Revenue growth focused posts

I wrote a few weeks ago about strategic outsourcing and technology rationalization. Today, I am sharing some further views on successful technology portfolio assessment and a transformation strategy to Second Circle Technology ™. As the economic downturn continues we are seeing and increasing number of companies looking at cost reduction through application portfolio transformation. Application transformation with Second Circle Technology drives more flexible and lower cost while legacy systems constrain IT’s ability to meet business needs. We have seen reductions in cost that range from 15% to 30% of IT spend.  At the same time, legacy application portfolios constrain the ability to meet business needs. Some of the typical constraints are:

  • applying systems and processes consistently throughout the company
  • adapting quickly enough to address changing business needs
  • ensuring the skills needed to make critical changes to systems

There are also inhibitors that make changing the application portfolio a challenge:

  • Users have grown up with ‘their’ application (often built in-house) and are very protective over them
  • Users perceive risks from the fear of unknown while others dislike possible loss of exclusive ownership/control
  • Change may appear to be more manually intensive to the users than the existing applications
  • Technologists push new technology based on personal interests and to develop their own skills and market value
  • Organizations lack an effective approach to maintaining an effective portfolio and demonstrating how all the pieces fit together.

We see many instances where companies fail in their efforts to transform their application portfolio. Often, there is insufficient up front focus  securing business sponsorship and commitment. Transformation to a new or updated application portfolio is complex and there is an insufficient focus on the culture changes and buy-in needed to support the new approach. If you are trying to assess your application portfolio, you must ensure the transformation is driven by the business strategy – establish the business vision, leadership and sponsorship required to drive the program. When evaluating each application in the portfolio, you can use a structured analysis to select the most appropriate transformation approach. Begin with an inventory of applications and an overall mapping of how systems all fit together. From that point, you can assess each component of your architecture for the right strategies. Once the overall view is in place, you can make decisions at the application level. Options include:

  • No change to current systems – leave current situation apart from routine support and maintenance
  • Incremental enhancement or “bolting on” extensions to existing systems/architecture or “ring-fencing” legacy applications
  • Replacement with a Software Package – use best of breed commercial off the shelf package or combination of packages to replace existing systems
  • Replacement with a Custom Developed Application – replacement of existing systems with new, purpose-built applications
  • Outsource with an on demand service provider– pass applications, infrastructure or development to a 3rd party. This is particularly popular with the advent of cloud computing and service provider expertise.

To ensure success, make sure you treat your initiative as a business change program – put in place the required capabilities, skills and resources to deliver the transformation, define and communicate your approach.

I thought about some of the interesting work we are doing with innovators and decided to dust off and update this article that I originally wrote in 2003. Not surprisingly, basic opportunities and concepts have not changed too much so I decided to re-publish it with a few updates. What HAS changed? Certainly the jargon has. I am sure you have heard these: “Inboxing” is now when a relationship of Facebook has progressed from the Wall to 1:1 communications to direct “inbox communications”!…. “We’re inboxing” – cool.. “Friending” and “Unfriending” even “Facebook Stalking” ouch… From an enterprise user audience perspective, when we think about the information we access and seek, let’s imagine the future. We experience a single intuitive interface to the content and services that we need and want in our daily lives. We access personalized entertainment, news, information, services and messages easily using the right medium. Our personalized network understands our preferences and the available knowledgebase while maintaining our privacy.

Perhaps this feels like a utopian vision – too far into the future to be actionable on today’s agenda. However, new technologies in the social web and information management within corporations now allow us to deliver against this vision. Content and services can be filtered for relevance and personalized so that your audience; readers, employees, customers, and partners can experience a focused set of multi-media content. Effective information management delivers significant business value by increasing productivity of the knowledge worker and engaging target audiences. Also companies realize strategic advantage by leveraging intellectual assets and being up-to-date on relevant industry knowledge. As Metcalfe’s Law states, “The power of the network increases exponentially by the number of computers connected to it. This law is often cited as a key driver for the explosive growth of the Internet. The more users on Facebook, the more conversations and connections we have. The more readers of a blog post, the more social sharing, syndication and value. However, Metcalf’s law also contributes to diminishing productivity within an enterprise.

Why?

We have limited ability as humans to deal with the spiraling number of information choices and the myriad of channels all vying for our attention. The mountain of information available to us is vast and growing. Google indexes around billions of web pages. The deep web is estimated to be 500 times larger. Daily e-mail traffic is measured in multi-billions of messages per day. The web gets searched over a billion times every day. Add telemarketers, spam, radio, TV and newspapers to these channels and the amount of information we see is stifling. Information overload is a daily trial. While information is a critical asset and source of competitive advantage, most companies have not deployed systems to deliver content and knowledge to their target user audience. Only a small fraction of information is fully relevant to the user. RSS feeds and content syndication help, but the problem still exists:

  • 1000s of irrelevant e-mails
  • Intranets that are hard to use
  • Feeds with irrelevant content
  • Wasted internet searches

I estimate the cost to productivity ranges from a 5% loss in dealing with spam, to as much as a 20% loss in research and analysis. However, new technologies are delivering compelling new ways of information access – ranging from social relevance and voting (e.g. Digg) to more advanced (big “S”) Semantic Technologies where information resources can be pre-filtered with specific Ontologies. What are some issues preventing companies from successfully deploying an effective information network?

The first obstacle is the lack of vision and commitment. Companies have failed to recognize and communicate the priority of a unified information management model preferring instead to allow disparate initiatives and systems to emerge across the enterprise. While there is value in deploying solutions close within business areas, when looked upon as a whole, these disparate systems compound the information management problem and fragment the corporate culture.

A second challenge is a lack of focus on user-centered design. Companies have had mixed success in truly understanding what will make a user truly engage in a new information service. Too often information is organized without an eye toward user intent and information architecture. Search is typically broad and text based, rather than data-driven. RSS is also not fully filtered and based on both relevant ontology and social / peer ratings. Advanced content management and web services technology are critical enablers to a personalized user experience and should be adopted as enterprise standards. These need to be taken to another level with advanced semantic search and relevance engines.

Finally, companies are failing to recognize that technology solutions only address the visible information management challenge. A successful information network within an enterprise or community requires an operating model to organize the publishing process and encourage semantically-aware user generated content and an effective ingestion of external content relevant to the community. What are the steps you should take?

1. Begin with a top-down information strategy
2. Design around the user audience experience
3. Define a sustainable business operating model
4. Use Second Circle technologies (like Semantic Technology and Social Relevance)  for innovative information acquisition, access and display

Feel free to comment, and contact me if you would like to discuss your information and audience content strategies.

With this economic turmoil in the last month, I am seeing a dramatic shift in focus from building and growth to efficiency and cost reduction. These times are similar periods in each of the last three decade when we faced similar challenges. I thought about which strategies to dust off and use now to help deal with these economic realities.  Two winning strategies are outsourcing and technology rationalization. When approached the right way, these strategies rapidly deliver cost reduction, but also improve service delivery and differentiation. So what are the options? When companies start to consider ways to reduce costs, there are some typical strategies they consider:

  • Recruitment freeze / Budget reductions – The challenge: This can create an unbalanced employment profile
  • Supplier Renegotiation – The challenge: This is a good strategy, but takes time and requires knowledge of and monitoring of total business spend
  • Process Re-engineering – The challenge:  This also takes time and requires access to best practice skills, also the time to full payback can be extended
  • Strategic Outsourcing – The challenge: With Outsourcing you need a service management process to manage the relationship. you might also face resistance among management
  • Central Service units – The challenge:  The approach can work well, but can go against culture and can take time to implement.
  • Rationalization of IT Applications – The challenge: This is a solid approach to consider continuously, there will be some one-time costs for integration and decommissioning of applications.

I think the two that work particularly well in times like these are Technology Rationalization and Strategic Outsourcing. Both of these strategies can actually enhance your market growth and service strategies while reducing costs. Some obvious areas to focus on include:

  • Technology Infrastructure
  • Procurement Processes
  • Marketing Platforms and Digital Channel Management
  • Corporate Events and Meetings
  • Redundant and Overlapping Applications

I would start with Rationalization – this way your Outsourcing strategy will be more directed. Plus, sometimes, Outsourcing is the weapon to drive Rationalization! Step 1, Rationalize Technology Portfolio Over time, we add on to our application portfolio and create a kluge of systems that inhibit users (internal and external)  from consistent access to the information and services they need. As an example, too often Marketing technologies touch your audience in multiple inconsistent ways and are not underpinned with a single view of the audience, effective community, web 2.0 experience and isnights through data management. Technology rationalization is a first step in creating an overall technology architecture that aligns with your business model. Benefits include:

  • Drive down costs and total cost of ownership for redundant applications
  • Streamline audience experience and audience intelligence with rationalized systems portfolio
  • Drive simplification and increase productivity
  • Rationalize project portfolio aligned to business drivers
  • Consolidate contracts
  • Rationalize licenses

Step 2, Outsource Strategically Clients still look to outsourcing to reduce costs and enhance shareholder value, but there are many other reasons to outsource. When done strategically, Outsourcing can and should enhance your growth strategy. Some benefits include:

  • Improve Cost predictability
  • Focus on Core business
  • Consistency in delivery with reliable outcomes
  • Flexibility to address to market changes
  • Access best practices and re-focus on differentiation
  • Gain access to specialist skills
  • Improve quality of service

Get started by answering a few questions.

  • Are you spending too much on an application portfolio that is not well integrated or aligned with your current business strategy?
  • Are there options to consolidate application systems and drive business value?
  • Is the organization ready to consider strategic sourcing options?
  • Which areas of the business portfolio can be better managed through a strategic sourcing relationship?
  • How much can be saved through thoughtful rationalization and sourcing strategies? How much can be gained?

I enjoyed a trip to Philadelphia last week to attend the ITEC Conference . I spoke at two sessions on Thursday, here is a summary. Session 1 Second Circle Web 2.0 and New Marketing Metcalf’s Law – The value of a network is proportional to the square of the number of connected users We are in a new digital ecosystem and the search box is the new window to our intentions:

  • 112M million blogs
  • Bloggers are mainstream
  • 2,700 Social networks
  • 1.5 million photos added to Flickr daily
  • 4 million daily Twitter messages
  • Average age of evening news viewer: 60

As Chris Brogan has shared many times, there is a new information model: Information must be: Dynamic, Localized, Atomized, Relevant, Mashable, Mobile, Shareable Web 2.0 is a jargon term and overused, but it still is understood as representing a wide range of new technologies that share some common principles: Participation Social Software Mobility Folksonomy The Long Tail We talked about the following technologies that can transform new marketing and PR: Blogs Microblogging RSS, Content Aggregation and Syndication Wikis Session 2 – Web 2.0 for KM & Collaboration The second talk focused more within the enterprise and discussed how similar technologies are having an impact with team collaboration and innovation. Companies are realizing the benefits in using Second Circle tools for KM and Collaboration. However, there are some key differences inside and outside the firewall. Need for security Firewalls restricting access to social networks Regulations/ Sox prevents transparent communications Mix of public and private networks for content Rich new media impacting network performance Documents buried across servers and desktops Culture doesn’t support blogging and sharing views Can’t establish my personal presence and profile online Not using RSS to keep track of my information resources Access expertise across all my networks – work / personal KM & collaboration drives innovation, participative decision making, and information access, and colleagues access across an organization: Driving efficiency and lower costs Enabling distributed, networked businesses Delivering innovation and speed to market Supporting flexible working Knowledge as a distinct factor in market value Low cost open networks and services Generations of tech-savvy digital natives. A case study in life sciences pointed out four key strategies: Building customer relationships Enhancing the work environment Achieving competitive advantage Ensuring compliance and security We talked about the following technologies and how they are being used “inside the firewall” to drive value. Profiles & Expertise Location Corporate Blogs Wikis Document Management Search RSS, Alerts & Messaging Team Collaboration Some advice: Support your “Digital Natives” Foster Grass Roots Adoption – Participation Use Tagging Strategies and Folksonomy over overly burdensome taxonomy models Adopt light weight but clear procedures and policies for Information Management Governance, Security Contact me at CrossTech Partners if you want to learn more from the presentations: [email protected]