Changing risk profile

It is interesting to look back over nearly forty years of being engaged in business improvement projects with differing roles and responsibilities at different stages.  The profile of the IT elements of projects has changed significantly over this time.  Technology environments have evolved and involved:

  • mainframe
  • client-server
  • web-based
  • service-oriented
  • mobility
  • cloud based

Solution design and development has evolved through:

  • Various generation languages (remember 4GL?)
  • Bespoke software development
  • COTS (commercial-off-the-shelf) software
  • Configurable COTS
  • Cloud hosted configurable COTS

and many other different dimensions and variations!  Each stage of development has built products and capabilities that embed the previous level activities into the platform, moving platforms from operating systems to cloud-based configurable solution platforms such as those offered by Salesforce.com  A recent demonstration of a system for a disability entity indicated how reliable the underlying platform has become, enabling the development to focus much more on business need and business functionality.

The resource and risk profile for projects has changed considerably!  In the early years, the largest resource and risk was the software development activity. Now?  Well, now it’s the business change activity – determining how customers and staff can utilise the new digital service offerings, helping them to develop new skills and capabilities and transitioning to make most effective use of the new, dynamic digital work and customer spaces being created.

And so …  what were once software development projects, progressively became IT projects, and now are business change projects.

I wonder whether program and project risk registers reflect this shift in resource and skill demands?

 

More business, less technical?

Enterprise modeling (or enterprise architecture) started off in the technology world, with the CIO and others needing to make sound investment decisions about enterprise wide infrastructure (such as mainframes, networks, etc).  These decisions involved resources which would support multiple change initiatives and where it would be “unfair” and “unjustifiable” for the initiating project to bear the full cost of the resource.  Equally, there was a need to ensure that these enterprise wide and longer-term investments would prove to be sustainable investments in situations where future project requirements were not well defined or understood.  Hence, the strong technical focus during the “childhood” years of enterprise architecture.

In its adolescent years, enterprise models incorporated business models AND technical models, such that the technical investments were informed by business considerations and were more “business aligned” or “business driven”.

In the early adult years (now), greater attention is being given to modeling business capabilities over technical capabilities.  Further, business architects are being more strongly valued and technical architects are being found  to be deficient in meeting the enterprise modeling needs in rapidly changing times, where businesses need to be able to respond to market disruptions in much shorter timeframes than was previously the case.

In such an environment, questions are starting to arise as to the balance of effort between modeling the business capabilities versus modeling the technical capabilities.   I recently indicated that I expected the demands for technical modeling would reduce due to greater use of “cloud services”, and then was given cause to provide the following explanation for why I thought so.

With the increasing alignment between business and technical capabilities, there will be less need to architect the technical capabilities. These will progressively become tightly defined capabilities which can be easily and effectively used by business capabilities.

Business agility will come through the flexibility to mix and match business and technical capabilities to meet changing market needs. Put a different way – agile businesses will become plug-and-play business capabilities with the supporting technical capabilities being enablers rather than barriers – architecture is needed moreso when there is poor alignment.

What do you think?

An invaluable pattern

One of the most useful patterns (models) in enterprise modeling can be summarised as SICOCUO.

SIPOCUO For those who are familiar with IDEF0, you will be familiar with IPO – input, process, output

For those who are familiar with Six Sigma, you will be familiar with SIPOC – supplier, input, process, output, customer

SICOCUO is a further extension of this thinking, firstly be extending beyond customer to include use, outcome

An important element in the design and delivery of an output is an understanding of its prospective use by the customer and the outcomes realised through this use.  The simplest way to describe this is in terms of an car manufacturer and a purchaser of a car. The intended use by the customer – whether to transport a family, to participate in a car rally, or to distribute bales of hay to livestock, dictates a range of the features and characteristics which need to be designed into the car and which influence the processes (and capabilities) required to deliver cars which will be valued (and hence purchased) by prospective customers.

Hence, the extension of SIPOC to SIPOCUO.

SICOCUO is a variant to SIPOCUO in as much as it treats the focus as a capability rather than a process.  By focusing on a capability, appropriate attention to be given to all elements required for the effective performance of the capability and hence the organisation deploying this capability.

Hence, the final formulation:

  • Supplier
  • Input
  • Capability
  • Output
  • Customer
  • Use
  • Outcome

This pattern can be used at any level of an organisation.   It is quite valuable in distinguishing the responsibility of CXO and LOB Execs to realise the benefits from using a system versus the responsibility of the CIO to deliver a quality system.  It is equally valuable in positioning the current operation of an enterprise, its overall outputs (products or services) and the outcomes sought by its chosen customer segments.

Where to start

In my experience, the best place to start is to model enterprise capabilities.   Current indicates are that significant interest exists in modeling, analysing and designing business capabilities.

One of the key features of this approach is that it can be undertaken using a breakdown approach.

  • Level 0 represents the enterprise as a single capability.
  • Level 1 capabilities are the standard split of governing, value adding and enabling capabilities
  • Level 2 capabilities are those required to support each of the level 1 capabilities
  • Level 3 capabilities are those required to support each of the level 2 capabilities, etc

In this way, working with people who know the enterprise well, it is easy to construct a capability model, either of the current or the proposed enterprise operating model.

This allows the governing body and executive management to assess the suitability, strength and sustainability of each capability, from there developing an enterprise improvement agenda, with clarity in relation to the investment required and the benefits / outcomes expected and, if well managed, realised.

Modeling the enterprise market

It seems that there are a wide range of Board members (directors of companies, government enterprises and not-for-profit entities) who are unable to conceive / appreciate the nature of the disruption that is likely to / will inevitably occur in their market place – disruptions caused by innovative adoption of IT by others. This is not about knowing more about IT. It is about being able to picture and imagine a different operating model in their marketplace.

In a completely different context, my Church Council was discussing future directions. One Council member suggested that we pose the following question to members of our faith community – what are your hopes and dreams for how this faith community might make a difference in people’s lives in 10/15 years’ time. Another member who makes some of the most valuable contributions to the thinking of our Council responded to say she could not think that way. She could not conceive of what life might be like in 15 years time and then work back to the implications for now. Having said that, she was one of the first to “get” the fact that the world has changed and our community has not changed, but needs to respond to the changing world. She can work forward incrementally and deal with the necessary change in that fashion, but cannot use her imagination to jump forward 15 years. Some can, some can’t. It is not a reflection of an inappropriateness or unsuitability for governance. It is the different ways in which our minds work.

In a different space, exploring IT enabled innovation, I have become alert to one of the key issues facing Boards and Governments being that IT enabled innovation is disrupting businesses and marketplaces all over the world.

Yet there is an amazing inability of some people, even some for whom one might have the highest regard, to conceive of the nature of the disruption that will occur and the impact for their organisation. This is not about technology or technical knowledge. It is about the ability to imagine and conceive of completely different operating models being adopted by competitors which will radically change marketplace dynamics. It is an inability to observe patterns in other marketplaces and to conceive of the implications for the marketplaces in which they operate.We need to find ways to activate the collective imagination of Boards and Governments to better perceive changes which will inevitably occur in the markets in which they operate (whether commercial or non-commercial markets).

What better way than to model the markets in which we operate and regard them as the enterprise.  In that way, we will identify capabilities needed by the market and the opportunities to position our enterprises to meet changing market operating models and their associated market demands.

Governing the Murray Darling Basin

Understanding the value of enterprise modeling is best achieved through practical examples.

Here is an approach to applying enterprise modeling and governance thinking to an important national challenge in Australia – the Murray Darling Basin, a significant river system upon which a significant segment of our nation is dependent for positive economic, social and environmental outcomes.

What is apparent to me and I assume to some but not to others is:

  1. The Murray Darling basin is a significant area of economic, social and environmental activity in the life of our nation. I don’t have the statistics at hand, but it does contribute a recognisable amount to our GDP and it does support a significant population. It is a significant environmental asset. These figures have been quoted and are readily available.
  2. There are other significant communities beyond the bounds of the basin that rely on the continued viable operation of this river system. Typically this is a reliance on water supplies.
  3. If the communities that exist within this geographical area and those outside the area continue to behave as they currently are (and have for the last x decades), it is evident that the river system will collapse and all the communities will suffer. Hence, change is mandatory – there is no choice.
  4. There are many communities who are unwilling to make the currently proposed changes. They claim that the proposed changes will impact on them economically and socially, and reject the changes on this basis. Yet, if no change occurs then all will suffer economically and socially. So, the choices are between no change (unacceptable), insufficient change (unacceptable), some change (necessary but not yet acceptable). It appears that there is insufficient recognition of the degree of change needed, especially when that change impacts local communities – yet the local communities will be impacted even more by no change or insufficient change.
  5. It is in this context, that we need new thinking models to enable appropriate decisions to be made, lest we make no decision and all suffer the consequences.

One thinking model which might help to approach the problem from a different angle, entails the following:

  1. The Murrary Darling Basin is a signficant national asset
  2. The MDB needs to be more appropriately “governed” – the current model of partnership between State Governments is clearly not working – it is evidence of failed governance.
  3. A new governance arrangement would benefit from taking a “portfolio management” approach to this valuable national asset. That is, to manage the asset in a way which generates the greatest value to the asset owners, operators and those that rely on this asset. Portfolio management simply applies the governance concept to the defined resources involved in the portfolio.
  4. A little known fact (as I understand it) is that our national Constitution which creates a Federation of states (and territories) is designed in such a way that it makes it very difficult to reduce or remove any states. (This comes from thinking and reviewing our three levels of government, and asking whether we could remove the second level – the answer is that it is virtually impossible to do). However, it is designed in a way that makes it relatively easy to add more states.
  5. What if Australia was to create the new Murray Darling State? This state would have a geographical boundary that aligns with the Basin perimeter ie the primary area that is the source for the river system, and the communities that are within this boundary. The new state would involve excising these areas from Qld, NSW, Vic and SA. I imagine that ACT would remain a separate territory.
  6. Under these new arrangements, the Murray Darling State would establish a Parliament and Government to attend to the long-term sustainability of the state, and all those within the state who are dependent socially, economically and environmentally on the viable operation of the state and one of its most valuable assets.
  7. The MDS would have full rights to manage its assets, and would establish appropriate contracts with other states for the provision of products and services. Normal state trading arrangements would be established and operate.
  8. States reliant on products and services from MDS would need to adjust their thinking and their behaviour as a result of becoming a customer of the MDS and negotiate in good faith, consistent with the Constitution. Disputes would be referred to the High Court.
  9. MDS would have representation in the national Parliament, consistent with its composition and place in the nation, based on the normal rules for representation – population based for House of Reps and standard numbers for Senate. Future decisions might well still require an Authority which brings the States and the Australian Government together to make appropriate joint decisions.

This, to me, offers a new thinking model (and even perhaps a new operational model if it were decided to be implemented). It allows the problem to be tackled in a more holistic fashion, using conventional decision making tools and instruments. It allows the nation to come at this problem in a different manner, without all parties coming from the position of “everybody else needs to change but I won’t because it will be the death of me”.

Even if not implemented, I believe the thinking model allows for a different approach to the problem – and I would hope a more successful one in making the necessary decisions.

I am interested in comments on either of:

  1. the merits of this as an alternate approach to a major national problem
  2. the merits of finding alternative thinking models to intractable problems facing our Boards

Enterprise modeling is a governance tool

Enterprise modeling, as described in previous items, provides decision support to enterprise improvement investment decisions.

Given that some of these decisions are in the province of corporate governance, it becomes evident that enterprise modeling, if used effectively, can contribute to and enhance corporate governance activities.

Of course, enterprise modeling is not exclusively applicable to corporate governance.  It supports a range of business improvement investment decisions, typically in the context of taking a portfolio management approach to a defined set of resources / assets to the benefit of overall improved organisational performance.

Hence, enterprise modeling is intrinsically related to and supports more effective approaches to the practices of governance, strategy and portfolio management.