A Cloud Story I: The Coming of the Cloud

Posted on April 12, 2011 by Chris Niccolls

We’ve all hearing stories about Cloud based services and how they’re going to change the way we live and work. If you manage services in a large firm you’re probably hearing little snippets here and there about Cloud projects that are already underway at your firm. But what does it mean for you? Just why does the cloud matter? Well, one reason it matters, not surprisingly, is cost. If you use the Cloud selectively, there is probably at least one service that can be provided more effectively by a Cloud provider (with a much large client base, and therefore a lower cost per user). There are issues and problems, but there are also clear advantages in buying services from whoever has the best solution deployed to the largest number of users. To understand this, let’s go back, Back, BACK in time to the very beginning.. the early 80’s.

For the last 20 or 30 years there has been a bit of corporate, well, hubris. By the early 80’s big firms became REALLY BIG and technology was became easier to use and much cheaper; big firms believed that they could build or run pretty much anything. Every Clark Kent was no Superman… all-powerful and invincible! Firms that sent a lot of work to printers created internal copy centers that used the new computerized/plain paper technology. Internal travel agencies were created, especially after computer based airfare booking systems became available. PC’s were suddenly everywhere, and the cost of computer processing plummeted. It was only natural that these firms would write their own word processing software, email systems, CRM’s and other applications. Very big firms built their own private telephone networks, because they could afford it and they felt the security was needed. All sorts of new internal departments were developed. Big firms were not completely wrong; they could build these non-core services… but that didn’t mean that the services were very good or very cost-effective. For a while it looked like this massive insourcing was effective, because corporations often built their new services using new technology, and compared it to their previous providers using previous generation of technology. For example, corporations used photocopiers for printing services but old providers used offset printing (and other technologies). It’s not completely straightforward, but as time went on it because clearer that just because you can build a service it doesn’t mean you should.  

By the early 90’s it was becoming very clear that internally developed word processors, email systems and CRM’s couldn’t keep up with commercially developed systems. Now, big firms switched to buying externally but supporting internally. Funny thing is, the products that continued to be developed internally devoted a lot of resources to non-value added features (color of a screen, placement of a button on a page, etc.) driven by powerful users, but commercial products devoted resources to value added features (better interface, faster processing, etc.) driven by the majority of users. Commercial products and services increased their lead. Then the Internet hit, and small firms had access to the same (or equivalent) services that only large firms had. Which led to the next generation of services. While 30 years ago the big firms could say they had to build services that didn’t exist or that weren’t right for their needs. Today it’s hard to ignore all of the publicly available services that can compete with internally developed services.  Many of which have a lot of advantages, better price points, and are evolving more quickly than internally developed  services. You can especially see this with the smaller services that are provided by the big firms.  

For example, a few years ago almost every big firm developed video conferencing systems. Today, free Cloud services are often more feature rich and reliable.  And they’re getting better very quickly. There often isn’t enough use of these services to justify a fully staffed support team, which leads to low quality support (with poor user feedback) and high cost per service provided. These are obvious candidates for migration to a cloud-based specialty service. However, if that is the starting point for migration, is there an end point? For every firm this is going to be different, but the answer lies with an earlier discussion about core functions. If the function is not a core function, and you don’t do it very well (compared to a publicly available service), why do you want to perform it internally? The answer to that question probably defines the upper limit of the Cloud, beyond which services should stay internal. It can definitely be complicated. Tomorrow we’re going to pick up this same theme and look at today’s practical uses for the Cloud. But for now… that’s my Niccolls worth!

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A Well Managed Core

Posted on April 11, 2011 by Chris Niccolls

The nuclear disaster in Japan is the case study that just keeps on giving. Putting aside the policy and planning issues about the reactor itself, there is another problem, the extent of which  we still don’t know. The power plant, like many other industrial facilities, made extensive use of temporary workers. However, at the Fukushima Daiichi nuclear power plant it was temporary workers, according to the New York Times (http://nyti.ms/fEeMjR), that were assigned the ts, “thousands of untrained, itinerant, temporary laborers who handle the bulk of the dangerous work at nuclear power plants here and in other countries (are) lured by the higher wages offered for working with radiation. Collectively, these contractors were exposed to levels of radiation about 16 times as high as the levels faced by Tokyo Electric employees…”

Any way you look at it, this is a questionable practice. Even putting aside the ethical issues, can management avoid dangerous work and still really mange teh plant? Yet, the decision was to expand the use of temps  after the plan was damaged. Much of the heroism we’ve heard about in Fukushima… the desperate efforts to stop the reactor from melting down, lives potentially lost to radiation exposure, continuing to work while the reactor might explode at any moment… appears to be the work of temps.    

I’ve never been to Fukushima and I certainly didn’t have any plans to visit anytime soon, so I guess I’ll have to wait for additional news from Japan to know what’s really been going on at the plant for the last few weeks. However, I wonder, exactly which functions have been given to the temps, just because they are dangerous. The most fundamental rule in  Outsourcing is that you never outsource your core. It’s pretty much the mantra of the outsourcing industry. But when things go wrong in a nuclear power plant a LOT of functions suddenly become dangerous. If all the managers can only manage “from the rear” (preferably from behind a lead wall) I’m not quite sure how the very best management decisions can be made.  We’ll see what unfolds in the coming weeks, but I’m getting the feeling that Japan’s nuclear power managers weren’t thinking about protecting their core functions when that “other” core starting having problems.

Having worked with a LOT of different fortune 500 firms I can tell you that there is little consensus about which functions are core. In many organizations, I’ve found that there is little analytic thought devoted to identifying core functions. Instead the core is usually defined by tradition and habit. What about your organization? What is the process that you use to identify your core functions? How do you decide which positions should be filled by a full-time worker, a contract worker, a temp or should be outsourced?

In the past, this question was somewhat academic. Outside of a major re-organization, this was not a frequently asked question. Today, however, the impact of outsourcing combined with the rise of Cloud-based functions makes answering this question a much higher priority for every manager. Give some thought to how you define your core functions, and we’ll revisit this issue in a few days. But for now, that’s my Niccolls worth!

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Do Outsourcers Know What Time It Is?

Posted on April 8, 2011 by Chris Niccolls

Today, I was puttering around on the Internet, on a site that I frequently visit, Linked-In. I decided that I would take a look at their “Answers” section, which lists questions by members that other members are invited to answer. One of the questions made me pause for a moment and think. The question was, “Why does India think differently than America when it comes to time?” If you work with offshoring in India, you have probably been told that you can expect problems with punctuality or on-time delivery when you work in India. Or you may have read in an article or a travel book that if you are in a hurry to get something done, then you can expect to experience a cultural shock when you visit India. Whatever the source, you will hear anything from a whisper to a shout about the lack of an “exact time” culture: deadlines are missed, commitments are made that are not honored, meetings happen “sort of on-time”. Will you see this in India? Absolutely. However, you will also see this in Mexico (the land of Manana), anywhere in the Caribbean, large parts of South America, smaller towns in Europe and the US. Probably, there are a lot of places in the world that you have never visited (and never will) that have a disappointing view of timeliness.

It so happens that most of my family lives in Florida. If you’ve ever visited the big cities in Florida you will notice that many of the locals are former New Yorker’s. If the Floridian in question is still working, you will also notice that they spend a lot of time complaining about the real locals (who they see as, “nice people but slow and lazy”) and the tourists, or “Snow Birds” (who they see as, “overbearing perfectionists who don’t appreciate how things get done in Florida”). The Snow Birds are mostly New Yorker’s. They love Florida but complain about the poor quality of the: service, local pizza, attitude of workers, etc. If you are a big city/big company manager your view of time and punctuality is NOT held by the majority of the world. For a reminder of the varied a views on time, even in your own geography, think about your last visit to: the department of motor vehicles, the last time you had a general contractor work on your home, your “scheduled” appointment with the cable guy, or (increasingly) your appointment with your doctor.

What’s a service manager to do? The first thing you need to do is to keep a sense of perspective. 10 years ago very few services tracked and measured their performance, or provided SLA’s (service level agreements, a statement of the expected levels of performance). 20 years ago true time tracking was rare; to the degree that consultants and lawyers tracked time, they did it at the end of the week and it focused on billing rather than accuracy. 30 years ago, if anyone ever brought up this issue in a corporate services meeting the silence would have been deafening. If just wasn’t that important. Today time management is a vital element of any service. When you hire a new worker, they enter into a culture that benefits from the last 30 years of discussions and procedures about timeliness. When you open a new location, anywhere in the world, you should not expect the same understanding of time.

Does this mean that you need to make compromises when you work offshore? Not at all! You can create almost any culture you want in any location… if you’re willing to devote the time and energy. However, don’t focus on creating the EXACT same culture everywhere. If your firm has a New York and London office, you’ll probably agree that each office has cultural differences. These are probably the two most similar international cities you can find in the English-speaking world. In order to manage the effort this will take, you need to identify key elements that need to be identical and other elements that can be similar. You will find that every culture has elements that are superior to your original model; be selective in what you keep and what you change. Still, regardless of your ultimate model, compared to the New York to London cultural differences you should expect a greater range of differences in Mumbai, or Manila, or Beijing. If you put in the time and effort it requires, you can get to the culture you want, but it will take years, not months.

Let me be more specific. If you plan on owning and operating your own location, and outsourcing is new to your firm, you can expect to take 3 to 5 years to get the culture to work the way you want. If the location is in your own country, this can take half the time (because of greater cultural similarity). If your firm has experience running operations in an offshore location, but has never run your service from this location, you can reduce this time by a year or so. If you want to reduce this time still further you need to work with an outsourcing firm that can run, or at least build, your offshore services.  If this is what you need to do, it is critical that you choose the right outsourcing firm. What should you look for? You need to select a supplier who has been around for several years, performs similar work with similar clients, and is the best match for your culture (don’t ask the supplier about their culture, ask their clients).

Selecting the right supplier is a necessary pre-condition for developing the right culture, but it is not the only condition. The supplier will get you halfway there by: building or transferring your service’s fundamental culture, finding the right sources for qualified staff, perfecting staff training, understand compensation issues. Your half of the process continues well after your new facility is up and running. Your greatest responsibility will be to ensure that your culture is understood and that the supplier and all of the managers are held accountable for delivering up to your expectations. How?

  1. Understand and document your culture/expectations: Before you can make your offshore service responsible for living up to your culture, you need to document it. If you have multiple shifts and multiple locations, do you currently have exactly the same culture and expectations everywhere?  You need to standardize your onshore cultural model before you tackle offshore.
  2. Clearly communicate and train for your expectations: Make no assumptions. This isn’t a casual conversation, an email or a call with the supplier. This is a classroom course with a training work book, a glossary and a monthly follow-up with your on and offshore staff to measure progress on cultural change.
  3. Ensure that SLA’s and metrics reflect your expectations: Reinforce, reinforce, reinforce! You need to be sure that your “important” measures… the measures talked about in meetings and reflected in your contract… include key cultural issues.
  4. Hold the staff accountable: Once you’ve laid all the foundational steps above, you have to treat offshore staff the same as your onshore staff. Probably not on day one. First, they must demonstrate progress. Treat a new offshore center just as you would a new domestic office or shift.  Give them time to absorb new lessons, but don’t make excuses for them, and never say, “They just can’t learn how to do that.”
  5. Really, really hold them accountable: If you set up a new onshore shift, they would eventually be responsible for owning their product: taking instructions from the client, quality control, speaking to the client when the work is late. If you never allow the offshore staff to fully own their product, they will never be truly responsible for on-time delivery and other measures of timeliness. If you feel your offshore staff cannot perform these functions… you may be right, but only if you don’t have the right staff. The right staff DOES exist; if you staff isn’t quite right you need to re-examine your expectations, your recruiting specifications and your billing rate (did your supplier underestimate the cost of staff?).

You can have the culture you need, but you’ve got to build it. When you partner with the right supplier they can lay some of the foundation and reduce the time it takes to build your culture, but you must continuously hold your offshore staff accountable or won’t get what you expect. And that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Expectations and Rewards, Improvement, Continuous or Not, Learning and Development | Tagged , , , , , | Leave a comment

S’what’s a SWOT?

Posted on April 7, 2011 by Chris Niccolls

A lot of perfectly respectable management theory has been left to marinate in too long in strange acronyms and hard to remember buzz words. Good management doesn’t need to be complicated, and it doesn’t need a special language. There’s a lot of parallels with cooking. Some great meals can be made of simple ingredients prepared simply. Complex recipes and difficult to pronounce names aren’t necessarily better.  For example, I’m not a big fan of Chef Ramsey… too much screaming and yelling for my taste, and I can get that at work… but there was an episode where he worked with a Pub in England that was deeply in debt and losing its clientele. He made a lot of changes, but the redevelopment of the menu was based on one simple concept, “No brown sticky sauces!” So, all the Madera glazes and Balsamic infusions were out; instead, just roast beef, shrimp salad, mashed potatoes, etc.… simple, straightforward pub food. Well, I thought that should be today’s thought of the day. Let’s keep it simple, and avoid all the complicated “sauces” that don’t help us. Let’s start off our menu of management offerings with, a SWOT analysis.

A SWOT is a very simple tool that can help you to identify and prioritize the issues your operation faces. How does it work? Well, imagine a 2×2 set of boxes. You can lay this out in excel or as a table in Word, or just write on a pad of paper. The four letters stand for Strengths, Weaknesses, Opportunities and Threats. Essentially, this lets you examine your operation by looking at two pairs: Strengths compared to Weaknesses and Opportunities compared to Threats. Now, let’s go to that 2×2 grid. Label the first box (top, left) as Strengths. In the box below that (bottom, left), label it Weaknesses. Go back to the top, move over one box (top, right) and label it Opportunities. The last box (bottom, right), label Threats. So far, not so hard, right?

Now you just need to put cunningly crafted and analytical observations about your organization in each box. OK, that’s it for this wee… AH! You would like a few more details? Ok, no problem. Start with the most obvious items, in a simple bullet format. For example, if you run an internal service, you have a Strength of being the only provider for your service. If you aren’t the only provider, that may be a Threat. Why is it a threat? Does it mean that there is some other group that can perform the work better, or is more conveniently located, or is open at hours that you are not? If those are the threats, what does that mean for your Weaknesses (not open at all hours, training in some areas should be stronger, not able to fully support all offices, etc.)? If you jot down the most obvious items and then do this sort of jumping back and forth between boxes, writing up the other sides of each issue, you will quickly write out all the key bullets about your organization. And don’t limit yourself in the number of SWOT items, write as many as you like. When you read about SWOTS or when you talk to consultants you can get the idea that it takes a special background to lay out a SWOT. Remember, no one knows your operation as well as you do. A Six Sigma specialist might come up with different SWOT items than you would, but you might have insights that this expert might not. Still, if you compared both SWOTs you would probably see a lot of overlap in the findings.

Now that you have the basics, how do you improve it? We just need to follow these four steps:

  1. Continue to add bullets to your SWOT. Talk to your most difficult clients as well as your most supportive clients. Ask them if they can add to your list. You can even show them what you already have, and if they agree. Talk to the managers and staff  that report to you. Load up your SWOT.
  2. Print out your list and put it somewhere prominent, right in your line of sight. For the next 30 days, as you go to meetings and read your emails, see if new items need to be added to your list.
  3. Clean up your lists. You will see that some items repeat, or are the same item in different words. Look for insights as you combine. For example, if under Weaknesses you see a lot of individual failures in producing a product, maybe the real problem is that you have a training problem. Or maybe you have a cluster of problems and not enough information to know the root cause. In that case, you might develop a report on service problems (typically called a service recovery report, or SSR). Call it what you like, just  note that you need to get better in this area! Try to stay to about 10 items or less for each SWOT box. SPECIAL TIP: If you end up with HUNDREDS of items in one of your SWOT boxes, you may want to put all of this in Excel. Think of bigger categories, and have one column with “categories” and another with “item”. Sort if by category and subsort by item. Placing similar items close together makes it easier to “eyeball” adjacent items and decide if they should be combined into one.  
  4. Prioritize! Once you have analyzed and condensed all of your issues, order them by priority.

So, after 30 days, you will probably have a very good SWOT. Keep in mind that a SWOT is never done. The world is constantly changing, so your SWOT needs to be constantly updated. At a glance you can now show a very simple view of your organization. This will help you develop budgets, create continuous improvement plans and improve the management of your organization. It will take what you have implicitly known and make it all very understandable, even to people who do not understand your type of organization. Later, I will show you some specific examples of how you can use this. But for today, that’s my Niccolls worth!

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Cloud Watching…

Posted on April 6, 2011 by Chris Niccolls

There’s definitely a lot of talk about the Cloud, what it is and what it means for you. In fact, I recently viewed a YouTube video that stars a very animated Larry Ellison (Oracle’s CEO) opining on the definition of Cloud Computing. His conclusion: it’s nothing new.  According to Mr. Ellison, “Cloud computing is not the future of computing, it is the present… and the entire past of computing is all Cloud”. Which is what I’ve been saying for a while now.  Ellison contends that anything that used to be called “the Internet” or “computer services” or even “rental or lease” has been relabeled as  “Cloud” to get the attention of investors or to create media buzz. While Ellison seems to have similar opinions to my own… let me rephrase that… while Ellison is clearly a genius level visionary, I have to disagree with him on one point. While the technology is nothing new, the Cloud is pretty much the network or Mainframe model, the mindset of the client has become very different.

The first time you got involved in an automation project for a service or function you managed, your primary question was probably, “Will this work at all?” It’s kind of like someone showing up at your door with a bear and a bicycle saying, “Hey, have you ever seen a bear ride a bicycle?” You’re not sure where this is going, but it the guy with the bear certainly has your attention! You may have led some of these “computerization” projects, or you may have just inherited them. Either way, you’re long past the point where anyone has to prove to you that computers can help your operation. However, if you’re going to move work to another platform you’ll want to be convinced about 3 things:

  1. Moving your work to the cloud provides a tangible benefit
  2. The Cloud vendor’s services will work as advertised
  3. Your connection to the Cloud is secure

It’s really about trust. Trusting a service that is running somewhere in the world, possibly at a site that you may never personally visit. Even as I write this, computer services you use today may be moving into the Cloud. Perhaps because another corporate group (such as IT, Communications, Corporate Security, etc.) that needs to improve a performance or cost metric that does not affect you directly. In that situation, you may receive little notice about these moves. Even if you hear about it, you may not be asked to be involved. But that doesn’t mean that you can’t proactively speak with your IT department (or any other technology group your firm has) and ask them to map out any service changes that could affect the services that you provide. If you approach this properly, as an ally rather than as an obstacle, you can gain insight into where your services are headed and you may be able to provide fresh insights on how your firm’s services need to evolve that a pure technology group may not be aware of.  Assuming that the move to the Cloud is initiated by another group, you should focus on item #3 (since 1 and 2 are probably in the domain of the group that initiated the move). Assuming the data belongs to you, concerns over data security would probably be given the best reception.  

Since the Cloud is a form of outsourcing, there is an extra benefit that you can expect. This service will be managed through a contract, and (for most of you) the contract will provide many more details about the service than you receive today. If you work with your technology groups, you can use this to define a roadmap of your services. With this, you can identify problems and issues, and have a much more informed discussion with the internal groups that support your operations. If you are involved early on when new Cloud Services are evaluated, it will be easier to ask very specific questions about the service and request that the contract addresses your concerns.  

So remember, even if the Cloud represents unknown risks (and it does!), a move to the Cloud also means that you will have more opportunities to shape and to document the services you depend on. And that’s my Niccolls worth for today!

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Bulking Up Your Staff?

Posted on April 5, 2011 by Chris Niccolls

Everyone I talk to tells me that there are good signs of growth in the economy. And managers in large firms are talking about the positive signs they see that new positions will be… although, not just yet.  The resistance to hiring is dropping, but it’s still difficult to get approval for new hires. There are a lot of potential hires in the system, all waiting for approval. Still, if this recovery is like other recoveries, there may still be some hurdles to overcome. Typically, when there is a turn around and business is rising, there are a lot of false starts before approvals are finalized. It can be frustrating, but it does help to remind ourselves that a convoluted approval process is a lot better than a very straightforward “NO!”

Do expect to have important hires “sort of approved”, followed by “just about approved”, and then finally the approved positions put in for a round of additional approval even when you’ve passed all the approvals you thought were needed. It always seems to be like this. Be careful in informing the hire about start dates, because you may run into unexpected barriers and paperwork. Do keep in touch with the candidate, even more than you usually would. If this process seems frustrating for you, it can be agonizing for someone waiting for their start date. If you spend a little more time keeping in touch now, and you will build an extra buffer if the candidate suddenly is left in limbo because no one is sure what process comes next.

The mystery approval process is not just confined to full-time employees. If you are about to start an outsourcing pilot, your contract may be going through the same meandering approval process as new staff. If this is atype of work that you haven’t previously outsourced (or haven’t outsourced to this location), there can be a lot of confusion over the rate for the service. Because there are so many permutations of rates, services and locations, it’s very difficult for your procurement department to be sure that the billing rate is reasonable. It often takes a very long time to gather and verify this data. You may want to consider the following approach when you meet with your procurement department. Emphasize the opportunity cost. Whatever the outsourced cost, it is probably lower than the current cost (since price is often a primary driver for outsourcing). Therefore, every day where you aren’t moving forward with outsourcing is a day where you pay for more expensive labor. You might develop a presentation that discussed the 30, 90 and 180 day cost of a delay. Procurement (and other departments) may also be concerned that once you start working with a vendor they will lose all negotiating leverage, since you will be dependent on the outsourcer’s service. You can strengthen your argument by agreeing that once the pilot is sucessfully concluded you will pause the pilot until cost negotiations are completed and a new rate is in place. So, start with a higher price (make SURE that the outsourcer has the revenue to hire the right staff;  eliminate any possibility of pilot failure due to inadequate or inappropriate staff). This process will work best with very specific and/or generic services, such as: transcription, basic data entry or simple electronic data filing that require little or no knowledge transfer.

The summer will be here soon and we’ll all be in the gym swearing to  drop that extra 10 pounds we packed on over the winter. While we’r tehre we may as well work out our flabby authorizing muscles. All together now: reach, Reach  REACH for that new hire paperwork, lift… Lift… LIFT that telephone and call a candidate… raise, Raise, RAISE your budget… Whoops! Did that a little too fast did we? That’s going to hurt in the morning! Maybe we should have warmed up first? In any case, that’s my Niccolls worth for today.

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Epsilon Cloudburst

Posted on April 4, 2011 by Chris Niccolls

Have you heard of Epsilon, the marketing firm? Well, if you haven’t you can probably expect to hear about them soon. One of the many services Epsilon offers is the management of emailing services for many large corporations. Personally, I didn’t know much about Epsilon until I started getting emails from firms as diverse as Best Buy and McKinsey.  Apparently, these firms (and many others) use Epsilon’s emailing services; during the last week, there was a security breach at Epsilon, which exposed client data. All the emails, and the articles I’ve read, agree that the breach did not reveal any “secure” data, just your email address. No reason for panic, but can we learn anything from this incident that will help us deal with the coming wave of Cloud based services?

Wait… YOU! That’s right, YOU… way in the back!  Did I see an inappropriate grin, a smirk, a certain air of superiority? OK, it is hard to pass up pointing at Epsilon and saying, “I told you so!” You let an outside group run some part of a service, and there you go… security breach. Your firm’s name in the papers, which is the start of every nightmare you’ve ever discussed with legal, compliance, corporate security, etc. Even though this does seem to genuinely be harmless, you might get some calls from a client, or clients might be curious about other services that have access to your data. Providing some access to your data is a big part of working in the Cloud. It may still be your data, but it will not (always) be on your servers and your facilities. Since each service probably only gets to see a small sliver of your data, your exposure is smaller (probably) than if you had a breach of your own. On the other hand, because these services concentrate client information from many large firms in one place, each exposure will impact a lot of firms. Furthermore, these services may have contractual agreements… if not with you, then with other clients…  about when (and how) they will provide information on a breach, including how they contact the press.

This is where it gets interesting. If you contract with an external electronic service (call it the Cloud or call it something else), then you will probably demand a formal escalation process and a review/audit of their systems to know if: each type of breach has been properly defined, the vendor is aware of each breach (how?), if the vendor can determine when/if their network is probed or attacked, etc.  If you still perform the same service internally, or back when you did, did you have this sort of formal process to identify, escalate and report a security breach? Unless you  belong to your IT department’s email group, would you know about every possible email breach? To take a related example, your IT department probably informs you when there is a wide area outage of their systems… because of a virus, a downed server, or a failed piece of networking equipment. But you wouldn’t wouldn’t get a call if just one PC, somewhere in your firm, crashes. Probably not if two crashed. However, if 500 PC’s crashed at exactly the same moment, you would probably hear about it. What is the threshold, for each type of outage for you to be informed? Alternatively, consider when a presentation center, a corporate library, or a single secretary sends a very important document to the wrong fax, email or other address. Does your firm track how often this happens and has everyone been trained how to respond?

This can be tricky. We can expect more and more of these breaches as big firms migrate further into the Cloud, but it’s hard to say what that means. It may be that more breaches are being reported, in contrast to more breaches actually happening. The Epsilon is breach, however benign, is a good wake up call to think about how your firm currently defines and reports n breaches… and what sort of policies you would want to see if you used a Cloud service. That something to think about, and it’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Uncategorized | Tagged , , , , , , , | Leave a comment

A Tsunami Of Problems

Posted on April 1, 2011 by Chris Niccolls

The problems in Japan continue, as do the truly heroic efforts to contain the disaster. Still, how did this all happen? Now that we have some information, we can put together the pieces. The first piece is simply that all of Japan, not just the Fukushima Daiichi facility, lies in the Pacific Seismic Belt, or as it is often called… the Ring of Fire. This is the world’s most active earthquake and volcano zone. Not surprisingly,  Japan has some of the most advanced building techniques to deal with earthquakes.  The reactor met the most recent earthquake building codes. However, according to this week’s New York Times article, “Japanese Rules for Nuclear Plants Relied on Old Science”,  the real culprit wasn’t the earthquake, it was the Tsunami. Yes, the earthquake caused some damage but the fatal blow was the follow-up hit from the Tsunami. The plant is built on a cliff right on the edge of the sea, which is about 18 feet below the plant. Since Tsunami is a Japanese word, they must happen in Japan frequently enough for them to need a word to describe it! Until 2006, Japan had no specific Tsunami regulations, and the Fukushima Daiichi plant has had no Tsumani specific upgrades. Think about that. In 2004, we had the world’s most destructive Tsunami hit the pacific. In 1995, Japan had the disastrous Kobe earthquake. In between those two events… a whole pile of lesser earthquakes, Tsunami’s, rogue waves and other natural disasters.

On a really bad day we tend to all say, “We’re in a meltdown!” Luckily, however bad our problems get we don’t face consequences on the scale of a real meltdown. But should we have so many of these really bad days? A key takeaway from the Japanese example is that you shouldn’t just plan for a disaster, you need to plan for simultaneous disasters. They happen. We see smaller versions with some frequency. A winter storm AND a flu epidemic; a computer virus and a transit strike; a flood and a power problem. Lots and lots of permutations. One of the reasons that the Japanese under prepared for this disaster was because they chose to plan along deterministic rather than probabilistic lines. In other words, they planned based on  things that had happened, not on things that might happen. So, one-two punch disasters weren’t planned for. It is unrealistic for any of you to plan for every possible outage, and it is insanely unrealistic to assume that you’re going to get the funding to prepare for every possible outage. Still, we should give some thought to combination disasters. Take a look back on your service’s history. What are the sort of problems that have happened in the past? Are you able to deal with them? Are you able to two disasters happening at the same time? It’s an issue that’s worth thinking about.

In the Times’ article an engineer used a great term, “a cascade of stupid errors”, to describe how the Tsunami threat was underestimated. Don’t get caught up in your own cascade of errors by overlooking the data you already produce. There may be important indicators of the “little Tsunami’s” that are already impacting your operation. Increasingly, your “customers” live in a service world with little tolerance for outages. They pay for cell phone services that are supposed to work everywhere, flights around the world that are never supposed to be late, computers that are never supposed to fail. True, all of these things do fail, but the anger we all feel when a service fails seems to be growing every day. When personal services fail we often get some satisfaction from changing providers. Corporate services don’t work that way. Your customers don’t get to change to another service. Which is why your customers become absolutely livid when they don’t get what they want.  Go through your metrics, take a fresh look at your management reports and map out known all known serious outages. Plan for the things that haven’t happened yet, but probably will at some point. Worry about problems, but worry effectively. Convert your concerns into priorities and if it is a high enough priority, make your management aware of the possible consequences. Conversations about things that might go wrong can be difficult. Conversations about things that have gone wrong are even more difficult. And that’s my Niccolls worth for today!

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Filling The Big Shoes

Posted on March 31, 2011 by Chris Niccolls

Every manager needs to plan for the development and promotion of their staff. Over the past few years the economy has been slow, so for most of us planning on how to hang on to our existing staff has usually been more of a priority than career development. Likewise, you may have had to reduce staff but you probably haven’t had many key people leaving because they had an offer at another firm. There have definitely been rough patches over the last couple of years, but (excluding outsourced/offshore) the hiring treadmill hasn’t been a big issue. But that was the past. As the economy slowly recovers, you can expect the demand for promotions to rise and staff to become increasingly vocal. If you have managed your operation long enough, you may remember the problems you had during the last upturn: identifying promotional candidates, getting candidates involved in “developmental” projects, and dealing with disagreements over who was promoted. Is there a better way to handle promotions? There might be. Every operation is different, and this process will work better with some groups than others, but in the end I think It’s all about the projects.

Let me expand on that. Every support group has projects… challenging work above and beyond the daily services your group provides. IT departments usually have a lot of projects, while groups like a corporate library have far fewer. Accounting, document centers, secretarial, and other groups fall somewhere in the middle. There’s no absolutes, definitions of projects may vary, but overall it is these projects that provide experience and new skills above and beyond daily work. Some groups need to assign projects exclusively to managers because:  A) the work requires higher level skills and/or B) non-management positions (ex.: receptionist, transcriptionist, IT help desk, etc.) have very structured jobs that do not allow free time for projects. Still, if you can be flexible in staffing, you can allow candidates to have a few hours  a week for projects. Very much like applying for a new job, candidates would need to request assignment to a project, their request would need to be reviewed and approved (using whatever makes sense), and rejected candidates would be told why they are not the best fit (perhaps they could be directed towards better fitting projects?).

You may be thinking, “That’s all very Democratic, but why should I go through all this trouble, when I already know who should be promoted and who should be assigned to projects?” Even if you have a formal review process, the review generally focuses on performance for the existing position, and have little focus future development. True, some reviews have a development section towards the end, but even these sections are really speaking to individuals how need to improve in their current position, not how to prepare for their next position. That pretty much leaves every support group on their own when it’s time to fill the big shoes in their department. Most managers have no choice but to use instinct and a few bits of evidence to assign projects. When a promotional position opens up, you usually have just a few qualified candidates to choose between anyway. Your managers see this as a fair system, but the rest of your staff sees something different. They see a mysterious system with no known rules, where only a few insiders have access to promotions. They might agree that few candidates are qualified for any promotion, but they might quickly add that this is because individuals were previously selected for promotion and then received the experiences needed to become the obvious candidates when promotional positions were available. Every manager I know has had this sort of discussion with their staff, and some have it with great regularity. By moving towards a system where everyone can know about the availability of projects and how performance on your day job plus work on projects results in being qualified for a promotion you may be able to significantly improve your staff’s opinion on how fair your group is. The perceived fairness of your group is one of the most important indicators of staff retention. And it’s one of the few indicators (such as benefits, total compensation…) that is almost exclusively under your control.  

There is another benefit. By allowing self-selection of projects you create a larger, and usually happier, group of promotional candidates. The group becomes larger because a process of self-selection of projects usually leads to more of your staff gaining the experience they need to be promoted. They are happier because more of the tasks that promotion candidates receive math their interests. You will always have some less pleasant projects that need to be assigned, but as long as some can be self-selected, your promotion process becomes more transparent and more candidates are assigned the projects that interest them. For example, one person may view a trip to India as a once in a lifetime opportunity to visit an exotic location, but someone else may see it only as a hardship… having to make extensive plans for family and pets before traveling around the world  to a location they would never choose to visit. Yet this unhappy individual might be ecstatic about a trip to London or Paris.

Creating all of this happiness does come at the cost of extra management time, and some managers may be very uncomfortable about a formal and transparent process to promotions, but the rewards outweigh the costs. Especially when the economy is improving and keeping the staff you’ve developed becomes a higher priority. Disagree? Then write back and let’s talk about the barriers you are running into in your organization… otherwise, that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Expectations and Rewards, Learning and Development, Self Sorting, Unique Ideas | Tagged , , , , , , , | Leave a comment

When Outsourcing Is Mature…

Posted on March 29, 2011 by Chris Niccolls

In the last post we talked about where outsourcing is headed for firms that have reached a “mature” stage. That is to say, if you operate out of one or more lower cost locations, all of which passed their “training” phase, are working efficiently, with work logically assigned to each location, have few (if any) new lower cost locations to exploit, your operation is mature. And if you have negotiated a new contract in the last two to three years, your blended hourly cost may have reached its lower limit. Onshore/in-house staff costs will probably be headed upwards, since many support groups have not raises or promotions for a few years. Then consider inflation for outsourced locations. There has been much said about offshore inflation, but there is also a lot of cost pressure onshore. Why? Well, if you look at employment rates in big cities (where your operations used to be) vs. smaller cities, especially smaller cities with significant call centers and outsourcing employment, the small cities have much lower unemployment. A good example is Fargo North Dakota. Over the last few years, Fargo’s unemployment rate has been a half to a third of New York City. If you haven’t had it yet, expect that call from your near shore operation about the need to raise salaries to retain staff.

To offset costs, or to drive to a new level of savings, you need to do three things:

  1. Develop an “ultimate” in-house or on shore model.
  2. Identify location neutral production targets for every work function.
  3. Test each location for real production levels.

Not too difficult, right? Let’s look at each element. I will frame this in terms of a Document Center, because each function is very structured, well documented, and individual tend to perform only a limited number of functions (but remember: this is just one example, but your mileage may vary!). Most off shoring projects iteratively reduce the main center (in-house and/or onshore) by sending functions to outsourced centers. Eventually, the in-house center is similar to the original, but smaller, usually retaining: management, quality control, and administrative functions along with a limited production capacity for high priority work. It’s not a bad early model, but for a mature operation it can be improved.

It makes sense to retain a limited production capacity because someone can show up waving a cocktail napkin with a scribble on it and say, “I need to make this into a document”. This will indeed happen and when it does it is best handled face to face. Add a few other face to face encounters, a few verbal editing sessions and this justifies a few production staff, because of the greater efficiency and the good will you will earn. But administration should have moved to the location with the most production staff. Likewise, Quality Control… IF each location is truly functional… can just as easily be run from any location and can be most efficiently performed offshore.  Some may say that QC must remain onshore, but for highly documented and procedure based functions (a good description for document services) it’s just a question as to when the offshore staff has enough experience. The people hired on shore, near shore and off shore can all be intelligent and capable. If a center does not eventually develop these skills then I would review the recruiting, training and managerial expectations for that center, and then identify which is holding back the location.

What does that leave us with onshore? At least one “final stage” model of an outsourcing project is the transformation of the in-house center into a customer service gateway, which includes that small but vital emergency production capacity and customer service staff. The CS staff may be the former supervisors or it may require different people with a different skill set; however they are sourced, this will be a small number of highly skilled managers that deal with the satisfaction of the customer. Because seats in the headquarters (where primary document centers are usually located) are expensive, functions that require proximity to the client make the most sense. For your own services there might be a different combination of functions, but take another look at what is placed where in your current model. See if this discussion has made you rethink how you place the resources for your services, and if the right elements are in the right place.

The second and third elements are really just follow up on your design. Examine each function and set the productivity bar based on whichever location is the most productive. There might be room for even greater productivity (sounds like a Six Sigma talk in our future!), but at a minimum use your current benchmarks as your yardstick. If not all locations are at this level of productivity, they need to start committing to a date when they will get there and milestones along the way (ex.: increase productivity by 6% by August, etc.). Of course, once you set these targets you need to follow through with effective testing and then reporting to ensure that all locations achieve and maintain their level of productivity. Not so very difficult, if you reconsider your expectations and hold each site responsible for attaining productivity targets. I hope that this provides you with some new ideas for your operations, because that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Expectations and Rewards, Unique Ideas | Tagged , , , , , , , , | Leave a comment