Architectural Framework (TOGAF) Executive Overview. TOGAF, n.d. Web. http://www.opengroup.org/public/arch/p1/oview/
  7. Caldbeck, Ryan. “Why Execution Is Everything In Business.” Forbes. Forbes Magazine, 16 Sept. 2014. Web. http://www.forbes.com/sites/ryancaldbeck/2014/09/16/why-execution-is-everything/
  8. “Organisational Culture Eats Strategy for Breakfast and Dinner.” ORGANISATIONAL CULTURE EATS STRATEGY FOR BREAKFAST, LUNCH AND DINNER. Meliorate, n.d. Web. http://www.torbenrick.eu/blog/culture/organisational-culture-eats-strategy-for-breakfast-lunch-and-dinner/
  9. Lapkin and Weiss. “Ten Criteria for Selecting an Enterprise Architecture Framework”. Gartner report G00163673. Gartner http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=838915&ref=QuickSearch&sthkw=G00163673
  10. Brand, Saul. “Magic Quadrant for Enterprise Architecture Tools.” Gartner report G00263193 http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=2859721&ref=QuickSearch&sthkw=ea+tools+magic+quadrant