Promises! Promises!

Introduction

Beginning of a new year is time for new beginnings. We all make new resolutions, such as, regular exercise, giving up smoking. Over time one finds that these promises just fade away. Politicians too make promises at the beginning of their new terms and the result is the same, many broken promises.

Businesses are no different. Marketing is making promises and commitments, such as, to deliver goods on time or fix a customer problem. Customers value businesses that deliver what they promise. Customers trust increases. Confidence is eroded when businesses are not as seen keeping promises. IT is no different. Without customers basic trust that you will deliver what you promise, nothing else you do matters.

If keeping promises is important, why is it so hard to keep promises?

I have been reading a book called ‘Reliability Rules’ by Price and Schultz. It describes the challenges of Promises Management and how organisations can manage their promises and improve customer satisfaction and build brand. I believe these techniques are vary valuable for IT groups.

Common myths about promising

There are many myths about promising. People like (positive) surprises! Under-promise and over deliver! According to Price and Schultz, these are just that, myths. Customers value consistency over surprise. They want their realistic expectations to be met time and again.  If you always deliver early (surprise) customer may suspect you are over charging as the work is not as much as expected or may change expectations that you will always be early, thus defeating the purpose of under-promising. Continuing to over deliver increases costs. Customer likes the extra service but may not value it appropriately. Soon that would become the new expectation.

Fundamentals of reliability

There are three principles behind the reliability philosophy. These are Promise alignment, Promise clarity and the Moment of truth.

  1. Promise Alignment – Two drivers must be aligned; a) How well promises are made? b) How well they are kept? The challenge is that a lot of attention is given to delivering on the promises rather than on how well they are made in the first place.
  2. Promise Clarity – Promises must be clear both to the people who are carrying them out but also to the receiver or the customer. Promise making is poorly managed in most businesses. As a result employees shy away from making explicit commitments or try to distance them from the promise. (E.g. Rather than saying a problem will be fixed in 3 days, call centre says, I shall notify the Technical support today. This is not a clear promise to the customer).
  3. Moment of Truth – The moment of truth for the promise is when the delivery (or action) is made. At this time the customer evaluates what he thought he was getting against what is actually delivered. When there is lack of clarity about what was promised, it is difficult to confirm that the delivery meets the promise. Any resetting of expectations must happen prior to delivery otherwise disappointment is likely to result.

Six ways promises are broken

Six ways promises are broken
Figure 1 – Six ways promises are broken


There are six ways promises are regularly broken. Only one way relates to poor delivery on a well-made promise. This underscores the importance of improving promise-making processes.

  1. Making Unrealistic promises – Unrealistic promises result from pressure from customer or competition. Customers may have unrealistic expectations. Sometimes the capability does not match expectations. Not challenging this result in unrealistic promises.
  2. Making a promise that is unclear, inaccurate or incomplete – Vague or unclear promises result in two sides having different interpretations of what was promised especially if agreement from the receiver is not obtained.
  3. Making promise by making no promise – Even when no promise is made the customer may draw from their past experience and expect certain outcomes. When these don’t match the performance, dissatisfaction results.
  4. Failing to manage promises when circumstances change – Changes to specifications, or internal peaks may time to time result in delays in delivery. Failing to notify customer and reset expectations leads to broken promises.
  5. The promise is not passed on properly – In large organisations; the person who makes the promise is not always the person responsible for the delivery.  Failure to pass on the promise in a full and timely manner result in broken promises.
  6. A promise well made is simply not done – Even when none of the above failures occur, delivery team may still overlook a detail, fail to test an aspect and the delivery is not made.

Getting promise management right

Price and Schultz identify four focus areas to get the promise management right. These are a) Brand promise, b) Partner reliability chain c) Customer promise management and d) Dependability within. Reviewing these four areas for failures of promise management would identify opportunities to improve.

a)     Brand Promise

Brand promises get made by marketing or by policies (e.g. service standards). An example of brand promise is Volvo, which is known for passenger safety. Brand applies to internal service providers like IT as well. IT policies, service levels, CIO statements and past experience creates a “brand promise”. Generally the team that has to deliver does not make the promise. Over promising can create serious disconnects and repeated over promising results in scepticism within as well as with customers.

  1. Audit the brand promise to understand where the gaps between the promise and delivery are.
  2. Explicitly communicate the ‘true’ promise by customer charters, published service levels etc
  3. Does your delivery organisation understand the brand promise and their role within it? Do they have the tools to meet the promise? Realign job roles as necessary.

b)    Partner reliability chain

Organisations have suppliers, agents, third party service providers and other parties who help deliver the service or the promise. Where partners have poor reliability (track record, quality, customer service) it can have a major impact on delivery.

  1. Establish systems to evaluate partner reliability performance. Key measures such as, ‘delivery in full on time’ or ‘on time, in full on spec’ would identify gaps.
  2. Firm’s interactions with partners (last minute changes, time to pay invoices) can also have an impact on how well they work together. Review how the firm and the partners view themselves and each other, where brand promises align and diverge and what can be done to improve trust (e.g. sharing information, mutual compromise etc)
  3. Include partners in the improvement initiatives. Where partners play a key role in delivery, including them in process improvement initiatives would pay big dividends.

c)     Customer promise management

Customers can cause promise management problems by at times having unrealistic expectations or not fulfilling their side of the transactions (e.g. specifications signed off on time). They may not have a clear understanding of their role or may not have the capability.

  1. Ensure reliable delivery of the “basics”. Get your customers to define what is their basic expectation from your firm/ group in their language (e.g. Easy to deal with, knowledgeable about their business, possess technical expertise etc). Take steps to meet these consistently.
  2. Take charge in managing customer reliability – Some companies are starting with making their customer promises explicit. Don’t assume, get the details of what the customer is going to do sorted in advance. Ensure the customer understands the consequences of the delays/ broken promises by the customer.
  3. Work with customers on change management plans. Define what is the fallback plan, what are the consequences of change. Work with the customers to reset promises.
  4. Customers can be really disorganised they can benefit from your experience in making and delivering reliable promises.

d)    Dependability within

without dependable internal people and processes, an organisation cannot improve reliability. Reliability starts at home.

  1. Is reliability measured or valued inside the organisation? Are leaders walking the talk on reliability? Are you hiring highly reliable people?
  2. Break down the silos – Collaboration between teams and silos is essential to deliver reliably on promises. Cross-functional effort to see how promises get broken and how the teams can work together to address these issues is a start.
  3. Improve promise-making capability and keep track of promises made in some type of a central system.

Impact of lack of reliability is often under estimated. Attention to reliability via promises management is a powerful way for IT groups to create trust and build credibility for them as well as for the organisation.

Unlocking value from the applications portfolio

Application analysis

Introduction

In today’s IT dependent world organisations have accumulated an array of applications from the modern to the ancient. Successive mergers and acquisitions have further added to the inventory. What’s more, because they accumulated over time, these IT portfolios are often patchy, redundant and lacking proper management oversight. The resulting IT portfolio has become complex and difficult to manage. According to reports, almost 70% of the IT budget is consumed by sustaining business-as-usual activities. When CIO’s are increasingly being asked to ‘do more with less’, it is necessary to optimise the IT portfolio.

Increasingly executives are using Portfolio Management method to tackle this challenge. IT portfolio management concept is not dissimilar to managing financial assets. In both, the aim is to collect data on the assets to be able to enhance returns and reduce risks. There are two types of IT portfolios, namely, IT asset portfolio and IT projects portfolio. Although the principles of portfolio management are similar there is great deal of difference in the processes used.

Within the IT Assets portfolio, we believe managing the application assets has the greatest upside. In this paper summarises benefits of Applications Portfolio Management and key learning from my experience in implementing APM.

Executive Summary

Organisations are using Applications Portfolio Management (APM) to make rational decisions about reducing the cost of application ownership, improving the functionality and the strategic alignment and reducing portfolio risks. The reason for the rapid growth in the use of APM is that organisations have achieved successes in cost reduction, managing the complexities of hundreds of established assets, and improving budget effectiveness.

Application Portfolio Management is a periodic fact-based assessment of organisations applications. Determining which applications receive same, lower, or increased levels of funding optimizes portfolios over time. The assessment helps refine application management practices, namely, which applications to cut, which to keep, which to renovate. The focus is to make sure that the business value and ownership costs are appropriately aligned and the portfolio is streamlined by rationalizing duplicate or obsolete applications. Over time, the applications portfolios as a whole should show the greatest business value and closest architectural fit with the lowest costs and risks.

APM generally consists of the following elements:

  • Applications Inventory – Identify and catalogue what applications you have and what they do and how much they cost.
  • Applications Assessment – Assess applications in terms of business value, alignment with strategy, technical architecture or standards and cost and ability to support. Identifying cost saving opportunities via removing duplication or overlaps.
  • Recommendations and Roadmaps – Develop changes to the application management strategies and create potential application transformation initiatives or roadmaps. The goal is to get prioritised action plans for tailoring maintenance spending, rationalising or migrating applications and addressing health risks.
  • Portfolio Governance – Assign responsibility for governance including managing the repository and tracking recommendations. Track and communicate the benefits.

Application portfolio management

Figure 1 – Applications portfolio management lifecycle

APM Implementation

APM implementation does not have to be too complex. The focus is on the big picture and identifying aspects that stand out from the norm. First step is the application inventory. Business users, IT support staff, IT architects and IT Managers take part in the data gathering stages. In the second step, gather data on operational performance, fit with the architecture or standards and the known vulnerabilities. This begins to find applications that need further attention. Next step is to analyse the application cost data and compare it with business value from other similar applications. Applications with too high costs or too low costs need further analysis. Final step in the process is to develop recommendations and migration scenarios, engage stakeholders in priority setting and begin detailed business cases for the selected roadmaps.

Where there are many application managers (e.g. in a federated structure), it would be ideal to assign responsibility to a central function such as Head of Architecture for creating uniform application inventory and assessment processes. A common repository would help the identification of duplicate applications across the entire organisation.

Benefits of Application Portfolio Management

APM benefits over time

  • APM improves the understanding of the applications so they can be managed effectively.
  • It helps track and communicate the technical and business health of applications to show problems and take advantage of opportunities.
  • With APM organisations can better align the applications portfolio to the business strategies and the technical architecture, thus improving business value over time.
  • Looking at how the portfolio supports key business processes, creates opportunities to remove the complexities and streamline support.

Over time APM enables focus to shift from application health and costs, to flexibility and responsiveness and ultimately to competitive advantage. By evolving applications in a planned and methodical way, organisations can maximise returns on their existing investments while making steady progress towards a stronger applications environment.

Tips for effective application portfolio management

  1. Executive Sponsor: Project must have sponsorship from the CIO or the Head of Applications. Proper understanding their goals and constraints ensures that the last recommendations can be acted upon.
  2. Engage Business: APM gives an excellent opportunity to tell and engage the business executives. Obtain business value and functional quality data from the real users and owners. Their support is critical for decisions to rationalise the duplicate applications or to adjust maintenance levels.
  3. Be pragmatic: In the first iteration, focus on applications that account for bulk of the costs and business support.  Similarly, in data gathering focus on few important attributes and costs. Where exact data is not available stake-holder/ user surveys can be used.
  4. APM tools: Spreadsheets may be used to record the inventory data. There are a number of third-party tools, which can help manage the applications inventory and the associated information such as costs, business value and risks. Tools would be of benefit for large portfolios and especially to keep inventory up-to-date.
  5. Source code analysis tools: These tools will help analyse the source code of applications and give information about the function points, complexity, etc. This data is valuable for understanding the reasons for complexity and the maintenance cost.
  6.  Assessment: Assessment typically covers business, technical, financial and operational perspectives. The typical questions are:
    1. Business: How well applications support the business process? What synergies we could achieve?
    2. Technical: Are the applications scalable/ extendable/ adaptable/ supportable? Do they fit the architecture?
    3. Financial: Do the applications cost too much to run? Why?  How can costs be reduced?
    4. Operational: Are the applications sustainable? What are the key vulnerabilities? Is the support infrastructure too complex? Can we find the right skills for support?
  7. Analysis: Looking at the data using a variety of criteria from business, technology, operations and financial perspectives would highlight  ‘anomalies’ and areas for actions.  Using a combination of factors would highlight anomalies, such as, if two applications are similar complexity and size but one has high costs, indicates an issue. Some solutions will become obvious when you see the problem, e.g. 17 versions of warehousing applications.
  8. Trend is your friend: Collecting cost and performance trends over time can give you richer insights than just point in time data. 18-24 months data would begin to yield useful information.
  9. Applications portfolio: Typically the assessment results would group each application in one of the four categories. These are Invest, Divest, Re-engineer and Tolerate.Application analysis
    1. Invest – These are applications of high business value and good technical quality
    2. Divest – Low value/ low quality or duplicate applications.
    3. Re-engineer – High business value but low quality applications are candidates for modernisation.
    4. Tolerate – High technical quality but low business value applications are possible candidates for cost reduction.
  10. Ongoing governance: Treating APM as a one time activity is a mistake. Any short-term gains would soon be lost. Assign responsibility for governance and ensuring inventories are regularly updated and assessed and recommendations are followed through. Establish key metrics and scorecards to check progress of the initiatives. Track and publish the benefits.
  11. Link with Enterprise Architecture: APM inventory provides data for the current state and recommendations should be aligned with the Enterprise architecture ‘desired end-state’. Application roadmaps create the migration path between these two states.
  12. Communicate the results:  Widely communicate the logic of the recommendations. Use the application roadmaps with the results of the assessment to tell business executives about the issues/ risks and various choices. This will result in a stronger business agreement.

If you would like further information or help please contact Kogekar Consulting.