Blog Host: Tom Pisello - Founder, CEO, President, Alinean READ ENTIRE BIO

In our latest research with IDC, the good news is that 2/3 of IT projects are now successfully deployed. This is truly a drastic improvement over pre-2000 figures, where 1/3 of all projects were cancelled prior to deployment and 40% failed to meet budget, schedule and requirement criteria for success. The primary success factor has to do with a more frugal environment -- today's projects are smaller and incremental. As well, development tools and resources have dramatically improved, along with application development capability and maturity. Good project management skills are still rarer than they should be, but contribute greatly to overall success when in place.

Today, of the failed projects, only 1 in 10 projects are cancelled before deployment, but an additional 2 out of every 10 are delivered short of expectations -- missing scheduled release deadlines, exceeding budget estimates or short originally planned features and functions.

So 2/3 delivery is good, right? Yes, but the bad news is that when examining the projects deployed successfully, 1/2 of those surveyed do not deliver on promised value propositions. In examining why, some of the value gap is because expectations are too high for the projects initially; key assumptions such as the impact of features or user adoption are not realized. For these projects, it is important to thoroughly risk adjust the business cases and set expectations more realistically. Still for other projects, value is not being realized because metrics to measure value success or failure and drive improvements early when it is clear that the project will fall short on delivery are not in place. Most people surveyed qualitatively assume the projects don't deliver because of adoption issues or other roll-out disappointments, but they really don't know quantitatively whether the return on investment is realized or not.

My ninth wish is for all IT executives to better quantify project success, including adding new tracking criteria to assure that projects are not only are delivered on time and within budget and meeting requirements, but deliver promised business value and ROI.

The Metrics: Average Project Success Rates

Canceled before completion	11.0%
Issues -- behind schedule, over budget, short key features/functions	21.4%
Successful delivery, but short on promised value	32.4%
Successful delivery and value realization	35.3%

Posted by Tom Pisello Eighth Wish: Information counts
16 DEC 2005 01:00 EST (06:00, GMT)
As the cost of manufacturing and delivering goods declines, information is becoming more and what businesses rely on for competitive advantage and valuation. For example, manufacturing companies are being valued today more for their industrial design skills, and manufacturing processes needed to source and guide assembly as opposed to their raw manufacturing capabilities, such as the ability to shape materials and assemble components.

First, understanding the digital information assets that the business currently relies upon can help IT focus security and disaster prevention/recovery investments to assure that these assets are adequately protected. As well, knowing these assets, IT can help the business instrument the data -- helping knowledge workers better access and visualize the information, key performance indictors and metrics relating to this data -- guiding the important dashboard and business intelligence projects.

Second, understanding which information assets are currently not digitized can help the business to improve process efficiency and reduce costs -- eliminating, paper-based systems, manual data handling, errors and omissions. As well, digitization of this core company knowledge through process automation can help capture vital intellectual capital that is currently in the hands of only a few key employees. Once digitized, the information collected from process transactions and workflow can be integrated with other information for additional business insight and skills.

Start basic, but we are clearly entering a new era of company valuations where information and know-how will prove vital. My wish is that every SMB IT executive recognizes this trend and:

1. Categorize and protect current assets.
2. Look for ways to digitize additional transaction, customer and supplier information and processes.
3. Instrument and visualize the information to empower decision making.

These service-level agreements work well to assure that IT-centric investments deliver as promised -- assuring that service is maintained. But what about business-oriented IT investments where these type of service-level agreements do not address the basis for investment? These business-oriented IT projects are designed to deliver business cost savings, productivity improvements or revenue benefits. However, although most vendors sell on the promises of quantifiable business benefits, most don't stand behind the achievement of these benefits. This leaves the risks of achieving promised benefits completely in the hands of the company, with no recourse on the vendor as to whether the benefits are achieved.

We propose that small businesses work with solution providers to quantify the proposed costs and benefits of proposed solutions and to tie a portion of the licensing or service fees to achievement of these ROI plans -- an ROI SLA. Should the plans fall short of proposed goals, a portion of the license/service fees are retained by the company, while if costs are less than expected or benefits higher, the vendor shares in some of the rewards. Sharing the risks and rewards can help IT executives better deliver on promises and hold vendors accountable for shortfalls. At the same time, IT vendors are rewarded with upside revenue for helping their customers achieve true business value from each investment.
Posted by Tom Pisello Sixth Wish: Front-office investments
14 DEC 2005 16:14 EST (21:14, GMT)
In a current study we are doing with Bain, we are looking at various IT success factors -- trying to determine what makes some organizations more successful with their IT investments. One of the first items we confirmed was the long-standing belief that it is not how much you spend on IT that matters, but rather what you invest in that counts. Looking at 500+ companies, we plotted IT spending versus performance metrics such as revenue growth, profitability and economic value add (EVA) -- and the results showed no correlation between more spending and higher performance.

With overall spending versus performance proving inconclusive, we are now researching additional success factors, which we think drive superior performance.

One of the key factors we are researching as to how it drives superior performance is front-office investments versus back-office ones. Front office investments include direct, external, customer-facing applications and resources, as well as indirect investments in applications to support customer services and experiences. Looking at a few of our select top performers we see that these companies have a higher amount of customer-centric investments compared to the competition. These investments are helping to drive revenue growth and market share, and, in today's expansive economic times, are driving these companies to superior performance.

On average small and medium businesses spend around 40% on front office IT, with top performers spending 10% more or so. So what's your mix of front-office vs. back-office investments? Let me know. Assess the mix for existing spending and new projects to see if you are focusing enough on growth and customers or are too focused on internal optimization.
Posted by Tom Pisello Fifth Wish: Be optimistic about technology again
09 DEC 2005 21:07 EST (02:07, GMT)
There was nothing that new technology and the Internet couldn't empower a small or medium business to do -- creating new business models with new ways to market and sell; ways to interact with supply chain partners; ways to service customers…to have the capabilities of large businesses but at lower costs and with higher agility.

Unfortunately, the optimism regarding technology investments was curtailed with the bursting of the Internet bubble. But if you follow the growth in Internet users, e-commerce sales, hosted application usage and other predictions, although the timing might have been optimistic in the midst of the irrational enthusiasm, the expansion and adoption of these solutions has indeed grown exponentially.

As a longtime technologist, I am always enthusiastic about technology's positive impact on businesses, but like many, got disheartened when the bubble burst. However, I am reaching new levels of optimism after reading the latest book by best-selling author, inventor, entrepreneur and futurist Ray Kurzweil -- The Singularity Is Near : When Humans Transcend Biology.

Projecting 20 to 100 years into the future, Ray Kurzweil projects the historical exponential advances in information technology, artificial intelligence, robotics, nanotechnology and genetics into the future to try and foretell what the world will have in store for us. Predictions include non-startling progressive advances such as genetically engineered replacement organs, bionic appliances and ever-real, virtual reality experiences to the more perplexing transcending of the human body -- allowing all those who chose to live forever in computerized form. In as little as 15 years, the analyses show that computers will have the raw computing power (although without the software) to equal the human brain, and some of the nearer term 10- to 20-year predictions are extremely invigorating regarding the potential to continue productivity improvements with automata personal assistants and virtual offices, eliminate handicaps through advanced biological enhancements and eliminate many health issues via nano-robot intervention.

As a reader of his prior futurist manifestos, and knowing how close he has come to prior predictions, the far-reaching implications will get every technologist excited and every Luddite running for the hills.

Kurzwiel spends a little too much real estate defending his beliefs against a wealth of naysayers than painting a clearer picture on what the future would be like beyond overviews.

But if you want to get excited about technology again, I highly recommend this holiday read.
Posted by Tom Pisello Fourth Wish: Time to hang ten -- catching the innovation wave
08 DEC 2005 23:18 EST (04:18, GMT)
The next several years will be the time for preparation and innovation, as IT spending continues to grow and the next technologically innovative wave rises and crests. Gartner recently outlined in its New Year's resolutions for CIOs that '06 and '07 are important preparatory years for the next wave, and we agree. Companies that recognize and begin preparing for this wave will be most ready to take advantage of the opportunities that Internet 2.0 and other new technologies provide. The rewards will be transformational to organizations that catch the wave -- changing business models, generating exponential revenue growth and leaps in productivity and greatly increasing market capitalization of the few who are early and catch the wave just right.

So what can an organization do now to prepare for these happy times ahead? The secret lies in the fact that today, organizations spend on average 65% of their budgets on keeping the lights on, support and maintenance operations and overhead. Of the remaining IT spending, another 25% is spent on progressive migrations and upgrades. This leaves a scant 10% annually for innovative applications -- new functions that help to improve business operating efficiency, drive transactions and revenue growth or drive business transformation such as launching new businesses or M&A enablement.

So what can be done today to be ready? We suggest that SMB CIOs and IT executives begin cataloging their spending to truly understand where the investments are being made and to begin steering investments toward achieving higher, innovative goals. In 2003 in response to Nicholas Carr's article that IT doesn't matter, I created the IT hierarchy of needs to provide a classification system to highlight how organizations can reduce costs on technology that had been commoditized, but at the same time improve investments in innovation that truly mattered. An organization could migrate spending up a Maslow-type hierarchy of investments, forming a solid foundation at the base, and then moving up the pyramid of developments, commoditizing prior levels and focusing more and more investments on higher level achievements.

The levels include:

• Level 1: IT infrastructure and mandatory/compliance -- These investments form a solid foundation for further advancement. While not delivering competitive advantage themselves, it is hard to advance to the next hierarchical level unless there is a solid foundation for growth. These projects should seek to deliver solid service levels while lowering total cost of ownership. Projects include server and storage consolidation, application development, managed services and outsourcing, security and SOX compliance.

• Level 2: Process and transaction optimization - These investments in the business seek to deliver operating expense reductions by automate key business processes or streamline supply chain and customer transactions. Projects in this category include supply chain management, human capital management, ERP, sales force and marketing automation and other business process automation projects.

• Level 3: Information optimization -- These strategic investments seek to empower the organization's decision makers with actionable information, empowering employees to track key performance indicators, create their own reports and queries, find key information faster and collaborate more effectively. Projects include business intelligence, scorecards, dashboards and portals and data warehouses.

• Level 4: Business transformation -- These revolutionary investments seek to utilize business information and implement new processes to empower business capability and agility, enabling M&A programs, launching new businesses, empowering different go-to-market programs, launching new channels or launching competitive programs. Projects in this category include acquisitions, direct marketing to capture competitors customers, win-back programs, new channel programs, new products in new market segment capture programs, new geography go-to-market programs, new demographics capture programs or new e-commerce sites.

Unfortunately most small and medium-sized businesses are busy investing in growth, and as a result spend less than they should on security-related issues. The good news is that most of these businesses fly low on the radar screen and are not the prime targets of malicious attacks. However, even though most SMBs are low profile when compared to the Microsofts and eBays of the world, this does not mean that SMBs are immune to threats.

The metrics indicate that the average 250-person small business, which has implemented some security measures -- but not best practices, will face:

• Two or more successful virus attacks over the next 12 months, affecting the productivity of about 20%of the user population for more than four hours or more for recoveries and restores.

• 10 or more successful network intrusions with varied repercussions from no damage (curious incursions) or impact to costly data damage/theft exceeding $250,000 or more in losses and recovery costs.

• Internal threats such as improper network use or access from within with various damages including information incursions to fines, litigation or data destruction/theft with varied impacts often exceeding $250,000 or more per destructive event.

Simple investments in core technology such as enterprise antivirus, antispam, firewalls, VPNs and identity management can go a long way towards preventing the most basic of issues. We are a small business that has implemented such basic tools and they work well. When a threat is realized, it is often not the tools but management or user policies, practices and procedures that fall short. So as digital footprints and assets grow, not only does the capital budget need to expand, but capabilities and maturity time, labor or services need to grow in concert to deliver proper protection.

Solving insecurities with growing security investments, capabilities and maturity is my third holiday wish.
Posted by Tom Pisello Second Wish: Consolidation and standardization for all
06 DEC 2005 23:48 EST (04:48, GMT)
...and for all a good night.

Every executive in small and medium-sized businesses wants to do more, but have it cost less…unrealistic expectations are what makes SMBs tick! And no one knows this more than SMB IT executives, who are often handed caviar dreams, but with a biscuit and gravy budget. Some things won't ever change, no matter how good we've been all year and even if we've made the top of the nice list!

So how can you survive into the New Year? The secret is to reduce infrastructure costs so that the wish list projects have what they need.

One of the best ways we have quantified to do this, particularly in small and medium-sized businesses, is to get a firm handle on the infrastructure and force much-needed consolidation and standardization.

In most fast-growing and dynamic businesses, decisions are often made for the moment. As such platforms, each a different type optimized for the intended need, tend to proliferate throughout the organization. With a lack of procurement controls and central architecture standards, the IT departments at most SMBs look like a CDW catalog representing every vendor, operating system, database, application and storage device imaginable. On each system different builds and configurations make support unique for each user versus unique for user groups. In non-standardized environments, each system requires its own special care and feeding, creating higher administration and support labor costs, and even giving up easy savings by giving up negotiating power with suppliers.

As well, with various offices opening quickly, hurried acquisitions and mergers and workforces working from home and becoming more mobile, enterprise assets such as servers, databases, applications, storage, backup management and security are often distributed haphazardly throughout the organization, forcing often costly remote management and support. Because assets are not known, understood or adequately managed, organizations often overspend by 30%-60% or more each year for extra capacity they already have available but cannot use due to lack of consolidation.

By consolidating and standardizing IT, prices paid for IT can be lowered through economies of scale and supplier negotiations. Asset utilization can be increased, helping to make better use of what exists and reduce additional purchase needs. And management and support costs can be drastically reduced and training costs lowered.

For our own small business, we implemented simple standards that helped us reduce costs with little to no overhead. All user systems were standardized to a single standard vendor, which we could call for support, and maintain interchangeable spares should issues occur. Going further, standardized images can be created for different user types and groups with standardized system and application stacks. For servers, we did similar standardization regarding vendors, and performed consolidation of all of our production servers into a server farm where applications for various clients are hosted, load balanced and managed centrally, helping us to maximize asset utilization, minimize new purchases and maintain high service levels.

Of course mandating unrealistic standards on users will not fly so it's important to get executives, business units and key users to buy in to the new standards, create a robust but standardized user and service catalog and implement a consolidated server/storage migration carefully to assure a smooth transition with contingency plans and no downtime. When done correctly not only can consolidation and standardization save money, but those processes have been quantified to improve service levels, increase responsiveness and deliver higher user satisfaction.

Most importantly, reducing infrastructure spending through consolidation and standardization can help the company shift precious IT funds from keeping the lights on to innovation.
Posted by Tom Pisello Are on-demand CRM solutions worth the hype?
05 DEC 2005 00:00 EST (05:00, GMT)
Being that the holiday season is upon us, it's time for wish lists -- and for executives at small and medium-sized businesses, there are no shortages of priorities to address.

This week I'll address what I feel should be the tops of any IT wish list for your organization.

Are on-demand CRM solutions worth the hype?

For many businesses looking to turbo-charge their sales and marketing growth, having a managed sales process is important. Implementing the right CRM solution can make or break these initiatives. Doing it right can help to improve the management of customer contacts and relationships, sales process and pipeline, management, forecasts and more. The hottest demand in CRM are for on-demand solutions from companies such as Salesforce.com, Right Now and Up Shot (Siebel on-demand). But are these on-demand solutions this hype-worthy?

I can speak from personal experience that they are not only worthy, but will only get better over the next several years.

In October we ourselves embarked on upgrading our sales and marketing capability and maturity, revamping all of our processes and tools. At the core of this initiative was on-demand CRM. For this, we personally selected Salesforce.com because of its ease of use, real-time performance and growing app-force community of add-on tools and applications.

I was concerned because our sales force, like most, does not like most CRM solutions, and we were not only revamping their management system, but changing all of the tools and processes at the same time -- a sure recipe for disaster?

As it is important for a small business to act fast when an opportunity is identified, we threw caution to the wind and instituted a four-week fast track program to revamp the sales and marketing process and to consolidate our piecemeal CRM solutions to a single on-demand CRM. We could not be happier with our on-demand CRM experiences and feel that it made executing such an aggressive program possible. Here were the leading benefits:

1. No technical resources were needed during the entire migration/implementation, saving these precious resources for other business/customer projects.

2. A non-technical inside sales representative migrated all CRM data from three different systems into the new system in less than four hours, eliminating any manual entry for individual sales professionals.

3. The entire sales and marketing team was trained and actively using the system in less than five days.

4. A marketing documents and tools repository was created in minutes, replacing a customized resource portal that required specialized capabilities to maintain.

5. Key deal reporting, forecasting and KPI reports were easily created using standard reporting tools included with the application, immediately helping us to gain insight that reinforced specific strategic decisions and provided insight to make further refinements.

The best news for the frugal executive: The on-demand solution was implemented for less than $1,000 in total annual costs per sales professional, with no IT expenditures other than the annual subscription fee.

As we expand our capabilities and initiatives, we will be taking advantage of the growing wealth of integrated best-of-breed solution providers for these on-demand platforms; integrating third-party add-on solutions to help us better manage client intelligence (such as integrating leads and corporate information directly into the CRM solution); calculating, quantifying and managing the value of our solutions to clients; managing incentive programs (helping to eliminate errors and shadow accounting) and more.

Wish #1: All can experience the same success that we have had with on-demand software, especially on-demand CRM.
Posted by Tom Pisello