IT projects without a goal

I see a lot of IT projects that are undertaken without a clear goal and this gets reflected in the failures. A good example is the recent cancellation of an SAP implementation by Select Comfort hotels.

During periods of slow sales or recession, a company should be focused on improving productivity or reducing costs. Implementation of new software should be based on increased sales, improved productivity or reduced costs. In this case, Select Comfort is cancelling an SAP implementation to save money. This is contrary to what they should be doing, if the original purpose was valid.

As described in the referenced BLOG entry and original announcement, the SAP implementation didn't seem to have a business goal. There were no identified problems with the original ORACLE system and no defined need for the conversion.

If Select Comfort had a measurable goal, they wouldn't have cancelled it during a slow period. They would have intensified their efforts.

Software reduces business productivity

People buy software to improve their business performance, but software initially decreases business productivity. Can a business afford this reduced productivity? During peak periods, maybe you can't.

Whether you currently use software to help you run your business or not, your initial step in introducing new software will be unfamiliar. You will start with a learning curve, learning how to do what you used to do easily. This will slow you down. At very least, you will have to make conscious decisions about day to day tasks. This will slow you down.

Adding to this productivity problem will be the complexity of the software. Most businesses use a very small part of a software product, probably less than 10%. With all of these features and functions, you will have to find your way through all of the features that you don't want, to find the one that does the job that you want. You often will try a feature that does the job, but another feature will let you do it more easily.

Adding to that complexity is the training. With all of these features and functions, it is impossible for a software supplier to train you on all of the features, so they restrict this training to the most common ones, or the ones that they think you will probably use. However, since they haven't worked with you to understand you business, they don't know what you need or how you will use it. Since most businesses don't have the time nor the money to provide extensive training, most organizations opt for the one shot deal, what I call "firehose training". The supplier provides their training program in a one or two day course. Since the training is out of context, little of it is remembered.

The net result is lower productivity, often for months, until people learn to become more comfortable with the software, starting to do activities subconsciously. Some will then experiment with new functions. In most cases, it will take months or years to become comfortable with the software. Some people will never experiment and never uncover the functions that could make them more productive.



talk about learning curve, complexity, training problems.

Surviving the recession: Lean thinking

During a recession, most organizations focus on reducing costs. Much of this focus is broadly based, looking at cutting costs, where the numbers are really big. In many cases, the approach is to cut staff, because fewer staff are needed to handle the volume of sales.

Many of these cost reductions cut to the bone. That is, they cut costs in areas which hurt them and make recovery of the business more difficult during a recovering economy.

All businesses waste their resources during peak times. The focus is on sales and growing and not on saving money. Work is done in the most "responsive" way to support customers, without proper planning. This waste builds up and a recession is an opportune time to focus on this waste.

In an article "Surviving the Recession: It's back to basics", the writer recommends the following:

• Develop a deeper understanding of your current and prospective customers (Don't cancel your CRM project!).
• Work to improve operational clarity (document your business processes and ensure all your staff have an end-to-end view!).
• As clarity improves, look at ways to reduce waste.
• As the economy recovers, look at your business strategy.

You will come out of the recession with an improved operation, better able to compete. The quoted article is based on Lean thinking.

Computer systems reliability and business impact.

An article on computer systems reliability from ZDNET Asia quotes statistics from Freeform Dynamics that shows the impact on business from what they call software resiliency. This means the system's ability to recover from software failures.

Some of the statistics include:

• 24% of organizations suffer from a software failure once per week.
• In addition, 34% suffer from a software failure once per month.
• Even worse, 20% of organizations suffer from financial or legal issues once per quarter.

These problems cause major business impact. In most cases, these problems can be prevented by planning for systems to be resilient. Yet organizations focus on new business functions, creating more dependence on these systems, and seldom plan for resilient systems. They assume that systems will work and react to failures.

Despite significant improvements in computer systems over the years, systems continue to fail. These failures can be prevented by proper planning, or at least the impact of these failures minimized.

Many technical support staff enjoy diagnosing problems and become very good at it. However, the business suffers while they react. Until business owners and managers insist on software reliability and understand the impact to their business, things will not improve.

The original article can be found here.

Organizational silos -why do they exist

Organizational silos are a big source of waste in most organizations, large and small.

This question was asked on Linkedin and thought it was worthwhile posting here.

Do you want to buy technology or upgrade your business?

Software companies sell software as a business solution. Are small businesses getting a business solution, or are they just getting software packaged that way?

When a business owner or manager looks for software, they are trying to solve a business problem. They are seldom looking for new software. Look at software as a way to upgrade your business.

What many businesses get insteadare a series of problems that they must deal with. Hopefully they overcome most of these, and recover to achieve a good return on thei investment. However, the cost are often much more than they need to be, due to a lack of planning for business outcomes, a lack of awareness of technology and a lack of experience with technology projects.

Lean is the way for business startups

We have seen many articles about the Lean manufacturing process started by Toyota.

What is just starting to gain traction is using the Lean priciples in non-manufacturing processes. Think of a business process in the same fashion as you would a manufacturing process. It is simply a bunch of activities put together to create a defined result.

There are two major differences between a manufacturing process and an office process.

1. A manufacturing process uses machines to perform the activities. An office process typically uses people, supported by software.
2. Waste is typically obvious in a manufacturing process. You find it in poor quality products, in wasted materials, etc. In an office environment, you find it in two places: Wasted time and bad data. You don't see wasted time; it doesn't accumulate. You don't see bad data until you try to make decisions; you end up with wasted time.

While some large companies are staring to use Lean principles in the office, it is seldom looked at in small businesses.

I thought the following article was interesting because it talked about Lean in new business startups.

IBM provides software to help businesses to improve value of Technology Investments

In a recent article on MSNBC, IBM announced that they are providing new software to help improve the value of technology investments. Some of the failure statistics identify the failure rates of IT organizations to achieve business goals. This has been the history of software projects. Part of the reason has been that IT organizations have been focused on success of the IT project, even though the project was initiated to meet business goals. Most of the studies of project success have been in large companies (small ones may not have as disastrous results, or the business fails if it does, so there is no company to study). However, many small business software projects fail as well.

My experience has been that the business goals have often been a fuzzy vision versus measurable business goals. When these can translated to project goals, they get very specific and often the business goal gets ignored. In addition, most of the focus goes to implementing the technology and not on meeting the fuzzy business goal. In addition, the business people are not interested in the technology and don't get involved until the HAVE TO. This is often too late as most of the business value comes from business outcomes that need to be delivered by the business. The technology project plays a supporting role.

What is interesting in this announcement is that it comes from the general manager of Managed Business Process Services, not from the software group. The software will help organizations to communicate more effectively to develop the business process, so that the software project can support it.

While small businesses likely can't afford IBM's software, they also don't have as large a problem as large companies do. They can communicate more easily, if they focus on their business processes. This is where the value can be found.

Start with a well defined business outcome. Define how your business process has to change in order to achieve that business outcome. Assess whether the software can help to achieve the business outcome. Measure the project results, not from a technology point of view, but from a business outcome point of view. The technology will get implemented, but it's not at the top of the list.

If you want to cheack out the MSNBC post, you can do it here.

Why don't more Small Businesses look at improving their business processes?

In this time of recession, many organizations are looking to reduce costs. They typically look at traditional ways to reduce costs. That may mean buying less of something reducing staff, getting cheaper products or whatever.

Most small businesses probably think that process improvement is something that only applies to large organizations, and is too expensive and not enough value for small business.

There are many stories of process improvement in large business, and the costs of doing it, as well as the difficulty in doing it. Many of these stories show how the improvements can result in big savings that can only be found in big porganizations.

While it's true that big organizations can find big savings, they also have big challenges to face. It is very hard to get a big organization working together to achieve these big goals because they have BIG communication problems. Process improvement is not hard. It is simple and straightforward. Communication is hard. Because the management team doesn't communicate their goals effectively, different people in different parts of the organization are operating on different goals. This is what causes the problem.

Most people work in isolation, not recognizing that what they are doing is having a negative impact on what somebody else is doing. This is where a lot of time is wasted. By getting everybody to look at the same process and see the inefficiencies and waste, they understand what is happenning and the problems are typically easy to fix and don't cost a lot of money.

There are times when major changes are needed and they cost a lot of money. However, it is often possible to make small changes that can have a 10, 2 or 30% improvement with minor expenditures.

How can we educate business owners that this is possible?

CRM for your business or your sales force?

Customer Relationship Management (CRM) is a big issue for any successful business. The better you manage your relationship with your customers, the more successful you will be at keeping them as your customers. This is why many software companies are in the business of selling software to help you do this.

IF CRM is so important, why is there such a high failure rate in CRM projects. I speak to many people who attempt to implement CRM, and most have the wrong approach. They look to the software as the solution and ignore the people.

In a recent discussion with a sales person, I found a very frustrated individual. The company had decided to implement CRM. He hated it! It created more work and didn't help him do his job. That doesn't sound like it will be a successful project.

To address this problem, you have to understand what CRM is all about. The purpose of CRM is to collect data, so that you can understand your customer better. If you collect bad data, you will have bad information about your customer. If you have bad information, you have no chance of satisfying your customer. If your sales people are frustrated with the CRM software and don't see the value, they will not collect valuable information. There is an old saying that I learned in my early days working with computers: Garbage In, Garbage OUT (GIGO). It applies to the CRM project.

There are two things that you need to do:
1) Define a very clear goal. Show how what you are doing will help you achieve your goal.
2) Ensure that what you are doing with the software will make it easy to capture the information to help reach the goal. The more difficult it is to capture, the less chance you have of reaching your goal.

This means that your sales people and your sales support people need to clearly understand and support the activities. If you don't, you will fail.

You may be able to get your support people to "follow the rules". You will have more difficulty with your sales people. They rend to be independent and are measured differently. Do your assessments of performance measure them on the "new Rules".

Is it time to cut back or invest in Technology?

During times like these, it's always difficult to decide. It seems that this is true of many companies. And many times we view it from two perspectives. We often say "Do as I say, not as I do", and this is true of SAP, the software giant that says they can help you run their business better.

In a recent BLOG on the Australian CIO site, Thomas Waigum comments on what SAP tells their customers versus how they act internally. In October, they issued an internal memo saying "stop all spending on Technology hardware and Software". This month, they recommended that their customers should take this time to upgrade their business by buying SAP.

We all have this conflict. While I am not a believer in across the board statements like "decrease expenses by 20% everywhere" or "stop all spending", during these times it makes sense to look at what you are spending on. During peak volume business, it is very hard to focus on where you are wasting money. You are too busy reacting to customer needs. During weak periods, it is often easiest to cut back on everything. Large companies often cut to the bone and end up weaker after the recovery sets in. If you focus your attention on the areas of waste, you reduce costs in the short term and come out stronger in the recovery.

So the answer to the question is "It Depends". If the investment produces a return, then it is a great time to invest. If not, don't do it. The questions are: "how confident are you that it will produce a return?" and "do you understand how it will produce a return?".

However, now is the time to do it. When volumes are low, your people have more time: Time to look for improvement opportunities, reducing waste, improving productivity. One place to start is the software you already have. Most software is underutilized and has many more capabilities than are used. Getting better use of such an asset will position you for the recovery.

Click here for the blog article that was referenced.

http://www.cio.com.au/article/270919/blog_surprise_surprise_sap_promotes_enterprise_software_investment?eid=-154

What's an Owner's time worth?

As with most small business owners, I always question whether I should pay for services from business consultants. Buying hardware or software is easy, but buying services that I could do myself always seems to be a difficult decision. As a consultant, I should be able to justify this, since I believe that specialists can do things faster (and cheaper) that non-specialists.

In a discussion with a client last week, I got a new perspective. Small business ownersdon't have a lot of time, and any time spent away from earning money is a waste. Most of us earn more in an hour than we gain from doing other work ourselves. Consider this:

• A specialist can probably do a job twice as fast as a non-specialist, because they have done it so many times before.
• A specialist has made many mistakes in the past, and has learned from those mistakes. That means that they can prevent mistakes from happenning.
• A business owner cannot focus his or her attention on a single activity. There are too many parts of the business looking for attention. You can't tell a customer to wait, because you've got more important things to do. This means that you work in fits and starts, constantly interrupted. It takes much longer to get the job done.
• If the job is really important, can you really afford to do it later?

This means that it will probably cost you three to four times as much to do it yourself, and may produce fewer results.

My client explained to me what I helped her with. I helped her to look at her operation with a new perspective, looking at how the organization could be more productive. This brought new opportunities into the discussion. Specifically looking at establishing standard processes which saved her time. When it was time to look for solutions, I was able to bring in new specialists, saving her time in finding and evaluating proposals. My experience in a broad range of technology allowed me to translate proposals that were essentially technical proposal into business terms. This again saved her time, since she didn't have to struggle to understand what the technicians said.

The biggest benefit that she described was time. Time saved by developing processes, time saved by finding opportunities, time saved by bringing in solution providers. All of this time could be devoted to developing the organization, upgrading technology platforms and generally moving ahead. Doing it herself would have increased the time requirement. There is one problem with time. There is never enough, and once it's gone, we can't get it back.

I knew this. We all know this. But why do we tend to act the opposite way?

Are you Wasting your Software Investments?

I speak with many business owners that are frustrated with Information Technology. They start with seeing opportunities in software to help their business, but get frustrated because it doesn't deliver what they need. They then go on to try another and another, hoping that they will be more successful.

While some software products may be more suitable for one business or another, the problems seldom have anything to do with the software. The software is working for someone, so it can provide value. The problem is usually with the way the software is used.

Problems come from a conflict in business processes, the impact that software has on processes and people, and reality. The reality of a software installation is that business is going to change, and that change will take effort, usually at a time when you can least afford it. These issues are the source of the problems and the lack of results.

Getting back to the waste question, why do we allow this waste to occur? It is waste because we have spent money to buy and install this software and we aren't getting anything for it. Even worse, as we move on to the next software product, we are adding to the waste.

The problem with software waste is that it is usually invisible, except on the Balance Sheet. Software is stored on a computer's hard drive, and nobody sees it. There is another type of waste created by the software and that is productivity. Because we have installed the software and we aren't using it effectively, our people are less productive that they could be.

In a plant, when we produce inferior products or have too much inventory, it is often obvious. It piles up on the floor and is visible to everyone. Software waste piles up in invisible places, and productivity waste disappears (lost time is gone, never to come back).

Another form of waste is software functionality. As your business grows and changes, the software you already have may be able to provide you with new functionality that you have already paid for. You may have the opportunity to turn on this functionality. While it's not free (no effort to enhance your business is free), it won't increase your costs but can improve your bottom line.

Don't let your Information Technology Investments add to the pile of waste! Look at how the softwarean can be used to upgrade your business.

Recession and Opportunity in Information Technology

A lot of talk is going on about the current state of the economy. Most people see it as a negative thing and assume that they will have difficulty maintaining sales, and will have to cut costs and reduce staff.

While this is a possibility, it is alaso an opportune time to improve your business operations. Improving business operations can reduce your costs, increase the quality of your products and services and and put you in a better position to maintain sales and be more ready to take on more business when the recession is over.

Let's look at the situation when things are going really well. We are so busy responding to customer needs that we do anything to deliver. This often means bypassing existing processes because they slow down deliveries. We also ignore excess inventory because we need more to satisfy customer needs. Over time these excesses cost us money and create excess overtime and waste.

As business slows down, your people have more time and while you can't afford to let them go yet, they have more time available. They are also more receptive to change, because the recession forces us all to think about it.

This is an excellent time to start to look at your business processes and how they can be improved. You have the time. You may also find ways to reduce costs. You may find ways to improve the quality of your products and services. All of these improvements may allow you to keep more customers because you have the ability to serve them better. A recesion provides a buyers market. Better capabilities means you are better positioned.

Another opportunity is your existing software. Usually when we buy software to run our business, we buy it for a particular reason. We get what we want from it (if we are lucky and do it well), then we move on. We seldom go back and look at the software to see if it can help us solve other problems.

Our business changes over time. As we grow, our needs change. These needs may be satisfied by software that we have already purchased. We don't have to evaluate new products, we don't have to install and learn new software, we just try the new function and see if it helps. That is like found money!

Nobody likes a recession. However, with every problem comes an opportunity. A recession provides an opportunity to improve your business so that you come out stronger and more competitive when it is over.

Why the traditional approach to IT staffing doesn't work

I see many small businesses that hire technical staff to support the technology used by their business. They often have been poorly served by sales people or buy technology from their local business or computer store. Things invariably go wrong and they don't know how to solve the problems, so they hire someone who is comfortable with technology and can fix the problems without having to call in tech support.

This makes the management more comfortable because they don't have to worry about technical problems. Someone else is responsible for handling it. In most cases, these businesses end up with reliability problems and problems that impact productivity of the business.

Why is that?

First of all, there are so many types of technology out there and no single person can be an expert in all of them. The result is that anytime something new has to be looked at, a lot of time is spent understanding and evaluating tools. This time could be saved by getting help from an expert.
Secondly, solving problems requires experience. So many things can go wrong. It can take a lot of time to identify the problem and get it fixed. In a small business, it is not often that the same problem occurs twice in a row, so your onsite staff starts again on every problem.
Thirdly, if you have a recurring problem, it has a major impact on your business. Your onsite staff may become expert on resolving it, but it still has an impact on productivity of the staff member who has the problem and the support staff that works on fixing it. Wouldn't it be better to prevent the problem in the first place? Most small business support staff don't understand the value and need for preventative maintenance nor what to do.
Lastly, if you have someone who is really good, they are gaining experience on your dollar. As soon as they have that experience, they are more marketable and you either have to pay more money or hire another untrained staff member.

A computer support company can be a much cheaper alternative, even though the rate that they charge is higher that an employee. This is not the case for all companies, but it is what you should look for.
They have a number of people and have a breadth of experience that you cannot afford in your business. You can get an "expert" in each type of technology. It will take much less time and effort to investigate and install new technology.
They see many different installations and see problems over and over again. While they may struggle on the first occurrence, they quickly learn how to solve these problems on somebody else's dime, not yours.
They learn what causes problems and how to prevent them. They can come to you with a preventative maintenance program, that ensures that your equipment keeps running. This increases your reliability and the productivity of your staff.
You don't have to worry about losing a staff member. Your support company is responsible for that. They can pay higher wages, get more qualified staff and keep them happier because of the range of challenges.

Hiring an IT support company can be as challenging or more challenging that hiring staff. It's important that you identify your needs and determine whether the company can meet them, and not put you in a tougher bind. This requires a good process for identifying the benefits of good management and ensuring that your supplier can deliver. Unless you have experience with doing this, you can get in trouble. Get somebody to help you structure this relationship.

Are employees laying bricks or building a cathedral?

There is an old story about three bricklayers, who were asked what they were doing.
The first said he was laying bricks.
The second said he was buliding a wall.
The third said he was building a cathedral.

Many people think they are doing their jobs when they do as the first bricklayer said. This is all most managers expect them to do. That is the cause of many problems and the reason that many managers are busy. They have to handle all of the issues caused by people who are simply laying bricks.

Just think of the third bricklayer. Is he likely to leave issues hanging? He is building a cathedral! You can't build a cathedral if you don't know what it takes to build a cathedral. The third bricklayer will do everything in his power to ensure that the cathedral will stand for centuries. The job of the manager is much simpler, as he knows that the bricklayer will not leave new issues to be dealt with every day.

What does this have to do with business?

I work with small businesses and help them to get a better return on their software investments. Invariably, I find them struggling with the software, because they may know how to use the software, but they don't understand how that helps the business to succeed. I work with them until they understand the business process and how they must work together to achieve the goals.

Two things happen:

• They understand what impact they are having on each other. They look for ways to eliminate negative impacts.
• They find that when they work together, the job is much easier for all of them. It is also easier on the manager, because he doesn't have to watch their every move.

At one company that I recently worked with, they found both those results. The comment made by one of the employees was that "he now understood all of the layers of the BIG MAC and why they were necessary".

This company got out of their silos and started to work together to achieve better results for their company as welll as made their own jobs easier.

When Should you Focus on Process Improvement?

Somebody asked me that recently and I had difficulty answering that question. My view is that you should continually focus on improvement. If you do, then you will minimize the amount of waste in your business.

However, that doesn't help someone who wants to start. There are good times and bad times to start. I'll focus here on good times to start. Once you have it working, it is much easier to maintain.

The good times are when there are major changes in your business. The timing is the same whether you are in a service business or manufacturing.

Typically, when you start a business, you develop solutions to meet your customers needs. The product or service varies depending on what the customer asks for. In your search for customers, you try to be flexible and provide it. This type of business is classified as a custom business. You deliver custom solutions based on your customer's needs. Your business processes are often customized as well.

As your business grows, you find that most of your customers are asking for very similar solutions, so you recognize that you can be much more efficient, perhaps more effective and deliver a better quality service or product, if you standardize. You look at ways to standardize the solutions that you provide. If you standardize your services or products, you also need to standardize your business processes to support it. If not, your business will become more complex and you will waste resources. This business is delivering standard products to a niche market.

The next stage is the mass market. Here there is not only a standard product, but also a very large market. In order to produce in these volumes you need not only standized business processes, but efficient ones as well. Mass market products are usually much cheaper. The business processes that support them must also be much more efficient.

When products are widely available, there is seldom enough market to justify a large number of players. onsolidation is the result. With consolidation, comes mergers. When two or more companies merge, there is significant upheaval. The business processes are different, the software used by the companies is different and often the company culture is very different. Attempts to merge without a review of business processes can be fatal.

To answer the question of when should you focus on your business processes, we look at the changes in the business model. There are three critical situations:

• When you move from custom to standard products.
• When you move from standard to mass market.
• When you enter a merger or joint venture.

Each of these is a critical stage. In general, I have found that growth beyond about 15 people makes it difficult for any manager to keep everything in his head. He needs good business processes which provide him with the information that he needs to manage his business. Good processes require software that support the process.

Too busy to focus on process improvements?

In many of the assignments that I take on, I find that small businesses are struggling to make progress and move their business forward. The primary reason that they give is that they are too busy. When business is good they are run off their feet responding to customers' needs (often reacting to service problems) and when business is bad, they are too busy looking for business and finding ways to cut costs.

In many cases, they have made decisions to upgrade their business by buying software. Installing software takes a lot of time and effort. It isn't a silver bullet, automatically changing your business for the better. When it comes down to the hard work of implementing, the business is too busy dealing with day-to-day issues, and does not complete the implementation successfully.

Recognize that being too busy is a symptom of problems. Yes, on any one day, priorities arise that keep you from achieving everything you want to. But if it happens every day, something is wrong. A good reason is that your business has grown very quickly and you are responding to customer orders. However, if you don't look at how you can support this level of activity, then you will quickly deteriorate into the second reason.

The second reason is that the quality of service is a problem. You are constantly dealing with customer complaints. If that is the case, this is a huge waste. You must respond to this in the short term, but prevent it in the future. If you don't, you will lose customers or your costs of delivering service will grow and profits will drop.

As an owner or manager, you can't afford to let this happen. Waste is a natural occurrence in a business. You take care of your customers and as your business changes, processes are forced to change. As these processes are changed, waste gets introduced, because only part of the process changes. What no longer is required often remains because nobody has looked at it. This waste is easy to understand in large organizations, but assumed to be small in small businesses because everybody "knows what's going on". On the contrary, small business often starat to miscommunicate when there are about 5 people involved. It hurts more as it grows, often being very painful as you reach 20-25. Unless you stand back and look at how your business runs, the problem is there.

Stepping back and looking at your business can be very difficult when you are reacting to what's happenning. "When you are up to your neck in alligators, it's difficult to remember that you are there to drain the swamp". Often the business owner will need help to remain focused. The help can come in the form of a business coach or consultant, a mastermind group or mentor that can help you to remain focused, as well as provide advice and support as you make changes.

The benefits are significant. Some studies have shown that 30-40% of activities and supplies do not help to deliver value to your clients But they do add to costs. Looking for a bigger profit? Improving you business processes can be a major source. If you are looking at software, don't automate the speed at which you can produce this waste. Fix the process, then get the software to improve on it.

When you need Information, Think Process

Every business neds information to operate effectively. Much of the information that we use to make decisions is subjective, based on what we think is happenning, or what has happenned in the past. As your business grows and develops, this changes, but our thinking about it often doesn't.

A set of studies done by Kodak described the following:

• 20% of the data that we have in our business is structured.
• 80% of the data that we have is unstructured.
• Unstructured data is growing at a rate of 36%, which means that the problem will continue to grow.

What is unstructured data? Unstructured data is data that is disconnected from our business processes. It is produced by our business processes, but may not be captured automatically nor stored in a consistent form.

What does this mean? It means that when we need this data is required, time is wasted searching for it, or recreating it or finding it. This is time wasted or decisions being made based on outdated or incorrect information. A further element of the study, showed that:

• Most Managers spend 15% of their time searching for information.
• 42% use the wrong information once per week.

Before you suggest that this is a big business problem, I have found that small businesses have the same kinds of problems. When I start to work with an organziation, I ask them what data they have in electronic form and try to analyze what's happening. Invariably, I am able to tell them something that they were unaware of. The problem is that the data is typically not 100% accurate, because it was not captured by a process that was designed for that purpose.

I often see decisions being made due to a lack of information. Attempts to collect the information often fail (except in large businesses where there are resources to do it) because staff are too busy delivering service and they must take time away from this to collect information. This seldom works very well of for very long.

The solution is to make data collection a by product of the process that you design. Most software has an assumed process built in. When you use it the way it was designed, it captures all of the data that you need and allows you to provide the information that you need to make decisions. When you only use the parts that you think you need, you lose all of the information you need for decision making, because not all of this data is captured.

The first thing you should do when you decide to buy new software, is to look at your business process (right after you define your goal and decide which process will help you deliver it). Identify how the software will help you meet your goal, including the information that you will need to make decisions or understand when you are having problems meeting your goal. Collecting the data should not be a major effort. It should be a byproduct of the process.

So when you want information about your business, think process. Design the process that will deliver not only the functionality that you are looking for, but also the information. Use the software as a tool to help you get there.

Information Technology is like a one legged stool

Every business today uses computers. It's hard to run a business without one. Even if you have a very simple business, you need to communicate with your clients and your suppliers and they force you into this world. Most businesses look at computers to improve the waay they do business. They look to productivity improvements, or functions that cannot be done without them.

Most of the technology that we buy is underutilized. The price of hardware has dropped so much that is is cheaper to put in too much hardware than to provide smaller alternatives. Software is the same. It is cheaper to distribute a single piece of software than to try and maintain multiple copies. So we have much more than we need.

There are two problems with this excess capacity. First, the software and hardware is more complex and harder to maintain. Each of us pays for this complexity. We may think we are getting value for money, but unless we can use it, the complexity adds up to more costs. In a large business, this may be manageable. In many small businesses, this can add up to slowdowns, extra downtime, extra support costs, productivity loss.

The second problem is that the complexity makes the software more difficult to learn and implement. I see many small organizations that fail to achieve the benefits from the software they bought. Part of this is caused by the fact that there are too many features. Part of it is caused by the expectation that the software is bought as a "silver bullet". Install the software and it's magic. Things will be better. It doesn't happen. It takes a lot of effort to get value from new software. Some parts may be easy. Getting real value is not.

I see Information Technology as a three legged stool. I will ignore the hardware at this point, because it doesn't provide value. It simply allows you to use the software. I will also ignore tools like Microsoft Office for the moment.

Leg #1 is the business software. It can be as simply as Quickbooks or as complex as SAP. Business software comes with built in business process assumed. It expects you to work in a certain way. If you do, then you get the best return. It helps you to do the job. If you don't, then it can make your life difficult, whether by forcing you to do things multiple times or by getting bad information because of the quality of data entered. If you look at your business process before you try to implement, you will be more successful.

That leads us to leg#2, the business process. The business process is how something moves through your organization, say from order to cash (your real goal is to get paid for the product or service that you deliver). If you understand all of the steps in this process, and understand how the software will help you to make that process more effective, then you will get significantly more value from the software. In many cases, even when an organization has looked at its business process, they encounter problems. The reason is that when you change business processes, you affect people. It's often been said that people resist change. That is true. People don't want to change if they don't see the value! Why should we? We are comfortable with what we do, we are more efficient when we know what we are doing, and we know how to prevent errors. Give me a new process that I don't understand, I will be less productive and I am more likely to produce errors. Why should I change? OK, some people like change for the sake of change, but we can only take so much. If you wake up one morning in a new house, have to drive a new car and go to a new job, how comfortable are you?

This leads us to the third leg: People. If you don't consider people, you will be less successful. I have seen many software projects that redesigned and implemented processes without involving the staff that did the job. The designs were based on senior staff or management input, and the process was automated to do what they wanted. The problem was that the process was not based on current reality. It was based on old experience (Senior staff and management don't do the day to day job), or on ideas of how things should work. The staff tried to work with it, but had to create all kinds of workarounds to get the job done. This reduced productivity, created frustrations with the staff and made them resent the change. Is there any doubt as to why people resist change? By involving staff in the goals of the change, in the redesign of the process and in how the software can provide tools to improve the process, you end up with a more effective process and less resistance to change.

So there you have it. A stool with three legs: Software, process and people. All three are critical for success.

There are two other elements that you will see on a stool and these are important as well.

• The first is the goal. The goal is to have a place to sit. The seat describes the goal of the project. This goal is a business goal, not a technical one. See yesterday's post for examples of the business goal. It's important that the goal be well understood and repeated regularly. Try sitting on a stool without a seat, if you don't understand. I have seen many stools without a proper seat.
• The second is support. Ever seen a stool without supports between the legs? Doesn't last for long does it? As with the stool, you need support between the legs (Software to people and process, process to people).

The most important thing is Focus. In real estate, they say there are three things that are important: Location, location, location. In IT projects, it's: Focus, focus, focus.

What is Business Value from Information Technology?

I've made a number of posts to this BLOG talking about getting business value from Information Technology. In discussions with different people, I have found many different interpretations. I've often commented on the fact that many IT projects have failed to deliver business value, and often get lost in "successful technology implementations". In these cases, the operation was a success, but the patient died.

In order to clarify, I want to describe business value in terms that might be better understood. Business Value can be measured by:

• Cash Flow
• Sales
• Cost of Sales
• Cost of Administration

It's that simple. There are many aspects of each of these, but if you have enough cash to manage your business, you have adequate sales, and your costs are in line so that you can make a profit, you are OK.

When you take on a technology project, you are trying to drive improvement in one of those elements. If not, why are you doing it? You may be doing something to reduce waste, improve quality, reduce inventory, improve productivity, but the real goal is to improve one of these four items. If your expenditure in technology or other services doesn't return value here, then it is a failure.

An assignment with a client recently, outlined the following problem:

• The company had installed software a year ago yet was not using it effectively.
• They took too long to issue invoices - weeks, sometimes months.
• They had opportunities to grow the business, but were restricted due to cash flow.

The focus of our actions was on improved cash flow. Within three months, we were able to get the software operational, tracking business from order to cash, and significantly improving cash flow. With improved cash flow, the business can now invest in equipment that will provide growth in sales.

The world is not static. The business was constantly changing while this activity took place. Traditional methods of measuring benefits would not have been possible. What was obvious, is that the order to cash cycle was improved, allowing the business to invest in growth. The improved cash flow was measurable.

Bringing the world of Information Technology, Business and Health together

I attended a set of seminars at BITNET (Business and Information Technology Network) yesterday. The presentations were focused on Health Care and its use of technology, and the progress (or lack thereof) that was being made.

A lot of interesting presentations, especially if you are in the Health Care field. But what does it have to do with Small Business? Part of the presentation included the efforts of McMaster University in bringing together three part of the University to develop this area. They have created a structure that brings their Business School, the Health program and their Information Technology program to address the issues.

What a concept!

Much of my BLOG has talked about bringing business and technology together to provide business value and measure success, not by projects or successful technology implementations, but by successful business outcomes.

With McMaster's program, they have brought the needs (the Health Care industry) for information and decision support together with the tools (information Technology) and the Business Management into one group. They have the opportunity to bring business reality to the Health Care needs and Information Technology.

I have seen too many situations where needs are defined as all of the things that I'd like to have, and the solutions developed by an "I can do that" attitude. The results are often a complex technical solution that does little to solve the business problem at too high a cost.

Small Businesses don't need a large, complex organization to develop solutions. They do need technology. They do need to understand the business processes they are addressing and the business outcomes to be delivered. And, they need to keep control of costs. Too often software is installed and business results aren't delivered.

In the Health Care industry, MacMaster is trying to solve that, and I applaud them.

BITNET is expecting to post the presentations on their website. If you want to check them out, see BITNET. For McMaster's eHealth program see eHealth.

Computer Training and Support - Return on Investment (ROI)

Many businesses look at training as an expense to be cut whenever times are difficult. They also look at computer support in the same way. They don't get support unless they have no other alternative.

This article that I found talks about these two "expenses" as something that should be looked at as an investment. Although much of the content is worthwhile, the challenge is to show that benefit. Some of the recommendations in terms of in house support is something that I disagree with.

First let's look at training. A lot of the article talks about measuring the value of training. This is one of the BIG issues and is the primary reason why training is often cut when it is needed the most. How do you measure the value of training. The article talks about how much people have learned. Is this measurable? The real issue is that training is of little measurable value unless it returns something to the business. Generally, we know and understand very little about the capabilities of the software that we buy. There is plenty of opportunity to use much more of the software. But whether we know how to use it, whether we use it, and whether we get business value from it is the important question. If we start with the end in mind (getting business value), then we can get a return on our training investment. If we become more productive, if we get information we didn't have before, if we are able to increase revenues, then we have created value. This is how we get ROI! Training does not provide value! The results that we achieve by the training is what is important. You canlook at the article to see how you can make it happen.

The second area referenced is support. The article recommends that every small business find themselves a good computer support company. If the support company is proactive (fixes problems before they happen), then what you gain is increased productivity because you don't sit around with failing equipment. You also will get better performance and response time. You get better technical skills and don't spend your time on trying to hire capable computer technicians. Unless someone deals with computer support every day, they aren't good enough. Your son or the neighbour's son, who is great at games and social networking is not good at maintaining a stable environment. This savings will far exceed the cost of preventative maintenance.

However, I disagree with a few recommendations related to what should be done in house vs outourced. For inhouse support:

1. I agree that staff should maintain a list of all day-to-day problems. This is necessary to identify whether adequate support is provided and whether it is getting better.
2. I disagree with running of tape backups should be done in house. In house staff are focused on day-to-day production. They don't understand the implications of backup and recovery. When something goes wrong, they invariably do the wrong thing. I have seen many cases where backup fails and they are "too busy" to take care of it, or have a problem with testing recovery, but don't get it fixed. We now have remote backup services that can be monitored and managed by a supplier.
3. I disagree with handling all first level Microsoft/Desktop issues. Many problems are created by staff trying to fix problems. If the problems require fixes, they are installed improperly and your supplier doesn't know what was done. If the questions require a how to, the scope of the solution is based on the skills and knowledge of the person answering the question. The training portion of the article describes the problem here. Most of our staff don't have a good understanding of the software being used. So look for expertise and measure the results.
4. I disagree that strategic planning should be done by the outsourcer. This is a business issue! The business may not have the technical skills to define the technology strategy and they will need support for this. But they must define the business strategy. Their supplier can help them to identify the technology that will help to deliver it.
5. I disagree that the outsourer should develop the Disaster Prevention and Recovery plan. This is a business issue! Business recovery involves much more than technology. Only the business managers understand what is needed. The supplier can help to develop solutions.

The two issues identified are valid as well as a lot of their responses and recommendations. If you want to see the full article, check

Why IT Training and Support Makes Business Sense

Business Analytics and Business Process

Business analytics is a fancy name for getting information about your business. Most small businesses (the size is dependent on who you talk to) will probably not want to talk about business analytics because these projects typically have a big price tag. But whether they are big projects or not isn't the issue. The issue is whether there is value in getting information about your business to allow you to better understand your customers, your costs, etc.

Most small business owners think they understand their business, and they do, to a point. What is surprising are the things that they don't see. As a business grows, things change and from the owner's standpoint, they still look the same. One of the first things that I do when I start an assignment, is to look at data that is already being captured in a company. I also interview staff to get the personal perspective. I invariably find things that surprise owners and managers. Through the interviews, I also find out why this is happenning and what may have caused the change. This helps me to provide advice to the owners and managers on how to address the issues that I found. This isn't even close to what business analytics is doing, but the concept is the same. There is no way that a small business could afford the cost associated with something of significant depth.

Why did I title the article business analytics and business process? Because I found an article that talks about the failure or success of business analytics is based on an understanding of business process. If you don't have a detailed understanding of your business process, you can't get good data and you can't get a good analysis of that data. Bad data means poor decisions.

If you develop good business processes, ensure that your software supports your business process to give you good data, you can analyze that data to help you make good decisions.

Thinking Outside the Box

We have all heard the term "Thinking Outside the Box". We know that it is thinking differently, but how do we do it?

We need to start by what is meant by the box. A box has four walls (and a top and bottom). When we want to store something in the box, we must put it within those four walls. We can't put it outside the box, because then it won't be stored.

Our thinking is limited by the same four walls. Everything we know creates the four walls.

Why is this important? If you are limited by what you know, you can't think outside the box! That's why many inventions come from people who are not focused in the area where they invent. They have a different background (a different box). They think "outside of your box".

What can you do about this? There are many ways, including reading books in fields, taking courses, hiring a coach, talking to suppliers, etc. Having a mentor helps you think about your business and challenges differently. Often you can solve your own problems by having them ask questions. As you try to explain, you come up with the answer.

In my case, I do a lot of reading, I work with different types of businesses and get to learn as I help them. I am also a member of BNI (Business Network International) as well as an Ambassador with BNI. This allows me to visit other chapters. Each week, one of the specialists within the chapter gives a ten minute speech about his/her business. I have been amazed at how much I learned about subjects that I knew nothing about. My learning has not allowed me to be a specialist at these services. It has provided me an insight into problems that I may encounter in my business or in my clients' businesses. When I encounter these problems, I know who to go to. I know someone who specializes in solving or preventing this type of problem.

Have problems that you don't know how to solve? Need to think outside the box? Start to network and find people that can help you do it? It can save your business!

SOA - Another Technical Solution with the same issues

IT organizations and specialists come up with new buzz words and three letter acronyms all the time. One of the current ones is SOA - Service Oriented Architecture. At this time, it isn't of interest to small businesses, but the issues raised follow the same pattern that can be found in all IT related projects.

A recent article talks about ten mistakes that are made with SOA projects:

1. Failure to explain SOA's business value.
2. Underestimating the impact of organizational change.
3. Lack of strong Executive sponsorship.
4. Attempting to do SOA on the cheap.
5. No SOA skills on staff.
6. Poor project management.
7. Viewing SOA as a project instead of an architecture.
8. Underestimating the complexity of SOA.
9. Failure to implement and adhere to SOA Governance.
10. Letting the vendor drive the Architecture.

These issues are true for SOA, but they are also true for any IT project. SOA is new to most IT organizations. In the same way, new business software is new to a small business. Change the acronym to anything else, and you will have the same issues. In the past 30 years, significant effort has been expended by IT organizations to solve the overall problems. The failure rate is still very high. Even worse than absolute failure is that those organizations that feel that they have succeeded, do not get as much value from the implementation as they could.

As the article explains, the biggest issues relate to people and process. This is true of all technical projects. If these issues are not addressed, your chance of failure is high.

The full article can be found at: http://www.cio.com.au/article/253821/10_mistakes_cause_soa_fail?pp=6

Are your systems too complex for your staff?

Is your software doing the job that you expected when you bought it? When a small business buys new software, they are usually looking for something that they don't have. They need new tools, improved productivity, reduced cost.

Most software products are built over many years with features and functions added to meet the needs of their customers. Each customer has unique needs. Some features are used by most businesses, but many find little use for most of the features. The larger companies are most likely to use more features. If you look at something as basic as Microsoft Office, how much of it does the average user know and understand. Most people never get beyond Word and Excel. Even then, how much do you Word. In my case, I used Word for over 10 years before I ever needed the Table of Contents function.

What does this mean to a small business? It means that you have a very complex software product. There is too much of it to learn and you don't need most of it anyway! The real question is "Do you know the features and functions that can help you?". If you don't, you are wasting money! You wasted money because you bought more than you needed. You are wasting money because there are functions that could help you be more productive.

This problem is not helped by the fact that software suppliers train you on the basic functions (because most people need them), but they seldom understand the real needs of your business. So they don't train you on functions that may be of the most value, because they don't know.

What does this mean to your business? The complexity can affect you in several ways:

• Your people are unproductive because they are doing things in an unproductive way (there are simpler ways of accomplishing the same thing).
• They don't take actions that could be of value because it takes too much time.
• They don't take actions that would help because they don't even know that it is possible.

How do you solve this problem? The best way is to look at your business processes before you buy software. If you look at your business process, you find what is working and what is not working as well as it could. You can streamline the business process. If automation can help, you can investigate software that can help you solve that business problem. You evaluate the software based on what it will do for your business and how easy it is to implement (not just what your software supplier tells you). When you buy, you won't buy what you don't need and your implementation will go much faster, thereby reaping benefits more quickly.

What if you've already installed? Can you still gain the benefits? You can gain major improvements by reviewing your business processes and how well they are working. Then look for ways to exploit what you already have. You won't save on what you've already invested, but you can still gain major improvements in productivity and quality of service.

Why should you focus on your business processes?

Business Process Management is a big thing in large businesses. It is a hot topic and many large companies have attempted to improve their business processes. There have also been many failures and I've mentioned some of the reasons in yesterday's BLOG.

But what about small business? Is there really any value in it? I recently came across some statistics that warrant a review at the point. This was from a study of business process management and two numbers are worth mentioning:

• Most managers spend 15% of their time searching for information.
• 42% of managers use the wrong information on average once per week.

The first number says that managers are not as productive as they could be if they have information at their fingertips. The second says that they are using the wrong information to make decisions almost half the time. This has a huge impact on their performance! Before you say that this is probably in large businesses, I have recently had an experience with a small company that indicates otherwise. It may be understandable in a large company because there are so many people involved.

Why does this happen? What is the impact? What does this have to do with Business Process Management?

The business processes that I saw were simple and straightforward. It involved all of the activities in a construction company from estimate through to billing and receivables. This is a straightforward process, so you would think. The business had grown and was no longer visible from end to end by one person. Estimates were made for new jobs verbally. Job scheduling came from what individuals remembered about these estimates. Job scheduling was difficult and often crews might sit idle while salespeople looked for new jobs. When the jobs were done, paperwork for materials and labour were submitted to the office. Because payroll and payables needed action, this is where the paperwork went first. Project Managers searched for the paperwork in order to produce the invoices. Since they were busy, they didn't have time to search, so days and weeks often passed before invoices were prepared. This created a cash flow and receivables problem.

The were two major problems identified in this process. Work could not be properly planned, delaying revenues and sometimes seeing work crews idle. Invoicing was delayed. Cost kept piling up, but revenues were slowed.

By focusing on the end to end business process, we started tracking all jobs when requests originally came in. We have a written record of the size of the job, and its priority. This allowed for proper planning and identified the potential times when crews might not be busy. It allowed the sales people to get out early and find new work, before the crews were idled.

We changed the flow of paper, so that completed jobs were highlighted and the necessary cost information immediately sent to Project Managers, allowing them to complete their costings and proceed with invoicing.

The net result was better productivity of work crews, faster invoicing and better cash flow. I think any small business would like to have that.

Business Process Management - Costly and Vague?

I attended a seminar recently that talked about Business Process management. Some of the views of this is that projects to implement Business Process Management (BPM) were considered by many to be costly and vague.

While it's true that many projects undertaken by large business are exactly that, I question whether it has to be.

Firstly, they are costly because they are taken on as huge projects that are going to change the way a company does business. Like any major change, they are complex and require many changes in many people, if they are to work. This kind of change will never be taken on by small business. They can't afford the disruption and the failure. Because they are so large, it's like trying to boil the ocean. It may be possible, but it will take a lot of heat concentrated in many places in order for it to happen. It's much easier to boil water in a pot. In the same way, small projects that address a small part of the business are more effective. It's easier to focus on one process than a whole organization. Continuous process improvement (doing it in small chunks) also gets people comfortable with constant change, eliminating one of the barriers.

The second issue is the focus. In many cases, when organizations talk about BPM, they talk about the process and the activities of the process, they don't talk about the business value that will be delivered from improvements in the process. Try talking to the average business person about process and you will get a blank stare. If you don't, and you ask what is meant, you will get many different answers, none of which are helpful. Why are you taking on a process improvement project? If it is not to add business value, then why do it? So, if you are to be successful, you should focus on business value and measure business outcomes that provide business value. Real estate professionals will tell you there are three important things. They are: Location, location, location. For Business Process projects, the three important things are: Focus, Focus, Focus .....on business value. This focus brings the project down to a level where everybody understands it. It becomes real to them.

Do you want to improve the quality of your services? Do you want to improve productivity? Do you want to reduce costs? Then process improvement is the approach. But keep your focus on business results.

Cost Cutting or Software and Process Improvement?

With the state of the markets lately, many small businesses may be concerned and their ability to withstand the changes.

A recent survey by Harris Interactive has found that 63% of small business owners are extremely concerned about the future of the economy. Their second biggest concern is cash flow.

In these circumstances, many businesses go out and start cutting costs. In many cases, these cuts are across the board, cutting all costs equally, and stopping all investments.

During a slowdown, business owners have to take a close look at their costs, but they need to look at cutting costs from a return on investment perspective. In my experience, many businesses don't look at many of their ongoing expenses. They pay far more for non-essential services than they need to. They also don't gain as much as they should when they do invest in new technology.

When business slows, there is the opportunity to take time to re-evaluate what is happenning in your business. Are you getting the best deals on non-critical services? A colleague of mine reviews the non-primary services for clients and only charges when he finds savings. His skill and knowledge, as well as experience with dealing with suppliers allows him to get better deals for clients, often without changing suppliers. Every cent of the savings goes straight to the bottom line.

Another area of savings opportunity is with technology. Most businesses buy software and implement only small parts of the features. This is understandable as the complexity and variety of features available in most software are far too much for a business to reasonably grasp in a short period of time. However, most businesses never get beyond the initial implementation. Once the first stage is completed, they stop because they get too busy. The software supplier leaves, because their software is installed and they have their money.

There is a lot of function left on the table, and much of this function may add value to the bottom line, without further investments in technology. The key here is too look at your business problems, see how your processes could be improved and implement some of the new function.

There are a number of benefits to this:

1. You reduce costs during a period of slow growth.
2. You get the resources to make the improvements because of the slowdown.
3. You reduce your costs for the long term, putting you in a better position, when the economy recovers.
4. Your improved processes deliver improved customer service at a lower cost, allowing you to grow your business when others are cutting back.

Many of the projects that I have undertaken have been to deliver improved customer service. In every case, we reduced costs while delivering improved customer service. I believe that this will always be true. Poor customer service costs money. It loses sales. The source of the problem lies in your business process. If your process is bad, it takes extra effort to deliver good service.

What software is right for your business?

This question is asked by many business owners. Most software suppliers will tell you that they have the best solution. The answer depends very much on your business. More bells and whistles is not necessarily better. Just because a supplier specializes in your type of business doesn't mean that this is the best solution for you.

In a discussion with a colleague yesterday, he identified some of the problems. He is a lawyer in private practice and works by himself. He doesn't have the per minute charge that is common in most large practices. He charges rates that reflect the value that he delivers (what a novel idea!).

He bought financial management software that is specifically targetted to law practices. What he got was a product that is not intuitive, is complex, has far more features and functions than he needs. It has features that would work very well for large practices that charge by the hour and has all kinds of checks and balances to ensure that billing is completed effectively. The problem is that since he doesn't operate this way the controls go against him. It doesn't make sense for him to use the functionality that it provides since it would take more time So he struggles with the software and can't make use of its benefits.

This is similar to a client of mine in the construction business. They bought a software product that does an excellent job at helping a business estimate and manage large construction projects. The problem is that most of their projects are small and don't need these features. The original implementation failed because it took too much time and effort to do simple things. I was able to help them to use the flexibility of the product to do things more simply and they were able to achieve their goals. The capabilities of the software are not totally wasted as they are a growing business and will need these capabilities in the future.

However, a lot of time and effort was wasted trying to adapt to the functions that didn't suit their business.

The key to success in software installations is to:

1. Understand your business goal.
2. Identify how your business processes need to improve to meet that goal.
3. Identify how the software will help to improve.
4. Take small steps. The more sophistocated software may be required in the long term, but start with quick benefits first to get a return on your investment.

More on CRM software installations

Another article on CRM (Customer Relationship Management software) talks about problems with SaaS (Software as a Service). This term can be found all over the IT press and is being hyped as the solution to all your technology problems. SaaS is simply a service where your supplier hosts the software that manages some aspect of your business (This BLOG is an example. I don't install or maintain the software. It's provided to me and I use it).

The primary point of the article is that SaaS doesn't eliminate the need to plan for implementing new software for CRM (or any other business function). The installation, management and support of software is only one small aspect of any software that will run your business functions. The time and effort needs to be put on your business processes and how implementation of the software will improve your ability to deliver the business outcomes that you are looking for.

The key elements of getting results that you want are:
1) Have a business goal.
2) Walk through your business process and identify how technology can improve your ability to deliver.
3) Don't forget the people. Everybody listens to their own version of WII-FM (What's in it for me). If your people don't see the benefits, they will fight it.

The cost of software is only one small part of the project. Lost productivity (as your people learn), conversion, training, consulting support are others. In an article on my website, I outline the costs of buying software.

Click here if you want to see the original article on SaaS and CRM.

Problems with CRM software installations

Customer Relationship Management (CRM) software projects have been problematic. I found an article that mentions some of the reasons why. The list of problem areas is valid, but it doesn't go deep enough.

Here are the six problem areas identified:
1. Lack of strategic goals
2. Accurate and up-to-date data
3. Start slow. Have a staged approach.
4. Ensure the CRM system is actually used.
5. Hosted or on-premise solutions
6. Too much customization can be a problem.

Items 2-4 address major issues and are related. So is #6. In order to ensure that you have accurate and up-to-date data, people have to use the software and use it consistently. The causes of lack of use are primarily:

• Too much data being collected and too much customization

When CRM projects are initiated, there is usually a basic goal: to get more business. When requirements are defined, the potential for increased information is recognized, but not the problems in getting it.

Firstly, people need to change how they do business. They have to collect new data (some may be easily available) and they have to enter it in the system. When and how do they do this? For telephone sales and support, it is usually easy, since the salesperson is sitting in front of a PC with other data about the customer. The situation isn't the same for the salesperson on the road. They have to enter this data when they get back to the office or at home. This cuts into their personal time.

Secondly, the more data that you collect, the more you have to analyze. Since there will likely be a focus on certain goals and therefore certain data, much of the data will be ignored. People will know it is being ignored and will stop collecting. Then you lose out on item #2, accurate and up-to-date data. That causes your project to fail.

Thirdly, when you start the project you have certain ideas in mind. These can be articulated, but you will find that as you collect data, your understanding of your business will change and you will want to change what you collect. With the items that are less well defined, it will be even worse. It is likely that you will find the data has no value, at least in its initial form.

The final reason of too much customization falls into this category. Most software products give you the opportunity to customize to meet your specific needs. If you have a very specific need and know exactly what you are going to get from it, do it. If you don't, leave it for later. Remember that many people have had input into the development of the CRM software. With little or no experience and no specific goal except to collect information, you may find that it is not required. Something else may fill the bill.

Out of the six points mentioned above, two are critical:

1. Have a goal.
2. Ensure that the data you collect is accurate and upto-date and helps you achieve that goal.

If you do that, you are likely to succeed.

Here is the article that I referenced.

The search for perfection in software projects

When installing software to run your business, there is good news and bad news. The good news is that most software today is very flexible and offers a lot of options. The bad news is that the software is flexible and offers a lot of options.

These options offer the opportunity to collect a lot of data that may be useful for your business. This data can be the source of failure of your project.

In speaking to a colleague today, I was reminded of all of the projects that I have been associated with and many others that I have encountered after they failed to achieve their objectives. In many of these, the planning process is the source of the problem. Each project is considered to be a major event. Since it is such a major event, the planners want to "get it right", and they assume that they won't get a chance to do it again. So they attempt to collect all of the data that they can, and anything that might be useful in the future. Anyone associated with making software work is familiar with the term GIGO (Garbage In, Garbage Out). If the quality of the data is poor, then the system just won't do what you want it to do. This results in failure of the project, or failure to achieve the return on investment.

The problem with any data collection system (that's what the software is), is that when you collect new data, you are changing the way people do their jobs. The more that you change it, the more difficult that it is to do the job. People may not be receptive to that change. When the job is made more difficult by requiring that new data be collected, people become more reluctant to do the extra work, until they see value from that effort.

The more data that you try to collect, the longer the planning process takes, the more effort it takes to get the job done, the longer it takes to implement and the longer it will take to get a return on investment. This stretches people's patience and reduces their interest in doing the extra effort.

Many projects, such as CRM (Customer Relationship Management) suffer from this disease. The planners see all sorts of opportunity in collecting data about customers, the interaction with customers. They attempt to get salespeople to collect this information. The salespeople see no return on investment of their time, and they don't collect quality data. The result is a failure of the project on at least some level.

The solution is to narrow your focus. Define the business outcomes that you want, identify the data that is required to deliver those outcomes and implement those features as quickly as possible. Measure whether those outcomes are being achieved and show your salespeople the results. Remember that they will be looking at it from the WIIFM perspective (What's in it for me).

Once you have achieved your desired outcomes, look for the next step and the next desired outcome. Many project planners look at a project from a one time perspective, rather than an iterative perspective. They want to capture all of the data the first time, and that dooms their project to failure.

Technology can drive you crazy and lose you money

When I speak to small business owners and managers and tell them what I do, I find a common reaction. Technology is driving many people crazy. We are faced with so much of it, it provides us with a lot of functionality and yet most of us are frustrated by it.

there are many people who enjoy the toys and enjoy working with technology and solving the problems that they create. However, most of us want to get the value the technology provides, but are frustrated with what we have to put up with to get it.

Every website that we have to sign in to requires an ID and password. That makes sense from a security perspective/ But the format and structure of these ids and passwords is totally different, and in order to maintain security, we have to memorize them. Who can memorize an unstructured combination of letters, numbers and special characters? And they are different for every site and application. Talk about making life difficult.

Then we can go to the challenges that we have with the way software works. Significant improvements have been made with common functions in most windows applications, in that they mostly look the same and work the same, but what business value came from the restructuring with Vista? We have the same functionality and a totally different format! This forces us to learn all over again and makes us feel stupid!

Then we have the common problems that we encounter from time to time: software failure. Although software is much more reliable today than it was a few years ago (reboot was the most effective instruction), we still get failures. Most of the failures are introduced by the software that's added to your computer. Since we all have a different set of needs, our computers reflect this and we have a different set of software. In a past life, I was a software developer and supported large mainframe systems. We had a comprehensive set of tests that we ran to see how well this software worked together. No small business can aford this today, and even though some large businesses try, they are only partially effective.

So how do we cope? We have to work with computers. We do get some value from them. We have to learn how to manage computers, to minimize the frustrations and focus on the value that they provide.

There are four levels of managing computers:

1. At the foundation level, we want our computers to run effectively, be stable and not cost us lost productivity. Check out the articles at http://www.thevirtualcio.ca/ for some ideas on addressing this issue.
2. At the business level, we want to be sure that we are getting the value from the software that we buy. My article on business process can be a starting point.
3. The real value comes from the data that you collect about your business. This happens when you are getting effective use from your software and you analyze the content of what you have collected. This data is the first place I look when I start to work with a company, and also the one that is the least used.
4. Your technology mindset is the most important. How you approach technology, your frustrations and your actions will determine the value that you get. I found this blog entry on Don't Let Technology Psych You Out! that can help to address this last item.

More on software project failures

It's terrible to harp on this issue, but it is such a big issue. Software projects fail to deliver on return on investment. I had to raise this issue again because of another article that talked about it. The article is written from an IT point of view.

IT organizations in large businesses are a focal point for a lot of the work that gets done in a business. 70-90% of IT expenses are typically spent to keep the "lights on". This term is used by most people in IT for keeping the business running. Most businesses are lucky if they spend 30% on new projects. Even when they do, much of the staff's attention is placed on multi-tasking to keep the lights on.

When they do work on new business initiatives, they are focused on the mechanics of the projects: gathering requirements, implementing technology, managing the activities, trying to manage scope creep. Most IT organizations do a pretty good job of managing all of these activities. They are also focused on improving their abilities to get the job done. Project management, requirements gathering, managing scope have all improved over the last ten years, yet this has had little impact on the results.

The issue is not managing projects, it is not managing the steering committees and getting everybody to do a better job. It is a matter of focus!

Most IT projects take on a life of their own and lose sight of the original goals while they focus on the technical issues of the project. The goal may start out to improve productivity of staff in delivering service. A decision is made to implement new software to achieve that goal. From then on, the implementation takes over. The original goal is assumed to be met by the delivery of the original software. However, most projects take longer than expected. During that time, the business needs change; the business managers learn more about their business because of the project and change the requirements because they see a better way. All of the focus is on the development and implementation of the software, that is, to have a "successful project".

The result is that the "project" might be successful (i.e. it was implemented on time, within budget, meeting specifications), but the patient died (the business didn't get the results it needed).

While this article and other studies are focused on large organizations, the problem is the same with small ones. The projects aren't as large, the costs aren't as high, the failures aren't normally as detrimental, however they are still failures. Money is wasted and most small business cannot afford this waste.

We need to focus on the business value! What are we trying to make happen? How will the software help to make it happen? If changes are required because the business changes, then let's make sure the original goals (if still valid), will still be achieved.

The original article can be found here.

Golf teaching us about software installation?

I just ran across an article from AMR Research about the technology changes in golf and how it has not changed the handicap of most golfers by a single point. They compare it to software implementations and the lack of return provided by the constant upgrades in technology.

The article also references a study done by McKinsey that showed the return on investment from improvement efforts:

• Improving management practices (i.e. business processes) improved productivity by 8%.
• Increasing the intensity of IT deployment improved productivity by 2%.
• Doing both yielded an improvement of 20%.

Software is often seen as a silver bullet and is often sold that way by software suppliers. The net effect has been very small. In my experience, I have seen the productivity of many companies go down after a software installation, and sometimes they don't recover. The return on investment comes when you look at your business processes and see how they can be improved. Then apply technology at the bottlenecks.

Don't assume that implementing technology will improve your business, even if it did a great job for a similar business! We can't all be Tiger Woods, but we can always learn from Tiger Woods. Keep learning about your business. Keep working at improving your business processes. When technology comes along that can help in some area jump at it and use it.

If you want to see the original article by AMR Research.

Unlicensed software a source of system failure?

A recent study by The Harrison Group on behalf of Microsoft has found that mid-market companies that have unlicensed software are more succeptible to system failures than companies that acquire their software through legitimate means.

Their analysis simply reports that this is the case, not explaining why. It also references the growth rates and identifies that the companies buying legitimately tend to grow faster than the others.

In my experience, licensing is simply an element of how Information Technology is managed in a business. For many small businesses, computers are looked at as an expense to be reduced. There is little recognition of the value that it can bring to the company. Under these circumstances a number of things occur. They include:

• Acquiring unlicensed software.
• Using software that is no longer maintained.
• Reacting to software problems after they occur, thereby encountering outages.
• Minimizing the cost of support by attempting to fix it themselves.
• Not using the software as effectively as they could.

All of these issues are symptoms of treating technology as a cost of doing business. Typically, costs are minimized, but there is no recognition that outages can cost money. When systems are down, people are unproductive. This can lead to overtime, customer dissatisfaction and lost sales.

When I am asked to help a company, they often have difficulties that are affecting their business. One of the things that I always look for is how is technology being managed. I usually find a break/fix mentality with an emphasis on mimizing costs. I also usually find that too much money is being spent... on the wrong things. And this affects their business performance. Money is wasted in some areas and restricted in others. Two of the areas where costs are restricted is in the purchase of software and in software maintenance. The result is system failures and lost productivity,

While the study talks about the relationship between unlicensed software and system failure , the real source of the problem is the mindset towards technology. It is considered a necessary cost of doing business rather than a value to the business. In my experience, if the value is recognized, the value increases. The report identifies that this does not nessarily increase the costs.

To see the full report, see http://download.microsoft.com/download/D/C/5/DC503630-3EDD-455D-B155-4FCCA6FCCEA3/TCO%20Global%20Final%20Whitepaper.pdf

Marc Lachance, The Virtual CIO, nominated as a Notable Networker

I've just come back from a Mediterranean Cruise and found that it was a busy week. I thought I would start with the fact that I have been nominated by my BNI chapter as a "Notable Networker".

Having been a founding member of my chapter, its first President, and now an Ambassador for Coporate BNI Chapters, I know what an honour it is to have been nominated.

The best way to explain is to reference the letter I just received from the Executive Director of BNI.

"Congratulations!

You have been voted by your BNI chapter members as one of this year's nominees for the chapter Notable Networker Award.

On Thursday November 6th we will be recognizing each chapter award recipient. In being nominated you are clearly viewed by your referral partners in BNI as someone who practices the Givers Gain philosophy consistently. Making that kind of positive impression as a business person is indicative of your ongoing professionalism, contribution and willingness to help others, all of which are the traits of authentic givers.

The Awards Gala is held in celebration, and appreciation of those, like you, who give so much to the BNI referral program.

We look forward to celebrating with you."

Security: another of the list of items of concern to business owners

Technology is a wonderful thing. It creates new opportunities to build a global business from your home. All businesses need computers today, most jobs require computers to get things done, and yet many people pass the job of managing computers to junior staff.

It's understandable that business owners don't want to do the drudge work. Unless you get excited by doing a lot of routine activities, managing computers is not exciting work. It also gets in the way of managing your business. You want to get customers, make sales, bring in revenue. Sometimes, it's hard to relate computer activities to managing your business. The most important ones are the routine ones, the ones that we forget, or don't understand the implications.

This list of security related issues affect most small businesses. They affect large ones too, but large businesses have people who focus on this. In a small business, the buck stops at the business owner. It doesn't mean that the business owner has to be involved every day, but has to make decisions on these issues and ensure that somebody is covering it (either staff or a supplier). If not, the risk is loss of data, loss of productivity and in many cases, loss of a business.

Who is responsible for IT project results?

Many of the business owners and managers that I talk to are frustrated with the results that they get from IT projects. They take too long, they cost too much, they don't do what the business owner or manager want to do. Even with those who are relatively satisfied with the results aren't getting what they should be. I see many businesses who are satisfied with the results when so much more is available..

Why does this happen?

The reason is that there are three conflicting goals in any project. They are conflicting because even though everybody believes that they are all important, they compete for resources, for attention, for focus. The three are:

• Implementation of the software and processes to get the improvements that your business is looking for.
• Achieving the business goals for which the software and hardware was purchased.
• Running the day-to-day business.

The first goal gets all of the attention. Usually a project manager is assigned, and she knows that she must get the software installed in order to have a successful project. If the project manager is your software supplier, his goal is to get paid. What is a successful project? At best, the software delivers the functionality that was requested, at the cost that was estimated, in the time that was planned. Why did I say at best? Because if that is the criteria for success why was the business doing it? A lot of consultants have studied IT project success. In these studies, although there have been improvements over the past ten years, aprroximately 30% succeed, 40% have limited success, and 40% are outright failures. Even with those successful projects, they achieve less than they could have. The project manager typically owns this goal and tries to keep everybody focused.

The third goal, running the business, has to get attention. It is what brings in the money. It pays for the purchase of the software, which is supposed to improve business performance. The first goal competes with the third goal, because they both need resources (people, time and money). Few businesses have periods of downtime that allow them to reallocate resources to projects during slow times. Most of the time, both peak at the same time. In addition, implementing new software and learning new ways of doing things reduces productivity. So you have peak resource needs for the project, peak resource needs for running the business and low productivity. This problem exists in large companies that can afford to throw extra people at the project. It really hurts the small business. The business unit manager is responsible for this goal and tries to keep everybody focused on it.

The second goal is the biggest challenge. the reason all of this started is that the business owner wanted to improve performance. The software was purchased for this purpose. The assumption that was made, was that if the software was acquired, the business would be better off. The question that was missed is "how will the business improvements be achieved?". This may seem to be obvious, but it seldom is. Because nothing was specified as to how it would be achieved, the implementation of the software becomes the only goal. People lose touch with why it is being done. Since the business owner is not involved in the day-to-day activities, and seldom wants to get involved in the detailed activities of the project, there is a big gap.

This gap is the source of the problems. There is a focus on the delivery of the software. There is a focus on delivery of service to the customer. There is no focus on the business benefits.

The solution must come from the leadership team. The owner and senior managers must set the goal (to improve sales, reduce costs, improve service, etc.). They must ensure that everybody understands how the software will help to improve performance. They must maintain this focus throughout the project, because everybody will forget. If they do that, two things will happen:

• The software will deliver the business results.
• They will be surprised by the extent of the improvements.