Five Things

1. Five Things Niel Nickolaisen CIO, Headwaters, Inc. Co-founder, Accelinnova

2. Introduction • I suffer from impatience, consultant fatigue, and career angst. • I look for solutions I can implement immediately, that do not require months of consulting, and that add immediate business value. • Therefore, I present . . .

3. 5 Things • That are immediately implementable. • Proven. • Easy to explain (even to the CFO). • That generate business value.

4. The Five Things • Purpose Alignment • Complexity / Uncertainty Matrix • IT Lean, Six Sigma • Build a Model Not a Number • IT Customer Service

5. 1. Do More Smart Stuff (and less stupid stuff) • Example, ERP implementation. • Legacy sequence of data entry was: • Name, telephone, address. • ERP sequence of data entry was: • Name, address, telephone. • “Requirement” was to customize ERP to match legacy sequence.

6. The Test • Was this customization “smart” or “stupid”? • This is not isolated: • 2006 Standish Group indicates that 45% of functionality is never used. Another 19% is rarely used. • Same reports shows IT projects return $0.59 for every dollar spent.

7. Always or Often Used: 20% Always 7% Often 13% Never Used 45% Sometimes 16% Rarely Used 19% Never or Rarely Used: 64%

8. Purpose Alignment High Partner Differentiating Market Differentiating Parity Who Cares? Low High Low Mission Critical

9. In Practice High Do We Take This On? Differentiate, Create Market Differentiating Achieve and Maintain Parity, Mimic, Simplify Who Cares? Low High Low Mission Critical

10. Example - ERP • Consumer Packaged Goods company. • Revenue from multiple channels (call center, internet, wholesale specialty, wholesale big box) • Replacing legacy system (poor transparency, multiple time data entry, low automation).

11. Before High WMS Legal Structure Accounting Product Development CRM Market Differentiating Channel Mgmt Analytics Low High Low Mission Critical

12. After “Proven products with no channel conflicts” High Analytics Channel Mgmt Product Mgmt Market Differentiating ERP CRM Legal Structure Low High Low Mission Critical

13. Doing What Is Smart • Reduced project timeline by 50% and cost by 40%. • Provided additional benefits (streamlined, simplified business processes). • Delivered high impact results immediately. • “Why do it any other way?” • And, on-going decision filter for all business decisions!

14. 2. Plan For Complexity / Uncertainty • Complexity driven by: • Dependencies / integration. • Team location, size, and maturity. • Bigness and badness of project. • Uncertainty driven by • Dynamic market. • New technology. • Project duration. • Formally assess these two dimensions.

15. Little Model High Colts Bulls Agility to handle uncertainty Simple, young projects. Process definition to cope with complexity Need agility Tight Teams Uncertainty Cows laissez faire Complex, mature market Need defined interfaces Dogs Low Low High Project Complexity

16. Example - Practical Implications • Big, Ugly Sales System • How to reduce complexity / uncertainty. • Use Purpose to simplify / standardize. • Select (parity) proven technology. • Reduce duration by breaking into phases. • Guarantee access to expert users. • Co-locate the team. • Match the project manager to the project.

17. 3. IT Lean Six Sigma Lean = Deliver value by reducing waste. The 7 forms of waste: • Rework (pretty much everything I have done). • Waiting (approvals and workflow). • Over processing (remember, 64% of features and functions are rarely, if ever, used). • Inventory (30-40% shelf ware). • Motion (poor access to expert users). • Movement (Alistair Cockburn, “People won’t climb stairs to get an answer). • Over production (licensing).

18. The 5S Tool • Sort • Set in order • Shine • Standardize • Sustain

19. Example - Before

20. Example - After

21. Applied to IT • Sort what we use from what we have (COA with 25,000 accounts). • Minimize exception handling: • Who is going to use this feature / function? • What do they want to accomplish with this feature / function? • How often do they need to accomplish this task? • If they don’t have this feature or function, how will they accomplish this task? • System stratification and treatment (A/B/C) • There are no “Mights” in 5S

22. Six Sigma Standard 6 Sigma 3 Sigma Process Variability

23. Applied to IT Project scope = 60 days. Actual = 50 day. 10 day variation. Why? What can we learn? Standard SPAM filtering performance = 60 seconds. Measured performance = 120 seconds. Variance of 60 seconds. Why? Firmware not current. Why not? No consistent process for applying patches / updates. Why? Stop the bleeding and find the knife.

24. 4. Build A Model, Not A Number Traditional Approach Analysis / Decision Process ROI Costs Benefits How well do we know costs? Benefits? What is missing? How well is this working?

25. How About This? Purpose Analysis / Decision Model Phase Plan Costs Benefits Considerations Phase plan includes what we need to learn in order to make the next decision.

26. In Practice • Customer retention / loyalty program. • No way to guess at benefits with most coming well into the future. Big costs. • But, potentially important considerations. • Developed a model that: • Included considerations • Delivered interim value • Improved knowledge about future phases. • The hardest part: “We will make no decision before its time.”

27. 5. IT Customer Service • Is it better to be right or helpful? • Customer service basics: • Communicate (the good and the bad) so that customers can plan alternatives. • Present options and let customers decide. • Measure customer satisfaction.

28. Right or Helpful Example • Username is first initial, middle initial, first four of last name: • nrnick@ . . . • What to do with • Brian K. Butterfield

29. Simple Questions • Differentiating or parity? • Dog, colt, bull, or cow? • Does this generate waste? • Do we need to decide that today? • Are we being helpful or right?

30. Questions? • More stuff available. • Accelinnova.com nnick@headwaters.com