A Gift For The Executive Who Has Everything

So let's say you've been searching Amazon, ebay, Google, etc. for that special holiday gift for your boss. My guess is, you have not found anything. Certainly nothing unique. Who needs another desk clock, engraved letter opener, set of golf balls, or inspirational poster?

To find the perfect gift, it is most important to consider what the recipient wants. Then, you must determine if it is reasonable to spend the amount of money required to give this gift. While I could continue on dispensing such platitudes, you already know all this.

This year, take a different approach. What has "the boss" been asking for all year? It is probably not a "World's Best Boss" mug. If I had to take a guess it would be to help:

• Cut costs / save money
• Sell more / generate revenue
• Increase satisfaction/loyalty
• Ensure compliance with rules and regulations
• Improve efficiency
• Become more competitive
• Reduce inventories
• Eliminate errors/defects

So this year, instead of a tin of stale cookies, develop an idea and formulate a plan that will help your boss accomplish one or many of these objectives. To help save money, since it is likely that your plan will require technology for implementation and consistent execution, inventory the hardware and software your company already licenses to see what you can use.

Finding novel ways of using existing technology to solve business challenges is a great gift idea for both the receiver and the giver. That, and purchasing new process intelligence and optimization technology from Global 360. Either way, you won't have to battle anyone for parking.

Justifying IT Investments

IT spending is reportedly increasing, albeit modestly (6-7%, 2006; 2%, 2007). It is clear, however, in both research reports and my own conversations with customers, that enterprises are not releasing funds to CIOs and IT Executives without justification and metrics. A recent InformationWeek article explores this increasing trend.

While ROI has long been an important factor in justifying IT investments, the notion of measuring the effectiveness of these investments is a welcome extension. I have always been critical of and frustrated by both vendors and IT departments that do not track technology's contribution to the business. Reasons for a lack of measurement range from the difficulty of the task, to plain old politics. In the end, time and time again, the most effective providers and implementers of technology are those who track its value back to the mission of the organization. Furthermore, the IT employees who always appear to be on the fast-track to promotion are the ones who can provide evidence of the bottom-line results their efforts bring to the organization.

This list of a dozen metrics for measuring IT's effectiveness is an excellent start. The key for any manager, however, is to select those metrics that are best suited to their projects and organization...and stick to them. The ease with which overcrowded "executive dashboards" can be developed can lead to analysis paralysis. This is debilitating, allowing managers to avoid making critical decisions by hiding behind data, and preventing important projects from ever getting off the ground. A healthy balance and consistency yields the best results. Obviously neither the ability nor desire to measure effectiveness guarantees a successful implementation of a particular technology. However, through regular measurement and analysis, an organization can make data-driven tweaks and improvements, learn from mistakes, and foster a culture where IT is credited as a profit-center.

Doing More With Less

CIO Insight released its latest Business Process Improvement (BPI) Survey since 2003. According to the survey, BPI ranks as the "top business priority for IT organizations." This is an increase from their April CIO role survey, where it was the #2 priority.

Since I have been engaged for years in the Business Process Management (BPM) market and directly seen interest rise, I am not surprised by such a high priority designation. What is noteworthy is that for $1b+ organizations, one of the most significant drivers for process improvement is "ensuring compliance with regulations." This is only 2 percentage points behind the #1 driver, "improving productiviey." For smaller organizations, compliance ranks low on the list.

I suspect for larger companies, high-profile legislation and increasingly complex industry rules and regulations, coupled with large distributed workforces, the constant threat of litigation, and personal accountability (courtesy of Senators Sarbanes and Oxley) makes ensuring compliance a top priority. According to the survey, the holy grail is an approach that improves productivity and ensures compliance, all while reducing cost (priorities 1, 2, and 3 respectively). It harkens back to the old addage of "do more with less" with the addendum "...but make sure it's legal."

Hasn't this always been the case? Is any legitimate corporation interested in inefficient processes that waste money and break the law (set aside the Enron's of the world for a moment). It is encouraging to see that IT organizations, long criticized for being a cost-center, are increasingly focusing on technology to help directly improve business processes. In fact, I often encourage customers to use their BPM systems to demonstrate the explicit value of their contribution to their organization.

The Summer Of Consolidation

If you are a frequent reader of this blog, you have likely noticed that I tend to avoid news-related topics. My focus is on questions and issues that arise as I work with my customers to help them streamline their businesses to achieve maximum profitability from their business processes. But I would be remiss if I did not assess the two recent major consolidations in the Enterprise Content Management (ECM) space.

Here are my thoughts.

Open Text Buying Humminbird for $489M
While the shareholders still must vote, Hummingbird has accepted Open Text's takeover bid. This after Symphony Technology Group offered $465M, a bid many financial analysts felt was too low. I am not very familiar with these two organizations, although I have experience with RedDot, but I know that they have been staunch competitors. I suspect the motivation here is to remove a formidable competitor from the market. For Humminbird customers, hopefully they will not be forced to switch platforms and they will continue to be supported. Open Text would be wise to do so. While Open Text offers WCM, it is targeted at a different market and is not nearly as easy to use and feature rich as Red Dot. I would imagine that Red Dot will remain untouched.

IBM Purchases FileNet for $1.6B
Forrester is quite bullish on the acquisition, while Gartner has a more skeptical take. Funny how the two highest-regarded technology analyst firms can disagree like that. For years, everyone from customers and employees, to Wall Street have been speculating on who would buy FileNet. With a long history, large customer base, and a large amount of cash, they were ripe for the picking. Oracle, HP and IBM were always the contenders and it is not surprising that IBM was the winner. Given that most of the senior management, including Lee Roberts (CEO), spent years at IBM, it is a natural fit. I believe it is the closest cultural fit as well... an important consideration for any successful acquisition.

There is a great deal of conflict, however, as to the true motivations of IBM for the purchase, and the impact on Filenet customers. Ultimately only time will tell. Whether for the customer base, technology, or to eliminate a strong IBM competitor, acquisitions are not easy, and IBM has a shaky history (think Rational, Informix, Crossworlds, etc.). While WebSphere makes up a significant portion of the market, the majority is not standardized on WebSphere. It is unlikely that IBM will continue to support non-IBM platforms that FileNet offers. Furthermore, FileNet relies on a strong partner organization for sales and implementation...where does this leave them? IBM Global Services is no friend to a FileNet partner. For FileNet customers, I doubt they will see major changes within 12-18 months. I believe that the acquisition does open a great deal of opportunity, albeit uncertain, for FileNet employees and upward mobility that they never had.

The Bits and Bytes to Record Destruction

On the surface, it would seem disposing of electronic records should be easier than those on paper. While hitting the “delete” key may be straightforward, unfortunately for those seeking to permanently destroy a record, it is not that simple. This challenge is compounded where optical platters are involved. The permanancy of optical is also what makes destruction so difficult. While re-writeable platters exist, most legacy systems employ permanent write-once platters. Further, for legal purposes it is common for write-once platters to be the storage medium of choice . But when the document retention policy calls for destruction of a record stored on optical, the "delete" key is useless. The issue is compounded when the dates of the documents to be destroyed are significantly different, while residing on the same platter.

This is a common challenge expressed by CIOs and CFOs. Unfortunately there are no easy solutions to this, but there are options. It is possible to delete the pointers to these records that make retrieval possible. However this does not destroy the record. Another option is to "pool" records into "storage pools." These group documents based on pre-determined criteria, such as those outlined by the retention policy. Unfortunately, most legacy deployments do not have this capability. The best option for many is to first migrate those documents that are not to be destroyed, onto magnetic storage. This is especially helpful as vendors like HP are sunsetting support for optical jukeboxes. Once the records designated for continued retention are copied to magnetic, the appropriate optical platters may be physically destroyed. This guarantees that the record is permanently eliminated.

Remember that regardless of your corporate policy, consistency and compliance with the law are imperative.

The Trouble With Those Old Documents

Few realize how seemingly innocuous documents can get an organization into trouble. Recent history is littered with companies that fell victim to their own best intentions. Boeing Corporation back in 1997, spent millions restoring 14,000 e-mail back-up tapes related to different e-mail systems, for a class action lawsuit. The project was so complex that they chose to just settle for over $90m. More recently, Arthur Andersen in the Enron fiasco told employees to destroy records in accordance with the retention policy, but failed to provide important guidelines and did not invoke the policy consistently. As a result, they were convicted of obstruction of justice.

It is now years later since these high-profile examples, yet when I speak with my customers, I still find that document retention perplexes even the most diligent organizations. I suppose I should not be too critical since federal and state laws are often ambiguous, written retention policies are not easily understood, training can be costly, and enforcement is very difficult. However, this is an important issue across all levels. While there are a myriad of consultancies primed to help even the most challenged company, most solutions involve:

• A clearly written policy (that obeys all applicable laws), regularly updated, consistently employed, signed and committed to by those responsible for enforcement and execution (usually all employees). This must include clear retention periods along with the mechanics of retention. It is also critical to outline the circumstances when the policy should be suspended (e.g., pending lawsuit).
• A clear understanding for how all records (paper and electronic) are to be destroyed and who/what is responsible for its execution
• Cataloging and identifying records for easy retrieval
• Enterprise Software to implement, automate, enforce, and track compliance with the policy

Ironically, destruction can be the most important component to document retention. The courts have recognized that organizations cannot and should not keep everything forever, but they are sensitive to selective enforcement, especially in sensitive situations where there is the appearance of obstruction of justice. Furthermore, with a pending lawsuit, all available documents are subject to subpoena, regardless of whether they should have been destroyed. Destruction of electronic records, however, can be particularly challenging. Next, I'll explore approaches to destruction of these electronic records.

Of Technology, Loyalty, And Fries

Tracking customer loyalty is becoming more common as organizations recognize that unlike loyalty, high satisfaction is poorly correlated to increased profitability. However, this trend has not yet influenced the return on investment (ROI) analysis associated with software projects. I hope this changes as research has shown that an increase in customer loyalty can have a tremendous impact on profitability (a 5% increase in retention translates to a 25-100% increase in profits).

In this environment of inadequate data, we must resort to inference to understand how software can impact loyalty. In certain instances this may appear to be a fool's errand (e.g., word processing's influence on customer loyalty), but many applications make sense. Let's review for example, Business Process Management Suites (BPMS), defined by Gartner as [a set of tools that] "enables the direct control and management of operational processes in near-real time by business managers and process owners to better meet today’s business cycle time needs and enable more-agile." In my last post , I discussed how loyalty is most directly impacted by the quality [and subsequent delivery] of an organization's products and services. The challenge is as delivery scales, the importance of making each customer interaction positive remains stable, while the difficulty grows exponentially. This is where a properly implemented BPMS shines.

Think of it this way, why was McDonalds so successful from the start? Consistency. The same quality and service no matter where you go. Imagine if those famous french fries were different from location to location. Their customers' loyalty comes from this consistency, a McDonald's fry is the same the world over. Similarly, a BPMS allows for this consistency of quality service and responsiveness, even in the face of a changing business climate, fluctuations in workload, new rules and regulations, employee movements, new products, major disasters, etc. Not only is this level of consistency possible, but the degree of oversight and monitoring is unparalleled. It is the equivalent of Jim Skinner, McDonald's Corp. CEO, tasting the fries from the 30,000+ restaurants in 100 countries every moment of every day.

Through the comprehensive use of a BPMS, if a customer's interaction with an organization is consistently positive (e.g., requests are responded to promptly, orders are fulfilled without error, applications are processed quickly, payment is ontime, etc.) their likelihood to stick like a barnacle and pass-along a recommendation promoting the vendor's products/service is much greater. With the ability to monitor these interactions, benefit from real-time, automated, process improvements, and simulate adjustments, it is reasonable that a BPMS can help drive customer loyalty and the bottom-line.

Using Technology To Drive Loyalty

You are probably familiar with the term "loyalty program," however you may not know these programs do little to influence true loyalty.

So-called loyalty programs typically assign points to your continued usage of the vendors' product... the more you use it, the greater the reward. Think frequent flyer miles (FF miles), which began in 1981 at American Airlines to keep business travelers flying with them. While many argue that without FF miles, only a couple of airlines would remain today, from a loyalty standpoint they failed. That is because money, rewards, gifts, etc. do not impact what is most important - quality of products and services. If an airline existed that was almost 100% on-time, comfortable, went everywhere you needed to go, reasonably priced, safe, etc., but did not give you a "gift," how would this lack of a "gift" or "reward" impact your loyalty? Probably not at all. The gift only matters when you first meet the basic requirements for loyalty.

This issue of quality applies to every company and industry. Dell was once the poster child for exceptional customer service, a major competitive advantage, but is now fraught with customer service woes after letting customer service slip as Kevin Rollins, CEO, admits. So how can software help?

In and of themselves, nothing from CRM to ERP to ECM to BPM to BI to CEM to BRM or any other 3-letter software-related acronym will generate loyal customers. As much as a brochure may say, it simply will not happen. However as I discussed in May, enterprise software implementations with an agile plan, solid project management, executive sponsorship, collaboration between IT and "the business," realistic expectations, strong user adoption, and appropriate metrics with a feedback loop for improvements, can put your organization on the track for driving loyalty and profitability.

Capitalizing On Loyalty

In Frederick Reichheld's Loyalty Rules he describes the concept of butterflies and barnacles when evaluating potential customers. A "butterfly" is very attractive, but easily moves from place to place, while a "barnacle" may not appear quite as attractive, but sticks around. "Loyalty Leaders," those companies that have the most loyal (and profitable) customers and employees, seek to attract customers who exhibit barnacle-like behaviors. The reason? As Reichheld describes, attracting new customers is costly and only generates big returns in the later years when the cost of serving a loyal customer falls (they become more self-sufficient) and the volume of purchases rises.

Another significant benefit of a barnacle is in frequent referrals. Since a butterfly does not stick around long enough to experience how much value you provide, they will rarely generate referrals. Conversely, a barnacle has a significant depth of experience and knowledge with a particular vendor, leading to highly credible peer recommendations. This value is three-fold.

1. The referred customers typically turn out to be barnacles
2. Since referred customers cost so little to acquire, they begin to generate profits much earlier in their life cycles
3. Referred customers cost less to support, since they tend to use the people who referred them for advice and guidance

Furthermore, barnacles, unlike butterflies, are not easily lured away by flashy, attractive, offerings. This means that they'll stick with you through thick and thin, even in the face of a seductive media campaign. To understand this, think about a company or brand that you have used for years. Then consider how many alternatives you have encountered, but ignored. Many industries have done a poor job at luring barnacles... think cell phones and airlines.

How does all of this (including the last couple of posts) relate to enterprise software - the topic of this blog? You can easily leverage your information technology investments to drive customer loyalty. I will explore this in my next post.

In the meantime, for further insight and discussion into the impact of customer loyalty, and Reichheld's venerable "One Number You Need To Grow: Net Promoter Score" (% of promoters - % of detractors) check-out these related blogs and resources:

http://netpromoter.typepad.com/paul_marsden/2006/03/title_here.html

http://netpromoter.typepad.com/fred_reichheld/

http://www.cfo.com/printable/article.cfm/7108840?f=options

Measuring Loyalty

Since loyalty (customer, employee, partner, member, etc.,) is so important to the profitability and longevity of your organization, it must be measured. The good news is that measuring loyalty is relatively easy, but the question is how to use the results to your advantage. Check out Reicheld's standard loyalty acid test which asks key questions especially useful to help to pinpoint problem areas. It is important, however, that upon surveying you thoroughly analyze the results, report, and then communicate what was learned and what actions must be taken to improve and drive loyalty. The most progressive organizations will incorporate the results as a key metric to be correlated and measured within their Business Intelligence and CRM systems. In this way, they can identify those who are loyal and the specific qualities that make them loyal. With this information, it is possible to develop specific programs and initiatives to encourage loyalty across the ideal customer base.

There are a few key components to capturing loyal customers and it all starts with the integrity of senior management. In fact, research shows that companies with loyal customers have employees who feel their leadership deserves their loyalty. So like most aspects of corporate culture, loyalty seeking flows from the top down. Prime examples of what Reicheld calls "Loyalty Leaders" include: Southwest Airlines, Vanguard, Dell, Harley-Davidson, and Intuit.

Here are the "Six Principles of Loyalty" he also describes:

• Play to win/win: Profiting at the expense of partners is a short cut to a dead end.
• Be picky: Membership is a privilege.
• Keep it simple: Complexity is the enemy of speed and responsiveness.
• Reward the right results: Worthy partners deserve worthy goals.
• Listen hard, talk straight: Long-term relationships require honest, two-way communication and learning.
• Preach what you practice: Actions often speak louder than words, but together they are unbeatable.

Of these elements, the concept of "being picky" is most fascinating because it means that you choose who is worthy of being your customer. While this may sound a bit controversial, it makes a great deal of sense when you consider the economics. Next, I'll explore how seeking out only those customers who demonstrate loyal tendencies pays off considerably over time.

Loyalty - What's It Worth To You?

Back when I started this blog I committed to talking about customer loyalty. I figure since I have recently focused on technology that I will take these next few posts to discuss this most important business issue.

Loyalty is something that I personally take very seriously because much of the bread on my table is directly tied to the loyalty of my customers. What's interesting is that if you are working for any company, even a non-profit, the loyalty of your "customer" effects you as well. It does not matter if you are a business analyst, systems administrator, HR Manager, Director, VP, or CEO, loyalty should be top of mind. Not only is loyalty a nice-to-have, but loyalty and its primary leading indicator - retention - can be directly linked to profitability. According to Frederick Reichheld, founder of Bain & Company’s Loyalty Practice and author of the international best seller, Loyalty Rules, How Today's Leaders Build Lasting Relationships, a 5% increase in retention translates to a 25-100% increase in profitability.

But what about satisfaction? Most companies, yours is probably included, measure customer satisfaction. In fact, companies often boast about their CSI (customer satisfaction index). Geico is famous for their 97% customer satisfaction tagline. While that sounds impressive, satisfaction is an essentially useless measure to determine the health of a business. Here are some facts:

• A recent automotive study showed that of the 90% of customers who said they were satisfied, only 40% became repeat buyers
• 25% of customers who experience a problem with your company don't tell anyone at the company
• Only 1-5% of customers with a problem tells management

Satisfaction is an indicator of what has happened, but in no way predicts what will happen. Measuring satisfaction is like driving while looking in the rear-view mirror. In my mind, loyalty comes down to this...if something better comes along (as perceived by you the customer), would you leave, or stick around? Switching costs have decereased in so many markets, making loyalty even more important. Next, I'll review measuring loyalty and using it to your competitive advantage.

Success in Business Rules

Every business has rules, from the notification process for vacations, which I am sure many of you recently exercised or soon will, to qualifying an applicant for a home loan. What I have oftened wondered is why business rules engines have been a luke warm market segment, eclipsed by more exciting technologies like Business Intelligence. It sounds like a great idea, identify your rules, reduce them to a series of variables and just plug those into some software that automates them. Done... nothing to worry about. Right?

Unfortunately like a whole lot of enterprise software, often the marketing hype and situational reality are a bit disconnected. But it is not all the fault of the marketers, some of the blame falls on us humans. We tend not to like rules, or better stated, follow rules. They are constantly changing and everyone has a different interpretation of what the rule is, or means. Just look at our legal system. Vendors strive to make business rules engines easy to use and some have been quite successful, Global 360 just partnered with Corticon, a leader in Gartner's Business Rules Engine (BRE) magic quadrant. They have an excel-style user interface that is quite slick and powerful, yet easy for us non-techies. I do not believe that a bulk of the problem resides with the ability/inability to use a particular system, as a few pundits have theorized, but it is the fact that mapping out rules is difficult and there are implications to changes...and we love to make changes.

The information for specific rules is dispersed throughout an organization and many are quite complex, rarely independent, and a change to one component can invoke the law of unintended consequences. That is why, especially with BREs it is critical to start with something small and easily manageable, map it out completely, and then use the software to automate the rule. Doing so will make it easier to make changes when necessary and will set expectations appropriately from the start. The BPMInstitute had a webinar on 6/9 that explored some of these issues. You can check it out here.

The Soft Launch

Today I am "soft launching" this blog to customers and colleagues. For my new visitors, I hope you enjoy perusing the posts while providing comments that benefit others. And be sure to pass the link along ( enterprisekarma.blogspot.com ) so we can build a diverse community of opinion.

It has been and continues to be my goal to make each post valuable to you by incorporating extensive research, experience, and a commitment to making sense out of the complexity that plagues Enterprise Software.

• To start from the first post back in April, click here
• To add this blog to your RSS Feed provider (e.g., Google Reader) , making it more convenient to access my latest posts, select one of the "rss feeds" under the heading in the right column
• To review archived posts, check out the "archives" heading on the right column

As the blog continues to evolve, please let me know what you think and be sure to return. Thanks for visiting.

Try Before You Buy

Essential to optimizing your business processes is the ability to simulate changes. A pilot who spends hours in a controlled environment before actually taking off can simulate hundreds of scenarios that include both ideal and adverse conditions. In this way a pilot can remain safe, while learning how to overcome potentially hazardous pitfalls. By simulating environmental changes, significant risks can be mitigated, while critical expertise is developed.

Unfortunately, business leaders have never had this critical capability necessary to confidently implement process changes. That is, until now. Leading Business Process Managment Systems can provide organizations with simulation capability. While the extent of this capability varies considerably amongst vendors, even the most basic simulation can be helpful before major process changes are undertaken. Even when the simulation capability is manual, a business analyst can test numerous scenarios to determine optimal processes for a variety of given situations. Like a pilot simulating landing in high winds, on ice, with failed landing gear, an organization can use simulation to develop business processes for a dynamic business climate, driving efficiencies, improving customer service, and gaining a competitive advantage.

Optimization Should Never Stop

By definition, optimization of your business processes should never stop. I could give all of the clichéd reasons like: "in this day-and-age, business never stops changing...neither should your processes" or "your competition never stops innovating... neither should your business," but you already know all of this. The problem for medium to large organizations is that it is difficult to make changes to business processes. This is especially true for ad-hoc changes, while being confident that the modifications will have a positive effect on service and the bottom-line. Change for change sake not only does not make sense, but can have a detrimental effect on your business. Most of us already know this, which makes organizations reluctant to effect change. But this extreme reaction can also have an adverse effect.

The key is to start by focusing on a specific set of business processes. Trying to tackle the super-set will, at best, result in minor improvement, at worst, have a detrimental effect across the organization. This is especially true since most processes are inter-related. By mapping out a process subset, incorporating all of the components and variables associated with the processes, and identifying goals and key performance indicators (KPIs), implementing changes will be less risky, provide measurable results, and act as an excellent learning experience. An excellent path to process optimization is through simulation.

Why The Hiatus?

I have not posted for 2 weeks for good reason. I recently had a new addition in my family, which as many of you must know, is an all-consuming experience. As understanding as she may be, my wife would have been less than thrilled had I been blogging while she was in labor. Since that is now over and everyone is healthy, I will be resuming regular posts, picking up where I left off. Thanks for your patience.

Combining BPM And SOA... What's All The Fuss About?

There has been a great deal of discussion around the combination of Business Process Management (BPM) and Service Oriented Architecures (SOA). Just run a search on these terms and you will see hundreds of articles and blog discussions on the joint topic. Many pundits believe that BPM is the real-world manifestation of SOA, which tends towards the theoretical. Check out this ITBusinessEdge article for a discussion. What is clear is that while one does not rely on the other, their individual value is greatly enhanced when joined. Review my post on May 3rd for a discussion on BPM.

While many BPM systems are focused on human-human flow of work, advanced suites can leverage SOA and Web Services to invoke systems as part of a comprehensive business process. By combining the two, a holistic process can be achieved.

For example, in the Financial Services scenario from yesterday, a new loan application is faxed into the organization. This fax invokes the BPM system and the specific business process associated with new loans. A SQL task in the process is kicked off and executes a database query to see if the applicant is already a customer, to ensure no duplicate accounts. Once it is determined that the applicant is not a duplicate, another step in the process connects with the mainframe and returns an application number to the business process. From this point, a business rules engine is called through a SOAP Web Service to evaluate the details of the loan application and depending on the outcome, approval may be automated and the BPM system notified. The next step automatically seeks the loan officer's review and final approval. Once recieved, another step automatically sends mail notification to the applicant, informing him/her of their approval.

This is a greatly simplified instance of the BPM system managing just one business process, making "calls" out to other systems and seeking human input along the way. With a Service Oriented Architecture, the details to making this process work are simplified. Now imagine hundreds of processes much more complex than this - traditionally static processes in an ever-changing business environment. Many of these processes are created by different departments with limited resources and different individuals with varying technical ability. While SOA, with its central "repository" of services, and traditional BPM controlling the process, makes great strides in managing the flow of work, ensuring efficiency and consistency. The dynamic business environment means that ongoing process optimization and adaptability is incredibly important, particularly to ensure a competitive edge.

More on this soon.

SOA In Practice

Now that we've got the theory, jargon, and general technical aspects of SOA out of the way, let's explore an example of usage. My hope is that this may spark some ideas for you in your organization.

Scenario Background: A regional Financial Services company was seeking to expand the average number of products purchased by existing customers. They knew the more business each customer conducts with them, the greater the impact to the bottom line, and the greater the retention rate. They launched a broad-spectrum marketing campaign, including print, radio, and television advertising. They even included Internet-based marketing in the form of Web advertising and e-mail campaigns. As a result, there was an influx of inquiry from both new and existing customers seeking to setup a variety of accounts. Applications came in from all channels (Web, paper, phone, even e-mail).

Challenge: The challenge for this company was in quickly processing these applications and creating the new accounts to meet high customer service expectations. As part of this, it was important to ensure that there were no duplicate accounts - these wreak havoc on their systems, especially invoicing and billing. Furthermore, since many of these were loan applications, they required credit scores which had to be obtained from a 3rd-party.

Before SOA: Prior to implementing SOA across the enterprise, each system and division had its own unique forms for new accounts, which were inconsistent. Often little differences would cause glitches (e.g., Male/Female vs. M/F, date formats, etc.). In addition, the 3rd-party providers for Credit Scores were different, depending on the department (e.g., Mortgages vs. Auto Loans). A constant challenge was in checking for duplicates, because the systems setup for this task often failed due to communication protocol errors. Checking for duplicates slowed the amount of time to process a new application.

Using SOA: With the newly implemented and fully tested SOA-based setup and associated Web Services, this company met their performance targets. Here were a few key benefits:

• Forms - rather than have disparate forms, with inconsistencies, they created a central repository of forms and "snippets" of forms. They used Web Services to call these forms when creating a new application. If anything changes on these forms, rather than having to make the change in 50 different places, it is updated only once, and then pulled when needed.
• Credit Scores - for consistency and speed, the firm made a decision to consolidate 3rd-party credit-score providers to a single company. They made sure the selected provider offered a secure, Web Services interface, with high availability, to which they could connect their loan application system and automatically capture the credit score. This reduced errors and increased efficiency.
• Checking for Duplicates - they used Web Services to connect to their mainframe, which houses all customer Account Numbers. Rather than taking a great deal of time and resources writing code, figuring the format, establishing communication protocols, etc., they easily called a Service to identify duplicates. If no duplicates were identified, the system called another Service to setup the account number. By calling a central service, consistency and accuracy were preserved.

There are an infinite number of possibilities for leveraging a Service Oriented Architecture. However, Business Process Management and SOA, are particularly well-suited to one another. I'll explore this powerful combination tomorrow.

Working with SOA

On Friday I discussed what SOA is and why your organization should be looking into it. Today, I will explore the real-world of SOA. Referring back to the "electrical outlet" example outlined in Friday's post, even 102 years since the 1904 invention of the "electrical plug and socket" by Harvey Hubbell, while standards exist, there are still 14 plug and socket types used across the globe. Anyone who has traveled to Europe with an electric razor, sans adapters, has learned this the hard way. Likewise, having a Services Oriented Architecture across line-of-business (LOB)applications does not mean perfect interoperability, but it is a significant improvement over the alternative - writing C-code, developing communication protocols, designing error handling etc.,

While SOA can be implemented using any service-oriented technology, Web Services is the most common. Example Web Services include SOAP and REST (to delve deeper into these services and related SOA technologies, select the hyperlinks in this post). Web services allow communication between software, based on a set of standards (e.g., XML, WSDL, UDDI, etc.). It is also important to note that with Web Services, software applications do not need to be based on the same platform (e.g., Windows vs. Linux) or same programming language in order to communicate. These issues have long been the achilles heel for enterprise systems.

Organizations that have adopted SOA are primarily focused on communications between systems within the company. However, Web Services ushers in a whole new set of capabilities by allowing for smooth interoperability with applications outside the enterprise. While potentially revolutionary, this is less common as significant security, accessibility, and performance issues remain.

Tomorrow I'll review a business scenario that leverages SOA to drive value to the bottom-line.

SOA And Why You Should Care

A Service Oriented Architecture (SOA) is "a collection of services that communicate with each other. The services are self-contained and do not depend on the context or state of the other service. They work within a distributed systems architecture." Think of a "Service" as application code that performs a specific task or set of tasks (e.g., determine a credit score for a loan applicant). These discreet services can interact in a standard way so it is easier to link one service to another.

Imagine if each appliance in your house were connected to your outlets using a different plug, and the outlets were different as well. Just getting your toaster to work would be incredibly frustrating, requiring numerous adapters and connectors that would be prone to failure, loss of function, etc.. This is the environment that IT professionals must deal with in their enterprise software infrastructure. The advent of key technologies (those that compose SOA) and development of industry standards have essentially made interaction between systems and applications easier and more straightforward.

Here's the upshot:

• Significantly reduce application development costs
• Increase business agility because useful pieces of code in one part of an organization no longer need to be constantly re-written... they can now be easily re-used
• Design completely new applications with minimal effort by leveraging code from a 3rd-party and combining it with existing code
• Create competitive advantages where no one is looking through a creativity and a just a few lines of code
• Reduce the time-consuming and risky task of changing firewall filtering settings by utilizing HTTP with Web Services

Next time I'll explore how it works, followed by a post with examples.

What Does SOA Mean For Your Business?

For the past two years the popularity of Service-Oriented Architectures (SOA) has been steadily increasing. Just check-out this Google Trends report. This begs the questions:

1. What exactly is SOA?
2. Why should one care?
3. Is SOA just marketing hype?
4. Is SOA just for technical-types? What does a business person need to know about SOA?
5. How does SOA benefit one's business?
6. How should one get started implementing a service-oriented architecture across an organization? What are the pitfalls?
7. Who benefits most from SOA?
8. How will SOA impact my existing infrastructure and business processes?

Over the next few posts, I hope to address these and related questions, providing greater clarity into a complicated issue with this new architecture.

What's The Deal With Buyouts?

On April 3, 2006 Global 360 was purchased by TA Associates in a $200 million management buyout (MBO), as announced in this press-release. Why am I talking about this when it happened over a month ago? Two reasons:

1. I continue to get asked about the nature of this transaction and the differences between the types of private equity buyouts.
2. Buyouts have been extremely popular and continue to grow

First, what are the different types of buyouts? A buyout is executed when either the controlling stake or the complete company is sold. There are two basic flavors: Management Buyout (MBO) and Leveraged Buyout (LBO). An MBO, often referred to as "going private," exists when a company has its outstanding shares purchased by an individual or small group of investors in order to obtain complete ownership. In the case of Global 360, when Sonny Oates, the primary owner, decided to retire, he executed an MBO with TA Associates, Technology Crossover Ventures and JMI Equity. More on this in a moment.

An LBO is a takeover that occurs primarily through borrowed money (typically greater than 70% of the total purchase price) often using the company's own assets as collateral. An LBO is often viewed as a desperate transaction, used to prevent hostile take-overs, or ensure a company's survival in rough times. LBOs were made famous during the 1980's.

A February 2006 article in the Washington Post captured the trends in "private equity dealmaking." Here are a few key facts (from the article):

• Private equity firms struck deals worth $396 billion in 2005, a third straight record year and a 51 percent increase over 2004, according to Thomson Financial _ outstripping a 39 percent rise in overall mergers and acquisitions business.
• In 2005 buyout houses raised $261 billion in new investment...an all-time high
• Overall, take-private deals rose by more than 150 percent worldwide to $97.4 billion, beating the previous record of $85 billion in 1988
• The growth of buyouts is widely blamed on the burden of Sarbanes-Oxley legislation and increased shareholder litigation risk

So what is the impact of the MBO on Global 360 and its customers? Very positive. This is for many reasons, not the least of which is the instant improvement to the Global 360 balance sheet, giving us access to the capital for growth and acquisitions. In addition, the management team and vision remain in place, only with greater resources for execution. This is because TA, TCV, and JMI have no interest in managing the company, as evidenced by their 28-year investment history and portfolio. In a market ripe for consolidation (as described by Gartner), this buyout ensures Global 360's independence and leadership position.

For more information on buyouts, checkout the always interesting "Buyout Blog."

Implementation Approaches, What's The Difference?

While I have talked in the past about the attributes for successful projects, I did not discuss the tactical approaches. Before joining Global 360, I had not heard much talk about tactical methods. However, it is obviously quite important. In my research, I have deduced the approaches down to the three most common: Agile vs. Iterative vs. Waterfall. What follows is a short discussion.

Agile Methodology
Back in 2001, a group of software developers who followed the "lightweight method [of development]" gathered in Utah to discuss various development methods. Out of this meeting, they crafted the "Manifesto for Agile Software Development." Essentially, it boils down to this (from the Agile Alliance Organization):

While all of the following are important, the Agile Method values:

• Individuals and interactions more than processes and tools
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

The ultimate end-goal is a successful implementation of working software. The most common criticism of Agile methodology is typically that it sacrifices detailed documentation for face-to-face communication and efficiency. The best way to think of the Agile Method is as an adaptive approach. In other words, as a project's needs change, so will the team - in order to deliver what is ultimately desired. This is not to say that the Agile Method is unplanned, rather it accounts for the reality where software implementations are often a moving target. Critical to this method, more so than any other, is the experience and resumes of the people involved.

Waterfall Methodology
Proposed in 1970 by W.W. Royce, famed software engineering researcher, this approach views development as a flowing process of: requirements analysis, design, implementation, testing, integration, and maintenance. Only when one step is completed and perfect, should the next one begin - there is no jumping back-and-forth, or skipping around. Interestingly, in the same paper which introduced the concept, Royce argued against it saying, "[it] is risky and invites failure."

While on paper Waterfall Methodology makes a lot of sense and in certain cases is ideal, most organizations are unable to invest the resources (i.e., money, people, time) required for a successful implementation of the method. In fact, many organizations do not know exactly what they want until they have a mock-up or prototype. They then use this as a way to learn more and incorporate the positives and eliminate the negatives in their design.

This is summarized quite nicely in a Wikipedia article on the subject. It states:

"The idea behind the waterfall model may be "measure twice; cut once", and those opposed to the waterfall model argue that this idea tends to fall apart when the problem being measured is constantly changing due to requirement modifications and new realizations about the problem itself. The idea behind those who object to the waterfall model may be "time spent in reconnaissance is seldom wasted."

Iterative Methodology
On the scale of "adaptive" to "predictive," this method falls somewhere in the middle between Agile and Waterfall approaches respectively. Essentially this approach allows for incremental development where a developer learns from previous versions of a system, using this information to constantly improve each new release. While quite practical for software development, for project implementations, it is not quite as applicable.

The Iterative Method boils down to the: Initialization step (creating a base version), the Iteration step (redesign and implementation of Project Control List tasks), and the Project Control List (record of all tasks that must be performed, including new features).

The initialization step forms the foundation for the project, offering the core features to solve the problem. It is usually easy to implement and simple to understand. The idea is to then use this as a way to elicit feedback from others. This feedback influences the Project Control List, which is used to form the next iteration.

The Value for Symetra

In yesterday's post, I described Symetra's phased approach to implementing their Business Process Management system. No matter how smooth the implementation, the bottom-line benefits must be there. So what are their results to date?

• Increased application processing capacity by 30%
• Reduced application processing time by over 3 days
• Decreased the need for temporary staff
• Faster and more effective customer service
• Shortened the time to train employees
• Improved employee satisfaction by making them more efficient in their activities
• Increased the ability to respond to process changes related to business strategy

In addition, they are no longer in constant reactive mode, "putting out fires." Now, goals are driving the process through the automatic work assignment. To learn more about Business Process Management and how your organization may benefit from a BPM solution, check out BPMInstitute.org, an independent resource for BPM information.

You've Got Goals, But Are You Meeting Them?

Last Thursday, Symetra Financial's (formerly Safeco) Margaret Harder spoke at GCC. What was particularly interesting was her in-depth description of how their Global 360 BPM Suite has enabled them to process more work, in less time, with fewer human resources.

Based in Bellevue Washington, Symetra has over 2 million customers and 200 employees, managing $20 billion in assets. They saw 14% growth from 2003-04. Incidentally, their initial Global 360 installation was back in 2003 and was designed to move them away from paper. Then in 2005, they expanded the system within the organization and in terms of capabilities. The Customer Service department implemented the process components to achieve true Business Process Management (BPM).

In just 5 months from start to finish the system and associated processes were fully implemented. As part of the implementation, they established measurable goals for 58 different transaction types. They incorporated these goals within the system such that the established parameters and thresholds would be automatically managed. This would mean that as tasks flowed into a queue, based on these parameters, it would be proactively assigned to the optimal resource. Those with permissions can run real-time Goal Management reports to determine efficiency and effectiveness in meeting the established goals. Their next step will be to incorporate Business Optimization into the setup.

Since Margaret's team recognized the importance of this system to the organization, they wanted to ensure a smooth roll-out. This meant smoothing the shock that is often associated with change, especially when tenured employees are affected. So they introduced these changes first with a pilot group of just 8 Customer Service Representatives. After just a couple of days of working through the kinks, they began to see significant benefits. Excitement started to spread within the group, but they were careful to manage the enthusiasm. They continued to roll out the system in ever larger groups, while:

• Sending "benefits" e-mails to the broader organization
• Placing creative posters around the building that described individual benefits
• Collecting and posting testimonials of pilot users
• Establishing a "mentor" program between existing and new users

All this was completed to ensure a positive transition. After a total of 4 stages, they completed the roll-out and instead of "shock and awe," by that time the introduction was barely noticeable... exactly how they wanted it. So how are they doing, and what are the hard and soft benefits? Check back tomorrow for details.

Managing The Distributed Workforce

Every organization must plan for a variety of risks. As I mentioned in my post on 4/26/2006, it is often the act of planning that matters much more so than the plans themselves. Continuing from yesterday, I am particularly interested in AIG's distributed workforce and thought you might be as well.

A distributed workforce is like the internet versus a mainframe. In fact, the development of the Internet began as part of wartime communications. The defense department was looking into the ability to re-route digital traffic around failed nodes – an Achilles heel for the then current phone network. With such a network, if a portion failed, another node would pick up the slack.
In the event of a disaster, a distributed network is an ideal way to handle the situation. The human brain acts in a similar way. In many cases, as one sense fails (e.g., sight), another compensates (e.g., hearing), becoming more acute. While certainly not perfect, it provides the strongest chance for survival.

With the progression of telecommuting and its enabling technologies, a distributed workforce is more practical than ever. While certainly not every organization can support such an organization, those that can may want to seriously consider it as part of disaster planning. So how do you sustain such an environment?

I asked Mr. Popolano, AIG’s CIO this question. He suggested that monitoring is key. A remote employee’s progress and efficiency should be transparent – both you and they should be able to monitor it in real-time. Goals should be established and actual results compared. If an employee is consistently falling short of defined goals, action must be taken. An employee who is just incapable of success as a remote contributor must be dealt with. He/she must be prevented from becoming a “virus,” negatively influencing fellow remote co-workers. Done well, a distributed work environment can improve employee satisfaction and productivity, while being an important component to handling all types of disasters.

What's AIG Worried About?

After speaking with a few customers, I realized the timeliness and importance of Tuesday's GCC presentation by AIG CIO Mark Popolano. He gave tremendous insight into how valuable BPM really is and why it is critical to growing business.

AIG is one of the largest insurance providers in the world (#9 in Fortune 500 ; 2005 sales = $109 billion). They have over 95,000 employees with 11,000 employees in IT alone. They have a 100% virtualized help-desk, supporting over 2,700 applications, along with 30,000 agents who helped generate $10+ billion in Net Income for 2005. Amazingly, they now have more than 40% of their workforce working from home – talk about distributed work environment!
In the short time they have been using Global 360’s BPM system, they have been able to:

• Optimize business processes across the organization. According to Mark, “the business process is the end-game…[you must] keep the flow of work through your organization to keep the cash engine going.”
• Eliminate compensating controls, which is critical for compliance with Sarbanes-Oxley legislation
• Enable a mobile, dynamic, workforce whose productivity has increased along with job satisfaction, and retention
• Reduce risk associated with an exclusively bricks-and-mortar operation in the event of a disaster
• Reduce costs by enabling effective outsourcing

Interestingly, Mark spoke quite a bit about their concern over the avian/pandemic flu. In the event of the avian flu reaching the US and becoming highly contagious between humans, chaos could set in. He knows, however, that AIG must continue to operate in the face of tremendous adversity and serve their customers. According to Mark, their BPM system enabled AIG to be “up-and running just 9 hours after hurricane Katrina,” ready to be there for their customers. If they fell victim to chaos, amongst other detrimental effects, they would put their brand and reputation at risk.

A key component to addressing risk is through a distributed workforce (PDF).

BPM – Deja Vu All Over Again?

You would not be crazy if you thought Business Process Management (BPM) was just Workflow repackaged in a 21st-century Analyst-provided moniker. [Adding to the confusion, BPM is also often referred to as Business Performance Management.] In today’s post, I’ll attempt to provide some clarification on how Business Process Management is more than just Workflow with a fancy name. Today’s GCC discussion with Gartner Analysts, Jim Sinur and Michael Melenovsky was quite insightful. However, if we look to the Analyst community for clarification, well… there is little agreement. We at Global 360 consider BPM the act of managing and routing content within or external to an organization, while regularly modeling, analyzing, and simulating existing and alternative flows to optimize those processes and meet pre-defined goals.

While there is certainly overlap, workflow falls short of the second part of the BPM definition. I think of BPM as the logical evolution of Content Management and Workflow. Why? Well, most workflow systems are limited to routing content/work items (e.g., insurance claims, new loans, expense reports, address forms, etc.) in a static flow. But what indication do you have that an existing flow is the optimal route? What if there were another way… a better way. That is where BPM comes in. Like an experienced taxi driver who knows how to get you to the airport on time, even though all the major highways are blocked, a true BPM system can provide you visibility into your workflows and help you determine the optimal route to meet your goals. Better yet, it can use this information to automatically and proactively route content based on pre-set parameters and goals. Workflow tends to be stagnant –once setup, a route will rarely change, because it was never meant to.

In today’s dynamic, highly-distributed, work environment where margins are tight and change is constant, routes are never done. Like animals in an ecosystem, organizations that can adapt the fastest will have a tremendous competitive advantage that will directly impact the bottom line. Content is no longer king, Process has taken the reigns.

The Chicken Or The Egg - Starting A Project

Yesterday I wrote about the negative effects of the barriers between the IT and Business communities. Interestingly, while here at the Global 360 Customer Conference I noticed a dilemma addressed in almost all customer presentations… who should be the impetus for application development: IT or Business? They all had the same answer – it depends.

While this indecisiveness may seem like a cop-out, it does depend, but that should not matter. Oftentimes, as IT implements/develops, tweaks, and maintains systems, they determine creative approaches to addressing inefficiencies within the business. But it is all too common that when they present solutions to problems unknown by the business community, they are dismissed. Those who are already too busy firefighting can be frustrated by those creating problems where none were thought to have existed. An organization’s culture should foster and embrace a proactive approach to addressing problems and making improvements. After all, isn’t that what Six Sigma, TQM, etc. are all about?

Conversely, the business community should always be seeking improvements across the organization. A tweak here and a tweak there can mean the difference between growth and stagnation, beating your competition and filing for bankruptcy, customer loyalty and defection, etc. IT must embrace these changes/suggestions, but like their counterparts, they are often too busy. The solution is a corporate culture that empowers and supports ALL of its employees to seek out improvements. Of course not all ideas can be implemented, or are worth it, but all should be given proper consideration and due diligence. If not, the competition will.

Breaking Barriers - Mending IT And The Organization

There is a disconnect between technology users and technology implementers. While I do not have hard data as in my other posts to back-up this claim, I have noticed it all throughout my career, from my IT work to Management Consulting. I suspect you have noticed also. Even today, it is always interesting to me when I am speaking with technology leaders and ask to meet with the user community, or vice versa. I am almost always met with apprehension. This rift is dangerous, especially as enterprise software becomes more complex and integrated. It is time to make amends. Why?

Last week I spoke about what it takes to have a successful implementation. Communication, expectation setting, understanding needs & requirements, were all at the top of the list. The irony is that these tend to be executed poorly in implementations. I dislike stereotypes, like “techies are introverts with no people skills,” not only because at best, they are wrong, but because they relieve both sides of critical responsibilities. The one who is stereotyping puts up a barrier and fails to understand the individuals who meet their perceived stereotype. The one being stereotyped can use it as an excuse or a crutch for poor behavior. I believe stereotyping is a core contributor to this ongoing rift. As systems continue to grow in complexity, it is becoming more dangerous. Logically, however, it makes no sense.

The purpose of IT is to serve the needs of the business, whether automating repetitive tasks, streamlining complex processes, or developing new business channels as in self-service. How can those implementing these activities do so without working with those who need them? Everyone would be better served by thinking in terms of the Vendor/Customer relationship, where IT is the vendor and the user is the customer. Any vendor knows to maintain a happy, loyal customer, one must first understand the needs and wants of the organization. Business users would be well served by understanding the capabilities and resource availability of their internal IT teams and related personnel. As with most activities, expectation setting and communication on both fronts are imperative. Those organizations able to overcome stereotypes will most effectively complete projects, meeting expectations on time and on budget. This will provide a distinct competitive advantage over those enterprises unable to make amends. Stereotyping is always a bad idea.

Learning From Others

Next week, Global 360 is hosting a few hundred customers at our annual Global 360 Customer Conference in Las Vegas, NV. I've always looked forward to events like this for my customers because it is a great learning opportunity. While there will be exciting announcements about the company, new solutions, and the industry, the greatest value is in the interactions between fellow customers. There are only a few times when it is so convenient to talk with people from a variety of organizations, trying to meet similar goals. Like old friends getting together for the first time in years, there is so much to talk about. It is gratifying seeing a Manager from a Claims Management group at a large insurance provider, exchanging ideas with a Director of Accounts Payable at a medical supplies distributor. Selfishly, it is an excellent learning opportunity for me as well. It is also the perfect time to get questions answered from the leaders within the organization and to help influence the direction of products and services.

I will be posting from the conference all next week... stay tuned.

Where's The Disconnect?

Why is disaster recovery still challenging to organizations? Perhaps a 2003 Harris Poll sheds some light. This poll, along with a more recent IDC study, revealed the false confidence of many executives compared to their more realistic IT Managers. When asked how long it would take to recover applications and data after a loss, CEO’s and other senior execs indicated 10 hours. IT Executives indicated 30-40 hours… over 3x longer! Clearly there is a disconnect. Unfortunately, by the time most business executives find this out, it is too late.

As a result of good planning however, my customer’s catastrophic event was relegated to a surmountable challenge. Heeding the advice of our 34th President, they were able to use this event as a learning experience to help further refine their plans. They were also thankful that, while the failure was with a separate system, the Global 360 support team rushed to assist with the recovery process to help bring them back online.

A President's Advice - Good For IT?

One of my favorite quotes is attributed to former President Dwight D. Eisenhower, when he said “Plans are nothing, planning is everything.” Recently, a large customer of mine had a major database failure, bringing operations to a crawl. More importantly, this database housed critical customer information and due to the size of the organization, full backups were completed only periodically with differentials more frequent.

Many years ago, while working with an internal corporate IT department, I recall regularly performing tape back-ups of filestores and databases. While it was a relatively straightforward process, restoration was a different story. On one slow day, I decided to go back into the archives to see what would happen if we needed files from old backups. I was surprised to find that 30% of the tapes could not be read, or were missing a bulk of the data. While the technology has improved significantly since then, and best practices have been refined, I suspect that the real-world implementation of the two lag far behind. In other words, organizations know what to do, they just don’t do it. Unfortunately this can be costly…

• In a 1996 study conducted by the Contingency Planning Research organization, they found that the hourly cost of downtime associated with lost data can range from $18,000 for a small business, to $6.5m for a Retail Brokerage.



• According to an article published in the Disaster Recovery Journal, Fall 2001, “Only 6 percent of companies suffering from a catastrophic data loss survive… 43 percent never reopen, and the remaining 51% reopen only to close within two years.”



• In a USC study conducted by Ian Mitroff, professor of Business Policy, interviews and surveys about crisis planning conducted with Fortune 500 companies found the following: During a three-year period, proactive companies [those who did not need a crisis to occur before preparations and planning] averaged fewer crises than reactive organizations, 22 compared to 33. The average return on assets for proactive firms was higher than that of reactive ones, 6 percent versus 2 percent.

Succesful Implementations Should Not Be Elusive

Have you ever wondered why some IT projects turn out successful and others with less than desirable results? I have participated in countless RFIs, RFPs, presentations, demonstrations, proof-of-concepts, “bake-offs,” and negotiations. I have been involved in year-long investigations and sales-cycles. And through all of this due diligence, I have seen these same implementations fail to meet expectations. For those that believe they already know what is required to make a project a success, consider this a refresher. For those who haven’t given it much thought, I hope you find this helpful.

For a detailed review about project success, consider this detailed analysis from the University of Missouri – St. Louis. Here are a couple of interesting statistics from the study:

• On average, about 70% of all IT-related projects fail to meet their objectives
  
• Only 16% of IT Projects are Successful (on budget, on time, met requirements), 53% are Challenged (over cost, over time, or lacking intended features), while 31% are Impaired/Failed (abandoned or cancelled at some point)

Here is a list of the top 10 attributes for a successful project outcome (Jiang, Klein, and Balloun, “Ranking of System Implementation Success Factors”, Project Management Journal, December 1996):

1. Clearly defined goals. (including the general project philosophy or general mission of the project, as well as commitment to those goals on the part of the team members).

2. Competent project manager. The importance of initial selection of skilled (interpersonally, technically, and administratively) project leader.

3. Top Management Support. Top or divisional management support for the project that has been conveyed to all concerned parties.

4. Competent project team members. The importance of selecting and, if necessary, triaging project team members.

5. Sufficient resource allocation. These are Resources in the form of money, personnel, logistics, etc.

6. Adequate communication channels. Sufficient information is available on the project objectives, status, changes, organizational coordination, clients’ needs, etc.

7. Control Mechanisms. (Including planning, schedules, etc.). Programs are in place to deal with initial plans and schedules.

8. Feedback capabilities. All parties concerned with the project area able to review project status, make suggestions, and corrections through formal feedback channels or review meetings.

9. Responsiveness to client. All potential users of the project are consulted with and kept up to date on project status. Further, clients receive assistance after the project has been successfully implemented.

10. Client consultation. The project team members share solicited input from all potential clients of the project. The project team members understand the needs of those who will use the systems.

For additional factors, read through the report.

The Challenges Are The Benefits For SaaS

The ability to sustain and grow a Software-as-a-Service (SaaS)-based company may not be much different than the ability of a Chef to sustain a restaurant. Consistency, reliability, and innovation are the keys. Those that can execute in these three areas will thrive. As a significant benefit, these components may also drive the success of SaaS on the whole over client/server-based enterprise software. Why?

As with any company, customer loyalty drives success. While managing and selling for a SaaS-based company, we would often think of our customers as if they were on a perpetual trial, constantly having to prove why we're worth it. When a typical enterprise software company sells perpetually-licensed software, once the deal is closed, the customer owns that software for all time. If you no longer need the software, or just don't like it, well... you're stuck. This means that due-diligence is critical before making a purchase both from your internal needs/requirements assessment standpoint, as well as in reviewing vendors. While the same applies for SaaS systems, it is to a much lesser extent.

If you don't like, or no longer need your Salesforce.com, Dovarri, Zarca, LoyaltyLab, Apptix, (or any other SaaS provider) system, well just cancel your contract. Try getting your money back from your Oracle, IBM, Siebel, etc. implementations. You may be able to cancel maintenance and support, but that's about it (and inadvisable). This places a tremendous amount of pressure on SaaS providers to constantly earn your loyalty - consistency and innovation are paramount. Furthermore, the impact of reliability is tremendous and remains a formidable challenge for SaaS providers. Salesforce.com's outages are just one example. And they are a public company with $100m in the bank! Most SaaS providers are start-ups with a only a bit of funding.

In the long-term, those SaaS companies that overcome these challenges will pose a formidable threat to traditional vendors. While my old biology professors would dislike the reference, it is a prime example of "survival of the fittest" in action.

If It's Good For Them, Why Not Me?

Ironically, many of the benefits of a Software-as-a-Service (SaaS) system, are negatives for a large enterprise. Large systems have lots of moving pieces, many of which are from different vendors and touch different users of varying skill level. Therefore flexibility and control are critical for these organizations, but are not strengths of SaaS solutions. Roll-outs of upgrades are major events, which can wreak havoc in a large organization if not well thought out. Customers of SaaS providers like Salesforce.com are typically at the mercy of the vendor. Even the common subscription model itself can be disconcerting. CIO's tend to like assurance and hate uncertainty, leaving a lot of "what if's."

What if:
-the vendor goes out of business like all those ASP's in the '90s?
-the vendor loses my data?
-the vendor's systems are down?
-I want/need to change the UI
-there is a security hole?
-I need access to my data and I lack an Internet connection?
-the vendor is acquired by some other company and their data ownership and privacy policies change and are unappealing?

While these are questions that every SaaS customer must ask and company must answer, the implications for large organizations are magnified. After all, if the home-cook burns the steak, only a few, [mostly] forgiving friends and family members are left unhappy. If the professional chef burns the steak, many, [mostly] unforgiving customers are left unhappy, angry, and quite vocal about it.

So that begs the question. Can a bad SaaS system, like a bad chef, remain in business for long? Some of us know all too well that a bad home-cook can keep on cooking for many, many, many years. But what about the chef?

SaaS For Everyone?

Software-as-a-Service (SaaS) systems are technically limited by many factors, not the least of which is the browser environment. While the expansion of broadband and new technologies such as AJAX give developers capabilities they did not have just a few years ago, major issues remain - from security to integrations with mainframes and other legacy applications. Further, SMBs are an underserved market for what have traditionally been enterprise applications, but that does not mean they don't want the benefits of Business Intelligence, CRM, ERP, etc. like the big guys. It is that typical enterprise implementations for an SMB are often like swatting a fly with a 2x4. While the problems are agnostic to company size, the scope and depth are quite different. It is easy for a home cook with some skill and decent equipment to prepare a great meal, but doing that everyday, multiple times/day, for a few thousand people, as on a cruise ship... that's an enormous challenge. That is what any good enterprise-level application is designed for. In addition, SMB's tend to lack critical components to successful in-house IT implementations:

• IT and business-related human resources to plan, execute, tweak, maintain, upgrade, etc.
• Financial means
• Technical Literacy

The beauty of a SaaS system is the need for all of those components is either reduced, or even eliminated. Cost is also often sited as a significant benefit of SaaS systems. However, according to Forrester, by the third year of deployment on average, the cost of a hosted application starts to exceed that of an in-house licensed application. By the fifth year of a deployment, the cumulative cost of a hosted application is estimated at more then $1.6 million, while the licensed software costs about $1.4 million annually.

So why wouldn't a large enterprise want SaaS?

On with it...

Now that we've got the preliminaries out of the way, let's get on with it. I will be posting a short series about my thoughts on the future of enterprise software. Having recently left a leadership position at a Software-as-a-Service (SaaS)/On-demand/ASP/Web 2.0 (whatever the term de rigueur) software company, for a more traditional organization with a "perpetual license" model, I have been thinking about the "thin client/server" approach exploited by most of today's enterprise applications. Clearly the force of Salesforce.com since coming onto the scene back in March 1999, after Siebel's 6-year run, spawned numerous on-demand applications, including many copy-cats. In fact, their marketing mantra was "No-Software" (it is still in their phone number). Now IDC estimates that SaaS spending will double in the next five years to $10.7 billion in 2009 (IDC No. 33120: Worldwide and U.S. Software as a Service 2005-2009 Forecast and Analysis: Adoption for the Alternative Delivery Model Continues, May 2005).

So what does this mean for SAP, Microsoft, Oracle, let alone the thousands of other vendors and their customers? While SaaS and the open source movement must be addressed, and many companies like Microsoft already have, or are developing their strategies, it remains unclear how large customers will adopt these systems. In my experience, SMBs are today's primary target market for these solutions and for the foreseeable future. Check out tomorrow's post for why.

...And Finally

Most recently, the siren song of Business Process Management (BPM) lured me to Global 360, the world-wide leader in BPM and analysis solutions with over 20 years of customer success. After having seen the tremendous value generated over the years by imaging, workflow, document management, business intelligence, CRM, ERP and most recently BPM systems, I had to explore the next step - Business Optimization. This fulfills the promise of these systems by incorporating comprehensive analysis and even simulation, allowing an organization to maximize the value of its people, processes, and content - imagine that! With potential savings in the $millions, this is revolutionary across an organization, whether it is loan origination, claims processing, accounts payable, supply-chain, etc.

Why Global 360? Allow me a "plug" for a moment. With an unmatched history, veteran team (at all levels), tremendous customer successes, and cutting-edge technology, Global 360 helps complex organizations optimize their business processes better than any company. This, combined with our "secret sauce" - a sales and support methodology that uniquely focuses on proactively working with and helping our customers, has me excited about the future.

Over the years as an Information Technologist, Management Consultant, Sales Executive, and Senior Manager, I have gained a unique perspective and seen the intricate inner workings - the good, the bad, and the ugly - of extremely complex organizations, systems, and implementations. My "Good Karma" goal is to share this accumulated experience and my viewpoint with you.

Credibility, continued...

The saga continues... A few years following eGrail/Filenet, I was presented with a Director, then VP Sales opportunity at Zarca Interactive. Zarca is a comprehensive "Software as a Service" (SaaS), Web 2.0 company. They enhance traditional Business Intelligence (BI) and Customer Relationship Management (CRM) solutions by associating attitudinal data (e.g., customer perceptions) with traditional operational information (e.g., transaction data) to drive customer loyalty. For example, if I am a retailer like Target, I not only know what you bought, but I know what influenced you to buy it. With this information business leaders at companies within retail, healthcare, hospitality, energy, financial, and numerous other industries including education and state/local/federal government agencies, are able to make faster, yet more informed and confident decisions.

Zarca's unique solutions and strong sales team led to over 105% growth in 2004 alone. Yet, this pales in comparison to the increases in customer satisfaction and ultimately loyalty achieved by clients. After all, a small increase in loyalty = exponential increase in profitability (more on that later).

Credibility Is Key

The most trusted advisors whether friends, mentors, co-workers, bloggers, etc. are those who prove themselves credible. While a resume may only address the tip of the iceberg, what follows is a bit about me. Please use this information to evaluate my intentions and future postings.

I have a diverse background working for large and small companies, public and private, been on the front-lines working in an under-staffed IT department, and even started a few small technology-based businesses while in college (George Washington University alumnus). I was a Management Consultant for Arthur D. Little (ADL), the world's first management consulting firm (founded 1886), focusing on technology and operational-based business strategies for some of the world's largest organizations. I was an early leader on the eGrail Inc. sales team (a Web Content Management provider later purchased by FileNet Corp.), where my formal consulting background helped my customers ultimately extract the most value from our solutions. [CMSWatch, founded by Tony Byrne, is an excellent resource for WCM-related information]

I became a FileNet Account Executive following the acquisition. And during my tenure, I concentrated on helping healthcare, financial services, and insurance companies expand and manage their Web properties. This, while incorporating complimentary Enterprise Content Management (ECM) technologies to drive revenue, ensure a competitive advantage, and reduce servicing costs. WCM spearheaded FileNet's transition from a focus on Imaging and Document Management to a broader Enterprise Content Management, which also included Business Process Management (BPM).

What Does Karma Have To Do With It?

For over 13 years, I have been helping individuals and organizations across the country extract the most value from their technology investments. I am an Enterprise Software Account Executive (aka. Salesperson) and while we are all in the business of selling (i.e., persuading, convincing, evangelizing, etc.), I make my living at it.

Why Karma? Well, with a last name like Rudolph, you do not have to be the most creative kid on the playground to ascribe a seemingly witty verbal jab about our famously, socially-inhibited, glowing friend, onto yours truly. Like the story teaches, however, one must learn how to overcome adversity, transforming it into success, and use it to benefit others. The very definition of Karma.

That is what this blog is all about. My goal is to leverage the successes and failures I have seen over the years primarily in Enterprise Software projects and my natural curiosity for your benefit. I will seek to consolidate my accumulated knowledge, constant research, and general thoughts on Enterprise Software to help you meet your goals for your organization. If Karma is about giving and receiving, what do I hope to get out of this? Perhaps your business someday, or maybe a referral, but mostly the self-satisfaction that comes with helping others. That is what true sales and Karma is all about.