Monday, October 30, 2006

ERP Systems are Neither Silver Bullets nor the Bane of Business

CIO Magazine has a story entitled, "ERP Systems on Steroids, Is it time for a no-tolerance policy?" in which the author discusses the faults and failures of ERP systems. As I mention in my comment to the post, I am not ERP advocate however I found his arguments lacked consistency and depth. Read the article and then my comments following it.

Tuesday, October 03, 2006

Once You've Outsourced Everything, What's Left?

Many of us have witnessed the rise of outsourcing across numerous business sectors. IT outsourcing was big in the post-Y2K days. Outsource everything and cut your costs was the utopian's, I mean consultant's cry. Many companies did just that. I know of one organization that has since repatriated core strategic functions like Enterprise Architecture, Project Management, and Business Analysis from their outsourcer. Why? Architecture will determine your organizations flexibility and ability to adapt to new demands. It will also determine the cost burden you bear for the maintenance of your infrastructure. In the wrong hands (which are any that aren't directly attached to the organization), this can spell disaster, albeit stretched over a 5-10 year period. Similar things can be said for the Project Management and Analysis disciplines.

Since the early days of outsourcing and offshoring the focus has shifted from technology services to business services. Outsource your call/contact centre. Outsource HR, manufacturing, payroll, even your business strategy (many companies do this by bringing in management consultants to do what their own managers should be doing).

Some of these make a lot of sense. Payroll is largely a low value-add and commodity business process that can easily be outsourced without risking a loss in cost-effectiveness or strategic leverage. What about manufacturing?

We do not need to name the number of manufacturers that are moving their operations oversees. Goodyear is moving a portion of its manufacturing to China. IBM, Intel, and Cisco and others have or are building R&D centres in India. Offshore your knowledge! Hey, that's smart! Or is it? How will they even be able to answer these questions when they've offshored their brains?

When you remove manufacturing from North America, you remove the skills required to build plants, and develop factory automation from the society. People go where the job demands are high. How many MBA students with a focus on manufacturing are there in Canada and the US today? How about the rest of the world? Although I'm interested in knowing what the hard numbers are and what the last decade's trends show I don't really need to - it's clear. Read the newspaper and management journals and then go back to history. MIT's Sloan Management Review has an excellent article on what management 'gurus' did to (accidentally) shift the power over product pricing from the manufacturer to the distributor and mega-retailer (say Wal-Mart). These experts taught that to compete head-on with higher-quality manufacturers in Japan, companies had to divest themselves of activities that were not part of their core competencies. They did. They got rid of sales and distribution among other functions. From the article:
"Although Goodyear started using alternate distribution channels in the 1970s, the shift away from its dealer network accelerated dramatically in the early 1990s when the company introduced its tires to Sears and Wal-Mart stores. As a direct result, the company went from having a global network of loyal and faithful dealers and strong brand loyalty to becoming the manufacturer of a commodity that could be purchased at an ever-growing number of outlets for a lower price...The prices of Goodyear tires to consumers fell precipitously...A slow degeneration of the company began...unable to raise its prices ...Goodyear was faced with the inevitable: the removal of costly manufacturing centres from within the United States."
What some managers fail to account for when making major structural changes to their organizations is their systemic impact. Major changes, made within an isolated framework - such as only thinking about cost-cutting or improving quality (as in Goodyear's case)- can have significant negative impacts on an organization.

Government and policymakers need to start attacking this problem today. Again, it is systemic. Labor costs are only part of the problem. Education is another as is the relative complacency of today's 'Western' workforce. Is protectionism the answer? I don't think it is that simple but countries like Canada and the US are in the process of losing control over their economies, a fair extrapolation of the final outcome of offshoring, have to make some tough and likely radical decisions.

Sunday, August 20, 2006

Staffing in the 21st Century - Older Employees

Knowledge Workers are an important part of any IT strategy. Who you hire in key positions can make or break your organization. Who you hire in non-key but core positions can make or break its effectiveness and efficiency.

An excellent article, "Age at Work", in the June/July 2006 issue of Scientific American Mind discusses the differences between younger and older (over 50) workers:
...although older people may be slower at some tasks, they are actually faster at others, and in most cases they are less prone to mistakes. The research also reveals that only certain brain functions are affected by possible age-related deficits and that simple changes in the workplace can compensate for them.

The issue of hiring older workers will become more pertinent as the mean age of potentials employees continues its migration north. Lower birth rates and deferred retirements will mean that more of our potential pool of expertise will come from these people.

I have been involved in a number of engagements with various branches of, let's call them Company A,'s consulting arm and have been impressed by the number of older workers they employ. They are more seasoned, less likely to rush into things, bring a wealth of practical project experience to bear on any given task, and are revered by their younger colleagues. Of one Company A employee I heard a younger one say, when I mentioned that I thought his heat capacity calculations were wrong for our computer room, "Really, I don't think he's ever been wrong." In the end he was right - I was wrong (it's rare).

I have worked with more senior, over 50, individuals in this organization than in any other. When I discuss my concerns with younger individuals at Company A and other organizations they don't always understand simple things like how a commitment made by another of their colleagues and broken by them is a problem because in my mind it is clear that Company A made the commitment and not any individual. I look at them struggling to understand it on a gut, emotional, level. The older ones just get it and take ownership for their 'corporate entity's' actions and not just their own. This is a very simple, almost trivial example - there are many more. I am also only using Comnpany A as one example. I have worked with other organizations, both large and small, and have had similar experiences in all of them.

Older experienced seasoned staff can be worth their weight in gold.

Saturday, August 19, 2006

Desktop OS - Does it matter?

The debate about Linux versus Windows on the desktop is not about technology, it's not about preference. So what is it about?

Why has IBM, for those of you who have been following, been investing so much time and money (billions) in making all of their applications [also] available on Linux? Why have they focused on making J2EE (Java 2 Enterprise Edition) the foundation of their enterprise applications and software development environment? In fact, they have been urging SUN to Open Source Java.

I'll address IBM first. In order to succeed, IBM needs a competitive advantage over Microsoft and won't get that as long as their applications only run on Windows. They learned that with OS/2 when Bill Gates lost interest in making it the enterprise Windows and focused on building a new technology (NT) version of Windows instead. The operating system is a commodity but is also essential to run all the enterprise 'stuff' a tech company like IBM sells. Linux allows them an opportunity to develop the hooks or services in Linux they want in order to make it a viable platform for their technologies. Open Source Java would do the same. I bet they can't wait! They have recently announced the availability of Lotus Notes for Linux (now) and Sametime for Linux (soon). Their portal integrates with OpenOffice, as will (I think) QuickPlace 8.

Linux on the desktop gives you choice. Choice not to run (for now) an anti-virus software. Choice to continue running enterprise applications like SAP, Lotus Notes, Sametime, Open Office, Firefox. Other applications are more of a problem but not if you want to move to a Cyrtix-like thin client environment for those.

I'm sorry but Office is not of strategic importance. It's a small piece of the puzzle and should not drive everything else. I have been using / experimenting with Open Office since beta 1.0. It's come a long way and is now what I use almost exclusively. I use it because I don't want my company, long-term, to pay the subscription fees required for MS' products. I use it because it's good enough. Non-IT management has bought in to deploying it to non-critical positions and saving the several hounded dollars per workstation we would otherwise pay. It will be rolled out slowly and carefully making sure negative impacts are mitigated. Our Information Technology group has been using it exclusively for the past 3 months.

I'll be loading a VMWare virtual machine using a free copy of VMWare Player with Windows XP, Outlook 2003, Project 2003 and any other applications I need for the time being, all licensed and paid for. I'll ween myself off them as time goes on. I have just started using SuSE Linux Enterprise Desktop 10 for file access and production/modification of MS Word, Excel, PowerPoint files. Here's what it looks like:

Now, I said it was about choice and it is but I have to also say that I am reducing my choices of what I can install on the desktop. That's where a Cytrix or Windows Terminal Server comes in. We'll see how it goes. Part of the reason it's important to be using desktop Linux and not only Windows is related to the need for platform diversity. I'll be discussing this issue in a later posting.

Update April 2008: OK, the Linux thing was harder than I thought. I'm finding the Mac / OS X combo to be pretty compelling though and have been using it as a complete replacement for the past 11 months. Will blog on it later.

Tuesday, August 15, 2006

21st Century IT Strategies

This blog will be dedicated to Information Technology Strategies for the 21st Century. I am a senior manager responsible for IT in a medium-sized Pharmaceutical company. I've also worked as a senior manager in the Financial Services sector. My background includes Electrical Engineering, Software Engineering, Networking, and Security. I plan on sharing some of my project and technology experiences as well as some of my thoughts around consumer technology and technology in general.

Stay tuned. I promise to write on a regular basis.