Fractal management

To manage technology effectively, you need methods that let you manage at different levels of detail at different times and across different subjects.

We tend to think that management should deal with the high-level, and leave technical details to specialists. Although this is generally the case, we should not have too fixed a view.

The world is not divided into "management" and "technical". The world is fractal. Management direction, organisation and control can be useful at every level of detail. But management takes time and costs money. The trick is to achieve the best possible return on management by optimising the level of detail at which management operates.

This means that management needs to work at different levels of detail at different times and across different subjects. Management needs to be able to delve into detail when necessary, if there is an issue or something that needs to be co-ordinated more widely. Even the most technical details, such as firewall configuration, can become management topics, for example after a network attack. Management also needs to be able climb back up out of the detail again, and quickly leave before they get in the way of the detailed work.

Effective managers know this. They know when to leave their staff to get on with the work, when to get into the detail, and when to back off. Navigating multiple levels of detail is an important skill for technology managers.

One of our customers is carrying out a high-level assessment of strategic fit of their systems. They also want to know in more detail how one individual data item is implemented in each, because it is a current issue for them. This is not arbitrary and inconsistent, but the reality of effective management.

There is no right and wrong level of detail for management. In some subjects and at some times, management can deal with high-level summaries; in other subjects and at other times, they need the detail. You need an approach that lets you vary the level of detail to reflect the fractal realities of management. You need to do this in a controlled way to show that management is being responsive and responsible, not inconsistent and meddling.

This has helped me settle an issue that has plagued me for the past few months. We have struggled to find a good name for the method that my company, Metrici, provide. (The method provides an ongoing process to identify and justify improvements in IT.) We now call our method Metrici Extensible System Quality Management. We call it "extensible" because it can extend across different subject areas, across multiple purposes (governance, control, and day-to-day management), and up and down the continuum of detail. It provides a consistent framework that lets you manage at different levels of detail at different times and across different subjects.

Whether you use our methods or not, this is a valuable characteristic to look for in all your management methods. There is not a right and wrong level of detail for managing technology, provided that it is not fixed, and you can flex your management response as you have need.

© Copyright 2008 Minimal IT Ltd. See the Minimal IT website for the original newsletter and copyright information.

Can I have it in Excel?

The latest formats make it much easier to export data and reports to Excel, even if you do not use Microsoft technology and do not have the latest versions of Microsoft Office.

I am often critical of Microsoft because of the incompatibilities between one version of their software and the next. I always encourage people to look at free and open source alternatives, because in the long run they offer greater freedom at lower cost.

Despite this habitually negative tendency, I am impressed at the latest version of Excel, Excel 2007.

Most of the reviews that I have read dismiss Excel 2007 as "New interface, but no new functionality." I can not comment on this, because I have hardly used the new version at all. What has impressed me, is that Microsoft have redesigned the underlying file formats.

The file formats of earlier versions of Microsoft Office are very difficult to produce unless you use Microsoft software. The latest versions are based on XML (known as Office Open XML), and are available as published standards (ECMA 376 and ISO/IEC DIS 29500). This allows any software to write files that can be read easily in Microsoft Office. Microsoft's compatibility pack allows the new formats to be read in earlier versions of Microsoft Office, and to be imported into other products such as OpenOffice.org.

XML-based standards for office documents are not new. OpenOffice.org and many other office suites use the OpenDocument standard (ISO/IEC 26300). There has been criticism of how the formats from Microsoft were adopted as standards. However, in a corporate IT environment most people use Excel and we in IT are often asked to deliver data and reports in Excel. The new formats make this much easier.

We had this requirement in our Metrici Advisor product. The system provides standard reports, but a number of customers wanted to export data to Excel to integrate with other reporting.

Metrici Advisor is Java-based web application. It runs on Linux, and uses no components from Microsoft. The Microsoft components for producing Excel spreadsheets were not an option. Because Metrici Advisor's reporting is all XML-based, we thought we would try to produce Excel data to the new formats directly from the system.

Without going into technical details, this was relatively easy. We create the Excel data in three steps: extract data into a tabular format, convert the tabular data to Office Open XML, and then compress this to produce the final files. (This approach makes it easy to extract different data sets, and to support other formats such as the OpenDocument standard.)

Setting aside the technical details, and glossing over how Microsoft got their formats adopted as a standard, the new Microsoft Office formats are significant for corporate IT:

• They make it much easier to produce data and reports in Excel format directly from any application, even if you do not use Microsoft products.
• The formats are reasonably easy to build using simple, standard, open-source products.
• The Microsoft Office compatibility pack means that the new formats can be used in earlier versions of Microsoft Office, and in other products too.

So, yes, you can have it in Excel.

© Copyright 2008 Minimal IT Ltd. See the Minimal IT website for the original newsletter and copyright information.

The value of belief

If you believe and act on business estimates of the value of IT, organisational pressures will drive the figures to be accurate.

In last week's newsletter I suggested that the most accurate way to estimate the business value of IT is simply to ask the business owner of each system what the system is worth, and believe and act on whatever answer they give.

We can use these estimates of value to help us manage IT. We can use them to decide which systems to keep, which to discard, and where to invest. We can use them to show which IT creates profit, and where IT is an unjustified cost. We can use them to value IT projects - the project value is the difference between the value of the IT before the project and the value of the IT after the project, multiplied by a suitable payback period.

Some would argue that this approach is an abdication of the IT organisation's responsibilities. I disagree. The IT organisation has broad responsibilities, but it can not be responsible for downstream business value. Openly stating this places the responsibility more clearly where it belongs.

Some would argue that this approach is too difficult. I disagree. In simple cases you can estimate the value of IT by estimating the cost of the manual alternative. In entirely IT-dependent processes you can estimate the value of the IT as a proportion of the value of the entire process. If the benefits of IT are intangible, you can set a notional value to counterbalance the very real costs of IT. Even estimating that an IT system is only worth its running costs is useful for management.

The beauty of this method is that it encourages business managers to estimate accurately.

• If nobody agrees to own a system, or the owner refuses to value it, then the system has no identified value, and should be removed to save costs. The threat of removal should strengthen the IT organisation's position to get more meaningful estimates.
• Some owners might say that they can not value the IT financially because its purpose is not financial, for example because it reduces risk or improves customer service. Do not be deterred. The same business managers estimate financial worth, for example when they take out insurance or employ staff to deal with these issues. It is their responsibility to translate between the financial and non-financial. If they will not, manage as if the system has no value.
• Conversely, some owners might put ridiculously high values on their IT, or refuse to disentangle the value of IT from the value of the processes it supports. Excellent! The CIO or IT Director can claim this as profit that IT makes for the organisation. The personal and political ramifications of assigning profitability to another senior executive would soon bring down unreasonably high estimates.

Using the estimates to show how IT creates profit, and to show which IT systems are not worth their costs, encourages meaningful discussions about IT value. It encourages business managers to give the best answers they can: well-researched, cautious, but not too low. This is the best mindset for valuing anything, and gives the best figures for managing IT.

© Copyright 2008 Minimal IT Ltd. See the Minimal IT website for the original newsletter and copyright information.

The business value of IT

It is hard to measure the business value of IT. But there are a few simple things you can do to make measurement easier.

If we knew how much IT was worth to the organisation, we could make much better decisions. We could decide what systems to keep, what to discard, where to invest. We could show that IT does not just burn money, but creates profit for the organisation.

Yet we hardly understand what value means. Often we even muddle up value with cost. The value of IT has nothing to do with how much IT has cost in the past, or how much it would cost to replace. We have to understand how much it is worth to the organisation.

We can talk sensibly about the value of IT change that alters the costs and risks of IT. System quality management estimates the value of IT investments that save IT cost or improve risk and responsiveness. But useful though this is for IT management, it is not true business value.

The problem is deeper than we might imagine. When we talk about IT, we talk about things which do not, of themselves, give value, such as projects, and IT delivery processes. Or we talk generally about business processes, without identifying how much of that value comes from the IT, and how much comes from the human activity.

To talk meaningfully about true business value, we need to restructure how we present IT. Presenting IT as a complex of technology, process and organisation, with projects, service delivery processes, IT organisation, architecture and infrastructure, is meaningless to business value. We need a simple thing that represents all of this, that could potentially be of value. The concept of "system", taken broadly to mean a system service, the application that supports it, and all the technical infrastructure and human support infrastructure around it, starts to make IT into a more identifiable thing that can have a value.

We need to be clearer about IT's contribution. It is hard to disentangle the value of IT from the value of the business processes it supports, but we have to do this if we want to value IT. In a strict sense, the value of IT is the value of automating the storage, transformation and communication of information. To get closer to a true business value of IT itself, we have to stick to this narrow definition of IT, and exclude the broader business processes and changes of which it may be a part.

These changes of view do not answer the question, but they do make the question possible to answer. We can now approach our business colleagues with a sensible question, "What is this thing worth to you?"

This is not an easy question to answer, but I think it is the right question. It separates what IT itself delivers from the business context into which it delivers, and from the paraphernalia of its delivery.

Will the answers be right? I strongly suspect that the only way to get more accurate valuation is simply to act on whatever answer they give. More on this next week.

© Copyright 2008 Minimal IT Ltd. See the Minimal IT website for the original newsletter and copyright information.