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Monthly Archives: July 2014

The Evolving Face of Business

By Daryl Bishop

Daryl BishopReading popular press or watching movies such as the Aliens series where Weyland Industries pretty much ran the world, you would be under the impression that the future of business is pre-ordained with large behemoth corporations running the show.

The notion that large corporations will evolve into globally dominating entities is not new and not without historical precedent. Certainly, the U.S. Government has in special cases, split up large companies with the aim being to minimise monopolistic behaviours. I would, however, like to offer a counter view that market forces are compelling the move from large centralised organisations to ones where greater profitability is linked to smaller nimble businesses that can rapidly react to changing market conditions.

Here are my reasons why:

Built for Creativity and Innovation
The two companies below highlight the advantages of keeping organisation sizes small or at least acting small

  • W.L. Gore & Associates – Bill Gore, the founder of W.L. Gore & Associates, the maker of the famous Gore-Tex fabric, organised his business into small task force groups. To promote communication he limited teams and manufacturing facilities to 150-200 people. There was a sociological imperative for this sizing as it was thought that this was the maximum number where people could build connections with each other.
  • Flight Centre – Flight Centre, an Australia-based travel company with over 2000 stores, uses an organisational structure where stores within a region operate as tribes competing with other stores. This encourages connectivity and belonging within the tribe while promoting competition between stores.

In both examples the key to unleashing the creativity and innovation of people was limiting the size of the corporate ‘tribes’ to encourage connectedness.

Agility
The last few years have seen the rise of the startup movement; these companies attract the best talent, have a source of funding through venture capital and crowd funding sites and have a lean startup framework to build and quickly adapt to the market. Startups innovate quicker and produce products that customers want, as they can rapidly pivot as needed to match their products to customer demand.

Profitability
Interestingly, when Standard Oil was broken into 90 separate companies in 1911 as a result of an anti-monopolistic legal action, the share price of these separated companies on average more than doubled. Companies survive, thrive and die based on their ability to innovate and quickly bring products to the market. The speed of business has accelerated over the last decade due to globalisation, the Internet era and the aforementioned rise of the startups.  The companies that can create and react quickly to the market will survive and thrive.

Small but Large
The recent 19 billion dollar sale of WhatsApp to Facebook is an example of how companies can be small and still attract large valuations. In WhatsApp’s case it had 55 employees at the time of sale.  The historical link between the payroll and company valuation no longer applies. Smaller organisations make ready use of a larger service and capability ‘organism ecosystem’. This minimises capital investment by use of a service consumption model, allows focus on their market segment, and supports rapid growth. The use of cloud services is an example of a technology service offering from this ecosystem. This also expands to manufacturing services such as design, fabrication and batch run.

Joining the dotted lines, I believe the trend will be towards smaller organisations that will better react and compete in a fast paced marketplace than their larger brothers. Of course, large organisations will still have a place across all sectors; however, I predict the market will provide a natural brake on unrestrained growth, as size becomes an impediment to competitiveness.

So what’s this to do with technology? IT needs to work closely with the business to ensure that the right strategy and services are in place. As technology is at the forefront of change, the onus is on us to inform, educate and be creative for our business. Finally, IT needs to be the model of agility that other business units strive to replicate.

Evolving Business Image


Daryl Bishop is a business solutions architect with VMware Accelerate Advisory Services and is based in Melbourne, Australia.

Streamlining Service Management to Achieve Cost Savings Targets

By Reginald Lo

ReginaldLo-cropIT departments continue to face aggressive cost saving targets.  During the recent recessions, many IT departments did not just “cut the fat” but they have also “cut into the bone.”  How can IT cut more?  Every stone must overturned to find even more cost saving opportunities.  A legitimate question is, “how does Service Management help achieve the cost saving targets?”

To answer this question, there are a number of perspectives that will help:

  1. How does Service Management directly save costs?
  2. How do we reduce the cost of Service Management?
  3. How do we change the conversation around Service Management so the Business becomes more interested in maximizing the value of IT Services as opposed to minimizing the cost of IT services?

This discussion is focused on cost savings so we will investigate the first two perspectives.

How does Service Management directly save costs?
The adoption of mature Service Management processes can improve productivity and (let’s be honest as to what Executives are looking for) opportunities for reducing head-count:

  • Reducing the re-work.  The biggest cause of re-work is failed changes.  Better Change Management, Release and Deployment Management, and Testing and Validation, can reduce this largest contribution to waste.  Configuration Management can enable Change Management and make it more effective.
  • Reducing the fire-fighting. Many organizations do not realize the high cost of constantly fire-fighting.  Fire-fighting pulls resources from strategic project work so there are the direct costs to fight the fire as well as the indirect opportunity costs that the projects must bear.  In contrast, a proactive approach, giving people time to think strategically and plan reduces the number of fires and frees the resources that were fighting fires.  Being proactive means emphasizing, among many other things,  the Service Design processes, Event Management, Problem Management and Continual Service Improvement.  Another not well recognized cost of fire-fighting is the impact on the Business.  Fires, by its very nature, do not just create costs and inefficiencies within IT but also create costs (real and opportunity costs) for the Business.  So a reduction in fire-fighting will help IT as well as the Business.
  • Consistent adoption of efficient and effective processes. Too often, processes vary across the organization: different teams follow different processes, different individuals perform processes differently, there are differences between geographic regions, between different legacy organizations (due to the history of mergers and acquisitions), and between different services that IT provides.  If an organization identifies/defines the best practices for its organization and ensures consistent adoption, the organizations as a whole will experience a productivity boost.

How do we reduce the cost of Service Management?
Many of the cost saving arguments for Service Management have been discussed before.  However, a “dirty little secret” is that Service Management is sometimes the cause of “non-value-added” cost to the organization.  This is not the fault of Service Management framework but of an adoption that does not focus on business value.

If you hear comments like “I spend more time writing up a Change record then implementing the Change,” there are probably many cost saving opportunities within Service Management to:

  • Streamline processes and make the more efficient
  • Remove bureaucracy and administrative “busy work”
  • Remove overlapping controls, e.g., between Change and Release
  • More efficient use of tools that support Service Management

Another way of finding to reduce the cost of Service Management is to analyze who is doing what activity within each process.  For example:

  • Can the activity be performed by a less expensive resource?  What training and tools can we provide the less expensive resource so they can be successful at the same tasks as the more experienced / more expensive resources?
  • Can the activity be off-shored (again to a less expensive resource) in a way that we can still keep the process coherent?

To ensure Service Management is not causing a burden to the organization, you need metrics to measure the cost and value of each process.

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Reginald Lo is Director of Service Management Transformation with VMware Accelerate Advisory Services and is based in California.