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IT administrators and workers are so busy addressing operational issues,
they don’t have enough time to be innovative, according to a recent study
from A.T. Kearney, a management consulting firm.
In fact, the study says that only 20 percent of the IT budget is
allocated toward innovation, which is a 30 percent drop since 2002. As if
this wasn’t bad enough, 30 percent of business executives think the IT
budget is wasted.
To address these perceptions, IT must address process and applied
innovation requirements.
Applying Controls
The operations teams are concerned with supplying infrastructure services
that are required for competitive parity. If you will pardon the analogy,
these are the people who need to keep the plumbing working according to
defined service levels. To do this, the various functional areas must
adopt process models and quality improvement methodologies.
To elaborate on the need for process improvement, studies show 80 percent
of the problems IT encounters are created by human error, and IT
operations expense budgets are consumed with unplanned work levels as
high as 45 percent. In other words, human error isn’t just creating
incidents, it is one of the largest, if not the largest, underlying
causal factors for budgets being blown and innovation on the decline.
If people are constantly firefighting, then they don’t have time to do
other things. As management witnesses expenditures that don’t further the
business, a spiral can set in where less money is allocated toward IT.
And with even less total funds to spend, IT will react by cutting
innovation even further just to try to stay afloat.
If the organization is staffed for reactionary firefighting versus
proactive engineers, then the organization may very well have the wrong
resources to go to the next level.
The answer isn’t to get better at fighting fires — the goal must be to
prevent the fires in the first place.
To begin addressing human error, organizations must implement change
management as more thoroughly covered in the IT Process Institute’s
Visible Ops Handbook. Without a doubt, stopping human error from entering
the production environment is one of the largest improvements that an IT
operations group can make.
Switching Teams
For development groups to meet expectations, they need to understand
strategic objectives, be tightly involved with the business and they also
must be effectively managed in terms of how they go about developing new
products and services. This requires project management processes and
formalized development through the use of well-thought-out System
Development Life Cycle (SDLC) methodologies.
These two areas are integral as project management provides a control
wrapper within which the SDLC functions. If we listen to the Standish
Group and their Chaos Report, the overwhelming majority of projects fail
for non-technical reasons. By adding controls through the use of
formalized project management and a well-thought-out SDLC, management can
mitigated risks confronting the creation, testing and deployment of new
systems.
But what about innovation?
For most businesses, raw innovation isn’t what matters.
IT must work with the business side to truly understand what risks and
opportunities are out there. From there, the groups must work together to
identify where to invest time, resources and money. There must be an
understanding by all parties that force multipliers are key and need to
be focused upon. Borrowing the ”force multiplier” term from military
parlance, the intent is to identify areas where the return is in
multiples of the investment.
Some may call this obvious low-hanging fruit, but it goes beyond that.
Low hanging fruit may bring tremendous results in a short amount of time
but doesn’t necessarily mean the returns are sustainable or worthwhile
over time, unless some form of time value of money (TVM) analysis is done
as part of the business case. For example, cutting the operating budget
in half without careful analysis may cause earnings to rise but is
unlikely to be sustainable.
To identify force multipliers, teams must recognize that a relative few
processes truly create value and drive the organization towards its goal.
This inequality is often labeled as the 80/20 Rule, which says that a
relative minority of inputs (20 percent) generates the majority of
outputs (80 percent). Whether it is 15/85, 30/70, or whatever the exact
outcome, the point is that statistically, the minority or processes we
perform — projects we are involved with personally and at an
organizational level — really drive value.
These precious few must be carefully identified and focused upon. If
customer service is a vital differentiator that creates repeat sales, go
after it. If driving down cycle times in one area of manufacturing is
vital, go after it.
To really drive this home, imagine a critical path on a project GANTT
chart. If tasks are accomplished that are not on the critical path, then
the completion date doesn’t change. However, if a task on the critical
task list is completed, then there is real movement toward completing the
project. Even better yet, if tasks are completed early or resequenced and
done in parallel to pull in the completion date, then the objective is
realized sooner.
In short, understand the goals of the business and determine what can be
done to propel the organization toward its goals faster. This means
watching both ways to add value and methods to manage risks. A path with
high rewards but also high risks must be carefully considered.
There are two major points to take away from this.
First, operations and development need the proper processes and controls
to ensure that risks are managed and expectations are met, resulting in
lower unplanned work and more resources to work on planned work.
Second, raw innovation isn’t what is needed. Innovation that benefits the
business while properly balancing risks and rewards is what is needed.
For this to happen, IT must work with the business side to identify both
opportunities for improvement and potential solutions that address those
opportunities.
