five things niel nickolaisen cio, headwaters, inc. co-founder, accelinnova

Five Things

Niel NickolaisenCIO, Headwaters, Inc.Co-founder, Accelinnova

Introduction

• I suffer from impatience, consultant fatigue, and career angst.

• I look for solutions I can implement immediately, that do not require months of consulting, and that add immediate business value.

• Therefore, I present . . .

5 Things

• That are immediately implementable.

• Proven.• Easy to explain (even to the

CFO).• That generate business value.

The Five Things

1. Purpose Alignment2. Complexity / Uncertainty Matrix3. IT Lean, Six Sigma4. Build a Model Not a Number5. IT Customer Service

1. Do More Smart Stuff (and less

stupid stuff)

• Example, ERP implementation.• Legacy sequence of data entry

was:– Name, telephone, address.

• ERP sequence of data entry was:– Name, address, telephone.

• “Requirement” was to customize ERP to match legacy sequence.

The Test

• Was this customization “smart” or “stupid”?

• This is not isolated:– 2006 Standish Group indicates that

45% of functionality is never used. Another 19% is rarely used.

– Same reports shows IT projects return $0.59 for every dollar spent.

Never Used 45%

Rarely Used 19%

Sometimes 16%

Often 13%Always 7%

Always or Often Used: 20%

Never or Rarely Used: 64%

Purpose Alignment

MarketDifferentiating

High

Low

Mission CriticalLow High

Partner Differentiating

Who Cares? Parity

In Practice

Achieve and MaintainParity, Mimic,Simplify

MarketDifferentiating

High

Low

Mission CriticalLow High

Do We TakeThis On?

Differentiate,Create

Who Cares?

Example - ERP

• Consumer Packaged Goods company.

• Revenue from multiple channels (call center, internet, wholesale specialty, wholesale big box)

• Replacing legacy system (poor transparency, multiple time data entry, low automation).

Before

MarketDifferentiating

High

Low

Mission CriticalLow High

WMSLegal StructureAccountingProduct DevelopmentCRM

Channel MgmtAnalytics

After

MarketDifferentiating

High

Low

Mission CriticalLow High

AnalyticsChannel MgmtProduct Mgmt

ERPCRMLegal Structure

“Proven products withno channel conflicts”

Doing What Is Smart

• Reduced project timeline by 50% and cost by 40%.

• Provided additional benefits (streamlined, simplified business processes).

• Delivered high impact results immediately.

• “Why do it any other way?”• And, on-going decision filter for all

business decisions!

2. Plan For Complexity / Uncertainty• Complexity driven by:

– Dependencies / integration.– Team location, size, and maturity.– Bigness and badness of project.

• Uncertainty driven by– Dynamic market.– New technology.– Project duration.

• Formally assess these two dimensions.

Little Model

Project Complexity

Un

cer

tain

ty

Simple, young projects. Need agilityTight Teams

Dogs

Complex, mature marketNeed defined interfaces

Cows

BullsAgility to handle uncertaintyProcess definition to cope

with complexity

laissez faire

Colts

Low

Low

High

High

Example - Practical Implications

• Big, Ugly Sales System• How to reduce complexity /

uncertainty.– Use Purpose to simplify / standardize.– Select (parity) proven technology.– Reduce duration by breaking into phases.– Guarantee access to expert users.– Co-locate the team.– Match the project manager to the project.

3. IT Lean Six Sigma

Lean = Deliver value by reducing waste.The 7 forms of waste:

– Rework (pretty much everything I have done).

– Waiting (approvals and workflow).– Over processing (remember, 64% of

features and functions are rarely, if ever, used).

– Inventory (30-40% shelf ware).– Motion (poor access to expert users).– Movement (Alistair Cockburn, “People won’t

climb stairs to get an answer).– Over production (licensing).

The 5S Tool

• Sort• Set in order• Shine• Standardize• Sustain

Example - Before

Example - After

Applied to IT

• Sort what we use from what we have (COA with 25,000 accounts).

• Minimize exception handling:– Who is going to use this feature / function?– What do they want to accomplish with this feature

/ function?– How often do they need to accomplish this task?– If they don’t have this feature or function, how will

they accomplish this task?

• System stratification and treatment (A/B/C)• There are no “Mights” in 5S

Six Sigma

Process Variability

Standard

6 Sigma

3 Sigma

Applied to IT

Project scope = 60 days.Actual = 50 day.10 day variation. Why? What can we learn?

Standard SPAM filtering performance = 60 seconds.Measured performance = 120 seconds.Variance of 60 seconds. Why? Firmware not current. Why not? No consistent process for applying patches / updates. Why?

Stop the bleeding and find the knife.

4. Build A Model, Not A Number

Analysis / Decision Process

Costs

Benefits ROI

How well do we know costs? Benefits? What is missing?How well is this working?

Traditional Approach

How About This?

Analysis / Decision Model

Costs

Benefits Phase Plan

Considerations

Phase plan includes what we need to learn in order to makethe next decision.

Purpose

In Practice

• Customer retention / loyalty program.• No way to guess at benefits with most

coming well into the future. Big costs. • But, potentially important

considerations.• Developed a model that:

– Included considerations– Delivered interim value– Improved knowledge about future phases.

• The hardest part: “We will make no decision before its time.”

5. IT Customer Service

• Is it better to be right or helpful?• Customer service basics:

– Communicate (the good and the bad) so that customers can plan alternatives.

– Present options and let customers decide.

– Measure customer satisfaction.

Right or Helpful Example

• Username is first initial, middle initial, first four of last name:– nrnick@ . . .

• What to do with– Brian K. Butterfield

Simple Questions

• Differentiating or parity?• Dog, colt, bull, or cow?• Does this generate waste?• Do we need to decide that

today?• Are we being helpful or right?

Questions?

• More stuff available.• Accelinnova.com

nnick@headwaters.com