The Agile Executive

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Archive for the ‘Business Service Management’ Category

Your Investment in Enterprise Software – Guidelines to CIOs and CFOs

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The overall investment associated with implementing and maintaining a suite of enterprise software products could be significant. A 1:4 ratio between product investment and the corresponding investment over time in related services is not uncommon. In other words, an initial $2M in licensing a suite of enterprise software products might easily balloon to $10M in total life-cycle costs (initial investment in perpetual license plus the ongoing investment in associated services).

I offer the following rule-of-a-thumb guidelines to assessing whether the terms quoted by a vendor for an enterprise software suite of products are right:

  1. Standard maintenance costs: Insist on a 1:1 ratio between license and standard maintenance over a 5 year period. If standard maintenance costs over this period exceed the corresponding license costs, chances are: A) the vendor is quite greedy; or, B) the vendor’s software accrued a non-negligible amount of technical debt. Ask the vendor to quantify the technical debt in monetary terms. See Technical Debt on Your Balance Sheet for an example how to conduct such quantification.

  2. Premium customer support costs: Certain premium customer support services could be quite appropriate for your business parameters. However, various “premium services” could actually address deficits or defects in the enterprise software products you license. If the technical debt figure is high, the vendor you are considering might not be able to afford the software he has developed. Under such circumstances, “premium services” could simply be a vehicle the vendor uses to recoup his investment in software development.
  3. Professional services costs: Something is wrong if the costs of professional services exceed licensing cost. Either the suite of products you are considering is not a good fit for your business parameters or the initiative you are aspiring to implement through the software is overly ambitious.

To summarize, the grand total of license fees, customer support fees and professional services fees over a 5 year period should not be higher than 3X license fees. Something is out of balance if you are staring at  a 4X or 5X ratio for the software you are considering.

One final point: please do not forget to add End-of-Life costs to the economic calculus. Successful enterprise software  initiatives can be very sticky.

An Update on Agile Business Service Management

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A previous post in this blog defined the demarcation line between The Agile Executive and BSM Review as follows:

If software development is your primary interest, you might find my forthcoming posts in BSM Review go a little beyond the traditional scope of software methods. If, however, you are interested in software delivery in entirety, you are likely to find good synergy between the topics I will address in BSM Review and those I will continue to bring up in The Agile Executive. Either way, I trust my posts and Cote’s will be of on-going interest to you.

Since writing these words, I realized how tricky it is to adhere to this differentiation. The difficulty lies in the “cord” between development and operations. Development needs to devise algorithms that take into account operational characteristics in IT. Operations needs to comprehend the limits of such algorithms in the context of the service level agreements and operational level agreements that had been negotiated with their customers (either external or internal). The mutual need is particularly strong in the web application/web operations domain where mutual understanding, collaborative work and joint commitment often need to transcend organizational lines.

Given the inherently close ties between development and operations, here are some BSM Review articles and posts that are likely to be of interest to readers of The Agile Executive:

It is a little premature at this early stage to project how BSM Review will evolve. My hunch is that forthcoming articles in BSM Review on cloud computing, large-scale operations, leadership, risk mitigation and technology trends will be of particular interest to readers of this blog.

“How do we move towards an agile procurement or agile development methodology?”

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Colleague and friend Annie Shum sent me the following excerpt from  U.S. CIO Vivek Kundra’s Friday keynote talk at the University of Maryland’s CIO Forum:

Questioned on whether service-oriented architecture still is an emphasis in a federal cloud computing paradigm, Kundra said SOA “absolutely” still matters. “Look at the Social Security Administration and what it’s done with SOA and local government,” he said. “They can build lightweight applications to interact with databases elsewhere.” That embrace of modern development practices extends beyond just SOA or upgrading programmers’ skills from COBOL. “How do we move towards an agile procurement or agile development methodology?” asked Kundra [highlighted by IG].

The {SOA –> agile procurement –> agile development} connection is intriguing. Obviously, Kundra gets the nature of the next revolution in productivity. My hunch would be that Business Service Management, particularly in its Agile BSM flavor, would soon be added to the mix.

Software Moulding Methods

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Christian Sarkar and I started an e-dialog on Agile Business Service Management in BSMReview. Both of us are keenly interested in exploring the broad application of Agile BSM in the context of Gartner’s Top Ten Technologies for 2010. To quote Christian:

Israel, where do agile practices fit into this? Just about everywhere as well?

The short answer to Christian’s good question is as follows:

I consider the principles articulated in the Manifesto For Agile Software Development  http://agilemanifesto.org universal and timeless. They certainly apply just about everywhere. As a matter of fact, we are seeing the Manifesto principles applied more and more to the development of hardware and content.

The fascinating thing in what we are witnessing (see, for example: Scale in London  - Part IIAn Omen in ChicagoDepth in Seattle, and Richness and Vibrancy in Boston) is the evolution of the classical problem of managing multiple Software Development Life Cycles. Instead of dealing with one ‘material’ (software), we handle multiple ‘materials’ (software, hardware, content, business initiative, etc.) of dissimilar characteristics. The net effect is as follows:

The challenge then becomes the simultaneous and synchronized management of two or more ‘substances’ (e.g. software and content; software, content and business initiative; or, software, hardware, content and business initiative) of different characteristics under a unified process. It is conceptually fairly similar to the techniques used in engineering composite materials.

Ten years have passed since Evans and Wurster demonstrated the effects of separating the virtual from the physical. As software becomes pervasive, we are now starting to explore putting the virtual back together with the physical through a new generation of software moulding methods.

The Case for Agile Business Service Management

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BSM Review has just published my article The Case for Agile Business Service Management. Here is a key para from the article:

During turbulent times such as the past year, Agile business service management enables the business to become more competitive by speeding up the pace of delivery of new functionality and accommodating changes in business requirements as part of standard operating procedures. Like a computer chess program that extends clever tactics into the strategic realm [The New Yorker 2005], it compensates for the lack of prolonged periods of techno-economic stability through business Agility, substituting speed, flexibility and momentum for traditional long range planning. It is particularly noteworthy that Agile business service management applies equally well to companies pursuing adaptive strategies as to those betting on shaping strategies [Hagel et al 2008].

As indicated in a previous post, the article outlines the research agenda I will be pursuing. Specifically:

  • How is agile BSM implemented and delivered? …measured?
  • What are the benefits of agile BSM to the business objectives of development? …ops? …test?
  • Who carriers responsibility for agile BSM delivery and implementation?
  • Who benefits from agile BSM delivery & implementation?
  • How are these benefits applied?
  • When is Agile BSM expected to be understood and accepted by the business entities?
  • Where is agile BSM likely to be wholeheartedly implemented first?
  • What is the impact of Agile BSM on ISV’s (as distinct from IT “shops”)?

Listeners to Live Recording of Four Principles, Four Culture, One Mirror are well aware of my view of scaling downstream – it is the most tricky of the three dimensions of Agile scaling (up, out, downstream). IMHO Agile BSM is the first step toward effective scaling downstream.

Agile Business Service Management

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Over the weekend we activated the BSM Review. It is a thought leadership website dedicated to next practices in Business Service Management (BSM) in a way that is appropriate for our era. To quote my colleague and friend Bill Keyworth:

This website is dedicated to the BSM dialogue by whoever wishes to participate.  There is no fee to join …no content that requires a subscription …and no censorship of reasonable ideas and questions.

My area of focus in this site is Agile Business Service Management. The term is defined as follows:

Agile Business Service Management (Agile BSM) is the fusion of modern software development methods with the prevailing preference to run IT from the perspective of the business customer. Instead of dividing the “world” to development on the one hand and operations on the other hand, Agile Business Service Management unifies the two to manage them as part of one continuum that improves the delivery and usage of the application to the targeted business end-user. By so doing, it crosses the metaphorical chasm between the R&D lab and the customer door (or laptop, or iPhone, or…)

My research agenda in the context of the BSM Review will be outlined in a forthcoming post. For now, suffice it to say it will primarily be driven by two themes:

  • Business alignment: At the heart of it, BSM is a discipline to better align business with IT; at its core, Agile is about “customer collaboration over contract negotiation.” The two are conceptually similar: they express the strong desire in both development and operations to carry out meaningful tasks that have business impact.
  • Continuous manufacturing: I view IT as a form of continuous manufacturing. If you accept this premise, the application of Agile concepts, principles and techniques to IT management makes perfect sense. Just as Agile has been influenced by Lean techniques from manufacturing, it has the potential now to influences (continuous) manufacturing in its IT incarnation.

If software development is your primary interest, you might find my forthcoming posts in BSM Review go a little beyond the traditional scope of software methods. If, however, you are interested in software delivery in entirety, you are likely to find good synergy between the topics I will address in BSM Review and those I will continue to bring up in The Agile Executive. Either way, I trust my posts and Cote’s will be of on-going interest to you.

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