I hate to recommend two articles by the same person in quick succession but I have just seen another article by Bob Evans at InformationWeek.com on the above topic.  This resonates because I heard the same message in almost the same words at the IAOP Global Outsourcing Summit last week.  In this case, Bob is arguing that while CIO’s must cut costs when necessary (like now for many), we cant afford to ignore innovation.  This reminded me of another pet best practice of mine which was part of my comment back to Bob on his article:

“One other thought: I have been advocating for some time the need to build flexibility into IT strategies to allow right sizing of the IT organization to the current and foreseeable (about 20 minutes!) needs of the business and the economy. In short, acknowledge and plan for good and bad times ahead - they are both coming. This means analyzing how the IT organization can and must change in response to key parameters that drive the business. Two of these parameters might be sales and innovation needs.”

Bob Evans article

A colleague pointed me at an interesting dialogue between InformationWeek’s Bob Evans and his readers with the above title.  Bob started the dialogue with an article that listed the eight top priorities that he believes CEO’s have for CIO’s.  Good list.  Good article.  While I support the whole list, my eyes naturally scanned down to #8, “Create a massively transparent organization with all metrics focused on business value.” Yes!

While these articles sometimes end with a rhetorical request for readers to send their thoughts (My requests are NEVER rhetorical), in this case, Bob followed up with an article describing some of the responses.  Somewhat unusually, the responses were great and really added something useful to the original.

For example, executive searcher Judy Homer offered four suggestions on the types of business-value “evidence” those CEOs are looking for:

“During their interviews they are asked to provide metrics and concrete examples of:

1. How they have contributed to their companies’ success and market share.

2. How they’ve increased the level of customer satisfaction and improved the efficiency of the business through the products and/or services they’ve delivered.

3. What their strategic plan would be for delivering value during the first 6-18 months in their new role.

4. How they’ve controlled the cost of delivering effective IT solutions.”

I’d go one step further and say that all CIO’s should ask themselves these four questions every year.

Bob Evans Original Article

Reader responses

Writing in the Feb 2 edition of InformationWeek, Art Wittmann noted that in the January 2009 (yes, everyone knew about the crisis) poll conducted by InformationWeek, 44% of respondents said that demands on IT are rising while only 16% said that fewer projects are being requested and approved.  So it looks like most of us are agreed that the crisis will not affect the fact  that we will have more to do.  Will we have less to do it with?  According to Art, “spending will hold steady.”

So while that may be optimistic, it looks like we will have to produce more output with the same input.  As anyone familiar with software metrics knows, that means higher productivity, more function points per hours, fewer defects per function point, etc.

How can we grab a chunk more productivity quickly?  You may not know as you read this but I expect that if you go back and think about your development process as a supply chain, you will be able to guess where there might be some bottlenecks.  If you can think of one (the one you think of will probably be the lowest hanging fruit) but don’t know what to do next or if you can’t think of any, let me know.  I might be able to help.

Art Wittmanns article

Report from IAOP Global Outsourcing Summit 2009, Carlsbad, California #5

Satyam fraud - what could an outsourcing professional have done?

One session of the Summit included a great discussion with lots of audience participation on this topic.   There was some consensus around the fact that  we can probably all do more due diligence before and during the contract but that probably wouldn’t have helped in the case of Satyam.  Instead, it’s best to treat fraud as the same sort of “Act of God” for which you would have a Disaster Recovery Plan.  Of course, this extends to any unexpected event that causes of justifies a termination of an outsourcing contract.  You might have a great contract that allows you could to terminate but how, exactly, would you keep the delivery going? Without prior planning, a lot of knowledge could be quickly unavailable.

How many of us have Disaster Recovery Plans for our outsourcing?

Report from IAOP Global Outsourcing Summit 2009, Carlsbad, California #4

As companies expand the scale and scope of their outsourcing, their expected and achieved savings tend to decline until and unless they get to a high scale and scope because they tend not to put in the necessary infrastructure and strategy until and unless they acknowledge and act on the commitment to high scale outsourcing.

A trend of recent years towards setting up captive offshore capabilities has shifted to engaging service providers and sales of captive providers.  This includes Private Equity investors setting up “portfolio captive” capabilities to provide “shared services” to various, otherwise unrelated companies in their portfolios.

Contracts are coming under much tighter scrutiny as clients look much more closer at performance management and how, if at all, they can squeeze their vendors on performance to get more for the same money or the same for less money. The conclusion that I draw from this for DCG is that our software metrics, benchmarking and function point counting services will all be in greater demand over the next year or two.

More sourcing centers of excellence are emerging.

There is increased pressure on service providers to increase efficiency AND reduce rates and ther is evidence that service providers are responding.

There is a much stronger focus on improving process efficiencies and on capabilities to manage outsourcing and off-shoring.

There is evidence for increasing importance of off-shoring as an engine for company growth but there is also evidence for discretionary projects and being canceled or postponed.

More details and some good charts of the results  can be found in Shared Services Outsourcing News article:

Outsourcing Survey Results

Report from the IAOP Global Outsourcing Summit 2009 in Carlsbad, California #3

The Conference Board in CEO Challenge 2008-Financial Crisis Edition — features an analysis of the matched sample of responses of 190 CEOs, chairmen, and company presidents who participated in The Conference Board CEO Challenge 2008 survey fielded in July and August, and then took the time to fill out the survey a second time in October, following the recent economic downfall.  When asked to rate their greatest concerns from among 94 different challenges, the matched sample of chief executives participating in this year’s survey chose excellence of execution as their top challenge for the second year in a row.

But 46.7% of survey participants — up from roughly half that (24.5%) in the summer — were most concerned about speed, flexibility and adaptability to change. Global economic performance (44.6%) and financial risk including liquidity, volatility and credit risk (43.8%) were the fourth and fifth most pressing concerns, but were not in the Top 10 list of concerns in the summer survey. Business confidence also jumps into the Top 10, moving up 25 ranks from 34th out of 94 challenges to 9th. Those rating business confidence as being one of their “greatest concerns” rose four-fold from 9.1% in July/August to 36.3% in October.
Conference Board Report - Top 5 CEO Concerns Before and After Crisis

Report from the IAOP Global Outsourcing Summit in Carlsbad, California #2:

“It is my opinion that everything must be based on a simple idea. And it is my opinion that this idea, once we have finally discovered it, will be so compelling, so beautiful, that we will say to one another, yes, how could it have been any different.”

John Archibald Wheeler (quoted by Jagdish Dalal in his presentation)

Quote source

Reports from the IAOP Global Outsourcing Summit 2009 in Carlsbad, California #1:

Some interesting data points from todays sessions:

From a survey of IAOP members expectations:

Regarding existing outsourcing contracts, 43% of outsourcing will remain unchanged but 44% will have either renegotiate prices or volumes. 5% of outsourcing arrangements will be suspended or cancelled.

Regarding the number or amount of new outsourcing, 38% expect no change, 36% expect more and 27% expect less. Why? Most respondents said more savings (no change there) but an increased number said “more flexibility.” What are outsourcers going to be focused on? Greater due diligence, more off-shoring and fewer, larger providers. In other words, risk management.

A contact from a IT vendor management group in a major multi-national corporation told me that they have been instructed not to do new outsourcing contracts or renewals for longer than one year. As he said, “That takes away one of our few negotiating points for lower prices.” However, we then decided that in the current climate, it probably wont make any different and lower prices will still be available from providers worried about less work.

The Indian share of outsourcing is still the biggest but is declining. The diversity of countries doing outsourcing is increasing.

Flicking through Information Week, I came across a couple of obscurely named but absolutely critical metrics to use when consider disaster recovery:

Recovery Point Objective (RPO) identifies how much data can be acceptably lost.

Recovery Time Objective (RTO) identifies the acceptable time for a system to be done (or the time it takes to bring it back up).

Clearly, such metrics require extensive discussion and explanations between the businesses and IT.  Both are functions of cost and it would be interesting a useful to ask for a plot of these against cost before making any decisions.

You can find the full, short article by Howard Marks at

Practical Disaster Recovery

Economist January 17, 2009 “Technology Firms in the recession – Here we go again”

The Economist quoted Forrester Research figures which predict that technology purchases will decline by 3% in 2009 and increase by 9% in 2010 when counted in dollars. However, when they discount the effect of the dollars expected strength in 2009, the actual technology spend is expected to increase by 3%. That’s certainly cheery news! The logic is that technology firms are actually quite lean already and certainly spending on IT is, “…fairly low on the list of things to cut.” Of course, the Economist reminds us that the IT industry, “cannot defy gravity.”

Both of these points bear out my own experience of the past month. Companies are significantly more reluctant to spend but, in many cases, they are not really sure why. They are adopting a “just in case the worst happens” approach which may, if anything, be the very approach that brings on the worst.