Author: Andrei Fomitchev

Technology Business Management (TBM) is a value-management framework instituted by CIOs, CTOs and other technology leaders. Founded on transparency of costs, consumption, and performance, TBM gives technology leaders and their business partners the facts they need to collaborate on business-aligned decisions. Those decisions span supply and demand to enable the financial and performance tradeoffs that are necessary to optimize run-the-business spending and accelerate business change. The framework is backed by a community of CIOs, CTOs and other business leaders on the Technology Business Management Council.

While TBM applies common business management practices to IT ones that have defined the modern, data-driven enterprise it also represents nothing less than a business revolution in IT. As Brian Adams, CIO of WorleyParsons put it, TBM represents the first real change to the way IT is managed thats occurred during my 25-year career. Everything else has been evolutionary; TBM is revolutionary. Adams viewpoint and his passion for TBM, have been shaped by his somewhat unique perspective. His career actually spans roles far beyond IT, including CFO, strategy and development, marketing, product quality, and customer satisfaction.

IT is not the first domain to undergo a similar revolution. In the 1970s and the 1980s, manufacturers implemented a data-driven approach to optimize their supply chains from procurement through production. For the first time, they used technology to connect supply to demand, in turn reducing inventories, cutting production times, and improving margins. Manufacturing resource planning (MRP), as this method was known, led to new manufacturing techniques, such as just-in-time (JIT) inventories and total quality management (TQM). MRP was a game changer, and it gave birth to todays enterprise resource planning (ERP) software.

More recently, marketing departments have made similar changes. Just a decade ago, they were led by brand-savvy, creative leaders who made only gut-check decisions based on a knowledge of their products, buyers, and competitors. Marketing was a battle of wits, not data. Now, many chief marketing officers (CMOs) apply data to every aspect of their discipline. Using marketing automation tools and analytics, CMOs are working hard to connect every part of the marketing supply chain from website inquiries to qualified leads to active opportunities to closed deals. Many CMOs understand the conversion rates and costs at each stage of this supply chain, which they call the revenue engine. They continuously optimize that engine using data. Marketing is today quickly becoming as much science as it is art.

Managing the Supply and Demand of IT

Now its your turn. IT must use facts to answer important questions about its own supply chain: How are your resources (money, people, and time) spent to deliver towers of infrastructure and other technologies? How are those resources used to deliver projects? How are your towers cobbled together into applications and services? How are those apps and services consumed by your business partners to generate revenue and manage costs? If you can make these connections, you can make decisions that improve efficiency, grow return on capital, and add business value. Further, you can change the conversations you have with your business partners.

As with the marketing supply chain, you can look at yours in reverse. You can see precisely how business demand drives the cost of your apps and services, and in turn, you can identify the consumption of infrastructure towers and resources. This is powerful information. Not only does it help you create a financial plan based on how resources are actually allocated and consumed, it connects everything your people do to business outcomes.

Early TBM Successes

It is no coincidence that the development of TBM was influenced by someone who understands firsthand the challenges of managing supply and demand. Rebecca Jacoby, SVP of Operations at Cisco, started her career in manufacturing and supply chain roles, and at one point she was responsible for the global consolidation of Ciscos supply chain. After becoming CIO in 2006, she advocated a management approach that addressed both the supply of and the demand for IT. For Jacoby, this went beyond the supply-chain management for only IT. Instead, it would fundamentally change the conversations that she and her team were having with their business partners.

At Cisco, we recognized that in order to drive business value and innovation, we had to become a competitive provider of IT services. This meant, among other things, that we had to change the very conversations we were having internally and with our business partners. Our conversations and our vocabulary needed to move beyond technologies, SLAs and projects, to discussions about the tradeoffs needed to balance cost, quality, and value. Only in doing so could we free up resources for business growth and strategic execution. These tradeoffs are at the core of Technology Business Management.

Rebecca Jacoby, Cisco

Jacoby went so far as to define those value conversations by setting standards for them. They included strategy alignments, IT portfolio planning, architectural reviews, and quarterly value discussions with stakeholders. They centered on value considerations scope, source, architecture, quality of service, time to capability, risk all balanced by a new dimension cost. The result allowed her to align business and IT plans more closely, shape the portfolio of applications and services to meet the businesss needs better, tweak their technology stack to increase performance (even while reducing costs), and shape demand by putting a price tag on consumption. Now, as Chief Operating Officer, Jacoby is putting these practices to work beyond IT.

Still, its not just former CFOs and supply chain leaders who are shaping TBM. Many CIOs who have spent a majority of their careers in IT also are putting their mark on TBM. Larry Godec has spent the majority of his career working in various IT roles much of it as the CIO of First American, a leading provider of title insurance, settlement services, and risk solutions for real estate transactions.

In 2012, with the housing market starting to recover, Godec needed to shift his IT department to respond to the demands of a growing business. Godec recalls in great detail precisely when his TBM journey began a budget meeting with his CEO Dennis Gilmore. Dennis said, Were going to focus on growth. He told me I needed to know where we should be investing in customer-facing technology, because thats what the business will need to compete.

However, with a majority of his budget dedicated to supporting the existing IT estate, Godec needed to figure out how to shift resources quickly without putting the business at risk. He needed to see his resources in business terms, so he could collaborate with his CEO, CFO, and his line of business leaders on where to make the changes.

In a stroke of good timing, Godec heard what he needed to hear at a presentation by Tony Scott, then the CIO of Microsoft. I was at Microsoft for a briefing by Tony when he showed this dashboard I had never seen. For the first time, I saw someone who put IT costs, resources, and investments into terms I could easily explain by the applications and technologies that the business was using.

Godec now saw the way to put everything he did into business terms. Godecs first pass at TBM helped him create a simple portfolio view of the IT-business landscape, so he could have informed discussions about which apps and services were being consumed and by whom; how much he was spending on each of his major applications; and how much he needed to spend to support each line of business.

These facts led to several revelations about their portfolio. Many of the insights helped lead to cost reduction, while others led to the opposite conclusion. For example, by seeing for the first time the percentages of total spending on their app portfolio, they could justify increased investment in customer-facing technologies.

Other insights came in rapid succession, such as identifying end-of-life applications that were still consuming infrastructure and resources. In the end, these insights added up to significant budget savings and reallocations to more valuable purposes. Godec knew there were more, so he put his team on the hunt for new discoveries. His goal? Significantly reduce annual operating costs without reducing the quality of service and support. His team of only two people, mostly in their spare time, exceeded this goal in just a few months.

This is an important lesson. TBM isnt necessary because IT is too expensive. Instead, its needed because your resources are in short supply. IT budgets of course never satisfy everything your business wants; but the real problem is that skilled people are hard to find and your business competitive clock is ticking faster and faster. You cant afford to waste people or time. IT may represent less than a tenth of your business cost structure, but it is inextricably linked to your ability to compete, serve your customers, and reduce those business costs. Your IT capital must thus be invested wisely to create the most value.

IT governance and Information Technology policies is not generally a hot topic for SMEs. However, planning business growth and development is impossible without a solid technology platform. Therefore, putting in the proper IT policies and practices to ensure that your infrastructure (be it done internally or outsourced) aligns with your business mission is essential.

In large enterprises and organizations, matters of IT policy are within the competence of the Chief Information Officer (CIO). Such organizations will have quite large and verbose IT policies, often revised by a lawyer for legal purposes. But an IT policy does not need to be a large volume of legalese to be meaningful and valuable for corporate governance.

This article discusses the key aspects that SMEs need to consider when developing their IT policies, including defining scope and responsibility, IT infrastructure documentation, acceptable use of information technology, information security, IT services and standards, IT systems management and maintenance, IT incidents, and information systems.

Defining Scope and Responsibility

The scope of any IT policy should clearly be defined what it enforces, who it applies to, who is the Policy Owner, etc. An important aspect to consider are internal and external governing documents (provincial or federal legislation) that directly applies to IT practices in your industry. For example, institutions dealing with private health information fall under the Ontario Personal Health Information Protection Act (PHIPA).

There may also be certifications that influence IT policies and standards that must be considered. For example, ISO certification mandates certain IT practices to uphold certification.

Each policy should clearly indicate who is responsible for implementing/upholding it (executive, user, external consultant, etc.)

What are the essential IT policies relevant to SMEs?

IT Infrastructure Documentation

IT Documentation is critical for business continuity and knowledge retention about IT systems. The IT infrastructure documentation policy should establish a minimal list of documents to be created and maintained. Some examples of IT documents that are critical for any organisation:

• IP address distribution table spreadsheet;
• System and Network diagram;
• Firewall access control list, or similar list of access rules;
• Active Directory user audit spreadsheet, including security group membership;
• etc.

Acceptable Use of Information Technology

The Acceptable Use policy determines what users can or cannot do with IT resources. It touches on things like who may use IT resources (authorisation), users responsibility, and limitation on personal use. 

Areas that are covered by Acceptable use would be:

• Telephones
• Computers
• Internet, including social media, and could platforms
• Email
• Printers
• etc.

Information Security

Arguably one of the highest concerns for some enterprises, as everyone tries to protect data leaks and security breaches due to high liability costs (as we discussed in our article on Cyber Liability). The policy should define and list the information (data) covered by it (Confidential company-owned data, private data, databases, hard copies, etc.) and cover areas like:

• Domain Access and Accounts;
• User and administrator passwords;
• Remote Domain and Computer Access, including access by Third Parties;
• Network security: firewall, Remote login and Administration, network segregation, wireless networks, etc. (in larger policies, there may be a separate policy on Network Security in addition to Information Security);
• Antivirus protection;
• External Storage Devices;
• Email and Content filtering;
• Portable computing and Mobile Devices;

IT Services & Standards

This policy should define what services that IT department provides and what standards should be followed. For example, shared network storage and access to it, printing, data retention and backup standards, etc.

IT Systems Management and Maintenance

This policy should deal with things like hardware replacement and rotation (how frequently), managing firmware and software updates, monitoring, day-to-day operations, etc.

IT Incidents

This should talk about how IT incidents are handled at your company, i.e. who is responsible for reporting incidents and to whom, what are the resolution times (SLAs), what are standard procedures in handling incidents, etc.

IT incidents should be differentiated by severity. IT Disaster Events should be separately defined and a separate policy for Disaster Recovery should be written.

Information System

The Information System is a an aggregation of all IT resources (hardware and software) that support key business processes. With respect to the mission of any company with a (moderately) complex value chain, it is important to understand how the information system serves the business process, and how well the two should align. Information system policies should define the standards for developing and auditing key business processes and information systems.

To Conclude

Having the proper IT policies and practices in place is essential for SMEs to ensure business continuity, data security, and compliance with relevant regulations. It can also help companies better manage their IT resources and align them with their business mission.

As an IT consulting company, BALANCED+ can help SMEs develop and implement effective IT policies and practices to improve their IT governance and support their business growth. Contact BALANCED+ today to learn more about our IT consulting services and how we can help your organization achieve its goals through effective IT governance.

While keeping track of sales and production numbers and completing financial statements is necessary, it only scratches the surface of valuable information that can help improve performance, reduce costs, and optimize throughput in plastics manufacturing. Hidden measurements of production, material usage, and hours offer insights beneath the surface that can help you achieve a more efficient operation. Ignoring this data poses a risk to the health of your business.

Overall management of production and inventory is really the sum of the management of individual resources within the business individual machines, people, materials, and goods. And just as the chain is only as strong as its weakest link, challenged or underperforming resources can negatively affect the performance of the entire organization.

It is important, therefore, to measure and manage each resource as closely as possible in order to detect any variance from expectations and be able to take corrective action before productivity and throughput are affected. In todays digital factory, it is easier than ever to achieve that goal. The best modern ERP/MES systems are built to continuously monitor key measures of machine rate, output, efficiency, quality (reject rates), utilization and other factors and alert operators and managers when conditions or accomplishments vary from expectations.

Arguably the most important internal measurement to watch is Machine Efficiency: tracking of cycle time the interval between successive pieces produced or similarly the amount produced per hour in either units or pounds. Since actual production time is a major factor in product cost, a variance from the assumed or optimum run rate can make a big difference in cost-of-goods and profit.

But running faster than normal may not always be good if the result is lower yield or a higher scrap rate. So tracking rejects is also very important. And reject tracking should be as real-time as possible. The sooner a quality problem is detected, the sooner corrections can be made and fewer bad parts will be made.

Even though raw material cost is typically a relatively small component of cost-of-goods, availability is critical running out of material before the required quantity is produced can be disastrous. Acquisition and maintenance of raw material are tied to forecast or backlog, and usage rate. If the usage rate is incorrect, there is risk of material shortage. In addition, an inaccurate usage assumption in the recipe or bill-of-material can lead to incorrect pricing and misleading margin assumptions.

Monitoring actual material usage validates bill-of-material assumptions and provides insight into actual usage including start-up losses and normal scrap all information that can be used to refine costing and material management. Monitoring of usage in real-time may also provide early warning of process problems that can lead to rejects or operational problems.

It may sound complicated to continually watch multiple factors at multiple resources, but in fact, continuous measurement and reporting are much simpler it sounds. Technology gathers the detailed information and does the initial assessment by matching actual measurements against expectations and past experience. Only deviations or unexpected results are immediately communicated to responsible individuals for follow-up or further investigation. Accumulated information is always available, of course, for study and performance improvement efforts. Contrast that with the need to respond to a quality problem, production delay or cost overrun after the fact without any hint as to the source and location of the problem.

The Titanic had its unfortunate encounter with the hidden underside of the iceberg at a time when radar, sonar and modern navigation and communications did not yet exist. A sinking caused by an iceberg encounter is unimaginable today simply due to the technology available and in use in all ocean-going vessels. Plastics manufacturers have access to the equivalent of sonar and radar for monitoring activities and resources in the plant that can reveal the existence and even the emerging possibility of hidden perils like an unexpected variance in run rate, change in scrap or yield, or unusual material usage. Smart management will use these signals to proactively fine tune performance to reduce scrap, lower costs, improve on-time completion, and preserve margin.

Source: Cyframe.com

Our Comment:

BALANCED+ has extensive expertise in developing software to collect information on physical quantities and monitor production in plastics manufacturing. You can learn more about by reading our case study on Nuform which you can click here to read

Your business processes are not just valuable – they are your business itself.

According to Appian.com, a business process is a collection of linked tasks which find their end in the delivery of a service or product to a client. Generally, business processes are grouped into three categories:

• Management processes;
• Operational processes;
• Supporting processes.

Operational processes are what constitute the key value chain they are at the heart of what makes your business different (or similar) from any other. For example, in manufacturing, the operational processes are those directly linked to making the product (sourcing raw materials, production, finishing, packaging, shipping, etc.). Supporting processes include finance/accounting and, of course, IT.

The natural human tendency is to minimize waste and optimize. However, left unto itself, the process of finding areas for improvement takes significant time, especially within an organization with processes that may span several months. This is where Business Analysis comes in. Wikipedia.org describes business analysis as

a research discipline of identifying business needs and determining solutions to business problems. Solutions often include a software-systems development component, but may also consist of process improvement, organizational change or strategic planning and policy development.

That is, business analysis develops and optimizes solutions to address business needs.

Any process is based on the flow of information, and a business is no exception. The main role of IT systems is to streamline, organize, and speed up information flows in business. IT Business Analysis focuses specifically on developing IT solutions to business needs and improving existing business processes. IT solutions can be as simple as the implementation of an instant messaging tool to speed up communication, or as complex as an information system that holds all business information and facilitates the entire workflow from lead to final sale to customer follow-up. A particular example of the effectiveness of IT Business Analysis is the Barcode Scanning System BALANCED+ developed and implemented for Nuform Building Technologies Inc., which allowed for fast entry and accurate accounting of raw materials and stock. This system decreased the time needed for a full Inventory count by 4-5 times. BALANCED+ also develops and supports custom in-house information systems.

IT Business Analysis can work with all types of business processes. If focused on operational processes, i.e. those that form the key value chain, it can unlock the hidden potential of your business.

Management often frowns upon investing into IT systems, and this is often a legitimate concern IT systems should only be based on adequate business analysis, showing what specific improvements to business processes will happen as a result of implementing the IT solution. Depending on the business, the adequate IT solution may be off-the-shelf or fully custom, which is what we will discuss in future blog posts.

As businesses continue to rely more heavily on technology to operate, it becomes increasingly important to manage IT systems and infrastructure effectively. One way to ensure that IT resources are used efficiently and effectively is through proper IT documentation. IT documentation is essentially a record of an organization’s IT infrastructure, systems, and procedures. It includes everything from network diagrams and IP address distribution tables to active directory user audit spreadsheets and firewall access control lists. Here are four reasons why IT documentation is essential:

1.Knowledge Transfer

One of the most important benefits of IT documentation is knowledge transfer. When key IT staff leave an organization, they take with them a wealth of knowledge about the organization’s IT systems and infrastructure. If this knowledge isn’t properly documented, it can be lost forever. However, when IT systems and procedures are properly documented, this knowledge can be transferred to new staff members, reducing the impact of staff turnover.

2.Standardization and Coordination

IT documentation helps to standardize and coordinate IT systems and infrastructure across an organization. By providing a clear and concise record of IT systems, it becomes easier to identify areas where standardization can be achieved. This reduces the complexity of IT systems, making them easier to manage and more efficient.

3.Time Efficiency

Time Efficiency By providing quick access to IT documentation, staff can be more productive, spending less time searching for information and more time focused on their core responsibilities. This can be particularly valuable during high-pressure situations such as outages or emergencies, where quick access to accurate information can be the difference between quickly resolving an issue or prolonged downtime.

4.Improved Transparency & Communication

Finally, IT documentation provides a clear picture of what is going on within an organization’s IT systems and infrastructure. This makes it easier to identify potential issues before they become major problems, and to respond quickly when issues arise. Additionally, IT documentation can be used to identify trends and patterns in IT systems and infrastructure, helping organizations make better-informed decisions about future IT investments.

What should be documented?

Some important things you should document, and the list is by no means exhaustive:

• Network and system overview. This gives any IT-savvy individual a general overview of your IT infrastructure. This may be one or more documents, depending on the size and complexity of your infrastructure.
• Administrative credentials and passwords. Needless to say, they should be stored in a secure, preferably encrypted, location, but accessible in case of an emergency and by other IT staff.
• IT policies, reflecting the IT approach to various aspects of managing the infrastructure. This includes
  • Network and Security Policy (what networks and systems exist, for what purpose, who has access, etc),
  • Information policy (privacy, appropriate email use),
  • Internet policy (access to third-party resources like cloud platforms, what content is accessible, what content is blocked),
  • Hardware management policy (how often hardware is replaced, how old hardware is used, etc),
  • Backup and Recovery (when and how recovery is done),
  • and many more.   
• Information system. All the software that supports business processes and how it interacts between each other.
• Hardware inventory. What hardware you have, where it is, who uses it, and if any spare devices are available if needed.
• Software and license inventory. What software you have, who uses it, and if any spare licenses are available if needed. This will prove invaluable in the case of a licensing audit.
• Project-related documentation. This is especially critical for knowledge transfer if multiple individuals successively work on the same project.

How to keep documentation updated

First and foremost, work with your IT department or IT consultant to work out an approach to documentation. Make your position in this matter clear, and work out a policy to make sure important documentation exists and is updated, while avoiding excessive time spent on documentation.

It is best to update documentation real-time, as policies and environment change, but that is not always possible. Some documentation should in fact be updated immediately after changes are implemented, like administrative passwords. BALANCED+ recommends that IT policies and procedures should be revised and updated on a quarterly or semi-annual basis. This will also ensure that outdated and inaccurate documentation does not clutter up document library.

Conclusion

In conclusion, IT documentation is a critical component of effective IT management and support. By providing knowledge transfer, standardization and coordination, time efficiency, and a clear picture of what is going on, IT documentation can help organizations reduce the complexity of their IT systems, improve efficiency, and achieve better business outcomes.

As an IT consulting company, BALANCED+ can help your organization develop and implement effective IT documentation practices. Contact us today to learn more about our IT consulting services and how we can help your organization achieve its goals through effective IT management.