August 7th, 2008

Car chase: Chrysler CIO to run treasury dep’t.

Posted by Michael Krigsman @ 6:58 am

Categories: IT issues, CIO issues, Financial impact

Tags: car, cio, information technology, chrysler llc, financial week, strategy, management, michael krigsman

To reduce costs, Chrysler has combined IT and global finance into a single organization. While the move is not without risk, the company’s financial woes require dramatic steps.

From Chrysler’s press release:

Chrysler LLC today announced the appointment of Jan A. Bertsch, Senior Vice President Treasurer and Chief Information Officer as part of an on-going effort to streamline functions for greater efficiencies. Bertsch will lead the efforts to consolidate Information Technology Management and Treasury into a new structure.

Under this integrated structure, Bertsch is responsible for the Company’s global treasury operations. She continues to direct the Company’s systems and computer hardware strategy and planning, systems applications development, data center operations and telecommunications network operations.

THE PROJECT FAILURES ANALYSIS

On the surface, the plan appears a nonsensical attempt to reduce costs by combining unrelated corporate functions. Financial Week quotes an observer stating this view:

The move caught some treasury department watchers by surprise. “It’s not common at all,” said Dan Carmody, managing director with Treasolution. “Generally speaking, companies merge departments to streamline management hierarchy and to reduce overhead costs in order to provide greater value to shareholders.”

[H]e added that “the merger of treasury and IT is unique, mainly because of each department’s different functions.”

Down the road, Mr. Carmody doesn’t see more companies following Chrysler’s lead.

On closer inspection, however, the changes make sense for three reasons:

1. Chrysler’s financial performance has been dismal. According to the Wall Street Journal, the company’s sales “have fallen about 25% this year.”
2. Chrysler’s existing CIO, rather than the bean counters, is assuming control, ensuring that IT remains a strategic force within the organization.
3. Bringing finance under IT creates opportunities to drive cost-savings within the context of maintaining successful IT operations. That’s smart.

This isn’t the first time companies have combined IT with other functions under a single umbrella. Recently, I applauded Bausch & Lomb for merging customer service and information technology under CIO Alan Farnsworth:

Disconnects, gaps, or communication issues that might arise between these important groups now have a built-in resolution mechanism. With a single of point of responsibility, there are fewer cracks into which issues might fall and disappear.

•  Also see: Bausch & Lomb puts new CIO in charge of customer service

At the same time, not everyone has confidence in Bausch & Lomb’s decision. For example, TechTarget’s Margaret Rouse offers a less enthusiastic perspective:

Has IT become so integrated into business that the CIO not only doesn’t have to have a technical background — he also has to have a second job within the company?

It’s also interesting to note that JetBlue once tried to combine IT and marketing. Larry Dignan, ZDNet’s editor-in-chief, described this back in 2004, in a Baseline Magazine article titled Tough Sell.

Negative reactions from Twitter. Many observers will criticize Chrysler for taking steps reminiscent of past failed cost-cutting drives in IT. Ric Hayman, an IT manager, tweeted: “IT and Finance is a bad fit either way … who guards the guards?” He added:

[M]aybe I should be a developer at Chrysler then, to improve my retirement prospects :’)

Similarly, Patrick Moorhead sent this tweet:

The things companies do to “save” money……. Remember the “answer” was outsource all of IT to India? Or customer service?

Consultant and former auditor, Francine McKenna, from whom I learned about this story, twittered an eloquent summary of the case against combining IT and finance:

What’s next? Engineering & the Cafeteria?

My take. Chrysler’s cost reduction car chase is hitting a stride and IT plays a role. I think it’s a smart move.

Update 7/7/08 12:00 PM EDT: I asked CIO Magazine senior editor, Stephanie Overby, for her opinion:

The IT executives I spoke to talked a great deal about the cost savings and efficiencies to be gained by outsourcing IT application and infrastructure services to two main partners – CSC and TCS in India. And clearly the focus is on getting costs down and getting the balance sheet in shape under private equity ownership. They’re cutting their in-house IT resources in half.

What they didn’t talk about in any detail were any new projects in IT, any real investment in IT that will help Chrysler innovate and compete. It seems that they’re trying to get through this rough period first. Any really transformational ideas are thoughts for another day.

[Image via SlashGear.]

June 29th, 2008

SlideShare: user communication failure

Posted by Michael Krigsman @ 9:20 am

Categories: Enterprise 2.0, Availability and reliability, Failure 2.0, End-user impact

Tags: Object-oriented Programming, File, SlideShare, Ooa/Ood/Oop, Software Development, Software/Web Development, Michael Krigsman

While Enterprise 2.0 applications can be useful, hassles sometimes abound. In this case, I innocently tried to upload a simple file to SlideShare, only to learn things aren’t always straightforward.After attempting to upload the file, I received an error message stating in part:

There’s a big chance this is just a temporary/random glitch with our servers; just retry after 5 minutes and see if it works.

Here’s a screen capture, highlighting the relevant message:

The troubleshooting FAQ offers a bit more information:

I am getting a file conversion error while uploading my file. It gives me an “OOPs”. What is this?

This means your file could not be converted to our format. Reasons could be varied
- it’s possible our converter is temporarily down, try uploading once again
- if your file is password protected or contains macros, you might get an OOPs; remove them and upload again
- sometimes uploading the pdf version instead of the original ppt/odp file (or vice-versa) helps to overcome the OOPs

If none of the above helped, this could be due to some incompatibility between our converter & your file.

While every application suffers bugs and errors, I don’t understand why SlideShare doesn’t state whether or not their converter is down. As the screen capture shows, I spent 41 minutes screwing around — converting the file, uploading, re-converting, and so on. SlideShare, if your converter isn’t working, please speak up so I don’t waste my time.

Although I generally like SlideShare, communicating errors and problems clearly to users is obviously not a strong point. It’s time the company learned this important skill.

Update 6/30/08, 8:30am EDT: The SlideShare blog reports the upload problem has been resolved. Amit Ranja, one of SlideShare’s founders, sent the following comment by email:

Regarding your suggestion to add intelligence to upload error messages, it is definitely a good idea. Let me discuss this internally and see if we can incorporate that.

June 16th, 2008

Selling SOA: Stating the obvious

Posted by Michael Krigsman @ 7:02 am

Categories: IT issues, SaaS, PaaS, and SOA, CIO issues

Tags: SOA, David, Service-Oriented Architecture (SOA), Web Services, Middleware, Enterprise Software, Software, Michael Krigsman

Successful IT projects, including Service-Oriented Architecture (SOA) initiatives, begin with a clear rationale designed to help an organization solve specific business or technology problems. Practitioners frequently ignore this obvious point, which causes many failed projects.

With this in mind, I had mixed reactions reading a post by David Linthicum on How to Sell SOA. David says the following:

So, how do you sell? Let’s look at a few key concepts, including:

1. Shining light on existing limitations
2. Creating the business case
3. Creating the execution plan
4. Delivering the goods

From one perspective, it’s easy to dismiss this general advice as a form of insipid business pablum applicable to any large organizational endeavor whether IT or not. However, David’s discussion of these basics suggests the degree to which many enterprises misunderstand SOA. Failure remains an integral part of the entire IT landscape, so David is absolutely correct in offering such admonitions.

Selling expensive SOA projects depends on defining a business case, developing a workable implementation plan, and presenting benefits to senior management. However, there’s also a fine line between selling hyped-up concepts and offering something practical and achievable within stated times and budgets.

How do you sell SOA internally? Please share your thoughts.

October 26th, 2007

Consultants hate failure

Posted by Michael Krigsman @ 3:21 pm

Categories: Vendor relationships, Project management, Project strategy, CIO issues, Consulting

Tags: Project, Consultant, Consulting, Failure, Cydney, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Michael Krigsman

Two recent blog postings (here and here) questioned the value provided by consulting firms, stating that consultants benefit when their clients’ projects fail.

To counter this strong position, I invited Cydney Berry, Managing Director of Delivery Operations for BSG Alliance, to offer a response. Cydney has been in consulting for 20 years and has worked with hundreds of clients.

From Cydney Berry:

There is nothing positive about project failures for consultants.

If a project fails, it ultimately costs the consulting company money either directly or indirectly. All consultants want to build long-term relationships with clients. What happens when a project fails? It jeopardizes that company’s relationship with the client. It does not matter why the project failed, because if a consultant is managing the project, it’s their responsibility and even if they are not, they make a pretty good scapegoat. Project failures are never black and white (consultant vs. company) and attempting to deal with failures as such puts consultants on very shaky ground with clients. It rarely turns out well. And competitors love to amplify failures. Therefore, there is a lot of motivation to get it right.

The direct consequences of project failures can be devastating financially, especially on fixed-fee projects. Even on time and materials projects, the consultant may potentially bill more hours and get more revenue, but the negative business repercussions far outweigh any benefit from the additional revenue. If you factor in all the other outcomes of project delays and failures which indirectly increase costs, such as lower employee morale, opportunity costs, client relationship issues and negative market perception, it’s just not worth it.

What’s the ultimate impact of project failure on a consulting company? No projects, no references, no clients, no viable business. That’s a pretty good motivator to deliver successful projects.

July 25th, 2007

SOA: Future Failure and Technobabble Gibberish

Posted by Michael Krigsman @ 5:03 am

Categories: Project failures, SaaS, PaaS, and SOA

Tags: Editorial, SOA, IT-Director.com, Michael Krigsman

IT-director.com has an editorial stating 90% of SOA projects are failing in a significant manner:

The problem is that for every successful SOA implementation, there seems to be ten that are providing few of the desired benefits. Many of these failures are down to poor understanding of the underlying principles of SOA…

The point is pretty clear, so I won’t say more. Unfortunately, much of the editorial is written in technobabble gibberish, so I can’t recommend that you read it.

May 21st, 2007

Failed Aspirations at Project Aspire

Posted by Michael Krigsman @ 7:57 pm

Categories: Project failures, Government projects, Implementation

Tags: Michael Krigsman

According to the Tampa Bay Business Journal, Florida’s Project Aspire has been stopped in mid-track. From the article:

A top Florida official has suspended work on Project Aspire, a proposed financial management system for state government.

Alex Sink, the state’s chief financial officer, said in a release that the project was over-budget and unfinished, more than eight years after the state began exploring a new vision of management information systems.

——————————————-

Sink determined it was in the taxpayers’ best interest to suspend current activities and develop high-level oversight before moving forward, the release said. Gov. Charlie Crist agreed with the decision, according to the release.

The Department of Financial Services, which Sink heads, will document the work product and preserve the project’s development for possible resumption at a later date. The state will retain ownership of the hardware and software associated with Project Aspire, the release said.

——————————————-

The project had an original budget of $100 million, not including debt service, and was supposed to be completed in February 2006. The state has spent $89 million to date on Project Aspire….

Although the article provides few details, the state of Florida has a website devoted to the project. A quick read of some of the documents included on this website suggest the following:

• Apparently, this is a PeopleSoft ERP implementation project.
• The project started early in 2004.
• BearingPoint developed some of the project documentation on the website, so I assume they were the implementation partner
• As of April 9, 2007, substantial system testing and a “Go / No go” decision was expected around the end of Sept. 2007.
• Gartner was brought in to evaluate the project. As of April 9, 2007, a  preliminary analysis indicated that the project would require $200M overall to implement the project.

Here are a few comments from recent Project Aspire meeting minutes:

• Chief Financial Officer Alex Sink began her remarks by stating that she has had extensive experience working with enterprise-wide systems; she expressed that they are difficult and challenging.
• CFO Sink reiterated that that in order for Project Aspire to be successful, we must have an executive leadership team. She stated that an executive committee will be set up that will include her and the Department of Financial Service’s Chief of Staff Jim Cassady, the Governor, House and Senate representatives, and the Attorney General.
• CFO Sink said that we need to re-evaluate the customizations that have been done to the Aspire software to determine what business processes can be standardized on an enterprise level.

There we have it: a $100M implementation, killed after $89M was spent, because the project would have required $200M to complete. Nice going, Gators!

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May 15th, 2007

“Custom Code Over My Dead Body” (Sapphire, Vienna)

Posted by Michael Krigsman @ 3:03 pm

Categories: Sapphire07, Implementation

Tags: Michael Krigsman

SAP is actively supporting a group of bloggers here at Sapphire in Vienna. Yesterday I engaged in a lengthy discussion between a half dozen bloggers and Pascal Brosset, Senior Vice President of Market Strategy for SAP.

The conversation was wide-ranging, with Pascal describing his overall goals and the mandate of his job. Fundamentally, Pascal is involved with helping SAP understand what customers will need and demand in the future. These anticipated customer requirements are used to guide SAP’s product strategy and the corresponding investment decisions required to build future products.

From the perspective of project success and failure, which is the focus of this blog, Pascal made a few important points:

• Simplification. The future holds smaller, increasingly well-defined products tailored to the needs of specific groups of companies and industries. The assumption here is that SAP software embodies a rich set of carefully-researched best practices, which the great majority of SAP customers will find very workable. These “prescriptive solutions” trade flexibility for simplicity, which SAP believes is in the best interests of it’s market. Basically, it’s the old 80/20 rule in action.
• “Custom code over my dead body.” Pascal believes strongly (I am definitely understating here) that SAP customers should virtually never write custom code. Custom code in a packaged solution creates a variety of evils, which taken together lead to cost and time over-runs downstream, aside from increased development costs and risks during the project. During the discussion of custom code, he asked the rhetorical question, “Would you customize your telephone?”. I understood this to mean that a well-defined solution, performing more or less as the user requires, should not need be redesigned by customers in the field. I do agree with this point, by the way.

Overall, my impression was quite positive. Much of what he said is logical, and corresponds to my own understanding of the real pains and experiences of customers. Clearly, Pascal is very serious about his mission and about charting a course that does the right thing for SAP customers.

Note to the naysayers: if all this sounds uncritically positive, well, I call it exactly as I see it.

Update 5/17/07: For more on the subject of simplification at SAP, see this posting: http://projectfailures.com/blog/2007/5/17/more-on-simplification-at-sap-sapphire-vienna.html  

April 19th, 2006

Stating the Obvious?

Posted by Michael Krigsman @ 4:21 pm

Categories: Project failures, Project management

Tags: Michael Krigsman

According to KPMG, lots of IT projects fail as a result of poor management. From the article:

KPMG International’s survey of 600 organisations across 22 countries revealed that 86% of respondents reported the loss of up to a quarter of their targeted benefits across their project portfolios.

Nearly half of respondents reported at least one project failure in the past year, an improvement from KPMG’s 2003 survey where 57% experienced one or more project failures in the previous 12 months.

Standish Group has been saying the same thing for years in their CHAOS Report. Please, Mr. KPMG, give us specific advice on how to actually solve these project failures. Generalizations about management are nice, but I want hard news.

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April 14th, 2006

Alive and Kicking

Posted by Michael Krigsman @ 3:08 am

Categories: IT issues

Tags: Michael Krigsman

Even since the pre-Y2K ERP build-up, conventional wisdom has held that big software systems are on the way out. Open source solutions and  software as a service (SaaS) providers, among other reasons, have put pressure on ERP vendors to come up with new ideas. In SAP’s case, for example, they are planning on the SME business to provide substantial revenue over the coming years.

So, I was surprised to read that Tekrati is reporting on research from Arc Advisory Group, stating that the ERP market will grow at a compounded annual rate of 4.8 percent over the next five years. While China and India will be contributors to this growth, they are not the only source.

From the report:

There always has been a need for integrated solutions, especially when talking about an integrated enterprise from the plant floor up to the executive offices. With the continued demand on acquisitions, along with the programs to address the Small-Medium Business (SMB) market, systems integration is a necessary evil between ERP and other enterprise solutions. Integration has been difficult, but SOA provides value to the enterprise by freeing key pieces of business functionality from individual systems, and making them available for integration with other applications.

Given this prognosis for big ERP growth, it looks like the implementation failure business will also remain robust.

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