ERP's vs. many little systems

Big box software vendors have a problem. I'm referring to Oracle & SAP, primarily.

Their business models almost demand that they generate significant revenue from ongoing maintenance agreements. But, those agreements are often so expensive that any self-respecting CFO will want those contracts justified every budget cycle. At some point, firms will determine that paying all that money for upgrade assurance might not be worth it anymore.

On the other hand, there are hundreds, maybe even thousands, of very inexpensive solutions for mid-sized firms available. And if those firms get big and successful without the benefit of a big-box application, they'll be far more resistant to writing that huge check to implement a true enterprise-class solution.

The value proposition has to change. It's no longer enough to tout the benefits of an integrated solution. Integration on its own has limited value, and there's lots of ways to achieve it. Those ways may be expensive over the long haul (maybe even more expensive than a single ERP), but the costs are expended gradually, in small increments... a point-to-point integration here, a focused custom app there. The big value comes from drawing the data together into a consolidated picture... and your gargantuan transactional system won't help you there.

The 10 year outlook for those big-box vendors looks dim to me without some significant changes. I don't know what those changes look like, but they must manifest or Larry is going to have to sell his boat.

Are you behind the curve?

There are few things more humbling to a technology professional than clicking around Google. If you ever think that you are keeping up with software solution development, 20 minutes of exploration will correct your viewpoint.

That this blog even exists is a testament to their capabilities. It took me 15 minutes to set it up, including 12 minutes of deciding which color scheme I wanted to use. Google Earth is remarkable in its ability to integrate data from a variety of dissimilar sources. Add to that the way that their applications seamlessly adapt to the delivery medium: from web to desktop to mobile.

In this, I believe that Google is setting the direction for computer use. Microsoft and Oracle products may be the face that the user sees when they log in, but how long do you think it will be before some CEO gets really cranky because they can find more information about their company by visiting Google than they can by clicking around their intranet? SharePoint started to offer some of this search functionality, but it was pretty bad (and from what I've seen, it hasn't gotten much better). Shouldn't getting content delivered to a mobile device be as simple (to the end user) as seeing it on their desktop? And shouldn't that content be able to reflect information drawn from sources throughout the corporate network?

There is real power in these concepts, and the firms that can harness them will experience transformational, positive change throughout their enterprise.

Corporate retrenching

According to today's Wall Street Journal, durable goods dropped 5.3% in January, which was worse than market's expectations of a 4% drop. Two quick thoughts on this: First, there is a 50/50 chance that the number is wrong. The Commerce Dept originally reported a 5% increase in durable goods orders for December, only to revise it down to a 4.4% increase. Second, no one should be surprised by this. If consumers aren't buying new homes, then they don't need new refrigerators and heat pumps.

I think that these portends a somewhat tight 1Q and 2Q for us in the technology business, especially in professional services. Uncertainty in the general, consumer-oriented market has a halo effect seen in the commercial market. Decision makers in corporate America are consumers, too, and their experiences at the malls, at Wal*Mart and at the Home Depot are going to impact how they make decisions at the office. Plus, B2B businesses who have consumer products companies as clients will feel a pinch as the retailers and manufacturers react to what's happening in the consumer market.

But there are corporate initiatives that senior management wants to get done this year. And as the deadlines for those projects start to close in, corporate demand will pick up. The demand won't be evenly distributed, and I'm not going to fathom a guess as to where it will start. But people with established relationships in the market will be among the first to benefit.

Aspirations of intelligence (BI)

So very few of the organizations I've dealt with over the past 10 years have gotten a Business Intelligence initiative off the ground. Yet, the whole idea has so much merit and so much promise that I wonder what the barriers truly are. Here are some of my ideas:

Complexity: Most systems use intuitive and familiar means for interacting with the data, and the sales pitches rightly emphasize their ease-of-use. But the demo doesn't even begin to describe the hard work and complexity that precedes the data being available to that nice friendly interface. Discussions about summarization levels, refresh intervals, data-drilling, and data cubes confuse the business community, which then stalls the implementation.

Elusive ROI: The systems themselves are getting cheaper, but the time and energy required to get them in use hasn't decreased at all. That means that the projects are still very expensive. The "quick wins" every consultant encourages their client to pursue cost a lot, and they're not usually very quick. That's because there is still a great deal of BI infrastructure required for even modest use. So, as they look at a screen no better or informative than the spreadsheet they built 5 years ago, management wonders (usually out loud), "Is this what we spent all that money on?" It's not that the ROI isn't there to be had, it just usually takes longer than 6 months to get there, and that can often be longer than an executive's effective attention span.

Both of these are tough to overcome. A real leader coming in with experience using BI can make the difference, though. They have enough history with the tool to believe in its promises and to help the organization stick with the project through the valleys.

Improving your Website

Inc. Magazine's website published a little slide show with 11 ways to improve a corporate website. Most of them are really platitudes, like making sure it's a high corporate priority, keeping it simple and that ensuring that the site ranks high on search engines. Gee. Thanks.

But two of them were good. Really good, actually.
The first - make small, frequent adjustments and measure the impact. For whatever reason, this one seems to be lost on a big chunk of companies. A good design is modular, and therefore changes can be isolated to specific areas.
The second - build and distribute a widget. While these can be a bit irksome to receive in a corporate email inbox, they can give a consumer-based site a real boost. They engage the user and often attract traffic immediately, even if only for a short time. It's a nice way to get people to come back to your site.

The big one that is missing is so often missed by technology-oriented website recommendations that it frustrates me to no end. And that is to know your objective. Now that might sound every bit as trite as "keep it simple." But if it was so well-known, how come it's so commonly overlooked?

The way that I frame it for clients is this: What do you want someone to do when they come to your site? Make a purchase? Make a phone call? Leave a comment? Once you decide that, then you can actually measure the effectiveness of your site. And you can see what those small adjustments are doing for you.

And you might actually increase revenue.

Credit where credit is due: Inc. Web Site Slide Show

Corporate uses of Web 2.0

I have heard and seen of a fair number of uses for Web 2.0 technology, especially internal blogs and wiki's. Both are terrific ways to share documentation and meeting notes, as well as to encourage discussion and collaboration in both.

But what about mash-ups? I'm frankly surprised that pulling summary level data from multiple systems into a single viewing space (aka a screen) hasn't made more headway. After all, isn't the essence of business intelligence? Granted, a mash-up won't aggregate or summarize data from different sources. Yet I believe it would increase visibility into those systems, leading to managers start asking intelligent questions about the data, resulting a more useful and effective BI implementation.

Emerging Technologies

According to CIO Insight, the five most fastest-growing technologies are ...
1. Virtualization (servers and storage)
2. Customer Self-Service Technologies and Applications
3. Open-Source Applications and Systems
4. Collaboration Software
5. Storage Equipment

I bet that casual observers are surprised by the list. There is nothing about mobile technology, the convergence of voice, data and video, or about messaging. Except for the absence of messaging, the list makes intuitive sense, even if it might not seem all that exciting to the outside world. Two are about optimizing infrastructure (#1 & #5), and the other three are outgrowths of Web 2.0 capabilities.

What are your plans around these five?

What do you think about how this list compares and fits with CIO spending priorities for 2008?

Can you outsource leadership?

How committed does the leader really need to be to the firm in order to be effective? Could someone who has a very limited political stake in the outcomes of various initiative actually be more effective than one who has that stake?

My experience is that, at very senior levels, even outsiders become very committed to the goals of the organization. In essence the only real difference is in the details of how the individual gets paid. The days of "company loyalty" playing a big role in motivation are, I think, gone forever. Even senior leaders know that their tenure is probably going to be measured in months (as in 18-24 months) not in years... and certainly not in decades. They are not going to be highly focused on things like legacy and their place in company folklore.

Outsourcing middle managers could be more problematic since their effectiveness could be limited by their lack of hands-on company experience. But you'll run into the same problem with a newly hired permanent employee into such a position. And a true outsider isn't going to get terribly distracted by the corporate drama and power-plays that take place in every corporate environment in the western world.

Some of the line staff may question whether having an outsider in a leadership position is a good idea. And certainly, it's a bit out of the mainstream for the way American business commonly work. But does that make it a bad idea?

CIO Priorities for 2008

I recently saw the results of a survey of CIO priorities for 2008. The most prominent priority (as shown in the data copied from the site) is investing in "Strategic Applications."

Now we can argue all day long about what is and is not a "Strategic Application." But I find it interesting that this is as high or higher priority than security, even among large firms. Perhaps senior leadership is seeing additional security as buying more insurance when you think you already have enough, especially after all the security spending done in the past few years.

In any case, I believe that "Strategic Applications" are those that enable the firm to grow, either by entering a new market or expanding their reach into an existing one. They rarely are tied to efficiency or cost-savings initiatives. And they are even more rarely associated with generic quality improvements or customer satisfaction drives. We in the technology industry would be well-served to focus our energies on helping our clients drive revenue (positive) instead of focusing on risk and/or cost mitigation (negative) strategies.

Realized ROI

Every software project promises an ROI, or they wouldn't get funding. Sometimes the return is expressed in terms of convenience or quality improvements. But the only way to get senior leadership to buy into the lasting change that is necessary to achieve the benefits is to express the return in terms in dollars. Soft cost-savings don't get many people very excited. And significant hard cost-savings are often a painful route involving workforce reductions and other onerous measures.

If you can identify an incremental and profitable revenue opportunity that is enable by your initiative, the task of cost justification becomes far easier. The trick there is to make sure that the sales team can defend your revenue & margin projection. Sometimes, revenue protection can be used, but we'll talk about that later.

Unequal distribution of benefits

A college professor of mine once said that the reason why some people oppose free trade is that the benefits often are distributed unequally. For instance, opening up textile trade surely reduces the cost of clothing for millions of people. However, for the thousands whose jobs are displaced, all they see is a plant shutting down.

The same is true for process change in any organization. The benefits of those changes are distributed unequally. For some, their job gets easier. For others, it means giving up control over a process. And still for others, it means that they will have to do things they differently. While the organization benefits as a whole, the ones who don't will do what they can to block the changes, or reduce their effectiveness. The textbooks treat this as if it can be solved with "buy-in" or motivational speeches. But the truth is that the only way to handle it is to face the facts. Only then can the real situation be dealt with honestly and respectfully.

Efficiency doesn't matter

A staff member at one of my clients is struggling to gain support for an efficiency initiative. The problem is that everyone is in favor of improving efficiency, as long as it is someone else that has to change.

The only time that efficiency projects get any traction is when it produces either true, hard savings (usually accompanied, unfortunately, by workforce reductions) or meaningful revenue increases. The staff member, in this case, has yet to make the case because they have framed the initiative in terms of improving service and efficiency instead of changing the financial standing of the organization. Therefore, even though everyone supports it, no one cares. And if no one cares, it doesn't matter how smart the idea is. It just won't go anywhere.