Today I want to sum up a McKinsey Quarterly article, which describes how to reduce IT costs and complexity in 3 steps.

The IT architecture of a company can be seen as formal description of its business operations, business applications, databases as well as the equipment that run the applications. As the IT architecture is growing organically over the years, it is hard to control. In almost every established enterprise you can find duplicated systems, inconsistent data and provisional (data and application) integration. IT initiatives are often driven by short-term needs, not by a long-term blueprint.

Time to clean up this mess! Especially now, in times of the economic crises, it’s a unique opportunity to reduce IT costs and boost business agility significantly. It’s time for a clearly defined IT blueprint with organization-wide guidelines for the most appropriate and efficient systems and processes.

Business leaders must evaluate the business requirements and processes that underlie the existing architecture and then explore more efficient alternatives. For minimal disruptions and maximal benefits, the article suggests a three-phase approach.

Phase 1: Immediate Cleanup

The first phase should have a length of three to nine month. The team’s task is to generate quick wins through cost reductions by rationalizing software licenses, canceling noncompliant projects and decommissioning little- or never-used applications.

The savings in the first phase are not that high, but they are important to keep the management on track for the next steps.

Phase 2: Reducing Complexity

The second phase should have a length of six to twelve month. In this time the team decides if existing IT applications and system are really needed in future. The following methods are used to reduce complexity:

• Enforce out-of-the-box solutions
• Reuse existing components
• Consolidate databases
• Standardize technologies
• Reduce interface complexity
• Consolidate systems that do similar things

When IT and business managers analyze different opportunities, they must keep an eye on the trade-offs between short-term benefits for business units and long term costs for the entire company.

Phase 3: Business Innovation

The third phase should have a length of at least one year. In this most ambitious phase companies must consider transforming or even completely reinventing themselves. IT can play a major role in implementing big changes in the way companies run their business by supporting strategic innovation. Therefore, the IT must assess alternate operating models and shape the future with new solutions, for example using the Internet for online collaboration among employees or product innovation with help of customers and suppliers. New tools and processes can help to find profitable niches in declining markets and increase productivity.

The answer to the current economic situation is not only IT costs reduction. The answer is also IT complexity reduction, which leads to improved agility, greater flexibility, faster times to market, more efficient and effective business processes as well as faster growth once the turnaround begins.

What is your preferred frame of mind when facing challenges in professional- or personal life? Are you attracted to the notion of problems that want to be solved or do you see an outcome, an opportunity that wants to be realized? If you want to convince co-workers or yourself to change it can be helpful to switch to »opportunity mode«.

You know you are problem focused when the main part of activities in change initiatives circle around questions like the following:

• What is the problem?
• Who or what caused it?
• What is the root cause?
• What consequences does this problem have?
• What is the solution?

Of cause problems, root-causes and effects are important. But look what a difference it makes if you approach them from a slightly different angle:

• What would an ideal state without the problem look like? (What do you want?)
• What options do you have to get there?
• What else will you have when you get there?
• What do you need to get there?
• What are the immediate next steps?

Doesn’t this sound much better than the »problem version«? I for myself seem to be an instinctive problem solver. By forcing myself to focus on the goal and the benefits linked to reaching it motivating myself has become much easier (most of the times). Using this »mind hack« in professional life helped to motivate stakeholders by avoiding being paralysed by mounting stacks of problems and doubt in early stages of change.

What do you think? All mumbo-jumbo or would you give it a try?

I found a very useful model for the potential value of cloud computing, which distinguishes three value areas.  As the cloud aligns the time and the size of investments with the value you receive, cloud computing delivers an economic value. You don’t need to spend millions of Euros for it-infrastructure today and receive the revenue years later! The architectural value of cloud computing is the simple and abstract environment, that hides the complexity. That makes it easier and faster to develop and deploy applications. The strategic value concentrates on the organization effectiveness. It helps your organization to differentiate from others and focus on the processes that really add value to your business.

Do you think this model can be useful? Do you see any other cloud values which should be captured by the model?

Found at: Mwdadvisors.com

Great overview over the roots and main branches of complexity science inlcuding actual hot topics like self-organization, emergence and ecologies.

Found at Wikimedia.

Flexibility is one driver of dynamic which in itself is a driver of the complexity of a system. Flexibility is correlated in a positive direction to complexity as there is a direct cause-and-effect pattern like more flexibility produces more complexity.

Sounds logically. But what about the other way around? All businesses and IT departments want to be agile or at least flexible. A conclusion is that if you want to be more flexible you have to be able to manage more complexity! (at least if you are not in a chaotic environment like we all feel from time to time in a couple of projects)

ITIL, CMMI and all the other rules and regulations try to move the system “IT Service Delivery” from a complex situation to a  more manageable and more stable state with less complexity. This seems to be a good thing at first. Like the correlation predicts most of the un-complex IT Service Deliveries therefore are a bit static or unflexible at least.

If this position in the complexity continuum is a dedicated spot choosen by the CEO or the CIO who is in the know everything is fine. But more often than not people try to be more flexible and less complex at the same time. We all know what happens then.

I fiddle around with market positioning of professional services firms a lot to gain understanding of what we are doing as one of a bazillion consulting firms. David Maister is THE Maister when it comes to professional service firms and their specialties.

There are lots of models for market positioning that all go like this:

On the left hand side you have the Procedure work, also cold Standardized, Applying the Body of Knowledge or Commodity. On the other extreme to the right we do have the Rocket Science guys with smartest brains around.
In the middle tier we see Customized services and more senior consultants can deliver Gray Hair stuff.

The biggest differentiator is the leverage that the firm can use as a profit driver, i.e. how many consultants can be utilized by one Partner in the firm.
In Commodity companies 45 consultants will work for 1 Partner in a project, for example a software development project. In contrast one Rocket Science Partner can only manage as less as one non-partner consultant. So you see the profoundly different dynamic in these business models.

As we are focussing more and more on the human side of IT projects we came across complex adaptive systems, also known as software developer teams I am confident that we do not need to tell you about agile, lean, SCRUM and so on to improve performance of these complex adaptive systems.

My colleague Daniel pointed me to the Cynefin model with the 4 common domains simple, complicated, complex and chaotic  plus 1 special domain Disorder.

(c) IBM Systems Journal Volume 42, Number 3, 2003

What struck me with this framework is that the 4 positions in the PSF market and the client problems dealt with in each slot match quite good to the Cynefin domains!

There are a lot of insights to be gained by consultants and their clients. For example one can see that in a complex or even chaotic system or situation there is no value in the standard process of sense – analyse – respond as there is no clear cause-and-effect relationship.

Any consulting firm that has THE exact best practice solution for your complex problems that is tried and tested did not really understand complex systems. Maybe they will solve your simple or complicated problems in a very efficient manner but NOT the real problems that partly lie in the interaction of humans.
What are your thoughts on this?

Complex(ity) – another word for “Dunno”?

Our research shows that the terms complex and complexity are often used to hide that the person has little or no sufficient understanding of the thing that he is describing as complex.

It is a very complex situation/problem/software/process/organisation/business or whatever tends to reveal an insufficient diagnosis of the context. No DBA would speak of a complex database but any business guy will for sure. On the other hand any IT guy has seen complex business rules or processes first hand.

I vote for banning the word complex from your active vocabulary and see what happens. Vote Stefan!