Category Archives: Technology

Do You Really Think It’s A Good Idea To Have Your Head In The Clouds?

eWeek.com recently published an article on how “many data centers [are] unprepared for disasters” that’s downright frightening. According to the recent AFCOM “State of the Data Center” survey that polled 358 data center managers from around the world,

  • more than 15% of respondents said their data center had no plan for backup and recovery,
  • 50% of respondents have no plan to replace damaged equipment after a disaster,
  • 65% have no plan to deal with cyber criminals!

Well sufferin’ cats!

This says that if you outsource your data center management, you have a:

  • 15% (1 in 7) chance of losing your data
  • 50% (1 in 2) chance of being down for an extended amount of time after a natural disaster
  • 65% (13 in 20) chance of getting screwed if you’re targetted for cyber crime.

Do you really like those odds?

When It Comes to Tech, Sometimes I Think Analysts Should Get Out of the Game

Especially if they don’t have a degree in technology! Even if they have 30 years in the tech industry, because, at some fundamental level, they just don’t get it and ultimately end up making a suggestion that not only makes everything more complicated than it has to be but confuses the heck out of the average person.

So why am I ranting again? Supply Chain Brain republished an article by a Gartner analyst on Suite Versus Best of Breed: The Argument Rages On that, to be honest, impressed the hell out of me until I got to the second last paragraph. The author nailed the pros and cons of enterprise suites before beautifully exposing the advantages and disadvantages of of best-of-breed with the precision of a master craftsman and then concluded, with deft clarity, that best-of-breed vs. integrated suites is not a good basis to guide application selection (which is a reality that not all technology analysts seem to be aware of). But then, just when I was about to applaud Gartner for publishing such a fine piece, the author not only goes on to say that the solution is a “new model” (which is scary in itself as most analysts have no idea what a real “model” is or that there’s a big difference between “framework” and “model”), but goes on to say that the model is something called pace-layered application strategy. WTF?!?

I’m a PhD in Computer Science with fifteen years designing, building, leading, and consulting on the design, architecture, integration, and implementation of enterprise software systems, with expertise in algorithms, data stuctures, computational geometry, optimization, mathematical modeling, relational databases, automated reasoning, and some areas of semantic technology … and I didn’t have a sweet clue as to what he was talking about. (So how is an average non-technical person supposed to know what this means?)

So I made the mistake of looking it up. Of course, the first result from a Google search is a Gartner page to a locked article that describes pace layering as a “new methodology for categorizing applications and developing a differentiated management and governance process that reflects how the applications are used and their rate of change”. Buzzword Bingo anyone? The next few results are no better — all buzzword summaries of this “great new thing” that you apparently can’t get any information about unless you’re a Gartner client (surprise, surprise) [unless you’re really good with Google].

So I decided to take a step back and look up pace layering before I dove deeper into the Gartner grief. According to this post by James Governor over on RedMonk on why applications are like fish and data is like wine, pace-layering is an idea from Stewart Brand where complex systems can be decomposed into multiple layers, where the layers change at different rates. The “fast layers” learn, absorb shocks and get attention; the “slow layers” remember, constrain and have power. One of the implications of this model is that information architects can do what they have always done — slow, deep, rich work; while tagging can spin madly on the surface. This is a good way to build systems, and embodies the best practices of a hybrid agile development model where one team iterates rapidly through a UI and the business logic, through regular interaction with the end users, to hammer out what it is that the system really needs to do while another team slowly builds a powerful, flexible, scalable and robust back-end that can accomodate an evolving business landscape. But there is a big difference between best-practices for building a system and best-practices for selecting a system.

First of all, you can’t implement an enterprise system in a couple of weeks, test it out for a few weeks, and then throw it away if it doesn’t work. Implementations (and integrations) take considerable time and investment. Secondly, there are no “fast” systems in the average enterprise. Once you implement something, you typially have it for years either because it takes that long to see value or it takes that long for the enterprise to agree on something new. Thirdly, the hybrid agile development approach that pace layering describes does not care if you are developing a system of record, a system of differentiation, or a system of innovation whereas Gartner’s pace-layering application strategy relies on a company being able to make this distinction because each has characteristics that apparently suggest ERP / Suite vs. Standalone Module / Best of Breed vs. Modified Best of Breed / Custom App.

And while each of the characteristics (on page 17) that Gartner identified in their recent webinar on “ERP Strategies: Exploit Innovations in Enterprise Software” (PDF slides) are important considerations in technology selection, there are two major problems with the approach.

  1. Technology selection is never that simple across the board.
    If the organization is a large enterprise that is slow to adapt to new technology and implements new systems infrequently, then an ERP suite from an established, stable, vendor that has been around for ten years (and that is likely to be around for ten more) is probably the best answer. But if the organization is a small, new, (but) growing enterprise that is quick to adapt to new technology and always looking for, and implementing, new solutions, then the best solution might be a new best-of-breed application from a smaller provider that is more cost effective and innovative (because, in the worst case, if the vendor goes belly up, the organization can always move to a new solution, and, if the new solution was 1/10th the cost of the ERP, still save a bundle even when the migration costs to a new system are factored in).
  2. It’s not about the framework — it’s about the solution
    and if you follow a framework, sooner or later you’ll choose the wrong system — and pay dearly. For example, the pace layer governance framework recommends best of breed for a function where differentation is key. This says that if you want to implement next generation sourcing strategies, you need a best of breed system. Not true. Many next generation sourcing strategies have nothing to do with technology. They are about business value, and with the exception of true spend analysis or decision optimization, can be accomplished with commodity e-Negotiation functionality, which even the ERP suites have in spades. If the organization is technologically behind, or needs a lot of support, it should probably go with a suite from a big player with the resources, and experience, to support it and then bring in a consulting firm, with access to (and expertise in) best of breed products to help with the spend analysis and decision optimization, where and when required.

In other words, another framework is not the answer. The answer is, as it has always been, identify your needs, identify the functions that the potential solution systems implement, and find the best match. Suite vs. Best of Breed vs. Custom App. vs Yet Another Confusing and Ridiculous Model be damned.

Tompkins Associates and the Next Generation Supply Chain, Part IV

In Monday’s post, we brought your attention to Tompkins Associates’ recent white paper on “Leveraging the Supply Chain for Increased Shareholder Value” which nicely complements CAPS Research and A.T. Kearney’s study on “Value Focussed Supply: Linking Supply to Competitive Business Strategies” and echos our cry for Next Generation Sourcing methodologies. A cry which has been taken up not only by The MPower Group (and spearheaded by Dalip Raheja who has declared that Strategic Sourcing is Dead and invited you to the The Wake for Strategic Sourcing) but by BravoSolution (who are rallying the battle cry for High Definition Sourcing and who have given us A Futuristic Look at High Definition Sourcing). We told you how they declared the need for a new Supply Chain Value Creation Framework and a renewed focus on business value in the supply chain, outlined three supply chain objectives — Profitable Growth, Margin Improvement, and Capital Efficiency, and described six primary types of value enabling actions to achieve the objectives before telling you that we would spend the next four posts discussing some of these actions and why Tompkins Associates’ white paper on “Leveraging the Supply Chain for Increased Shareholder Value” should definitely be on your reading list as you outline your Next Generation Sourcing strategy.

So, today, we are going to discuss the objective of Capital Efficiency.

Capital efficiency is a measure used to determine whether a particular product, service, or operation is profitable, could be profitable with some adjustments, or should be abandoned entirely. The basic measure is computed by dividing the average value of output by the rate of expeniture for a period of time. A good capital efficiency is greater than one.

There are two primary ways for a company to increase capital efficiency. It can reduce working capital or improve the return on its fixed assets.

The most effective way to reduce working capital for many companies is to improve inventory management as significant amounts of working capital are typically tied up in inventory for an average company. The most effective reduction will be realizied when both cycle stock and saety stock is optimized. The white paper on “Leveraging the Supply Chain for Increased Shareholder Value” outlines four techniques that can be used to minimize cycle stock and four techniques that can be used to minimize safety stock.

With respect to improving return on fixed assets, a supply chain has four options. It can focus on the network assets, the building assets, the equipment assets, or the technology assets.

Technology assets need to be upgraded regularly or the cost to maintain the systems will increase as the risk of obsolescence skyrockets. Thus, a return on technology assets can be obtained by upgrading to a new system with addtional value before the technology becomes obsolete and the upgrade prohibitively expensive. (To determine how much the upgrade is going to cost, use the Cost Model Calculations in the SI Enterprise Software Buying Guide.)

Equipment needs to be maintained as no value can be obtained when it is not functional, and if it breaks down to the point of no repair, all value is lost. Thus, value is maintained when equipment is maintained. However, value can only be increased by upgrading to new, more efficient equipment that is easier to maintain, repair, upgrade, and control through modern control systems.

Building assets offer a fairy large opportunity for return on assets. If a building is appropriately designed for a function and has the right height, layout, and column spacing, no space will be lost, operations will be efficient, and, if LEED standards were followed, it will be energy efficient, cheap to maintain, and sustainable. Any building that is not used 100% does not deliver an optimal return. If a building is only partially used, a greater return can be obtained by leasing the unused space, or, if usage is sparse, disposing of the building and acquiring, or leasing, a more appropriate space.

Finally, the network offers the greatest opportunity for a large return on assets as an appropriate network realignment often removes 5% to 15% from total supply chain cost. A well designed network has low transportation costs, high agility, and (geographically dispersed) robustness and can withstand a disruption in part of the network. A good network is optimized, using the techniques outlined in SI’s three-part series on Supply Chain Network Optimization (Part I, Part II, and Part III), and stress-tested against multiple scenarios using a simulation tool.

All-in-all, a company has multiple options for increasing capital efficiency, just as it has multiple options to improve margins and achieve profitable growth. That’s why its important for a company to adopt a value-focussed mindset, implement next generation sourcing and supply chain practices, and chase the value that is just waiting to be extracted from the supply chain. And that’s also why it’s important to add papers like Tompkins Associates’ “Leveraging the Supply Chain for Increased Shareholder Value” to your working library as there aren’t that many resources out there that describe what a supply chain needs to do to get to the next level.

Six Steps to Supply Chain Visibility

A recent clear goal sidebar on “12 steps to supply chain visibility” in Stores magazine outlined 12 steps a company can take for boosting transparency in the supply chain. What’s important to note is that half of these steps revoled around data, data availability, and new technology — something this blog continually advocates. Specifically:

  • increase data quality
    as this allows for better analysis
  • create an information hub
    so that all information can be accessed from one central location
  • be aware of when your suppliers’ labor contracts are expiring
    as this could be a disruption in the making
  • develop visibility solutions that are flexible enough to accommodate multiple fulfillment models
    since multiple shipment types and routes might be required to prevent disruptions
  • rack costs like freight, insurance, duties, taxes and other government charges
    because all data is relevant
  • implement route planning software
    to optimize transportation and freight costs

There is no substitute for good systems and good data.

Vendor Lies

ComputerWorld recently ran a great article on tech relationships gone wrong entitle “lies my vendor told me” which is a must read for anyone buying technology because, you guessed it, some vendors will lie (lie, lie) to get that sale.

We can scale to that level of service.

Just ask the retailer who grew four hundred percent in 4 years only to lose 48 hours of uptime during the critical Christmas season.

Yes we have expertise with this third party system that our product can be configured to run on.

Just ask the publishing company which fell for the vendor’s claims hook, line, and sinker when it said that it had expertise to install and configure remote Citrix systems which its product could be configured to work on (but which it had never done itself).

Yes you need a firewall.

Even though you have no critical data and no data worth stealing.

Of course your IT department can support this!

Why else would we say that you don’t need their involvment? (Could it be because they know for a fact your IT department can’t support the application and that, if you ask, the deal is squashed.)

Yes our cloud platform is mature!

Even though we just bought it from a third party, who threw it together with glue and copper wire, and neither party has any idea how to properly build, maintain, and provide a cloud platform.