Category Archives: Technology

Green Your Data Centers and Keep More Green In Your Bank Account

Supply and Spend Management Professionals everywhere, take heed, you can save bags upon bags of money by forcing IT to Green your data centers – and please the grippies (green hippies) at the same time as you drastically reduce your energy requirements, and, consequentially, your carbon footprint. That’s right, you can save energy and the environment as a side-effect of implementing IT technology that not only saves you money, but performs better overall! And all you have to do is make sure IT buys the right technologies from the right vendors, and not just the vendors that give them the most free toys or the most free passes to the tech expos. So read this post carefully. The technologies described within will not prevent IT from supporting your current application infrastructure or affect any SLAs you might have – although it might mean that IT has to upgrade their skills and / or get comfortable with new technology. (And if you’re not willing to learn on a daily basis, and you’re in IT, you’re in the wrong profession — and shouldn’t be surprised if you’re told to shape up or ship out.)

As I informed you in a recent post on how IT is our greatest threat to our energy future, your corporate data center is a huge energy hog, and likely sucks up considerably more energy than the rest of your office-based operations combined. Why is this the case? First of all, those big-boxed traditional servers suck up considerably more power than an average workstation, especially since they usually have redundant always-on power supplies, with power requirements in the 700W to 1,500W range being quite common. In other words, each server generally sucks up three times the power of a normal workstation, 24/7, whether it is used or not. But mostly your data centers are huge power hogs because of the huge amount of heat a large number of servers in a compressed space will generate and the simple fact that if the room is not cooled to at least normal room temperature, they’ll overheat, melt, and take not only your hardware investment, but your data (which just might be your most valuable asset) with them. Today, it often costs more to keep your data centers cool than it does to fill them with equipment. If you reference a recent article from Hewlett Packard on Electronics-Cooling.com, and recalculate the 3 year energy cost to acquisition cost with today’s prices (where you can get a fully configured 1U server for (well) under 3,000 and where the average retail price of electricity is now over 11c per kWh and rising fast), you find that, today, the average cost of keeping a server powered and cool is at least 30% more than the server itself!

So what can you do? You can start by using servers with power efficient chips, virtualization, and dynamic CPU allocation to reduce your power requirements. These initiatives can decrease power requirements substantially. Lower power hardware requires less watts to run. Virtualization allows you to reduce the number of servers you require by packing more applications onto fewer servers. And dynamic CPU allocation allows you to automatically shift processes between processors and, during down times, power down one or more cores to reduce energy requirements. This means that your server room can run at full capacity during the normal work day when it is being hit hard by every employee in your operation, but automatically power down by 75% (or more) overnight when almost no one is utilizing your systems and networks.

Then you can reduce your cooling requirements by using rack-based (liquid) cooling that focuses on keeping the servers chilled, and not the entire room they are housed in. Even in a jam-packed server room, your servers aren’t even going to take up a third of the space. This means that not only are you chilling a lot more space than you have to, but you have to chill part of the room cooler than it needs to be as, chances are, the vents won’t be right next to all of the servers. However, a rack based solution that only chills the servers only sucks up the energy needed to chill the servers, and this tends to reduce your power consumption by at least 15% to 20% alone! Furthermore, you can then install a heat exchanger to route the vented heat throughout your office building and use your servers to heat your building in the winter! That’s two hits of energy savings for the price of one!

So where can you get this technology? IBM and Sun are making leaps and bounds in virtualization, IBM and HP are leading the way with rack-based cooling solutions, and all three are leading the way in energy efficiency in their server offerings. (However, it appears that IBM has the best dynamic CPU allocation as it’s virtualization is dynamic and allows you to time-slice processes down to 1/10th of a CPU and use shared pools to insure a sleeping core isn’t powered back up until absolutely needed.) So, contrary to some propoganda, you’re not necessarily restricted to one vendor if you want to save energy, and thus you can use the competition between these vendors to save huge bundles of money.

At this point, you’re probably asking “How do I start?” and “How do I figure out how much money I really could save by helping IT go green?“. The answer is you start with a data center audit that examines your current infrastructure, your current network, and your current user support needs, and comes up with an optimal data center design using best-of-breed technology that will meet your current needs with less energy and less hardware investment requirements than it would cost to upgrade your data center using your current technology and infrastructure design. (And yes, you’ll save money on hardware too since virtualization will let you do more with less!) Then, as you replace and retire existing hardware, you can replace it with the right hardware – and cooling systems, for your needs and watch the savings rack up year over year (especially since today’s virtualization platforms tend to be more extensible and upgradeable in addition to lasting longer).

If you’re looking for someone to call to help you with this audit, I’d recommend you consider NCS Network. The first provider in Canada to offer a green data center solution, they have years of experience in designing, maintaining, and auditing data centers. In addition, they have partnerships and relationships with Sun, IBM, vmware, MiTel, Cisco, Wyse, Citrix, Xen Source, red hat, APC, Novell, and, of course, Microsoft. If you mention that you heard about them on Sourcing Innovation and book an audit before September 30, 2008, they’ll give you 10% off of their standard rates.

In full disclosure, although I do not own any shares in NCS Network, or get any commission for referring you to their services, there is a partnership between NCS Network and the doctor‘s company, whereby the doctor may serve as their Chief Software Architect on a consulting basis when an NCS Network client needs a senior software architect and Emerich Winkler of NCS Network may serve as the doctor‘s Chief Network Architect on a consulting basis when one of the doctor‘s client needs a senior network architect. However, if you hire them, and don’t hire me, I get zip, zero, and zilch and there’s really no financial incentive for the doctor to recommend NCS Network to you.

Supply Chain IT Can Make A Competitive Difference

Since the mid-1990s, a new competitive dynamic has emerged — greater gaps between the leaders and laggards in an industry, more concentrated and winner-take-all markets, and more churn among rivals in a sector. Strikingly, this pattern closely matches the turbulent “creative destruction” mode of capitalism that was first predicted over 60 years ago by economist Joseph Schumpeter. This accelerated competition has coincided with a sharp increase in the quantity and quality of IT investments, as more organizations have moved to bolster (or altogether replace) their existing operating models using the internet and enterprise software.

In addition, the internet and enterprise IT are now accelerating competition within traditional industries in the broader U.S. economy. Why? Not because more products arebecoming digital but because more processes are: Just as a digital photo or a web-search algorithm can be endlessly replicated quickly and accuratelyby copying the underlying bits, a company’s unique business processes can now be propagated with much higher fidelity across the organization byembedding it in enterprise information technology. As a result, an innovator with a better way of doing things can scale up with unprecedented speed to dominate an industry. In response, a rival can roll out further process innovations throughout its product lines and geographic markets to recapture market share. Winners can win big and fast, but not necessarily for very long. Thus conclude Andrew McAfee and Erik Brynjolfsson in their feature article in the Harvard Business Review on how “Investing in IT That Makes a Competitive Difference” can intensify competitiveness.

The article described a number of findings from research conducted by the authors along with Michael Sorell and Feng Zhu on the link between IT and competitiveness, and some of the findings were surprising. Not surprising was the fact that the average turbulence has been sharply increasing across numerous industries since the mid-1990’s or that industry concentration began increasing again around the same time. What was surprising was that the researchers also considered the role of M&A activity, globalization, and R&D spending in their analysis of the competitive landscape and, although they found some minor correlations, none came close to the impact of IT.

So, why the correlation between increased IT investment and competitiveness? The researchers posit that it was not the breadth of IT innovation that led to the improvement but because some of these newtechnologies enabled improvements to companies’ operating models and then made it possible to replicate those improvements much more widely. How does this happen? Consider the example given by the authors:

Imagine that a drugstore chain … has a number of rivals, most of which also have multiple stores. Before the advent of enterprise IT, a successful innovation by a manager at one store could lead to dominance in that manager’s local market. But because no firm had a monopoly on good managers, other firms might win the competitive battle in other local markets, reflecting the relative talent at these other locations. Sharing and replication of innovations (via analog technologies like corporate memos, procedures manuals, and training sessions) would be relatively slow and imperfect, and overall market share would change little from year to year.

With the advent of enterprise IT, however, not just [one drugstore chain], but its competitors [also] have the option to deploy technology to improve their processes. Some may not exercise this option because they don’t believe in the power of IT. Others will try and fail. Some will succeed, and effective innovations will spread rapidly. The firm with the best processes will win in most or all markets. At the same time, competitors will be able to strike back much more quickly: Instead of simply copying the first mover, they will introduce further IT-based innovations, perhaps instituting digitally mediated outsourcing or CRM software that identifies cross- and up-selling opportunities. These innovations will also propagate widely, rapidly, and accurately because they are embedded in the IT system. Success will prompt these companies to make bolder and more frequent competitive moves, and customers will switch from one company to another in response to them.

As a result, performance spread will rise, as the most successful IT exploiters pull away from the pack. Concentration will increase, as the losers fall by the wayside. And yet turbulence will actually intensify, as the remaining rivals use successive IT-enabled operating-model changes to leapfrog one another over time. Thus, despite the shakeout, rivalry in the industry will continue to become more fast-paced, intense, and dynamic than it was prior to the advent of enterprise technology.

In other words, technology innovation leads to business innovation, and business innovation gets results. So invest in modern supply chain systems — like sourcing, procurement, and global trade — and watch your competitiveness rise.

Choose Your (Project Management) Metrics Appropriately

A recent article over on CIO.com highlighted recent findings from Forrester Research which found that “Common Project Management Metrics Doom IT Departments to Failure”. According to Forrester, the idea that a project must be on time, on budget, and deliver the initial requirements is problematic and sets up an IT project for failure.

According to Forrester, the problem with these metrics is that they perpetuate the idea that a project is only successful when it is completed according to the initial schedule, budget and requirements — and therefore, that anything less is a failure. Project requirements change for a variety of reasons, and schedules and budgets change during the lifetime of the project based on better information as to effort, complexity and interdependencies, and, thus, the initial plan should not be adhered to if additional information leads to a better understanding of how the project different from initial estimates.

The reality is that, as the project requirements are explored, complexity will increase or decrease, and, more importantly, requirements will change. Some features and functions will be determined to be unimportant while new features and functions will be discovered that have more value than the initial requirements. Thus, even if these cost more, if the ROI is greater than the ROI predicted by the original project plan, the plan should change. This holds true regardless of the application area — operations, CRM, or supply chain. When it comes to IT, the reality is that you never know exactly how long it is going to take, how much it is going to cost, or just how much benefit you’re going to find until it’s done. You can estimate, and if you have an expert help you, the estimate will usually be close, but it won’t be perfect — and this is why may projects fail, because those who don’t understand IT expect that perfect plans exist. There is no perfection in IT project planning. Accepting this is the key to success.

The metrics that should be used are the ones that identify fundamental issues that cause projects to fail: like lack of governance, unrealistic plans, and limited understanding on the part of management. Better metrics are how many milestones are hit (as long as the project plan is updated at each milestone based upon knowledge gained and lessons learned), what percentage of people are using the system at the end of each phase of the rollout (w.r.t. what percentage of people should be using the system), and how many executives are using the system (even if only for reporting purposes).

Furthermore, project management personnel must play a more active role in managing project sponsors’ and business stakeholders’ perceptions of success and failure. Forrester recommends that project management personnel take the following four measures:

  1. Keep Project Steering Committees on Task
    Insure that the steering committee makes decisions in a timely matter and addresses problems and issues as soon as they arrive.
  2. Improve Communication with Project Sponsors
    Keep the sponsors up to date with changes in requirements and the impacts these changes have on the budget and timeline to insure that they see progress and success and not failure.
  3. Improve the Reliability of Project Plans
    Establish best practices for developing plans with significant unknowns. This can help with setting sponsor expectations for reasonable project performance.
  4. Better Communicate Estimates of Cost, Schedule, and Resources
    … and how they are based on current business conditions, current requirements, and current assumptions — and that they could change as the project progresses and understanding is improved.

Supply Chain IT Assessments

Warning! This post contains shameless plugs.

SourcingMag.com recently ran a good piece by Dian Schaffhauser on “How To Do IT Assessments (8 Practices for SMBs)” in Sourcing Mag that is also appropriate for any organization looking to gauge the effectiveness of its Supply Chain IT systems.

  • Develop a Ratings System and Apply it Consistently
    For each area — data management, process support, compliance, etc. — develop a simple rating system, such as a numeric system from one to five or one to ten, that lets you see how good you are doing at a glance compared to best-of-breed. Then you can quickly see what systems need to be upgraded the most. Consider doing the same for each supply chain employee — logistics, sourcing, contract management, etc. — against a standard set of modern job descriptions. Look to the local professional society (ISM, CIPS, SCL, etc.) for these, since you shouldn’t waste time “reinventing the wheel”.
  • Bring in an Outside Evaluator
    If you really want an accurate assessment of where you are, you need to bring in an outside expert (such as the doctor) who is familiar with best of breed systems and processes to help you. This expert can also help advise you as to what system or process updates will be the most beneficial to your organization.
  • Select a Framework and Use It
    Frameworks really do work when it comes to managing, measuring, and improving the delivery of services. Any industry standard framework — such as Lean, Six Sigma, or CMM — will do, as long as you are comfortable using it.
  • Take a Holistic View of Time Measurement
    Where are your employees spending their time? And where shouldn’t they be spending their time? If they are routinely spending time on tasks that are not value-add to your business, then you should be focussing on automating or outsourcing those tasks. Note that it’s not the amount of time that matters. It’s whether the task has value. Some tasks, such as pre-sourcing project research, will take a long time, and that’s okay, because, done by an internal expert, they will result in considerable value. So don’t sit down with a stopwatch and blindly focus on the most time consuming tasks, it’s not productive. Identify those tasks that your people should not be doing, automate or outsource them, and watch the process improvements and savings roll in.
  • Be Upfront About Your Intentions
    If your intention is to outsource, be clear, especially if the intention is not to eliminate jobs, but to make your people more productive at their jobs. If you need to improve operations because the company isn’t doing well financially, explained properly, your people will understand and buy-in. After all, most people grudgingly prefer change over losing their jobs (which will happen if you don’t plug the leak in the ship and it sinks). If you are honest with your people, they’ll be honest with you — and give you an honest effort.
  • Technical People Need To Be Evaluated By Technical People
    … and experts need to be evaluated by experts. (Which is yet another reason to enlist outside help, like the doctor, when trying to evaluate the state of your supply chain organization and it’s supporting systems and processes.) Otherwise, it will not be a fair evaluation, and you could trigger unnecessary animosity within your organization.
  • End With Recommendations and Move On to the Next Project
    The assessment should have a goal — specifically, the goal should be to determine the appropriate improvement project(s) that you are going to move forward on.
  • Outsource or use SaaS Where it Makes Sense
    Do the strategic and outsource the tactical. System implementation? If you’re not good at it, let a third party do it. New trade rules? Let a SaaS GTM provider keep your system up to date. Office supplies? Use a third-party e-procurement provider that integrates 4+ providers and spot-buy as needed.

Simplifying Global Trade Management Systems

Recently, Industry Week ran a piece by Melissa Irmen of Integration Point (acquired by Thomson Reuters), a company I covered not too long ago in this post, that offered 10 suggestions on how to make the implementation of a new Global Trade Management (GTM) system as painless as possible. Since some of the suggestions were quite good, I’m going to summarize them for you in this post.

  • Consider SaaS
    As discussed in my e-Sourcing Wiki Paper [WayBackMachine], SaaS has a slew of advantages that traditional behind-the-firewall systems do not. Plus, in addition to being a low-cost way of getting started, it’s an operating expense.
  • Buy Only What You Need
    Find an extensible system that can be upgraded later as your needs mature. (Another reason to look at SaaS.)
  • Check References
    Ask current users of the provider about usability and weaknesses. Also, I’d include references the GTM provider doesn’t provide if you know about them!
  • Inform Your Supply Chain Partners
    Not only can they help you acquire the right data for the system, but they might be able to collaborate with you through the system.
  • Get Buy-In From Upper Management
    GTM crosses organizational boundaries. Without a mandate from upper management, it might be hard to get other teams to buy in to the system.
  • Ensure Access to Transactional Information
    Make sure all affected parties can access the information they need when they need it.
  • Insure the Solution Contains E-Document Management
    This saves time, effort, and money and insures documents are not “lost” when they are needed.
  • Evaluate Adaptability
    New GTM systems will generate a number of “false positive” alerts on the black-and-white rules of global trade embedded in the system — but some of these will not apply to your company’s particular situation. Make sure that the system can not only accept authorized overrides but that the rules can be updated to handle these situations by a system administrator.
  • Determine How You Will Stay Up To Date
    If you go SaaS, the vendor will take care of updating not only the system, but the critical data that includes free trade agreement amendments, denied party list updates, etc. But if you go installed, you will either have to update this data yourself or subscribe to a service that does it for you.
  • Check for Governmental Connectivity
    If the relevant government body can accept electronic documents, the system should support it.