Posts Tagged ‘IT Finance’

The role of Key Performance Indicators (KPIs) in the organization is to provide internal and external clients with actionable metrics in easily accessible, customizable formats they can use to increase the effectiveness and efficiency of their operations. What differentiates KPIs from the wealth of metrics that can be generated from any business is that they are key leading and lagging indicators that can be used to reflect the strategic performance of the organization.

In selecting your KPIs it is important not to be tempted to label as KPIs the “top 40” metrics but rather generally at the top level you should limit yourself to the top 1-3 KPIs per strategic objective. These should only include those metrics that are essential to the success of the organization. In addition, each department will have their own contributing KPIs. The departmental KPIs should be selected so that they can be rolled up in support of the overall strategic goals.

The effectiveness of KPIs can be directly related to the care with which they are defined and implemented. Critical questions to consider when developing your KPIs include:

  1. How does this measure contribute to the strategic goals?
  2. Is it quantifiable?
  3. Is the data currently available?
  4. Can current performance, benchmarks, and target values be defined?
  5. How will it be used as a management tool?
  6. What is the high level plan for the establishment of reporting?
  7. Is there an outline for how continuous improvement activities will be implemented?
  8. Has a cascading plan to all levels of the organization been developed?

A brief discussion of the detailed considerations for each of the above questions is included to assist with the process of initiating a KPI program.

  •  How does this measure contribute to strategic goals? –  The success of using KPIs will be dependent on how effective they are at contributing to a better understanding of what drives the success of the organization. Keep in mind that KPIs will differ based on the type of organization and its goals. For example, a non-profit organization such as a school or a hospital will have different fiscal KPIs than a publically traded company. Each KPI should reflect the mission and goals of the organization.
  • Is it quantifiable? – A common mistake in developing KPIs is to take too general a statement such as “Improve customer service” as a KPI. To be effective it needs to be specific and measurable so “improve customer service satisfaction scores or increase customer repeat order rates” would be more appropriate measures.
  • Is the data currently available? – Another factor to be considered is whether the data to be used for each potential KPI is currently available. The expense of gathering additional data including system changes should be weighed against the value that the measure will provide.
  • Can current performance, benchmarks, and target values be defined? – To be effective a KPI must define a clear target so success can be determined. Industry benchmarks can often be useful in setting these targets. For example, an IT department may have as a target 99.999% availability of key systems. Meeting this target in turn will enhance customer satisfaction, ordering functions, etc. and support the other strategic objectives.
  • How will it be used as a management tool? – A clear understanding of how this KPI will be used, how improvement opportunities will be developed, and consequences for deteriorating performance should all be clearly mapped out before implementation.
  • What is the high level plan for reporting? – Publishing and reporting of KPIs is critical to monitoring progress. Formats for reports should be customized by role and function so that executives will see a summary view while department heads would have a much richer set of detailed metrics. Consideration should be given to the mix between dashboards, scorecards, detailed reports, and self-service tools for ad hoc analysis.
  • Is there an outline for continuous improvement activities? – A process improvement process allows the KPI values to be used to identify where focus should be placed to enhance performance.
  • Has a cascading plan been developed? – Each level of the organization needs to understand how their operations support the overall strategic goals. Cascading the KPIs clearly delineates their contributions and their opportunities for improvement.

Implementing a well thought out and comprehensive set of KPIs is the first step to a more proactively performance- based operation. This program will provide all levels of the organization clear targets and objectives with the ultimate goal of materially contributing to the success of the organization.

Does your company’s leadership think that having a robust Business Intelligence function is only viable for large corporations? Think again. In today’s global world, with information shared in the blink of an eye it is imperative that all companies know their numbers and manage by them. The information that a Business Intelligence (BI) function can provide can mean the difference between growth and competitive decline. Utilizing BI has been proven to result in significant competitive advantages both for small companies as well as large corporations.

Business Intelligence Planning

Initiating a Business Intelligence function in your company does not need to be excessively expensive but does require careful planning. There are five key steps in developing a plan for a BI function that, if followed, increase your chance for success. The level of complexity required for these steps is dependent on the size and complexity of your organization. Small companies can rapidly design a BI program to accelerate the process with the help of a consultant with BI experience.

The five steps are:

  1. Evaluate the company’s  strategic objectives for critical success factors;
  2. Design the Performance Measurement Blueprint;
  3. Perform a Gap Analysis;
  4. Develop Key Performance Indicators (KPIs); and
  5. Develop the high level plan for Reporting – Scorecards, Dashboards, Reports

It is important to involve top management early in this process. Their support will be critical to getting funding for the BI program once the analysis has been done.  Depending on the company culture however a draft of a proposal detailing the potential costs and benefits early on may be beneficial. A clear demonstration of the need for a BI program can facilitate its approval and funding.

It is always best to start the planning process with an evaluation of the company’s strategic objectives. To maximize the probability of success, any BI program should be aligned to the mission, vision, and the strategic objectives of the organization. Another critical success factor is documenting the benefits of a BI program up front in order to garner the support of top management or ownership.

Once you have determined how to align to the strategic objectives take a look at what are the expected levels of performance in order to meet or exceed these objectives. Determine any dependencies between objectives in this review. This will help you determine where you can expect cost savings and cost avoidances. An initial draft of non-tangible benefits should be developed at this time. Common benefits include improving quality, improving customer retention, gaining market share, reducing costs, meeting regulatory requirements, and fostering continuous improvement and innovation.

The next two steps are to identify the high level requirements for data collection and to perform a gap analysis. The gap analysis will identify any gaps in current capabilities to measure, analyze, and present the elements of the performance plan.  From there you can start to develop the KPIs that are needed to track performance. The last step of the planning process is to determine the high level plan for what reporting components will be needed. Generally scorecards and reports will be needed for managers and staff while dashboards will be needed for management.

Before you can complete the proposal for establishing a BI program you will need to determine the expected costs and benefits for presentation to management. This involves determining how the program will be designed. There are several options to consider in developing your capabilities for initiating a BI function. Each option will have different costs, timelines, and pros and cons associated with it.

The most popular options for launching a BI program are:

  1. Outsourcing a portion or the entire function;
  2. Purchasing a package through one of the many BI vendors; or
  3. Starting small with an in-house team.

The costs and the benefits for each of these options should be included in the BI program proposal. For a small company the third option is often the best initial choice due to the lower cost. However the cost of outsourcing and vendor packages can often be competitive and can decrease the time to adoption.

With all aspects of the BI plan identified the last step is to put them together in a proposal that clearly shows the associated costs and the benefits of having a BI program. The most compelling benefit in today’s increasingly competitive environment is to gain the advantages that an analytically focused strategy can give to your company’s success regardless of its size.

Not that one would be able to tell the difference, but I’m writing this article while flying back to San Francisco from a great week of meetings in New York, and I’m absolutely convinced of two things:

  1. Lugging a laptop around from meeting to meeting is overrated; and
  2. The iPad makes it ridiculously easy to be just as productive on the road. (Oh and 3, as if it weren’t blatantly obvious to anyone who’s flown them: Virgin America = love.) By the time this article publishes, the iPad2 will be shipping, which will present a faster, lighter, longer-lasting experience.

Informal survey time: This flight is just about full, and looks like half of my fellow passengers are using some type of mobile device: iSomethings, Androids, and iPads. (Sorry Motorola, love the Xoom but none spotted around this nightclub-in-the-sky.) I counted maybe four or five laptops, and about 8 iPads.

The time of the tablet has clearly arrived.

Now anyone who has or does carry a laptop with them, you are with me on this, right? Seriously, it’s 2011 and the average laptop is still heavy (6lbs!). The exception might be the MacBook Air 1.86Mhz – a slick machine for sure, but make a move in that direction and $1,600 will need to make a move from your wallet. For less than half this cost you can have a fairly nicely-loaded iPad2 3G.

Now before you drop this post like a hot skillet and rush off to the Apple Store, you need to know a few things. The iPad is indeed quite cool, but a full-fledged laptop it isn’t, so some sacrifice is definitely necessary. Making the iPad your primary road machine requires having some proverbial ducks lined up first:

  1. Email.  The good news here is that the native Mail app works nicely for just about all email needs. The only drawback is that if you’re a Salesforce user, you’re out of luck for a mail-to-Salesforce sync with the iPad.
  2. Documents & spreadsheets. There is currently no MS Office for iPad. Sad, I know. However there are workarounds for working with documents and sheets: Google Docs works pretty well with iPad, and Safari’s use of HTML5 caches your work in case of a connection interruption. Also, apps like Citrix Receiver (for Xen users) and LogMeIn Ignition will connect you to your laptop or other machine back at the office.  I understand that Apple’s own iWork for iPad app is pretty good, though apparently has limitations if you need to convert to MS Office formats.
  3. Presentations. Keynote for iPad allows you to create all the decks you need, or better yet edit existing PowerPoint files. Since most meetings tend to be between two or three people, presenting from the iPad itself is a great, intimate way to talk someone through your deck. For formal presentations, just use the A/V dongle and you’re all set. Need to drop some Photoshopped goodness into your deck? There’s an app for that.
  4. Backoffice apps. Of course while on the road you’ll need to stay connected; your business juice running back in your datacenter.  Salesforce and most other CRM apps are web-based, so you’re already covered here. Connecting to your company’s systems is possible using the native Cisco and other supported VPN protocols. Datacenter providers are themselves releasing server management apps for the iPad. Rackspace, for example, just released an updated version of their feature-packed admin app for iPad, and I’d expect Terremark and the other major players to follow suit.
  5. File management. Storage space is key here, and since there (still) is no support for SD cards with the iPad2, I’d recommend getting the 64GB version. Given almost ubiquitous WiFi or 3G, both Dropbox and Google Docs are two smart ways to manage and backup files from the iPad.

If you happen not to be an Apple or iPad fan, I’d still recommend considering a tablet versus a laptop as your ‘road dog’. (Motorola Xoom is the best of this bunch at the moment, IMHO.) The light weight, size, decent-sized screen, and connectivity to your datacenter and business applications presents a compelling case for replacing that heavy old laptop. Your shoulders will thank you, too!

I’ve spent many years as a consultant helping companies analyze their business to improve performance and reduce costs, Clients large and small often ask questions regarding outsourcing/managed-sourcing. They’ve often read case study after case study showing how companies of their size/in their industry have shown real cost savings from their IT outsourcing programs, but their own initiative seems to be lacking in some fashion, often experiencing cost overruns and sub-par service levels.

I always come back with the same answer – A question:  Did you have the right information to make this business changing decision, and did you enter into your agreement from a position of strength?  The prospective client’s answer is usually slightly defensive, wondering why I’m questioning that company’s decision-making ability.  Which essentially I am – clearly something is amiss. At this point, the wheels are in motion and a serious conversation about how the agreement was entered into can take place.  This conversation is meant to figure out what has gone wrong and how it can be fixed.

Here are the main points where an outsourcing agreement can go wrong:

  1. Is the true cost of IT known and understood?
  2. Was proper due diligence performed and a business case developed?
  3. Did you open negotiations to multiple companies so as to get the best deal for your enterprise?
  4. Are you enforcing the contract?
  5. Has your company had any changes that would affect your agreement.

If these five questions can be answered, your company will be well ahead of the game and can facilitate changes that will help resolve the issues you may be experiencing. Lets look at these a bit more:

Understanding the true cost of IT

Many companies think they understand the true cost of IT, but most don’t.  It’s not just what is in the budget, it’s what isn’t as well.  Since every employee is part of the larger family, things are often done in a way that wouldn’t necessarily be the case with an outsource company.  For example, IT support staff would likely service a broken computer while they happen to be in that particular location to fix something else; an outsource company won’t (and unless on-site, can’t) do that.  There are hundreds of other “off book” examples (an ad-hoc server repair in the datacenter without a ticket being called into the help desk, perhaps) that, once outsourced, will no longer occur.  These are true costs of doing business that are challenging to foresee and don’t always get accounted for internally, however with an outsourced vendor these types of activities become chargeable events. In a large organization, this can lead to millions of dollars in additional outsourcing costs.

Performing Due Diligence to get the best deal possible

Knowing the true cost is the first step in the due diligence process.  Other things need to occur, including:

  • Prioritizing which functions should be run internally and which should be run by experts that can drive costs out of the equation
  • An understanding of which parts of the labor force will be affected either by being re-tasked to the outsourced vendor running the operations or being relieved of their positions entirely
  • Service levels need to be agreed to internally; and
  • Building a business case that supports the initiative, this includes noting all assumptions so as to be able to go back and audit.  By doing this, the company knows what is expected and then study the agreement forensically to uncover why the initiative is not proceeding as planned.

Handling Negotiations to Secure the “best” deal possible

Each company has their own process by which they procure goods and services.  The key questions to ask here are:

  • Were your company’s policies and procedures followed?
  • Were RFI’s and RFP’s constructed properly and submitted to all viable vendors?
  • Did your company negotiate purely on price, and were factors such as the Service Levels (mentioned above) taken into consideration?
  • Did you do research on the providers, talk to their current clients, etc to make sure they were the right fit for your needs?

All of these questions need to be given consideration up front, or you’ll risk the likelihood of compromised service down the road.

Enforcing the agreement with the selected vendor

This is key. Your company, when entering an outsource agreement, must establish a structure to allow for monitoring of the agreement and related SLAs. Is the vendor living up to their end of the agreement? If no, are steps being taken to alleviate the issues?  If you are not monitoring your agreement, you are as much at fault as the vendor for any perceived failures.  The agreement and the activity associated with it need to be continually monitored, and analyzed.

Knowing the changes in business conditions that might affect your outsourcing agreement

These business conditions can take many forms, and some affect all business – the current downturn in the economy, for example.  Perhaps your company may not have grown at the rate assumed in your business case and therefore in your negotiations with your chosen outsource vendor.  Other condition changes to consider include mergers and acquisitions, perhaps you are using more computing power then you estimated and did not take into consideration when purchasing another company.  Have you come out with an incredible new product that has driven growth within your organization? This is a good affect, but one that may not have been included in the portion of the new products business case that deals with internal costs such as IT, manufacturing and supply chain management.  All of these reasons and many others can affect the actual agreement, therefore it’s a must that your agreement be continually monitored as I noted earlier.

Conclusion

Several reasons can result in your company essentially leaving dollars and services on the table with respect to outsourcing.  There’s no such thing as too much thought when evaluating an outsourcing initiative.  If you need help, there are many experts available to you who can provide guidance and help develop a sound strategy tailored to your organization. Whatever your size or complexity of project, we’re here to help.

ROI for Business Intelligence

by Matthew Carmen on January 3, 2011

When beginning or continuing an investment in a Business Intelligence (BI) system, a company must look at how it will be able to garner the largest Return on Investment (ROI) for such an initiative.  There are many factors to take into consideration in reaching the largest possible ROI.  These factors can be grouped into direct and indirect benefits:

Direct Benefits

  1. Quantifiable cost savings related the more efficient access to data.  This allows analysts to spend time analyzing and not gathering information.
  2. Automation of process, leading to real time savings and greater productivity.
  3. Shorter budgeting and financial planning cycles with reduced effort, allowing staff to continue doing their jobs.
  4. Improved efficiencies in operational groups such as inventory management, IT, facilities management, etc.
  5. Reducing support costs associated with reporting while terminating legacy reports and systems that go unused.

Indirect Benefits

  1. A single version of the “truth”, official company records and reports, leading to less rework and manipulation of data by individuals to justify differing views of what that data means to their groups.
  2. Facilitates containment of costs based on targeted areas as opposed to just saying every group’ cuts costs by 20%, as an example.
  3. Allows for the ability to run “what-if” analyses, the results of which often lead to better decision making.
  4. Improved customer service, resulting in increased sales.
  5. Allows for the long-term alignment of operations and strategy.

There are many other direct and indirect efficiencies and benefits that can be realized through the proper planning and implementation of BI tools and systems.  The more end-user groups that participate in the planning of a company’s BI system, the easier it becomes to change the ultimate corporate culture. Once the buy-in from the users is attained, the real savings begin, and a platform to accelerate corporate growth now exists.

Project Accounting – Do you really need it?

by Matthew Carmen on November 22, 2010

Let’s save answering the question posed in the title, for later on… lets first address a more fundamental question – What exactly is project accounting?

Project accounting is the act of tracking total costs of a project, from concept through implementation. This means all of the expenses, labor and capital expenditures related to completing any operational or strategic project. This project tracking can be done in tandem with the corporate accounting department (usually the case in large companies) or separately (as with small and midsized companies, when these companies actually perform project accounting). Depending on the size of the projects that a corporation is undertaking, the complexities of project accounting grow.

As the complexities of project accounting grow, technology plays a greater role. The business may be able to get away with Excel spreadsheet models – at least in the early stages of proving its concepts. This can continue to be useful for small companies that have small straight forward projects that are usually expense related. Once the use of internal labor, software development, and capital expenditures come into the mix, additional resources should be considered – irrespective of the size of the company – in order to reach conclusions successfully.

These added features include:

  1. Project accounting software – There are many packages on the market, from inexpensive versions that allow a small company to track their costs, to large modules that plug into a company’s SAP, Oracle, or other enterprise-class financial system. The larger and more expensive the software package, the more time and energy it will take to integrate into the company’s technology environment.
  2. Legal expertise – As a company’s projects become more intricate and complex, the project accounting office will need to understand things such as tax implications, capitalization of assets and labor, etc. The company’s legal and corporate finance teams will need to get involved.
  3. Information Technology – In most cases, new servers will need to be leased or purchased, power usage in the company’s datacenter will need to be reviewed (either with owned or outsourced datacenters). The datacenter strategy itself may need to be reviewed (depending on the size of the project, A large project may not fit into the company’s current datacenter), as well as any related labor costs going forward.
  4. Financial – The actions in this area of the company include the creation of a business case, business intelligence initiatives, the ability report on the successes of the project, activity based costing, budgeting, etc.
  5. Regulatory – depending on a company’s business, there may be regulatory issues that make project accounting necessary. Some regulatory programs may be tax deductable, while others just have to be done. Tracking regulatory projects is necessary to show that these are one-time costs associated with doing business.

Once a company has implemented the project accounting system that works best for its size and needs, something amazing things starts to happen, information that can be acted upon to make operational and strategic decisions is created. For example: In large scale projects – those that take place over years and have multiple layers of complexity – costs can be looked at by repeatable activity (i.e. labor during a certain stage of the project that happens at different locations) and ways in which these costs can be minimized become apparent. Business intelligence is then created to illustrate that having the right labor in the right place will minimize costs and keep the project on or below budget.

Conclusion

The time has come to finally address the question in the title! Project accounting, whether implemented on a small or large scale, can provide great value to more efficient management of the business. In these challenging economic times, managing a business at the highest level of efficiency is more important than ever. Reporting on and containing costs is a priority and should be pursued with great care and scrutiny. Not only do you need to have solid Project Accounting in your organization, your organization’s long-term success DEPENDS on it!

3 Ways to Save money and Increase productivity

by Matthew Carmen on October 25, 2010

For most companies, Information Technology is not their core business.  IT is, however, one of the biggest factors by which a company can differentiate itself from its competitors.  By using technology wisely, companies can automate many of their processes, allowing its labor force to focus attention on new products and services for both external and internal clients.  Capital funding is required to accomplish this, and in this economy this means reallocation of current funds, not an addition of new funds for a companies IT department.  It is a proven fact that good investments in IT facilitate rapid company growth.

As with most other departments within a corporation, IT runs on human resources – labor.  Therefore, the last thing a company should look to do when wanting to save or reallocate capital is to cut its labor force.  Once the labor force is cut, it is very hard to get back the productivity in the future.  When this happens, most IT departments become very reactive – they end up fighting the many fires that crop up and have little time to implement new technologies that could benefit the entire company.

Decimating a labor force – though providing significant short term financial savings – inhibits corporate growth.  With this in mind, what areas within IT should companies consider to free up funds for growth initiatives?

  1. Managed sourcing options for routine activities.  By routine activities I mean regular processes such as batch computing, monitoring of the IT environment, network connectivity and maintaining the physical environment.  Most of these are important areas that tend to be labor-intensive activities.  Within IT, the monitoring, network and physical management of the datacenter tend to have the largest staff of any group.  By considering managed services, a company can get high quality service and typically good pricing areas as well.  With the savings, labor can be added to groups that are doing application development and other innovative services which stimulate business growth.
  2. Implement tight asset management procedures.  By tracking a company’s software and hardware assets, existing assets can then be utilized more efficiently.   On the software side, a company needs to know what it owns, what piece of equipment it is running on, and how much of the total purchase it owns is actually being used.  Having an inventory system will allow the user community access to all of this information, and encourages the use of existing inventory instead of always buying more simply because a new project has budget money.  By implementing a rigorous asset management system, companies waste a lot less – often as much as 20% – on new purchases and maintenance of those new purchases.  These savings can likewise be used for continued corporate growth.
  3. Going green can provide great cost savings. One way companies can become “greener” is through server virtualization.  By vitalizing servers, companies can save much needed capital on two fronts.  First, by having fewer physical devices in your datacenter, less electricity will be used, thereby lowering the company’s electricity costs.  Secondly, many states and utility companies offer rebates and/or lower rates for electricity for companies who virtualize their server farms.  For example, one utility in Wisconsin offers a rebate of $250 per virtualized server.   Through the use of VMware or similar product can, if engineered correctly, reduce the physical presence of a server farm down by as much as 20 percent – serious savings can continue on well into the future.

All in all, there are several ways in which a company can save much needed capital without reducing the workforce, then reallocate the capital in such a way as to stimulate new growth.   Yes, certain positions may be deemed as unnecessary and the workload shifted to managed service providers or the like, but overall, the company will be able to use more of its skilled teams for forward-thinking growth opportunities. Such initiatives, which can be funded by cutting wasteful spending, work seamlessly with careful planning and execution.

Developing your financial management talent

by Brian Superczynski on October 11, 2010

Over the course of my career I’ve read numerous books and have attended seminars and classes on developing talent and leadership skills.  These classes have ranged from developing one’s own personal “brand”, to conducting performance reviews and even how to become a “thought leader.”  I’m sure during the course of your career you’ve also had similar experiences.

Now from what I’ve gathered from all of this training is that each of us has unique skills based upon our backgrounds and chosen professions.  In a light-hearted tone I like to refer to these unique skills as special needs.  I’ve also learned that if you don’t think you have special needs, you do – it’s just that you don’t know it yet.  In looking back at my experiences as an IT analyst, leader and mentor to other analysts, there is definitely a unique set of skills that facilitates adding value to financial support within IT organizations.

Finding an individual to perform routine financial tasks and create nice-looking Excel spreadsheets is easy.  Identifying an individual who can provide value-added input to your IT management team is a different ball game.   There are not many universities and even companies who train individuals how to apply their financial skills to IT operational financial management.  Therefore it is incumbent upon IT organizations not only to identify quality financial management talent but to provide training on IT-focused financial management strategy and practices.

I’ve always believed that IT financial management is a smart and rewarding choice for young finance professionals beginning their careers.  For starters, they are usually assigned to executive IT teams to provide financial and administrative support.  As such, they quickly gain invaluable experiences on leadership dynamics and how decisions are made.  I recall early in my career being the lead financial analyst on an executive IT leadership team at a Fortune 50 organization.  We hired a new executive who had just retired with the rank of colonel from the U.S. Marines.  The executive vice president called me into his office and introduced me to this new leader and proceeded to tell him that I would review his budget, his key initiatives, and also provide him with insight into his new team.  Now I was a full 25 years younger than this newly-retired colonel and he had this perplexed look on his face while I was reviewing his budget and organization.  After a while, the colonel looked up and said, “I get it – you’re the bosses S-L-J-O” (pronounced: Slow-Joe).  Puzzled, I inquired what a SLJO was.   I quickly learned that my corresponding position in the armed forces was fondly referred to as the “Stinky Little Job Officer”.  Actually, another word was used instead of “Stinky” but I’ll leave that to your imagination.   Now my point is that at a relatively young stage of my career I was given the invaluable opportunity to participate and be a key member of an IT leadership team, albeit in a “junior” but important and strategic capacity.  Not only did it allow me to utilize my financial skill sets, but it also allowed me to adapt those skills in a new capacity while learning what I found to be the interesting world of running a large Information Technology organization.  I found being accepted as a full-fledged member of the IT organization that I supported the single best training that I could have received early in my career.

On the flip side of my own personal experience, I’ve seen many IT organizations look to their financial support as overhead that is required only to provide corporate financial planning, with little more than budgets, monthly accruals, and variance reports.  In these instances, the relationship is typically somewhat contentious and the individual providing financial support is often unable to articulate the IT drivers in their analysis and they become little more than accountants and end up moving to another job fairly quickly.

By now you’re probably wondering if you need to develop an entirely separate training program for the group or individual providing your IT organization with financial support.  Might be surprising, but the answer is no.  As part of your team, they should be required to participate in your IT training programs.  Now, I’m not talking about your financial analyst becoming certified as a Cisco CCIE or a Microsoft Windows administrator.  I’m referring to having your financial support attend and participate in IT service delivery and project management programs.  Two that come to mind – which I strongly recommend – are

Of course, there are other programs such as Six Sigma that are also relevant and would be a good choice if your organization is adopting these or similar management methodologies.  All of these offerings and others are relevant to financial professionals and teach invaluable skills on translating IT terminology into financial and business relevant terms.

In addition, don’t overlook your company specific certification or training programs.  For example, at one organization all employees and contractors are required to attend a half day class before conducting any type of work in the datacenter.  The purpose of the class is to educate the individual(s) on why the datacenter is mission critical to delivering services and providing an appreciation for all the processes in place to ensure a high availability and error-free environment.  It was amazing how the one half day of training gave non-IT professionals an appreciation for the IT organization as a whole.  However, as a partner in a firm called Datacenter Trust, I must clarify that I don’t condone people frequently walking through your datacenter for training and tours.  At the same time, it’s always a kick seeing those datacenter engineers who don’t get out much impressing people with what they manage.  You know who you are…

These may appear to be obvious suggestions on developing your IT financial management talent, but more times than not I’ve seen the finance support organization recognized as a separate unique function.  The key word to remember regarding developing an effective partnership with your financial resource support is ‘inclusion’.   When developing your meeting agenda’s, identify a regular time to review the financial results compared to budget and forecast and any business cases or ad-hoc projects.  As appropriate, your financial support should attend as much of these meetings as possible to gain an understanding of the operational aspects of the organization.  Finally, elevate your IT financial support even further from the effective resource – or “SLJO” stage to a true technology and financial knowledge partner by having them actively participate in your IT-specific training programs.

4 steps to effective Disaster Recovery planning

by Marc Watley on August 23, 2010

Question: A wildfire 10 miles away from your company headquarters is raging out of control. The fire captain just ordered everyone in your building to evacuate. All staff have safely evacuated premises, and now you are likewise heading out, taking one final look at your datacenter – still humming away, unsuspectingly. You have offsite data storage but no offsite server infrastructure, applications, etc.

What do you do?

I’m paraphrasing from a not-so-great movie here – Speed (Keanu may have been good in The Matrix but the predictable tête-à-tête between his and Dennis Hopper’s character in Speed still makes me chuckle) – but IT executives today are, in fact, increasingly faced with the threat of disasters – whether natural (such as a wildfire) or man-made (e.g. some ding-dong crashing a vehicle into your datacenter). I may be taking a bit of creative license here, but this could not be a more serious issue. (Recall those horrible wildfires in San Diego, California area a few years back? The example above was culled from situations experienced during that period.)

As organizations – and their customers – increasingly rely on database, server, and IP-connected applications and data sources, the importance and responsibility of maintaining continuity of the business infrastructure and limiting costly downtime in the event of a disaster, is paramount.

Though many an organization had active disaster recovery (DR) projects on the books a few years ago, the global financial crunch of the last 20 or so months has wreaked havoc on IT budgets everywhere; only now are many of these DR projects once again taking priority.

If you’re thinking that you can ‘wait it out’ and disaster won’t strike on your watch, think again. Apparently, some 93 percent of organizations have had to execute on their disaster recovery plans. Yep. This according to an annual DR survey from Symantec last year.  A few more points from this survey:

  • In general it takes companies [with active DR plans] on average three hours to achieve skeleton operations after an outage, and four hours to be up and running
  • The average annual budget for DR initiatives is $50MM (including backup, recovery, clustering, archiving, spare servers, replication, tape, services, DR plan development and offsite costs)
  • Virtualization has caused 64 percent of organizations worldwide to reevaluate their DR plans

Whether your organization is a small recently funded startup or well-entrenched in the Fortune 100, designing, implementing, and testing a DR plan is an endeavor that takes dedication, careful planning and time (the entire process can take weeks or even months). There are many excellent resources available which can provide knowledge and detail as to the individual steps of a DR planning initiative.  (Cisco’s DR Best Practices site or Disaster Recovery are great places to begin, by the way.)  What follows is a high-level, best-practices overview of the planning process:

Executive Sponsorship

This first step of a successful DR plan involves two key components: One is to secure plan sponsorship and engagement from senior company leadership – CEO, COO, CIO, etc. The other is to establish a planning team that is representative of all functional units of the organization – sales, operations, finance, IT, etc.  This step is the catalyst to a smooth planning initiative, and requires focus and patience.  (The ability to herd cats wouldn’t hurt, either.) It may also be helpful to reduce the impact on internal resources by leveraging outside help from a consulting firm well-versed in DR planning.

Information Gathering

This portion of the planning process – information gathering, due diligence and assessment – is the most involved and most time-consuming, and a true test of teamwork across the organization.

The first step in this part of a DR planning initiative is performing a Business Impact Analysis (BIA), which helps to assess the overall risk to normal business operations (and revenue flow) should disaster strike right this second. The BIA is typically comprised of identifying and ranking all critical business systems, analysis impact of interruption on critical systems, and most importantly, establishing the maximum length of time critical systems can remain unavailable without causing irreparable harm to the business. This length of time is also known as Maximum Tolerable Downtime (MTD).  Working backwards from the MTD will allow acceptable Recovery Point Objective (RPO) and the Recovery Time Objective (RTO) to be reached.

With BIA in hand, the next steps are conducting a risk assessment and developing the recovery strategy.  The risk assessment will help to determine the probability of a critical system becoming severely disrupted, identifying vulnerabilities, and documenting the acceptability of these risks to the organization.  Engagement from the entire planning team is necessary in order to accurately review and record details for critical records, systems, processing requirements, support teams, vendors, etc. – all needed in order to develop the recovery strategy.

Also important in the recovery strategy is identifying the recovery infrastructure and outsourcing options – ideally alternate datacenter facilities from which critical systems and data can be recovered in the event of a serious interruption.  This, as they say, is the point at which the bacon hits the frying pan: Many organizations are leveraging the power and abundance of Cloud-based IT resources to lower infrastructure costs, and Cloud is particularly applicable for DR.  In fact, there are more than a few services who provide continuous data protection: typically accomplished via unobtrusive software agents residing on each server in a datacenter. These agents are then connected to a black box also residing in the datacenter, incrementally taking images of each server, de-duplicating the data, then replicating that data via secure WAN to a remote data store, ultimately providing on-demand (via secure web console) recovery from the remote location at any time. Companies such as nScaled, iland, and Simply Continuous offer such services and can even help build a business case to illustrate the ROI for this service.  Point is, do thy homework and explore if Cloud services such as these might make a sound fit into your organization’s DR plan.

Planning and Testing

Armed with a full impact analysis, risk assessment, recovery goals, and outsourced options, now the actual DR plan can be developed. The DR plan is a living document that identifies the criteria for invoking the plan, procedures for operating the business in contingency mode, steps to recovering lost data, and criteria and procedures for returning to normal business operations. Key activity in this step is to identify in the DR plan – a recovery team (which should consist of both primary and alternate personnel from each business unit) and to identify recovery processes and procedures at each business unit level.  Also important is to ensure the DR plan itself is available offsite – both via the web and in permanent media form (print, CD-ROM, etc.)

Equally important to having a DR plan is regular testing. This step includes designing disaster/disruption scenarios and the development and documentation of action plans for each scenario. Conducting regular testing with full operational participation is key to successful testing.

Ongoing Plan Evaluation

An effective DR plan is only a good plan if continually kept in lock-step with all changes within the organization.  Such changes include infrastructure, technology, and procedures – all of which must be kept under constant review, and the DR plan updated accordingly.  Also, DR plan testing should be evaluated on a regular basis, and any adjustments made (systems, applications, vendors, established procedures, etc.).

So there you have it – four key building blocks to tailoring a DR plan for your organization.  Of course, if the ‘disaster’ arrives in the form of a city-sized asteroid hurtling towards Earth, needless to say any plan will likely not make much difference. Anything short of such a global catastrophe, however, and a well-developed and maintained DR plan will keep employees and customers connected and business moving forward, with minimum downtime.

Again, this is by no means a complete recipe for designing and implementing a DR plan but instead is meant to serve as a high-level overview…offered as food for thought.  I encourage you to learn more, explore options, ask for help if needed – whatever it takes to thoroughly prepare your organization for the worst, should the worst ever occur. To loosely paraphrase our man Keanu once again from another of his, er, more questionable films from back in the day – Johnny Mnemonic – this is one topic where you absolutely, positively don’t want to “get caught in the 404″.

4 tips for selecting the right consultant

by Brian Beedle on August 16, 2010

The vendor selection process can be an arduous, time consuming, and stressful task.  Receiving quotes that run the gambit of the budgetary spectrum, deciding which product will give your company the biggest bang for the buck and wondering if saving a dollar or two is really worth the frustration of finding the “right partner”.  Every Project Manager has dealt with these issues, but keeping in mind the following points may provide some clarity and assist with narrowing the decision-making process when seeking a value-added business partner.

  1. Prepare a well defined project scope
    • Create a list of requirements. Ensure all aspects of the project are being captured.  Alignment and agreement within the organization must occur first and foremost.
    • Project Scope must outline all roles and responsibilities.
    • Establish all high level deliverable dates and the associated milestones for the project.
    • Sign-off from the Executive sponsor of the project must occur at this stage.
  2. Gather a list of recommended vendors and interview each. It is critical that the following points are addressed during the interview process to ensure that the vendor(s) have the resources available and the knowledge to deliver a final product that aligns with the project scope.
    • It is important to determine the level of experience that the consulting team exhibits.
    • Request resumes for the consultants on staff.
    • Inquire as to the specific projects these consultants have worked to qualify the expertise that exists.
      • Do they have relevant industry experience?
      • Speak to them about a “proven approach” to a similar project and how they were successful in delivering in a timely manner.
      • How many dedicated and part-time resources are available?
    • What involvement (if any) is the customer expected to contribute?
      • This is key in determining not only the resources that your organization will need to dedicate, but will also have an impact on the billable hours being allocated for the project.
      • Keep in mind, having an internal resource dedicated to the project is a great way to leverage the “hands-on” experience as a training mechanism.  In addition, these employee costs can be capitalized, reducing the expense budget.
    • Does the vendor’s Project Lead have a Business or Finance understanding or does this person strictly possess a technical background? Depending on the direct involvement of the business users, this is an important issue that needs to be considered.
    • Have a thorough understanding of how your organization is going to be billed.
      • Understand how your organization is going to be billed and at what milestones.
      • What is considered as reimbursable expenses at what percentage is this “capped”?
    • Request three business references in which the vendor has successfully implemented a similar product.  It is acceptable to ask for examples, or a letter of recommendation from former or current clients.
  3. Depending on the result of the interview stage, make a request of the vendor to develop a proof of concept. Compare this document to the original project scope
    • Does the Proof of Concept support the Project Scope and required end result defined by your organization?  Ensure that all key deliverables are being met.
    • Ensure that the timelines seem reasonable. Do they align with the deliverable dates of your organization?
    • Don’t hesitate to challenge the methodology or the approach being used by the prospective vendor.
    • Compare the approaches of the different vendors – It is important to keep in mind that you are the subject matter expert, push back on what does not seem reasonable.
  4. Negotiation
    • The lowest price does not always constitute the best solution. However, staying within an allocated budget is important. Do what is fiscally responsible for your organization; do not sacrifice quality or functionality just because a vendor comes in with a significantly lower price.  It is important to deliver a product that is going to meet the expectation of the sponsors.
    • It is important to understand what level of post-implementation support, training, and maintenance is included. This can be used as a key negotiation point.

These high-level items touch on a number of areas that should be considered during the vendor selection process.  Of course, there are a lot of other aspects that may need to be considered for your organization which go beyond the areas addressed here. Be resourceful. Don’t hurry off to start a project without doing your due diligence by investigating and selecting a firm that fits your needs. The results of a good implementation can change the way a business functions, the remnants of an implementation that is not successful can have even longer effects