Our baby steps towards Open Source and On-Deamand Software
Why should there be any resistance to open source or on-demand software, if they are of value to organizations? I have been pondering over this question myself. Is it just the case of resistance to change? Probably.
Now last week, my team suggested that it was about time we had collaboration software to manage our projects documentation. And then I came across a news item on Twiki. Twiki is an open source collaboration platform used by organizations such as Yahoo!, SAP, and Motorola. Enthused by these names, I am now trying to convince our IT department to help us implement this software for Project Management Office.
So far, this week I have been a bit more adventurous than usual. We have kicked off another project. I have asked my colleague to evaluate application of On-demand software in our environment. In fact we have registered with Salesforce.com and whatever I have seen so far is nothing less than exciting. Encouraged with what I have briefly seen, I have asked my colleague to find answers to following questions in her study:
- Why is the world more enthusiastic about On-demand when ASP has not been a great success?
- What could be the criteria to decide on the use of on-demand software in our environment?
- Which are the applications as outlined in our IT strategy could qualify for on-demand software?
These are our baby steps towards open source and on-demand software. Hopefully, I will be able to post some positive development on both these fronts in weeks to come.
Incidentally, lot of action seems to be happening in on-demand CRM software space. SAP is expected to announce its on-demand software next week. And Siebel is already offering on-demand software since last year.
“The state of the CIO” survey report – Surprises and Contradictions
State of the CIO is the annual report published by CIO magazine based on the survey of heads of IT. The survey population of about 545 represents a wide spectrum of industries (Manufacturing, Medical/health care, Insurance, Finance, Education, Distribution, Government etc.) and size (Less than $100 Mn, $101 Mn – 999 Mn, $ 1 Bn & more). The survey results can be downloaded from CIO website. Are there any surprises? Indeed, there are surprises as well as contradictions.
As per the report, the top 3 processes being improved by IT are Accounting & Finance (!), Customer Service & Support, and Human Resources. Accounting & Finance taking #1 position is really surprising. But then it could be on account of regulatory requirements such as SOX.
The top 3 contributions of IT towards the organization are Reduction in costs through efficiency & productivity, Business Innovation, & Attainment of competitive advantage. Regulatory compliance ranks 7th this year and it ranked 5th last year. Now this contradicts the finding as well as my assumption stated above. This means organizations are spending money on Accounting & finance processes to improve efficiency & productivity, business innovation and competitive advantage!!!
34% of the respondents (which was the largest block) stated that the goal of their company’s customer efforts is towards attracting new customers to expand revenue sources. If that was indeed the case, one expected companies to spend on IT for improvement in Sales processes (ranked #5) more than Customer Service and Support processes (ranked #2).
73% of the CIOs believe that IT should play a proactive role & lead business. Only 23% believe that that IT should play passive role and simply support business. This is an encouraging trend. In my experience, more and more business leaders now want IT to play more proactive role.
Small companies spend 9.8% of their revenues on IT. This is significantly higher than midsize companies (5.2%) as well as large companies (6.6%).
Supply Chain initiatives were consistently given low priority in response to various questions by CIOs. Supply chain initiatives can contribute significantly in achieving Cost Reduction, Business Innovation, and Competitive Advantage, which were identified as the top 3 impact areas by CIOs. What could then be the possible reasons for their low priority and the resulting contradiction? One possible reason could be that supply chain was irrelevant for more than 50% of the CIOs considering the industries they represented.
The top most barrier to CIO’s job effectiveness is “overwhelming backlog of requests and projects”. Unrealistic expectations from the business; Unknown expectations from business; Lack of business knowledge within IT department are some of the other barriers identified by CIOs. This is an extremely interesting confession by CIOs considering that most of them want to drive business and play a more proactive role. CIOs indeed have a tough job on their hands.
I, at times wonder whether surveys such as the one carried out by CIO magazine are meaningful considering the diversity in industries and size the responding CIO represented. It becomes very difficult for readers to identify & draw universal trends and takeaways.
Process Mapping Basics – Part I
The starting point of the implementation of BPM system (BPMS) is collecting process requirements by mapping the business process being automated. Any business process is a series of activities carried out by a performer or a group of performers in order to produce outputs by consuming inputs. A business process is always governed by business policies and business rules. Hence while, mapping the process and collecting process requirements, it is essential to capture the following elements of the process:
- Activity flow: sequence of activities from start to end along with their interdependencies and inter-relationships
- Information flow: inputs and outputs for each of the activity mapped as part of activity flow
- Business rules: business policies governing the flow of business process
- Performer: performer of the activity; a person, a group of persons, or a system
- Activity turnaround time
- Activity cost
Most of the modern BPMS provide process modelers – a graphical drag-n-drop tool – to map business process. These modelers also support process simulation. In case you are a beginner and wish to try process mapping, you may consider open source BMPS (process designers provided as part of BPMS) from Intalio (Would be available from Q2 of 2006), or jBoss. Savvion, one of the leading BPMS providers also provides 90 days evaluation copy of their process designer, which can be downloaded from their website.
It is not essential to map business process in the process modelers offered by BPMS. If you are a user of process modelers such as Visio and Provision, some BPM systems allow import of processes defined in these modeling software.
Some BPM systems support swimlane based process mapping. Swimlane based process mapping is a method of representation of process maps, where activities are organized performerwise and represented on the process diagram within horizontal or vertical bands. Each band represents a performer.
Typically activity flow, information flow, business rules, & performers are required for process execution by the workflow engine. Activity turnaround and activity costs are useful for process simulation, which can be carried out to identify and improve upon process bottlenecks.
Business rules in most BPM systems are captured as part of the activity flow. In such cases, workflow engine executes both activity flow as well as business rules. There are few BPM systems where business rules are captured and executed by a separate business rules engine. This gives business users flexibility in managing business rules, which change more often than the activity flow. For example, in case of loan application process, loan approval rules are likely to change more often than the activity flow of application verification, application evaluation and disbursement of loan. I will discuss business rules and dynamic process management in my blog in future.
Challenges of implementing the BPM system
Soon, we will be starting with the implementation of BPM, Content Management & Imaging system to automate new business process within my organization. New business process spans across different functions, which have different levels of interest and motivation to implement the system. During the scoping exercise, we found that we will be required to integrate at least 6-7 different back-office systems. So, this implementation is going to be a big challenge to my team and me. However, there are a couple of factors in our favour, which make me believe that we are likely to succeed in our endeavor. First, our project sponsor is a tech enthusiast and believes that the technology we are introducing is going to help him. And second, I believe we have a good team.
As we make our preparations, I am pondering upon the challenges that we’ll be facing during the implementation. Following are some of the top challenges:
Change Management: Today our entire processing is paper based and post implementation we’ll be moving to the image based environment. This means our application processors and underwriters will have to work on images, and especially, our underwriters will not have the luxury “to feel the paper” while they make their underwriting decision. Creating “value” for underwriters & other operational staff and overcoming their resistance to use the system is the biggest challenge we will face.
Managing Expectations: The top management and project sponsor in particular have big expectations from the system. Thanks to the vendors & consultants, in general across the organization, BPM & Imaging initiative is seen as a panacea to most of the business issues associated with operations. We will have to deliver a system matching and exceeding these expectations.
Commitment of resources to the project: The implementation team is a cross functional team. There are 4 stakeholders in the project and each has committed full time resources for the project. They probably are the best minds in their respective functions. Incidentally, the project is starting at a time when insurance industry in India goes through the busiest period. Hence, ensuring the commitment of these resources to the project during the busy season, when these resources may have to respond to the call of the duty for operational work will be a big challenge.
Integration with back-office system: Implementation will involve integration with 6-7 back-office systems. This is indeed going to be a challenge for our IT team not only during but also after implementation. The integration layer that we will be building has to be scalable and robust. Failure in any one component may bring down the system impacting business operations adversely.
Image Migration: During the course of the implementation, we will migrate from our current content management (CM) system to the new CM system. This will involve migration of imagebase and index data maintained in the current repository. This will be another challenge for IT considering that the current system is based on proprietary standards.
I do not think that the challenges that I have discussed above are unique to us. But I wonder whether I am missing on something. I would really be glad if you could share your experiences in this area. Look forward to hearing from you.
Why CIOs can’t become CEOs?
Our VP of Client Services and Underwriting is back from Egypt where he was invited to speak on Role of IT during a CIO conclave. I had a brief discussion with him about his Egypt visit when he managed to stump me with a question. Apparently he asked CIOs gathered in Egypt that why there were not many examples of CIOs becoming CEOs of corporations. Very simple. Because most of the deserving candidates are already CEOs of Info Tech companies!!!!
On a more seroius note, honestly, I hardly am aware of any examples, where a financial services or manufacturing company has a CIO becoming the CEO!!! Why is that? If Sales head, Finance head, HR head can become CEO, why not a CIO? In my VP’s opinion, CIOs lack business domain knowledge!!!
I hate to say you have lost! – Part II
Thanks a lot Phil for your comments. You make valid points about #2 and #3 of my blog post “I hate to say you have lost”.
In case of #2, your observations are valid. Especially, if the technology is new, indeed it makes a lot of sense on the part of the vendor to educate prospects and I am sure this could even lead to drastic change in requirements on the part of prospect.
In case of #3, I agree that organizations need to build capabilities in evaluating systems and technologies. In fact we too have a team engaged in this activity. However, my point is that unlike IT research and consulting firms such as Gartner, user organizations need not in absolute sense judge a system or an offering. The frame of reference for evaluations is always parameters and conditions prevalent in the user organization. After a couple of system evaluation exercises that we carried out, many vendors kept on challenging our decision and kept on telling us that their solution was the best. I know of atleast 2 examples, when organizations opted for Baan when SAP could have been a better choice for them. And the choice of Baan by these organizations did not in anyway mean that Baan was better than SAP.
I hate to say you’ve lost
The most difficult stage during any system evaluation exercise for user organizations is to communicate the decision to loosing software vendors. Not because organizations are not fair in their evaluation or want to be opaque about their assessment. But because vendors find it very difficult to digest the decision. And why not? A deal represents acceptance, reward, passion, growth, continuity…. and so on…. especially for small vendors and their people. And so, even after a deal is closed, vendors keep coming back to user organizations in various forms, shapes and sizes. Some want them to take a 2nd look. Others express their caution and alarm at the choice that user organizations make. Unfortunately, a deal cannot be awarded to more than 1 vendor most of the time and out of the 10 vendors that you evaluate, 9 need to be communicated the unpleasant news during some stage of the system evaluation process.
At times I wonder whether vendor organizations have complete understanding of IT environments and issues within user organizations. For example, when we evaluated BPM & Imaging system, we not only looked at the functionality & technology being offered, but considering that infrastructure systems such BPMS require huge amount of implementation efforts, we also rated system on Implementation Partner, their implementation approach and post sales support. So our objective was not to choose the best product but rather a product that could be implemented and run in our environment without glitches. You may have the capability to buy a Mercedes, but what’s the use of that vehicle if you don’t have the necessary skills to drive & maintain the vehicle in your environment. And believe me I had a tough time explaining this to vendors and that our decision was not a statement on the quality of their product.
Here are some simple rules that vendors can follow while selling enterprise software to make customers’ as well as their life better:
1. Understand customer requirements (not just business or functional requirements) and drivers for the initiative. Address them and probably you will have the deal.
2. Sell what customer wants. Don’t sell features and functionalities of your product that are irrelevant in customer environments.
3. Note that, “Customers are not in the business of evaluating systems & vendors”. Gartner is. So organization’s customer choice is not a statement on your product.
4. Respect your customer & the choice she makes. Do not make assumptions and pass judgment on the customer choice. Instead, find the evaluation criteria. Probably you’ll find answer as to why customer choice went against you. More importantly it may help you better your offering and sales pitch to other prospects.
5. In case you lose the deal, draw your learnings and move on.
Role of IT function in a user organization
Last few days I have had discussions with our Head of Client services and Underwriting about his challenges at work and in turn his expectations from IT in order to overcome these challenges. Incidentally, he has been invited to speak in a CIO conclave being held in Egypt. The theme of his talk: Crossing the functional divide – Expectation from IT department. While we discussed and debated many points, one important point stood out. He expects IT function to play the role of “evangelist”!!!
Business functions no longer expect IT to be passive onlookers – the maintainers of status quo! They expect IT to lead them to business improvement and creating value in terms of topline & bottomline.
Does this mean that I have to unlearn what I learnt after the dot.com bubble burst – “Technology should never drive business!!!” However, at least one business head I work with thinks that technology should indeed drive business.
What does this mean to IT? Don’t just drown yourself into the millions of lines of codes and stay closeted in tables and fields. Reach out. Invest time and effort in understanding the domain you serve. Identify pain points and areas of improvement. Design and propose technology solutions addressing these pain areas and aggressively and passionately pursue them with business functions.
No wonder then that, organizations are now creating the role of Business Analyst in their business or IT functions!!!
BPM & ECM
Around a year back, when we were evaluating BPM & Content Management system for our organization, I was attending a presentation from one of the leading ECM vendors, who also offered a very good BPM system (BPMS). During the presentation I asked the marketing manager making the presentation, what in his opinion offered more value BPM & ECM. “BPM” he answered in a flash! Not surprised by his answer, my following question was, why then the vendor positioned their BPM solution as a subset of ECM? Wall Street he said likes us being an ECM vendor than being a BPM vendor. That was interesting. BPM system around then was gaining ground but was certainly not big enough to impress Wall Street and hence the market cap. Even today the vendor continues to position itself as an ECM software provider!!!
In my opinion ECM systems and BPMS are mutually exclusive. ECM systems offer wide range of functionality such as Content (Document) indexing, Content Storage, Content Retrieval, Content Publishing (as part of Web Content Management), Content Personalization, Version Control, Check-in / Check-out, Annotation, Workflow, etc. If used as a pure content management system, ECM can be compared to the RDBMS. If RDBMS facilitates storage & retrieval of structured data, Content Management system facilitates storage & retrieval of indexed content such as documents, e-mails, audio, video, etc. ECM falls in the infrastructure software category and doesn’t support any specific business process or transaction just like the RDBMS. However, it can be used to supplement transactions executed manually or using any of the enterprise applications.
Most of the ECM solutions from vendors such as Filenet, Documentum, Hummingbird, Livelink, Newgen, etc have evolved from document management systems. These document management system supported document indexing, storage and retrieval along with basic collaboration or workflow capabilities. The workflow provided by them was embedded into the document management system and could not be used to automate a business process that did not require document to be passed from one user to another. The workflow capabilities offered by these systems were very primitive as they lacked sophisticated process definition, simulation, integration, and management (including BAM) capabilities. Having said so, many of these vendors are now either BPM ready or are getting there.
Typical Enterprise Systems Architecture would have 4 logical layers. The bottom most layer would consist of enterprise applications such as ERP or Transaction Processing Systems, SCM, CRM, ECM, etc. The layer above that would be integration layer consisting of integration software based on EAI, MoM, SOA, etc. Second from the top would be BPMS layer comprising of process templates spanning across enterprise systems. And the topmost would be B2B integration layer facilitating execution of business processes beyond the boundary of the enterprise.
In my opinion, BPMS is the Central Nervous System orchestrating all the business processes spanning within and across the enterprise. With the advent of SOA, application & infrastructure vendors are making every effort to take BPM to a totally different scale. As a result BPMS decision needs to be thought through carefully and strategically.
