For “Resistance Is Futile”, Press 1

Posted on July 25, 2011 by Chris Niccolls

Let’s face it, we have a very confused relationship with technology. Not just as individuals, but as a species. We are who we are as a species because of the technology we use. Too many other animals are faster or stronger or have more impressive teeth for us to reach the top of the food chain without a boost from technology. If our ancestors hadn’t used tools to shape their environment, this blog would probably be about where to find the best
designer moss for your modern cave life-style. Tools, and technology define us. Tools move civilizations along. Just 100 years ago, even in an advanced nation, most of the things that you could touch were either natural products or made by people (wood, leather, wool, etc.). Today, most of our environment is made directly by machines (plastic, computer parts, software, cell phones). People may still contribute but most parts are directly made by machines, in some cases designed by machines. Computers have become our step-children, and to a degree our competition.

An old theme for science fiction books and movies are technology turning on humanity. Sometimes technology is just seen as evil. Sometimes we think that computer intelligence will decide that it’s better than we are (like Star Trek’s Borg, and their “Resistance is Futile” approach to people management). Of course, “good technology” gives us spaceships to carry us to distant galaxies, robots to defend us against aliens, and every gadget that James Bond ever got from “Q”. Do we love technology or do we hate it? Come to think of it, does technology love or hate us? It’s both… it’s always both. One minute your drooling over your sexy new smart phone, the next you’re cursing it when it runs out of power in half the time as your old phone.

In corporations, hate for technology has been replaced by fear. For decades there was fear that machines would take over our jobs. In fact, the term “robot” was created for a play in the 1920’s were robots took our factory jobs away. Prophetic. But the most robot intensive industry is probably farming. Have you ever seen a farm? Well, the next time you see a big farm with a huge piece of equipment rolling through its fields, you’re probably looking at a robot. It still needs a human driver, but it has multiple computers and a satellite uplink. These machines record information on the state of the crops and weather conditions,  calculate where next to harvest, shrink wrap harvested crops and even drop a radio ID tag into the wrapper for future quality control. In the 1800’s 75% of Americans were farmers, dropping to 40% by the early 1900’s and less than 1% today. Industry followed a similar pattern. In the 60’s Detroit hired tens of thousands of painters, welders and similar trade workers. Today, I don’t think a single painter or welder has a production job in a major
car factory. It’s all done by computer-controlled  machines. Even if people became cost effective again, humans could not do the work at today’s quality levels. This is an expanding trend, and the industry that is most vulnerable is… Outsourcing!

In this month’s Outsource, a UK journal on outsourcing, Tom Topolinski wrote “The Next Big Thing to hit call/contact centres and customer service.” The “Next Big Thing”, according to Tom, is AI… the growing ability of computer intelligence to simulate human intelligence. I agree with Tom. Instead of a fixed menu of “press ‘1’ for this and ‘2’ for that,”
computers are generating dynamic and realistic conversations. Using a human sounding voice a computer asks you why you are calling and can interpret what you are saying. Sometimes the voice sounds a bit mechanical, and it misses the mark in finding the right service. Still, the best AI is better at correctly answering questions than today’s least capable offshore Call Centers. In a couple of years, AI will be twice as good at half the price. People based centers may improve, but not by very much. Costs, however, can be expected to rise.

Does that mean that Outsourcing is doomed? Yes, it does.

At least today’s “traditional” people based “lift and shift” approach to outsourcing. Moving work from one group in one location to another group in another location will still reduce your cost, but only for a little while. IT departments started outsourcing in the 80’s, banks a decade ago and legal firms more recently. In a few years, you will either game the benefits you were looking for or give up. If you get these benefits, you have a few more
years to develop greater efficiency. After that, prices will rise and you will need to compete to keep your best people, even at a higher rate. Outsourcing firms must become experts in process automation if they hope to continue to be viable. Some outsourcers may continue to rely purely on talented offshore staff, but they are likely to only be niche players.

Call Centers are just the beginning. Because call centers have been around for so long, they are fairly mature, well understood and well documented… excellent targets for automation. The corporate move towards Cloud services will make it easier to automate of outsourcing, just as the automation of outsourcing will accelerate the adoption of new Cloud services. The ongoing development of faster and more reliable communications further accelerates these trends. In the next decade top outsourcing firms MUST provide: great recruiting capabilities, excellent training, well trained project managers and business improvement teams and they must be very good at leveraging computer intelligence. Outsourcing firms without all of these capabilities will not be able to compete for the basic projects that make up the majority of outsourcing.

At the beginning of the 20th century modern industry was completely reliant on mechanical “muscle power” to produce goods. In the 21st century we are becoming just as reliant on electronic “brain power.” Traditional outsourcing… moving work from one group of people to another… will cease to be an isolated objective and become just one more milestone in a continuous path towards more efficient work. Computer intelligence is here to stay. At least, that’s my Niccolls worth!

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eBay… The New King Of Procurement?

Posted on July 21, 2011 by Chris Niccolls

A few blogs ago we were talking about how the next generation of Cloud services will evolve. To make a long story short, the best candidate would be large scale, on-line merchants with a lot of excess  computer capacity. The most interesting possibility, or interesting new player is eBay. They are a big on-line merchant. Technically, they are a cloud service because they are selling themselves as an Internet “storefront,” and alternative to smaller firms building their own servers and web sites. Furthermore, eBay owns Skype, so they can replace traditional phone and conference call services with their VOIP offering. A good start, but I haven’t heard anything about plans at eBay to take over their biggest market opportunity: taking over the world of corporate procurement.
Today’s blog is a deeper dive into this proposition. If you’re a manager in a major corporation, you’re just getting used to the idea of a procurement department playing a major role in all corporate activities. How would eBay’s arrival in your corporation help you? Let’s take a look…

Moving From Purchasing to Procurement: What exactly does a procurement department do? Like its predecessor, the purchasing department, they buy stuff. The difference is in how they buy stuff. Purchasing departments often stressed the importance
of relationships in getting the best products and services. Fair enough. However, this was also the time of the three-martini lunch and conferences at big resorts, with the signing of contracts at the end of the event. Gifts from suppliers were the norm, and it was hard to tell the difference between “industry practice” and bribery. Even if a purchasing department had the best possible deal with a supplier, they could rarely prove it. Purchasing departments were almost completely devoid of analytic capabilities. They might have an instinctual feel for pricing, perhaps because they used to be a sales person (which was not unusual) but how long does this knowledge last before it is out of date? As purchasing became more complex and corporations wanted more transparency into the decisions that consumed billions of dollars in corporate revenue.

Around this time global corporations were getting feedback from internal audits and external consultants that purchasing departments did not have strong controls or understanding of the money that the firm was spending. Why? Primarily four major factors. First, different offices did not coordinate purchasing decisions; aside from territorial issues, international standards and needs differed. Opportunities to leverage purchasing decisions were lost. Second, the lack of integration in corporate accounting systems made it very difficult for purchasing departments to know when and how other groups (accounting, business units, IT, etc.) were making purchases or if they were violating global standards when purchases were made. Third, throughout the 80’s and 90’s corporations were sourcing a wider range of increasingly sophisticated products and services (computers, networks, private jets, temporary employment contracts, cell phone contracts, etc.); purchasing departments had little expertise with these items and could not effectively purchase each item.  The fourth reason why purchasing lost control of suppliers… because individual business groups wanted to buy their own products (because they had the expertise, corporate was too bureaucratic, a group had specialized needs, etc.), so they became very skilled at aggressively bypassing the purchasing department.

Purchasing departments looked ineffective or even corrupt, and many were cleaned out and replaced with new procurement departments. These new groups were re-staffed by MBA’s and individuals with analytic backgrounds, rather than individuals hired for their ties to the firms they would buy from. Procurement introduced tools like six sigma to make each purchasing decision measurable and repeatable, identifying opportunities, and providing metrics to compare different supplier responses… often from Request for Proposals (RFP’s) issued to suppliers. However, even when armed with the most sophisticated personnel and software few Procurement departments are big enough and
sophisticated enough to be experts in everything. Without the necessary expertise and knowledge, you cannot effectively interpret the responses you get from suppliers. The tools of a modern Procurement department put all the information you need in front of you, but that data remains in indecipherable language until it is interpreted with the necessary expertise.

Hail eBay, Savior of Procurement: Fortune 100 corporations simply cannot justify staffing all the experts needed to cover all the purchases made by a modern corporation. The smaller the firm, the more resource constrained and less capable a procurement
department becomes. For small firms, which provide the majority of jobs and purchasing decisions in the world, the “procurement department” is one of the many hats worn by the firm’s owner. Large corporations are repeating past mistakes by trying to big omni-competent procurement groups. It didn’t work a hundred years ago when financial firms provided their own credit ratings, although they did eventually yield to “public” ratings by Standard & Poors, Moodys and others. It didn’t work when the world’s largest firms built their own secure communication networks in the 80’s, which they eventually dropped in
favor of public communication carriers. It didn’t work when IT departments tried to support every possible software and hardware platform in the 90’s, leading to the current migration to the Cloud. There are few  to believe that it will work this time for procurement. The alternative is to look outside, perhaps to the Cloud, for a firm that will provide many of the most difficult procurement services. I believe… and if there are any Investment Bankers out there listening… that the right firm for this huge market is, eBay. Here’s what they bring to the party:

  • Auctions: This is, obviously, the core of eBay’s competency. Auctions have become legitimate vehicles through which large corporations make purchases, everything from PC’s to outsourcing services. But did you know that a well-designed auction looks a lot like an RFP? You provide information in advance on what you want (just like an RFP) and the suppliers you’ve qualified to bid in the auction show up at an agreed-upon  time and bid against each other for your purchase. Unlike an RFP, suppliers see each other’s bid and can decide if they want to hold or lower their price, or raise questions, or withdraw their bid, etc.
  • RFP’s: Ideally, most purchases would go through an RFP like process. But the reality is that the development of a good RFP consumes a lot of resources, so this
    excellent tool is often rationed and only applied to the most costy procurement exercises. If they were more easily produced, they would be used more often, and smaller firms would be able to use this powerful technique. If eBay builds off its current capabilities and launches a corporate auction site, with a few extra RFP elements, they can replace or supplement the RFP process at most fortune 500 firms and make this powerful process available to a huge number of smaller firms. The better the process becomes, the smaller the purchasing decision that can be sent via eBay. Consider the fact that Corporate IT spending alone is expected to account for $3.5 Trillion in 2011. How much of this is efficiently procured today? How much money is left on the table every year?
  • Supplier Qualification: Once eBay creates the world’s largest marketplace for procurement and suppliers, what else should they do next? Well, they should expand on their current model where information on sellers is provided buyers. This not only provides information on what the seller offers, but also how long they have been selling through eBay, how many sales they’ve engaged in, and feedback directly from buyers. This is a very large part of what the RFP process
    provides.
  • RFI: However, eBay would be in a position to provide yet another invaluable service. Before an RFP is released, an RFI (Request for Information) is sometimes sent first to prospective suppliers. Sometimes this is to pre-qualify suppliers for the RFP stage, and sometimes it is to gather information used to develop the RFP. Because eBay would process an enormous number of RFP’s and auctions, both aggregate information (current average price for a specific model of PC, six months pricing trend for 20lb 96 brightness copy paper, price difference between two star and four star rated ink suppliers, etc.) and supplier specific data (what has your average pricing for this product been over the last year)… although suppliers may see this as too much information.
  • Ratings of Procurement: Turnabout is fair play. Suppliers would like to get
    information on who they will be working with. A bad relationship means the contract will be overly expensive or will fail to meet service targets. From a supplier’s point of view, one of the most important things in a relationship is getting paid… preferably on time. Next to that you would like to know just how
    difficult the client is to deal with on a day to day basis. Some clients are far more resource consumptive (higher requirement for meetings, reporting, etc.), and it raises the cost (or lowers the profitability) of a project. Suppliers need to know this so that pricing can be realistic. Of course, if individual firms find that pay late and are seen as poor managers, this might provide the incentive to fix these problems and make future procurement exercises more successful.
  • RFP Writing: Finally, could produce template and custom RFP documents. This would be an entirely new capability, but one that would be neither expensive
    nor exceptionally difficult to implement. It could be started with professional RFP writers and then supplemented through the development or buyout of RFP
    software. There are a lot of potential acquisition targets, or all sizes and capabilities. Although I’ve never used it, I’d vote for “RFPMonkey”, if only for the name.

Should eBay rule Corporate Procurement? Yes, it should! Procurement departments are popping up everywhere, and each new department merely duplicates the work of other departments without adding new value. Corporations are paying for increasingly larger procurement groups, that are each faced with sourcing projects that are not equipped to sucessfully impelement. The vast majority of American corporations are small and lack the volume discounts granted to larger purchasers, yet they cannot afford even a basic procurement group. If eBay provided an RFP process, an Auction based marketplace, and a few support functions (such as writing RFP’s), not only would eBay dominate an unorganized but huge market opportunity it could also offer a huge efficiency boost to all
corporate America. And that, dear readers, is my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Improvement, Continuous or Not | Tagged , , , , , , | 1 Comment

It’s Summer, It’s Hot And It’s Time For The Crazy Season!

Posted on July 18, 2011 by Chris Niccolls

Boy Is it hot outside! OK, it’s the summer and the summer is supposed to be hot, but 2011 looks like it’s going to be a sizzler this year in New York! When the heat goes up, that’s when we usually have the crazy season in America… a time for silly stories and strange happenings. So, I thought we would spend a bit of time today to tap the vein of crazy, after all it’s better than being on the outside today! OK? Here we go!

Politics As Unusual: The financial world is waiting to see if the Politicians in Washington are quite as crazy as we think they are, as the Federal government moves closer and closer to financial default and a downgrading of  the government’s credit rating. Too stupid for Words? Maybe, but not too stupid for PowerPoints. America, apparently, has competition for who is the craziest.  And top of the list we have… the Swiss. As we continue to unwind the financial crisis of the past few years, one of the hot issues is the tax revenue that is lost to various offshore havens, the granddaddy of which is… Switzerland. While there have been some reforms, especially in the wake of information revealed about money that was still held in secret that dated back to some very unsavory connections with WWII Nazi Germany. This would be a really good time to rethink the last 5 or 6 decades of offshore policy. Instead, one of the financial priorities (at least for a few Swiss) is to move forward the agenda of the APPP… the Anti-Power Point Party. The group is tiny and this is more of a publicity stunt than a serious political party, but their message is the Swiss need to outlaw PowerPoint because the country is losing $2.5 Billion per annum because of slide shows!! How did they come up with this number? First they made a few numerical assumptions: average salary, number of people in a meeting and average number of power point meetings viewed per annum. Then they made just one qualitative assumption: Most PowerPoint meetings are pretty much worthless.

This point was made years ago by Edward Tufte (Princeton and Harvard propfessor, contributor to the NY Times and other national journals, wrote groundbreaking  books on graphic design, etc.), and more than a decade ago told us that most PowerPoint presentations are pretty much worthless. He went further and said that by becoming the dominant form of communication in business and (increasingly) in education), it is actually hurting our brains. I’ve been in meetings like that! Yes, this has a touch of
crazy, but when you think about it… in the past it used to take some time to create a presentation, and therefore it took something of value to justify the use of a presentation. PowerPoint changed all that and now the most inconsequential issues can lead to long, boring and poorly developed presentations that we all need to suffer through. I wonder if I can join the APPP?

Spectacular Failures: It’s been awhile since we’re had a City-Wide blackout  in New York; the last one was eight years ago in 2003. Every year we have little blackouts that don’t make the national news… unless it’s a slow news day. Every year it seems that the borough of Queens is ALWAYS hit by whatever blackouts we get. Why? Well, the side of Queens that faces Manhattan… Long Island City and Astoria… have been growing massively over the past decade or more. Astoria has some great restaurants and outdoor cafes and Long Island City is closer to the mid-town and Financial district than most
of the rest of Manhattan, and the rent is lower. Small houses are constantly being knocked down to build larger houses, which are now being knocked down to build small apartment buildings, and a few of those have been knocked down to build skyscraper apartment buildings. Rapid building leads to a rapid buildup in power use and an equally rapid buildup in power outages. However, the funny thing is that I have friends in Astoria that come from Brazil who told me, “Back in Brazil we had power outages now and then, after all it’s just Brazil and things go wrong. But this is NEW YORK! How can they have outages here! Right?”

This must be how Amazon and Google service users feel. These are two of the biggest, most advanced Cloud providers in existence. They are selling their services on the basis that they can replace your fragile technology with robust, uninterruptable services. Of course, we believe them,  or at least we really want to believe them. Yet in the last year, both services have had outages. In February, Gmail went off-line for a few hours and then 150,000 gmail users lost all of their data. Google eventually got their data back, but it took up to four days for some users. What was the problem? An upgrade went wrong and they then found that there was a bug in the backup software that copied lots of empty folders, or no folders at all. Amazon sells its Amazon Web Service (AWS) as an alternative to maintaining their own data center. They guarantee 100% uptime. Then in April, their east
coast users lost their uninterruptible services.  Why? There was a small problem with their redundancy systems (a small error in routing) that created a data storm that made their services inaccessible. Your own IT department has probably had similar problems, and you may have been the manager that had to take (or make) the call about how the backup systems brought down the network.

I said this blog was about the crazy season, and it is. But you need to remember that sometime the guy who is talking is crazy, and sometime the guy who is listening is crazy. When someone tells you that the Cloud is magical, you’re only in trouble if you believe it. Nothing is invulnerable. Nothing is  indestructible. The Cloud can provide you with “better”, but no matter what the sales guy tells you, the Cloud doesn’t have any “perfect” for sale.

Crazy vs. Stupid: Back in 2008 in an article in the Atlantic, and just recently in a study in Science, questions have been raised about how Google may be reducing our intelligence. This isn’t necessarily a bad thing. By relying on Google, we don’t retain as many things in memory. This is part of an ongoing process. As we get older, we now worry if we have early onset Alzheimer’s every time we forget where we put the car keys. Apparently, this is normal. As we get older we have more things to remember, both historically (more years of life) and tactically (we interact with more people and have more responsibilities every day than when we were 12). Our brain reacts by filtering new data that needs to go into long-term memory. A few hundred years ago, the increase in literacy was accompanied by a decrease in the ability to memorize long poems and stories… except for actors and entertainers who continued to memorize for a living. Google accelerates this long-term trend. Our brains realize that it is easier to look up data rather than remember. How long ago was it that you kept dozens of phone numbers in your head? With speed dial and Google searches, your rain over-rules you and refuses to memorize new numbers. Teens just don’t memorize anyone’s phone number. College students are a little better off; they can remember their parent’s phone number… but only when they need money (sorry,
couldn’t resist). The point is that our brains are becoming more selective and will not store information that can be easily accessed through other means. We’re not necessarily becoming stupider, but if you take away our phones, GPS and computers… we’re in trouble! When you bring on young, new staff you see many little ways that they think differently than older staff. It’s not just a matter of maturity or training; their brains are getting wired differently, and by the time they are adults it may be too late to change this no matter what you do!

Studies have shown that today’s college graduates believe that they function at a much higher level than previous generations, but  when they are studied, they appear to be less
capable than  they believe. Get ready or  more crazy stupid discussions with your workers.
Like Google, the Internet conforms to  a user’s needs and preferences. Naturally,  if you grew up on the Internet, you will believe that this is how the entire world, including work, should operate. Welcome to a whole new order of crazy. Of course, as the economy continues to improve and the younger work force presses it’s demand for high paying jobs with more time off, maybe we should join the crazies!

It’s the crazy season and there is more craziness on the way, I’m sure! But for today, that’s my Niccolls worth!

Posted in Backup Plans, Best Practices, Common Sense Contracting, Decision Making, Delivering Services | Tagged , , , , , | 1 Comment

The Return Of The J Curve: A Lesson From Netflix

Posted on July 14, 2011 by Chris Niccolls

Nothing is free… or at least not free forever. The same goes for the lowest price. Eventually it goes away. Either a new, lower price is found, or the price rises. As the economy continues to rebound, free is no longer quite so free. We all know basic economics: when the economy improves more people pursue goods and therefore prices rise. There’s definitely some of that, but what is unique today is that the definition of free, or unlimited, or “eat all you want”… is changing. The recently announced price increase from Netflix represents more than just inflationary increases. The result is something called the “J Curve.” Imagine a that starts at some point, let’s say it’s the number eight. Then as we move forward in time, the number moves ever downward until we hit a point where it heads up again, and continues upward until it is higher than where it started. J Curves can lead to revolutionary changes when new cost structure, new populations, or new paradigms take hold and redefine how some element works.

Technology based services have for a very long time been getting cheaper and cheaper every year. When the Internet was new, users were mostly in universities that connected through very slow modems, where individuals paid nothing. Free is always a good price; then again the Internet didn’t offer much back then. As the Internet grew, so too did the fees. Hulu was started as a free distributer of TV programming and movies; today it offers Hulu Plus, where you pay for some services. This only makes sense, since you can now watch programming on your desktop, laptop, iPad and smart phone. As functionality increased, the owners of Hulu eventually said, “It’s now worth enough to start charging.”

Netflix has always charged for its services. However, every new rate card from Netflix has lowered its cost structure. They started with sending DVD’s, then they offered DVD’s and streaming content, which greatly lowered the cost per movie because it was cheaper to stream than to mail a movie. As more and more users downloaded movies, the cost per movie dropped and Netflix passed the savings on to their users. But this week that stopped. Why? One reason was that when mainstream America was not yet comfortable or capable of downloading movies, any revenue that a studio could get was found money. Now that Netflix and others download millions of movies every month, studios want much more money for their downloadable content. Another reason is that you can download movies on phones and computers, and increasingly on your brand-new  internet ready big-screen  TV. As long as no one wants what I’m selling, it’s cheap, but when everyone wants it… the price goes up.

Some of you may be thinking, “As always, Mr. Niccolls, you have enlighjened me with your  fascinating description of a macro-economic issue. But… uhhh… why should I care?” Well, you should care because the Internet isn’t just for entertainment. In previous blogs we have discussed outsourcing and Cloud services. Both  industries are heavily dependent on an inexpensive and unlimited use of long distance communications. In fact, the declining cost of technology has been the key driver for both industries. However, as we have all become Internet users we have also become big media users, dramatically increasing the bandwidth we consume. Consider the following:

  1. More files: Whatever service you are looking at, if you are looking at a Cloud
    service or outsourcing,  the number of files needed by that service are increasing. For example, in document review, the number of documents per review has risen a thousand fold in recent years because of the explosion in  the use of emailing and the number of backup files made by data centers. In the past you might have sent out a thousand paper copies of a memo, but few survive a few years later. Send out a thousand emails, and every copy is still on  the servers. And many more thousands of copies were sent around with minor comments, which all survive on some server… somewhere. All of these copies may need to be found and reviewed during a lawsuit. The same applies across your firm. Many more documents, databases and bits of information are used in a “product” today than just a few years ago.
  2. Bigger files: An even more profound change is that we are producing files that
    contain graphic and media elements that greatly expand the size of files. We store voice mail data, video training materials, graphic presentations and so forth. How much does this matter? Look at the home use of bandwidth. According to a recent article in “Wired,” a technology magazine, downloading a 3 minute CD-quality song consumes 0.03 GB of bandwidth. A 2 hour HD movie moves WAY up to 3.4 GB of bandwidth. If that movie is Blu-Ray, it consumes 30 GB. When that movie is in the next generation of Ultra HD video in 3D, Wired’s estimate rises to over 400 GB. As corporate work moves towards more graphics and more media (especially if you need Cloud services to modernize your technology) your data consumption can become astoundingly large.
  3. Continuous use: When a data vendor sells you a 3 MB line, they don’t assume that you will use 3 MB every second of every day. But we seem to be getting closer and closer to that behavior. Unlimited cell phone data plans now have… wait for it… limits on how much data you can use. This wasn’t a question when our media was smaller. Corporations tend to buy dedicated capacity and haven’t moved as
    intensively into video, but corporate data use is rising almost as quickly as home usage. The use of a Cloud service or outsourcing may have also been done to expand hours of operation, making more intensive use of the existing bandwidth, especially the late-night  hours. Today use is much lighter late at night, providing many Cloud and Internet services a time when they can perform maintenance. As usage at this time rises, maintenance options become more expensive.
  4. Changing pricing model: Consumers build the brand and volume for Cloud providers, but corporate users… who usually come later… are expected to be the big source of revenues. But once a service is mature enough to charge corporations, and become profitable, other groups that contributed to the product start to ask for their share. ISP’s are beginning to change how they charge for bandwidth. A lot of Cloud companies have benefited from free software, often Linux operating systems using “Open” software. These programmers generously provided their products for free, often for idealistic reasons; however, as the model changes and corporations rather than home users make use of their software this idealism is unlikely to last.
  5. Old guard resistance: When a major revenue shift happens in technology, providers with soon to be obsolete products pay attention to these changes. Not all the old guard will react effectively, but some top firms will invest in the new
    technology. Usually they want more than just short term profits; they want control of the new technology. Look at Thomson Research a decade ago. In the 90’s their revenues were primarily from print research. As the cost of on-line data fell and the products became more accessible, Thomson sold off paper assets and used the revenues to invest in or buy on-line services. Thomson invested in many
    potential competitors, buying them and integrating their products into their product suite when they matured. This provided Thomson clients with constantly
    improving products, and limited the number of competitors that could develop a dramatically lower pricing model. If this is the future of the Cloud, we can expect
    Microsoft, Cisco, Oracle and other major technology providers to push back on a
    dramatic fall in prices, even if it means buying out their competitors to slow pricing changes.

Will the cost of the Cloud and outsourcing services continue downward, or should we be ready for a new J curve? The improving economy is lessening the downward economic pressures of the last few years, the Cloud has real economic benefits but corporations may take much longer to benefit than assumed, growing bandwidth is offsetting financial benefits, and the current generation of technology providers will not sit by passively while revenues fall.  This mixed and difficult to interpret combination of forces seems to favor an upswing in cost. How much of a rise, and how fast is still a question, but that we are headed upwards seems much less of a question. Just ask Netflix. At least, that’s my Niccolls worth!

Posted in Common Sense Contracting, Decision Making, Delivering Services, Improvement, Continuous or Not | Tagged , , , , , | 3 Comments

Are Outsourcing Obstacles Too Big To Swallow?

Posted on July 11, 2011 by Chris Niccolls

Last week I saw a question on Linked-In that I thought was particularly interesting. The question was, “What are the top five challenges in BPO transitions that  need to be addressed in the outsourcing/offshoring industry?”  If there were any “winners” in this contest, it was: Lack of qualified staff; bad estimates (of just about everything by just about everyone), and poor client management.  Some of these problems will not get any better, if anything they will get worse. Let’s take a look at my own “top 5” list  and perhaps this will shed some light on the challenges outsourcing faces.

  1. POOR  CLIENT MANAGEMENT: This is the problem that every Outsourcer  bemoans, and with good reason. When the client decides to outsource, they could have come to this decision several different ways. It may have been the product of  long-term internal examination, guided by consistent and well communicated  sourcing policy and supported by comprehensive financial and operational  research. Sometimes this happens, but like most best practices, this is  usually an exception. Instead, the firm may be under significant financial pressure and must act quickly, skipping important analysis or communication stages. Alternatively, the firm may have chosen outsourcing because it does not believe that the internal group  is able or willing to meet performance standards. When this is the case, whoever is directing this outsourcing exercise many not want to involve the current managers of the service. Lots of problems with this scenario, but it happens. Lately, I have heard more talk about “resistance planning” as a critical stage in outsourcing and  change management. You need to plan for problems, but when your own management starts to rise to the top of the problem list… managers need to take steps to see that this is not how THEIR top managers view them.
  2. RISK ANALYSIS: Managers don’t move on an opportunity until they see sufficient benefits to do so. If you think you’ve identified a high-risk situation, you want to see a pretty big benefit before you get engaged. Most managers look at risk this way: It is more important to avoid being part of a failure, than to get credit for a “win”. Depending on the size of win (or loss) this may be true. In the last wave of outsourcing, many firms put “regulators” in place: Project Management Offices (PMO’S), Procurement Offices, Business Improvement Offices, etc. Because they have less detailed knowledge about your functions, these groups are likely to see the benefits of outsourcing targets that you (with more insight) think are too risky. An analysis from a regulator asking to move forward on one of thee opportunities is usually considered more impartial, and therefore more likely to be followed, than a recommendation from a service manager to not proceed (if the manager is even aware that they are being examined). However, while we immediately consider bias when a service manager makes a recommendation, improvement managers are as vulnerable to bias. Service manager are biased towards finding fewer eligible outsourcing positions, and regulators see more. However, the number and power of regulators is increasing, moving decision-making towards higher risk projects. That doesn’t mean that the total number of outsourcing projects will significantly increase, since resistance is also becoming more common (and effective?).
  3. REAL COSTS: Few clients truly understand their own costs. This is due to the
    distortion of costs that come from corporate service being an “internal” service. Service budgets are driven by internal processes, not by costs. Few internal services pay for real estate or other occupancy costs (electricity, cleaning services, security, etc.). When the corporation renews its lease (perhaps on a whole building), the service is unaware of how this affects cost… if the rent goes up, it may never be communicated to the service manager. In this situation, it makes sense to use the existing space without modifications,  to keep costs down (no new furniture, renovations, etc.). However, if you paid for  your space it could be more efficient to buy new desks… if you can fit more people in less space. Without a firm understanding of all costs besides compensation, you can’t have an intelligent negotiation with a vendor. Nothing in your previous corporate experience may prepare you for dealing with real costs, but until you understand it you will not be able to meaningfully participate in the pricing of an outsourcer. Instead your assumptions, based on your experience, may be injurious to the negotiation process.
  4. VENDOR PRICING: Vendor pricing must reflect real costs. If not, you need to steal revenue from one client to pay for another. The procurement process is designed to be adversarial. A procurement manager must push against pricing to get a better price; if you don’t do this, you don’t know where the bottom of the vendor’s price could be. Unfortunately, so many different services could be outsourced that even an experienced procurement manager cannot know the right price for every sourcing project; in that situation, it’s too easy to resort to just pressuring the outsourcer for a lower price until they say I can’t go any lower. The problem is that you negotiate with a sales representative, who may not understand the fine details of operational costs. If you lack a realistic basis for internal costs (see above) and you negotiate aggressively or offer the possibility of future profits (“If you give me a lower price, you can make it up on our next contract), you can push the price below the real cost. When this happens, the pilot may work out, but when you move into the production stage and increase the size of the staff, you can enter into a cycle of quality and production issues never ends.
  5. START-UP TIME: Location matters. Most outsourcing project move functions from one location (and expensive one) to another (a less expensive one). When you make this move, you may also be moving your staff away from the colleges, business centers and other elements that create specialized capabilities. In New York and London, it took decades to bring together the necessary resources to support: analysts in investment banking, MLS educated corporate library workers, legal document center operators, etc. If you are the first firm to outsource legal support staff to a small town in the Philippines, and there are no legal colleges or large legal firms in the town, can you build a professional staff of 200 in this location? You might. Can you build this operation in three months? I would highly doubt it. To successfully build a facility of this sort you should plan
    to take three to five years. If you were to move this to an offshore location with a history of legal support (and colleges, and local legal businesses), you might shave off 6-12 months. If instead you outsourced domestically, you might shave off another 6-12 months. The lowest priced location may NOT be the best way to achieve your goals; you need to better analyze how time affects your project. If you don’t understand the time element you will either misunderstand real cost, or not deliver the project on time, or break the process trying to meet an unrealistic time schedule.

There are of course, many other issues to comment on. Some of these issues will just become more challenging over time. There aren’t any magic bullets to make these issues go away, instead these are issues that you need to fully understand and educate yourselves on. If you do, you can contribute more meaningfully in an outsourcing project, and help guide those projects towards a successfully conclusion. And that’s my Niccolls worth!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services | Tagged , , , , , , , , , , , , , | 2 Comments

Higher Clouds: Learning From Amazon’s AWS Strategy

Posted on July 8, 2011 by Chris Niccolls

Last month, Amazon had a conference in New York to show off its latest web services. At the Amazon Web Services (AWS) Conference a number of very experienced executives presented some exceptionally impressive technology.  Still, as they day wore on I kept thinking, “Why does Amazon want to compete with Google and Microsoft for Cloud service’s clients?” After all, while Amazon is the biggest internet retailer in America, there’s not exactly an obvious path from that to ruling the market in Internet services. What’s the deal… and why should we care? The reason for caring, I think, is that whatever made Amazon decide to become a Cloud services provider will lead other companies to follow the same path.

When you look at the big Cloud service providers today, three’s not a lot of surprises. Microsoft and Oracle are Cloud providers because they are big technology leaders who are invested in many areas of technology; for them the Cloud is just a slightly new paradigm for charging for their services. Salesforce, AOL and Rackspace are usually on the list of big Cloud providers, but they were selling Internet services before the term “Cloud” was used. Firms that started out in instant messaging are now trying to be Cloud providers
of  collaboration and conference call services. Likewise, many new firms are popping up hoping to become the next big thing in Cloud services.  Yet, Amazon remains unique among the big players: a retailer who wants to become a technology player.

Of course the reason is pretty obvious, while Amazon isn’t a technology firm per se, they are definitely a huge consumer of technology services. A few years back Amazon realized that it had quite a bit of excess server capacity, so it offered “virtual stores” to potential retail competitors. It made sense: the increase in the volume of technology purchases provided Amazon with a lower cost per GB of storage, and virtual store clients received
higher quality and lower cost web services than if they built it themselves. It’s just a tiny step from selling virtual stores to offering full hosting services. But when Amazon took this step, the numbers became staggering. In the year 2000 Amazon had a value of $2.7 Billion; a very sizable firm. Today, Amazon is adding the same amount of storage and server capacity that they had in 2000… every single day! That’s how quickly they are building their capacity. How quickly are your IT services growing? Could you build, update and invest in your services as quickly as Amazon? Probably not. In fact it is probably so
many orders of magnitude greater than what you are doing (and Amazon claims it is all being done with zero downtime to customers) why wouldn’t you turn over the keys to your server room to Amazon? And that’s just today… they are accelerating their pace, further expanding the gap between what your IT department can do and what Amazon can provide.

If Amazon can expand into Cloud services, then any firm with large scale computer services could follow the same path. I’m guessing that over the next few years a lot of other firms will follow the Amazon model. Three players that come to mind are: YouTube, Google and Ebay. Let’s take a closer look at these three:

  • YouTube: They are top dog in free on-line video. They’ve made some forays into paid video as well, but they’re not known as a provider of corporate services. Nevertheless, YouTube has been quietly moving into corporate training. As more
    and more corporations develop video rather than plain paper documentation and
    on-line training, a very significant market will open up (to say nothing of every University, High School and training facility). Every big firm has some corporate videos, but few have the resources or technical capabilities to produce a large library of video materials that are worth watching. Yet, Americans are spending ever more time (and money) for College degrees, certification programs and in-house training; who will produce and distribute their video training materials? Consider the endless conference calls (now video calls), meetings without anyone taking minutes (yet held in rooms with… video equipment), and the rapidly falling cost of HD or better video equipment (your smartphones probably records HD video!) and you get an idea of how HUGE the potential market really is. Will it be YouTube or another provider that controls this market?
  • Google: OK, they already have their hands in just about every on-line technology on the market, but other than being the search engine and (increasingly) the backup email for corporate employees, they haven’t penetrated very deeply into corporations. But they are trying! They own the world’s most popular search engine, and they would like to get it installed inside your corporation. Imagine replacing all of the proprietary indexing systems in your organization with just the Google engine (how many databases and programming languages do you support today?)! And look at all the unindexed data… documents on local drives, common drives on the network… a lot of data that’s not accessible to the people who need it (or the people who don’t even know it exists). If Google can index your data, they would be happy to move the index to the WEB, where their massive search capacity can speed your requests. Well, as long as the index is on the web wouldn’t it make sense to move all your data to Google as well?
  • EBay: They’re the dark horse of this trio, since they don’t have any real corporate
    presence. What they do have is an auction system and a PayPal, one of the best known Internet payment systems. EBay is valued at over $40 billion, but their auction model requires more computer activity per sale than Amazon (multiple bids by multiple buyers, different selling conditions for every seller, buyers monitoring changing prices, etc.), so they probably rival Amazon in total storage and network capacity. They could mimic the Amazon model and provide Cloud hosting, but they could also take a unique turn by leveraging their expertise and taking control of the procurement and purchasing world. Auction based purchasing is on the rise in corporations. Being the world’s premiere auction site, the next step would be to develop something like “PayPal Corporate” to meet the needs of corporate buyers. Just as EBay provides ratings for individual sellers, they could develop a system (and they have the volume to make it the best system in the world) for vetting and rating suppliers against the needs of a procurement department. Reducing the burden of reviewing the capabilities of potential supply sources and checking references would have quite a value to corporations. The problem facing procurement departments is that the best practices that they should follow are too expensive to be used universally. Smaller firms cannot afford the expertise for resource hungry processes like RFP’s (Request For Proposals). Large firms can afford the expertise for RFP development, but these firms procure across such a wide variety of products and services that even they cannot afford all of the subject matter experts they need. As the number of procurements departments increases, so too does the need for RFP’s. This is a huge market for EBay and a huge opportunity for corporate American to improve the procurement process.

Will YouTube, Google and EBay develop these and other corporate Cloud services? There are no guarantees, but if the Amazon model is an example, we can expect to see more non-traditional providers moving into the Corporate Cloud. At least, that’s my Niccolls worth!

Posted in Common Sense Contracting, Decision Making, Delivering Services, Unique Ideas | Tagged , , , , , , , , | Leave a comment

Gramdma Has Left The Kitchen!

Posted on June 25, 2011 by Chris Niccolls

I remember a commercial from a few years back, I think it was for spaghetti sauce. It showed an Italian family’s kitchen as the Sunday meal was being made. In the kitchen, there were several grandmothers working away over a row of steaming pots. For the longest time that’s been the image for “traditional” food products: authentic traditional foods, made from family recipes handed down from generations past. In the gourmet section of every supermarket there is a running competition on which company makes the most traditional product, the most authentic foods or at least the most traditional processing. For the last couple of years I’ve seen a trend in higher cost pastas… a notice on the front of the box that tells you that they now use pasta hundred year old molds made
of bronze, to give factory-made pasta that home-made feel. The more traditional the better, until now.

A few days ago I wandered into the pasta section of a large supermarket, and I saw the familiar blue box of my favorite pasta. You know it’s a traditional product because it tells you that it’s been in business since 1887; actually it says, “Dal 1887”, just to let you know it does indeed come from Italy. Under that you see a woman in a peasant outfit holding a sheaf of wheat. I ask you,  are we talking tradition, or are we talking tradition? And what have we here? One of those little medallions that tells you about a an award they’ve won. What is it this time? The most authentic pasta at the Rome pasta tasting festival? Maybe it’s a golden frying pan award? I know, “voted best by the European association of grannies”. No. It’s not an award. It’s a… CERTIFICATION! Not one word about the golden fields of wheat ripening to perfection in Southern Italy, or how old their factory is. What
does it say (I’m not kidding… this is exactly what’s on the box!)?

  • Certified for the Distinctive quality of many parameters, such as…
  • High quality protein (gluten index above 70)
  • High particle size (40% with diameter above 400 microns)
  • Kneaded with cold water (under 15o C)

This is a bold and unexpected turn. All along I’ve been wasting my time choosing food based on taste, when I should have been thinking about particle size; grandma has definitely left the kitchen! But this movement isn’t limited to the kitchen. Showing the metrics that proves the quality of a product is becoming the norm, not the exception. It shouldn’t be surprising that certifications have also shown up in the corporate workplace. You’ve seen them for years, but they’ve only recently taken root. It may be a Microsoft certification in Word or PowerPoint, or it might be a PMI certification in project management. Your new employees may have added some certifications to make themselves more marketable, and HR departments are certainly  adding certifications as requirements or at least “good to have’s”.

When there is a down turn in the economy, a couple of things happen.  Lower end jobs become more automated. For example, there was once a time when a McDonalds employee had to know basic math; then in the ‘80’s there was a shortage of qualified employees, so computerized cash registers were installed where you hit a hamburger icon
instead of entering a dollar amount. The other thing happens at the higher end of the scale. Employees who are laid off during a downturn may be told that they are not qualified for their job when they try to return. In an employer’s market, qualifications get pushed steadily upwards. But that’s not necessarily a bad thing for your organization. Consider if your organization can benefit from adopting a certification process for some or all of your positions. Not only can this help to improve and standardize the qualifications of your staff, and provide the means to produce a better work product, it can also increase
staff loyalty. One of the things that your staff wants, and that most increases loyalty, is training. We’re still in an employer’s market, but we also have the most unhappy work force that America has seen since anyone’s been tracking this data.

A little investment in training now, could provide a big benefit if you can avoid the usual cycle of high staff turnover at the end of a down cycle. Give it some thought. Your staff is your most important resource, and a good certification program can help you keep them as the market continues to improve.  And that’s my Niccolls for today!

Posted in Best Practices, Expectations and Rewards, Improvement, Continuous or Not, Learning and Development, Uncategorized | Tagged , , , | 1 Comment

Creative Projects: A Few Ideas And Tools!

Posted on June 18, 2011 by Chris Niccolls

Every now and then you run across some really useful tools, or fascinating trends, that can help you with your operations.  Six months later you may forget about these tools, or they may be replaced by something better. (Hey Facebook, remember MySpace, or Friendster? You’re on top, but the clock is ticking!) So, before they become obsolete, here’s some interesting stuff and a few creative ideas about how you can use them. First, let’s first look at a couple of trends, and then look at the resources:

Cloud Products: A very, very big trend is to have Cloud based applications. We’ve talked about this in the past.  A true Cloud product runs from a browser (such as Internet Explorer or Chrome) and leaves virtually no files or software on your computer. That means that your data and your configuration are “out in the Cloud”. Why is this important? Because it means that you don’t need any specific computer. For example, if you want to look at your AOL, Yahoo or Gmail you can use your office computer (if
it’s not blocked), your home computer, your iPad, even your smart phone. As more applications become cloud based, you are freer to access applications even when you’re away from your “official” computer. Within corporations, IT departments are looking at ways to have more of your applications running on centralized servers rather than your desktop to ensure that data is always backed up and computer upgrades require minimal work.
Use: Now that it’s summer time, senior executives will spend time at the beach, overseas
on a vacation, at their summer home, etc. Usually the IT team has to field a lot of calls about the executive who has been separated from his computer and needs to get to an application. This is a great time to print up a short guide for executives on how to access your firm’s cloud applications (or frequently used non-firm applications that you support). 

Portable Products: Sort of a red haired cousin of the Cloud. For people who
move between different computers, these programs are designed to have low system requirements and run without leaving any data behind on your computer. How would you run them? Probably from a flash drive, one of the cheap little USB drives that you can hang off of your key chain. Load up your drive with applications, and then just plug this into whatever computer you use. Since it leaves nothing behind, you can be “relatively) safe using someone else’s computer.

  • Use: If you team uses portable applications, it is another option that allows
    freedom from being tied to just one specific computer. There are quite a few
    promising products in this category, but as the Cloud rises, the hybrid nature
    of portable products seems to be fading. Still, as a niche product it may still
    have some legs.

WhiteSmoke: This is an automated proofreader.  It you just hit a hot key and it analyzes content, and recommends changes. It works with just about any application by hitting a hot key. I find that all “artificial intelligence” products offer a combination of surprisingly insightful advice and unbelievably wrong comments. WhiteSmoke is no exception. However, when it’s wrong it’s always obvious, even if English is not your primary language, and you have a less than perfect grasp of English grammar. However, when it’s
right, it’s very good. In the hands of someone who spends a lot of time writing (I use it for this Blog) it’s excellent in making small corrections and pointing out alternatives. Microsoft Word, for example, corrects  misspelled words, but Whitesmoke is both corrects the spelling AND looks at the context to tell if it’s the right word or phrase. WhiteSmoke is partially a Cloud tool, it is installed on your computer, but it goes to the Cloud to analyze your writing, presumably because the process needs a lot of processing power or it monitors and analyzes which recommendation users except so that it can learn and improve itself.

  • Use: If your group produces documents of any kind, this is worth looking at. If you produce a lot of documents and you would like to produce a more standard
    product, having a tool like this that checks the same details can be very useful. Back in April I wrote a Blog (“Is Quality Control A Waste of Time?”) that explained how various quality control processes (such as proofreading) can absorb massive amounts of resources. By putting a tool like this in the hands of document editors who generally produce high quality work, you can vastly  improve turnaround, reduce costs, and possibly further improve quality. ( www.whitesmoke.com ) 

Information is Beautiful: Not an application, but a Blog site. It provides examples of
exceptional and unusual graphics. Usually these are business graphics, representing data, but doing so in a way that uniquely delivers a point. All sorts of graphics are shown, and there are links to a variety of sites that give you more detail about the graphic, and sometime even tools or techniques to help produce them.

  • Use: This is a fantastic resource for anyone who runs a document, presentation or graphic service. It now only provides excellent examples of creative graphics, but the sites these images come from provide a back story to the graphics that may spark interesting discussions with your clients. ( www.informationisbeautiful.net )

Instant Article Wizard: Well, it makes articles. Instantly. Originally, this tool was created to easily produce content to feed internet sites. It contains several tools. One tool uses Google to collect information (whatever quantify you want) on any subject you choose; you then determine the characteristics of the article you want, such as the number of paragraphs and the number of words. A second tool parses this information and standardizes the grammar so that it reads as if your “article” had a single author. The next tool, changes the wording in the article so that individual sections are not identical with the original, thereby circumventing any issues of plagiarism. When it’s done, you have a very readable and reasonably well researched article.

  •  Use: Any research or library group receives requests for background information. Data Source such as Thomson Financial provides Tools to collect and produce reports and article like documents, but sometimes the data you want is in the “unverified” world of data that Google accesses. If this is the right source of data, and you want to write a quick overview on a subject, this is a great way to save some time.  If you want a one or two page overview on a subject, this software produces quite readable documents. ( www.instantarticlewizard.com )

Digital Identity Calculator: If you support a legal firm, consulting firm or an Investment Bank (as well as other highly paid services), the reputation and standing of the
firms billable professionals greatly influence the amount of business your firm can bring in and the rates you charge. But how do you measure reputation? This tool is a great start. Essentially you Google someone, look at the results, fill out a few data fields based on the result and get a graphic that maps the volume of hits versus their relevance. You can produce a report in about 2 minutes, or you can supplement this with other information to develop a “reputation” rating. The methodology might vary from department to department, but this might be a very valuable product for the head of a revenue producing department… especially if it addresses how to increase reputation. This might be launched by any of these groups or by a combination of: Corporate Library, Marketing, or HR.  ( http://www.onlineidcalculator.com/digitalscale.html )

And that’s a quick roundup.  This is an eclectic collection of tools, but I hope that it gives you a few ideas about ways to add value to your organization. And that’s my Niccolls
worth for today!

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Social Networking for Service Managers

Posted on June 14, 2011 by Chris Niccolls

Want less face time on Facebook? Tired of being a twit on Twitter? Don’t care if you can Google it? I think we’ve all had occasional overload from Internet social media. Yet, everywhere you go you’re told how this is all vitally important and, ummm,  significant in its importance, because it’s uhhh… significantly important? Sound familiar? It’s all a bit vague, isn’t it. It all of this social media just hype? I don’t think so. There is a lot of hype to social media, but underneath it all there is something to this trend. It’s just a question of finding the right way to use leverage it. So, let’s just cut right to it and look at some of the most uses a manager can have for social media. Here’s my top five:

Develop your network: We all have a network, but some people are very good at developing a network and others are not. More people are terrified than are thrilled by the thought of giving a presentation to a large group or even mixing with a group of
unknown strangers. Social media is another way to build or expand your network. How? I’d start with Twitter.  You can identify individuals with the background that you are looking for through a twitter search, or by using Twellow, Tweeter Karma or other directories. Linked-In is another  source of professionals. You can search by company, by discipline or by joining groups that are relevant to your profession.

Develop new ideas:  Now that you have your network, talk to your people! Tweet about interesting subjects or articles, or re-tweet items of interest from others. Go to Linked in meetings and ask questions, or go to their “answers” section (on the far right of the menu) and ask for a solution to a problem you have. People really want to help, and to show you what they know. Leverage your network to solve tough problems, or use your network to
share solutions rather than re-inventing the wheel!

Collect benchmarks: We all need information when we make business decisions. For example, compensation has been held back for a long time, and everyone I sunder pressure from staff to give raises. Or your best people may be almost ready to leave. You can push for more money based on what you believe is right, or you can push more effectively if you know what your competitors are paying and if they are increasing compensation. The same is true with breaking a hiring freeze, justifying a move to a different set of applications, or implement ting a new business model.

Investigate your industry: Your firm probably hires consultants all the time, or has
internal consulting groups. When your organization is the focus of these consultants, it can be uncomfortable. Suddenly people that you don’t know are making recommendations about the service that you built. While there are definitely consulting projects that sideline the managers, the greater your knowledge (especially about industry trends) the greater the opportunity for an expansive role in changes to come. When change comes, it can be very powerful to say, “I’ve just done a survey of 20 of my peers and found…” Don’t wait for the next corporate change, start building and working your network today!

Find new staff: By building a network of professionals in your own field, you can also build a network of potential hires and keep in touch with their career progress. When
it is time to hire, it’s often difficult to find the right people and when you require very specialized staff the HR department of a large firm often does not have access to the right networks to find good candidates. Develop your own network, but work with your HR department on future hires.

Advancing your career: Just as others may use social networking to develop their careers, it may be very critical to you as well. You will not only find out about positions in other firms, but you may be surprised to learn how many opportunities exit in your own form that you are unaware of. Similarly, there may be many meetings and products that you learn of through your network that can help you develop your skills for your next promotion, even if it is within your own department.

There are some very compelling reasons to use social media to build and expand your own network. Take a look out there and see what exists, and how you can use it!  And that’s
my Niccolls worth for today…

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4th Sigma: Project Charters, Part 3 – Building Consensus

Posted on June 9, 2011 by Chris Niccolls

A Project Charter is a document that describes a project, names the people who will perform the project, what their roles will be and the name of the project sponsor (the individual that requested the project). Any book on Six Sigma will tell you why you need a Charter (to clarify and document the project, and drive but disagreements), but few of these books… and courses and classroom training…  goes very far in helping you to resolve the disagreements when they arise. Partially, because the Six Sigma process is supposed to identify candidates for Black and Green Belts based on their ability to resolve problems and drive consensus, HOW to develop consensus is frequently ignored or at dealt with only superficially. Likewise, because three are so many other books, courses and methodologies out there many Six Sigma sources feel that this is best left to others to deal
with. However, if you are sitting on top of a contentious project that is stalled or about to stall you’re probably thinking, “If any of you geniuses out there have an answer for me, would it kill you to tell me? PLEASE don’t tell me I need to go out and read a 350 page book to figure this out!”

Nope! It can be a lot easier than that. There are a lot of “if’s” when you deal with opposition, but there are some basic techniques that will help you. Every one of you has a different set of negotiating skills, and each of you may be in a different stage of project completion, so not all solutions will fit everyone. You need to pick and choose, and try different approaches to see what works most successfully and which individuals respond to what technique. Having said that, let’s get started by looking at a few different situations:

Early Grumblings: In the very earliest stages of putting together a Charter, you may hear a lot of grumbling from a lot of people. Always listen for this in the early stages
of a project. This could be caused by anything, including a lack of familiarity with the Charter process. See if there is any pattern to everyone’s discomfort. If complaints are widespread and coherent, have one-on-one talks with a few people and see what their issues are. There may be legitimate reasons why this is a bad project.  Decide if you agree with the issues, if there are any obvious changes to be made, or if there is no specific issue… just normal differences of opinion. Keep in mind that if this is a bad project, it’s OK, it’s even a good idea to stop a bad project.

The Usual Suspects: If you deal with a large number of projects, there are certain individuals that you deal with regularly. Some of these individuals may be difficult to deal
with and require much more time and effort to work with. If certain people you regularly
deal with continue to be difficult, and regularly block projects there are two approaches you may want to consider. First,  have a private conversation with the individual to find out what is there issue. They may just be overloaded and find that attacking a project takes less time than understanding it. Or they may just be naturally cautious. Alternatively, they may just want attention. Ask them, “How can this project be changed to get your buy-in?” Find out what is the minimal change to move forward. If this approach works, then meet with them before the start of every project to see if they will approve or not. If this doesn’t work, have informal meetings with other members to see if they favor the project, and there is just one “dissenter”. If that’s the case, concentrate on building the consensus with receptive members and move on.

Official Opposition: Some people always oppose your project. Not because they are difficult to deal with, but because they believe this is their job. They may be a Regulator (compliance, corporate security, IT standards, legal, HR, etc.). This is another opportunity
for a private conversation. Being a Regulator means dealing with a lot of opposition, which is rarely a lot of fun. Reacting to this, some Regulators just say no to everything. Since your Project Charter is just part of a larger process, you can have a separate discussion with this Regulator and remind them that more and more of these Charters are on the way. Find out if the process itself can be adjusted to minimize resistance. Perhaps this Regulator just doesn’t have the information (or the background) to understand your project. Having
pre-meetings could improve success.

Grudge Match:  Here the problem isn’t you or your project, it’s two parties on the team that can never agree on anything. Meet with both, separately, and be an intermediary. Don’t try to take sides, just find out what they are disagreeing on and what sort of compromises they are willing to make. See if you can get them mostly on the same page now, and in a position to settle their remaining issues in the Project Charter meeting.  Don’t want to have private deals or secrete agreements that are outside of the charter. Just try to broker a deal, or move them closer to an agreement.

Public Theater: If you take all of the steps above, you should have diffused most of the issues for disruption and disagreement before the meeting takes place. Issues will still pop up, and you should be prepared for them. Some people just like to put on a show, and a public forum is their opportunity to raise an issue. Their behavior may be because they are naturally difficult to deal with, or they feel the firm has ignored an important point or even because they have a legitimate problem and are frustrated that people don’t understand them. It’s draining and demoralizing for the entire team to deal with a disruptive individual in a meeting.

The Meeting: You’ve now dealt with just about every problem that you can before the meeting starts. That doesn’t mean that the meeting will be conflict free, but it means that you have taken care of most known reasons for the meeting derailing. There can be legitimate issues, and there should be a discussion of real problems or missing elements. This should be a rational, non-emotional meeting without personal attacks. You should assume that some changes will be needed in the original Charter, but that’s what this process is all about. Ask everyone just how far apart they are, and what there is any common ground. If, after you’ve taken all the steps above you still face insurmountable opposition, there may be something fundamentally wrong with the project. Consider if the project is flawed, or if the group accepts the project but doesn’t see it as a priority. Is there another higher priority project that should replace it?

Re-Schedule: A legitimate reason for opposing a project is that this is simply the wrong time for this project. Can you reschedule? Can you replace this with another project?
Is it truly that this is the wrong time, or is this just a low priority… whenever it’s scheduled?

There is no magic bullet that can fix all problems. However, the reasons for opposition can often be dealt with, and they are usually best dealt with before you meet as a group. If you can deal with as many of these problems as possible before you meet,  the meting no only becomes more productive it becomes more enjoyable for all involved. When you see that there is a lot of opposition to a specific project, determine if these are real problems and try to address them; even if it requires updating the Charter. There will be projects that should never be started, because something is wrong with them. There are other projects that are too strongly opposed or too weakly supported; these projects are likely to fail, or not deliver the expected benefits, or require far more resources than assumed. The Charter process will document the reasons why these projects never got started…. Which is better than doing a post-mortem on a costly product that failed. If you have a list of projects, just move on to a more popular project and report back to your managers on why this one shouldn’t go forward. And that’s my Niccolls worth for today!

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