Senetas View

Systems Integrity - Why the status quo is unacceptable.

Thu, 04 Aug 2011 04:52:00 GMT

This Senetas View discusses the importance of “Systems Integrity” and a risk assessment approach to systems planning and development in the wake of the recent high profile security breaches and systems failures reported. It also links the critical need for not accepting the status quo and treating security, privacy, performance and availability as core elements of IT project planning rather than as a separate issue. Here you will find information on security, privacy, systems performance and availability risks and how to avoid potentially massive rectification costs and lost reputation.

The “digital economy” has not just changed the way we work and consumers behave, it has radically changed business risk profiles. Systems “integrity” is an increasingly critical issue for most organisations as they take up the growing opportunities of new technologies. However, few systems planning and development methodologies include “integrity” risk assessments to identify and address privacy, performance, security, availability and information quality risks. And still the status quo approach to IT systems risks continues.

On August 3rd, the BBC reported “Governments, IOC and UN hit by massive cyber-attack”. An investigation showed that in the past 5 years these high profile organisations’ systems were breached” and added: "The United Nations, the Indian government, the International Olympic Committee, the steel industry, defence firms, even computer security companies were hit."

But, systems integrity is not simply an issue of security risks, but also includes risks of poor systems performance, information quality and availability issues. It is a critical risk management issue for most organisations particularly in the face of exposure to customer dissatisfaction, regulatory penalties, civil litigation, user service level agreement non-compliance and general loss of trust in the organisation.

Integrity risk exposure arises from: attacks by hackers; theft by staff; systems failures; misuse of information; breaches of privacy and intellectual property; cyber-crime; device risks (e.g. smart phones); weak processes and poor systems performance and availability. Indeed systems failures and poor performance may impact the very tools used to protect information.

Risk and reality
The recent publicised cases of: a high profile international “cloud” storage provider’s total security failure; release of an international on-line gaming organisation’s customer personal information; failed national airline’s reservations and check-in systems; failed bank and Asian international airline’s customer account systems; and an alleged breach of an ISP provider of NBN services, all highlight the combined systems integrity risks. Their impacts are not simply limited to inconvenience and lost revenue. They also include massive costs of: rectification, recovery of reputation and often unpublicised litigation costs.

In many cases office-holders and directors are also at risk of breaches of the law and severe penalties. These sanctions are likely to become wider and more severe as the Australian federal government progresses its plans for privacy legislation.

In the US National Institute of Standards and Technology’s recommendations paper, “Risk Management Guide for Information Technology Systems”, the authors Gary Stoneburner (NIST), Alice Goguen and Alexis Feringa from Booz Allen Hamilton said: “Minimizing negative impact on an organization and need for sound basis in decision making are the fundamental reasons organizations implement a risk management process for their IT systems. Effective risk management must be totally integrated into the SDLC (system development lifecycle)”.

However, the “status quo” remains. The tools used to manage IT systems security, information quality and performance and availability largely remain unchanged from the norm. These tools are complex and often involve the adding of “Band-Aids” to try to address new issues that arise. Following the norm fails us because technologies and associated risks move ahead of the norm. As cyber-crime experts warn, we can only expect these risks to increase.

The inclusion of a systems integrity focused risk assessment methodology in planning and developing any systems initiative is essential today. It is critical due diligence that helps ensure risks to security, privacy, performance and availability are identified and addressed.

A loss of faith arising from poor systems integrity quickly translates into brand damage, lost income and potentially huge costs. The impact can be devastating.

Increasing need for a systems integrity approach
There are 3 key drivers of IT systems initiatives, which are the same drivers of systems integrity risks:
1. Enhanced use of data
2. The “digital offer”
3. Customer demand

Powerful business intelligence and CRM tools that enable capture and analysis of vast amounts of data from multiple internal and external sources help enable better profiling, targeting and decision making and add significant value to the organisation.

But such enhanced use of data is increasingly exposed to: theft and misuse by staff and hackers; systems and process mistakes and insufficient controls; and device risks such as smart phones and other devices. This data is often sensitive and private and certainly of significant value. Much of the data is provided by trusting customers and business partners in good faith.

Even the simplest small business holds very sensitive data today - take the local drycleaner, with regular customers, who holds lists of their names, addresses and credit card details. It’s unlikely such a business encrypts its information!

Many businesses have developed from a “digital offer” – a new or a transformed enterprise on the back of new technologies that enable a more competitive market offer. But, with each new opportunity comes new risks – hacker intrusion, capacity issues, systems outages, poor availability, privacy breaches and poor performance that have the potential to work against the digital offer. The impact of disruption and bad customer experience can be devastating especially among very dependent customers. In a business-to-business situation, customers will quickly discover that their own businesses are at risk.

In better meeting “customer demand” opportunities such as incorporating on-line product support, organisations that are focused on their customers’ needs use new technologies to keep up. But in doing so, the organisation becomes exposed to new risks it has not faced before. The example of a new on-line product support initiative exposes both the organisation and its customers to real risks due to the exchange of information that may get in the wrong hands. Consequently customers’ trust in the system’s integrity and even the brand is quickly destroyed, potentially severing the whole relationship.

In each of these drivers of new IT initiatives there lie risks of potentially significant impact unless there is a clear focus on systems integrity during planning and development. It is not sufficient to say that security, privacy, systems performance and availability are separate issues or that they are managed by others. These are fundamentally critical issues that go to the core of what the systems will do and how it will be done.

A systems integrity approach to a new customer facing initiative is a key benefit to the customers and company, which customers will value. On the other hand, maintaining the status quo is unacceptably risky.

The Critical Role of Customer Value Management in IT Solutions. Or, "Beyond CRM"

Wed, 20 Jul 2011 03:08:00 GMT

This Senetas View discusses the importance of “Customer Value Management” and a risk assessment approach to sales revenues. It also links the optimal use of CRM though integration with business intelligence tools to help maximise customer value in the short and long term. Here you will find information on CRM, business intelligence, XRM and minimising the risks of lost sales and missed new sales opportunities.

Despite continued investment in customer relationship management (CRM) systems, customer satisfaction typically remains low. Additionally organisation satisfaction with CRM benefits is unacceptably low. Something is wrong. The common theme is how CRM is implemented and utilised and that few organisations plan beyond their sales value-chain and focus on the customer’s life-cycle value and behavioural characteristics. A “customer value management approach” is essential.

Amazon, one of the world’s largest book-sellers, lists around 6,000 titles about customer relationships, while there are more than 550,000 titles about management! Despite the potential catastrophic impact of declining revenues on any organisation, little more than 1% of business book topics focus on customer relationships – the driver of revenues.

Since the advent of CRM and growing investment in CRM systems, the focus has become increasingly on cost reduction rather than revenue growth. Consequently, as the use of CRM increases, customer satisfaction has declined significantly such as in banking and telecommunications sectors.

"Forrester Vice President Bill Band, presented evidence that under 50% of CRM projects fully meet expectations..."

Failure rates among CRM projects as reported by international researchers are alarming. Forrester Vice President Bill Band, presented evidence that under 50% of CRM projects fully meet expectations. Economist Intelligence Unit reported: “86% of survey respondents say that CRM will be important to their companies over the next three years. Despite this, more than 40% of respondents do not have a formal CRM strategy in place. Of those who do, 44% say that they have seen only “acceptable” results from their efforts and another 22% say that it has been a disappointment.” Clearly the technical design and implementation and use of CRM are not sufficiently driven by business strategy and an underlying value proposition.

A “Customer Value Management” driven approach is where the organisation understands the customer’s whole life-cycle – from pre-sale to post-sale – and understands customers’ buying behaviour, needs and preferences, channel preferences and attitudes. This concept has been further emphasised by McKinsey & Company in its paper: “Using behavioural science to improve the customer experience”.

Critically, understanding customers’ life-cycle helps identify where customer value lies – when and where there are risks of defection by existing customers, lost sales, and missed opportunities for new customers. Risk assessment is required at each touch point and the organisation should not be narrowly focused on simply where it engages with the customer (its value chain), but closely understand how the customer is influenced and behaves beyond that.

Best practice organisations understand and measure total customer value throughout their life-cycle. In the building products and hardware sector they recognise that a customer making a $200 purchase today is not simply a $200 customer, but a potential $116,000 customer throughout its life-cycle of DIY home renovations for the next 10 years!

The use of CRM has enabled a long term relationship to be managed between the company and its customer, which drives loyalty and sales. It was soon leveraged into a complete tool for marketing, customer segmentation, sales, support / service and relationship management. Revenue growth was achieved through increased re-buy rates, value per sale and new sales.

However, the use of CRM to focus on cost reduction, such as sales and support staff reductions, has exposed many to risks at various points in the customer life-cycle. In the banking sector, CRM became a key tool in fulfilling electronic channels (Internet and telephone) thus eliminating a large proportion of face-to-face relationships valued by various types of customers. Customers were pushed into channels the banks preferred! The folly of this later required an increase in branch and mobile banker channels to meet customers’ preferences! A similar pattern arose in telecommunications and insurance sectors causing many to be seen as “faceless organisations that were difficult to do business with”. As a result, spiralling customer churn and defection became key issues and customer loyalty reached a low at significant cost of lost revenues.

The use of business intelligence analytics integrated with CRM has made it possible to identify and evaluate these trends and customer life-cycle value. It has made the economics and importance of a Customer Value Management approach clear:

• How to identify where the risks of churn and lost sales are greatest;
• Meaningfully segment customers by behavioural characteristics;
• Quantify the cost of lost customers and missed sales;
• Determine a customer’s sales and margin value;
• Identify the true cost of a customer and individual sales;
• Understand customer segment buying behaviours;
• Make better decisions about customers’ relationships in the short and longer term.
This combination of business intelligence capabilities and CRM are often referred to as xRM – connecting all relationships.

CASE EXAMPLE - Customer Value Approach in the International Student Sector
The international student sector has been a major growth and export income producer over the past 15 years in Australia. Recently it has attracted an increasing number of competitors within and outside Australia. It has also faced market challenges such as the increasing value of the Australian dollar, visa restrictions and course quality issues.

A leading specialist provider of pathway, language and tertiary courses for international students saw its strong sales and profits come under threat from low cost providers. By adopting a Customer Value Management approach, the institution saw new opportunities to differentiate itself to maximise its competitive advantage and margins. It identified opportunities that met a larger number of student needs and offered greater value to their families - visa application assistance; accommodation services and work experience guidance.

While it did not seek to enter new product markets, the organisation identified the whole of student lifecycle needs and opportunities through its detailed analyses of data captured in its CRM. This enabled a strategy which drew upon collaborative relationships to better meet student needs under its brand to set it apart from low cost competitors. The majority of students placed greater value on these needs than cost of tuition.

A key tool that is most effective in customer value management and successful revenue risk management in any organisation is xRM. Business intelligence analysis tools are integrated with CRM identifying all relationships – people, products/services performance drivers, behaviours and activities. This enables alignment of the organisation’s value chain with the customer life-cycle so that a customer focused strategy will deal with key performance indicators and risks of lost revenue, low average sales value and missed sales opportunities. The challenge then lies in how xRM is used.

"Ultimately CRM and business intelligence technologies are tools that require a truly customer centric approach to achieve effective customer value management."

Business intelligence tools should be used to identify and measure:

• Customer behaviour based segmentation and purchasing trends;
• Customer satisfaction at each point of contact throughout their life-cycle;
• Product / service performance and impact on revenues;
• Drivers of customer churn, lost and won sales and increased revenue per sale;
• Performance within the supply chain / channels;

• Returns on investment in marketing and sales activities.

Ultimately CRM and business intelligence technologies are tools that require a truly customer centric approach to achieve effective customer value management. It is the approach that drives all parts of the organisation to focus on what matters and go beyond CRM.

Over-engineered Business Intelligence - 'A Bad Workman Always Blame His Tools'

Fri, 03 Jun 2011 07:19:00 GMT

Why managers should not play with mud!

This Senetas View discusses the risks of “over-engineered” business intelligence and business performance reporting systems. It also links to research highlighting poorer than expected returns and performance improvements. Here you will find information on business intelligence, data analytics, business performance management and IT return on investment.

The most effective management information is characterised by its simplicity and direct relationship to the organisation’s strategy and performance objectives, but focused on what actually matters most.

“Over-engineered” management information processes and “over-delivered” reporting often lack focus and clarity and increase the risk of decision errors. They are expensive, unnecessarily complex and distract managers from their most critical performance objectives.

For many managers the source of valuable information from which better decisions can be made is often right before their eyes, but lost in excess data and overly complicated analytics. Optimally informat-on should be matched to managers’ priorities focusing them on what matters.

IT research organisation, Gartner, identified that two thirds of organisations fail to achieve the promised benefits of such technology investments – the value delivered is inadequate or not recognised. More alarming was Gartners’ correlation of this with underperforming organisations.

Additionally, Booz & Co commented in its “Best-in-Class Business Intelligence” paper that at least 35% of the top 5,000 global companies will regularly fail to make insightful decisions because they lack the right information.

The rapid growth in business intelligence investment has not been matched by the same growth in business performance!

Similarly it is common for IT contractors, consulting organisations and project managers to acknowledge that their greatest frustrations in any IT project come under the same headings of complexity (versus simplicity and focus) and communication (clarity). This is particularly due to the multi-stakeholder nature of such projects where various expectations need to be met from inception to business requirements to delivery. Just like management decisions, the outcomes are highly dependent upon focus and clarity thus eliminating competing interests.

Here, “Big Data” (as termed by McKinsey & Company) is an issue – that collection of masses of historical data. The desire to follow the mantra that we should “learn from history so that history will not repeat itself” runs a risk that managers are so preoccupied with the past, they fall into the trap of “driving the car” by looking through the rear-view mirror and fail to see what is ahead!

It’s well recognised that some of the most successful organisation turn-around and growth achievements happen because the organisation became driven by a clear and highly focused strategy. Organisations like Apple, Caterpillar, SAP and Ford used focus and clarity to climb out of the mud and drive what really mattered. They used historic data to confirm the issues and to determine their focus, while looking towards forward opportunities that their competitors were missing.

For example, it may be that a key strategic objective is to arrest declining revenue. A clearly focused approach might identify the core issue as customer complaints – causing falling re-buy rates and average sales values. A focused analysis of customer history should help point towards what matters most. But too much analysis of the past (or “playing in the mud”) might fail to see other emerging trends and opportunities that lie ahead.

By beginning with a clear focused understanding of what management needs to know and how revenue performance objectives are best measured and achieved, it becomes simpler to know where to look amongst all the data and how it needs to be presented.

CASE EXAMPLE – Revenue performance and hidden customer issues

An international business products manufacturer focused on revenue components and trends to identify and rectify decline sales and implement a growth strategy. The focus identified the specific gaps and drivers of declining sales. Simple analysis identified key customer re-buy as the greatest weakness, demanding examination of the customer relationship management system – purchasing patterns, satisfaction and customer service history.

It found dissatisfaction with key products due to higher product failures linked to product design and delivery methods that were seriously aggravated by poor customer service response and replacement policies. These caused disputes and inconvenience to the customers’ own businesses. The business products manufacturer had used new delivery arrangements and outsourced customer service. While identifying where and how to fix the problems, they also identified a serious threat to plans for the release of a new product range for which the business case relied upon a high take up rate by key customers! The strategy was focused and the solution was clear – customer satisfaction.

Under the focused approach by adopting the simplicity of knowing what is needed, why and where the information is, and then how (and to whom) it needs to be provided, the case example’s current revenue issue could be quickly solved and a looming failed product release was averted.

By concentrating on only the key performance indicators that mattered most; those matched to the business strategy and performance objectives, managers at each level had a clear picture, more focused direction and made better decisions. That focus was simply on reducing complaints and a better response to key customers. Down the line this drove improved product, delivery and customer service performance. The ultimate outcome was increased sales and a successful new product launch. Booz & Co would refer to it as a focused “performance driven approach”.

Conversely, in an over-engineered and over-delivered approach, managers are forced to play in the mud and often make less effective decisions. Today’s business intelligence and performance management tools enable greater flexibility and power but increase the risk of over-engineering and ultimately meaningless, overly complex reporting that forces management to play in the mud – be reactive rather than pro-active.

The answer lies at the top – clearly identified and communicated drivers of the business strategy with a sharp focus on the measures that matter. Responsibilities will be equally clear and all stakeholders will be driving the related issues in the same direction. Changes will be easier through clearer communication of these drivers.

And then there is the issue of return on investment. Simplicity typically comes at a lower cost and leads to better and quicker decisions – both of which drive value.

Ultimately, when new IT initiatives such as performance reporting, business intelligence and customer relationship management fail or deliver little value, it is the system and the tools used that are blamed. But the initiatives are typically doomed at inception and the tools were just used badly; proving the saying that “a bad workman always blames his tools” right!

Did Customers Design Your Business? Using Knowledge Management to Achieve Competitive Advantage

Thu, 04 Aug 2011 04:26:00 GMT

[Real knowledge is to know the extent of one's ignorance - Confucius]

In this Senetas View you will find information about Knowledge Management, Customer Satisfaction and Business Performance Management, business processes and productivity. It discusses the competitive advantage Knowledge Management brings – the benefits of using internal and external data and analytics to create knowledge used to maximise customer satisfaction, productivity and growth.

It might sound surprising – to let customers design your business - but how easy is it to do business with your organisation? Would you want to be a customer of your organisation? How much do managers really understand about their customers’ experiences? After all, the customer is the reason for the organisation’s existence.

Front-line staff possess the best understanding of the organisation’s operational performance, business processes and customers’ experiences because they are at the “coal-face”. They have to work within the business processes to deal with customers. They process information through interaction with other staff and customers, such as solving customers’ problems.

These activities capture a range of valuable data. Data is also captured through market research and increasingly through dealings with third parties (external data) generated in user forums and wider social networking media through emerging tools.

Clearly there is a lot of data available to help improve the business’s competitive advantage – this is both an opportunity and a challenge! A variety of systems are involved such as Customer Relationship Management (CRM), workflow (ERP) and document collaboration among staff. The opportunity is rich information. The challenge is to turn this information into knowledge and use it effectively.

The competitive benefits lie in recognising it as a part of the organisation’s intellectual property – Knowledge Management. That approach will lead to: improved growth and reduced customer churn. Hidden but valuable benefits include lower costs of problem solving; improved business processes; reduced management distraction and lower organisation exposure to “brain-drain” when facing the loss of experienced staff.

Kate Andrews of knowledge organisation consultancy, Knowable, reported that 86% of BRW’s 100 fastest growing organisations can be described as “highly innovative”, using knowledge management – organisation wide - to drive their intellectual and capital development.

But, despite the plethora of material about customer satisfaction, market research and consumer groups record high customer dissatisfaction. Statistics of telecommunications companies’ customer churn highlight how customers typically vote with their feet. The direct and hidden costs of such churn are huge, where more than one new customer is needed to cover one lost customer.

What prevents many organisations from focusing on knowledge management is a culture of being slaves to their processes. As CooperCom Inc. put it in their white paper “Symptoms of the Dysfunctional Organisation”, they continue the status quo and do not take an outside view of their organisation.

The issues are simple requiring a Knowledge Management approach to the business’s operational performance – ease of doing business, business process weaknesses, customers’ frustrations and impediments to productivity.

Yet with the IT industry recording high levels of investment in business performance management and productivity, process re-engineering, and document management systems, customer dissatisfaction levels remain high. So, who designed the business processes? How is knowledge used to improve this? Certainly customers’ influence is not high enough!

T. Cummins of Wordpress commented in his research paper, “Ease of Doing Business”, that customers see ease of doing business as an issue at each stage of the relationship and that early on it is an important indicator of how the organisation will behave in the future. In one case an organisation’s business process re-engineering based on customer research about the pre-sale process lead to substantial success and the effort required was “relatively simple and cheap”. The knowledge was managed and used to create valuable change. But, it took commitment to a new approach.

Of course no organisation is going to literally have customers design their systems; but, the best performers endeavour to know everything about their customers – what they want, expect, and are attracted to. They understand how customers want to engage and be supported – throughout the whole customer relationship life-cycle, from marketing responses to after-sales-service. A knowledge management approach influences what decisions and policies are implemented; how problems are solved; how to re-engineer key functions that impact on the customer.

The best knowledge management requires commitment to being a truly customer centric organisation where business systems monitor customer interactions and risks of: lost pre-purchase opportunity; lost sales; missed new opportunities and re-buy and defection to a competitor – a competitive advantage.

The analysis and correlation of data builds knowledge about customers’ expectations of performance, such as: response times; dispute resolution processes; questions and problem solving; the products or services they use, billing errors and delivery time-lines; service levels; buying preferences and support.

The value of “corporate knowledge” is highlighted by Tom Davenport in McKinsey & Company’s paper, “Rethinking knowledge work: A strategic approach”, where he highlights the need for a “knowledge strategy” to help ensure the vast array of data sources and systems don’t reach a point of diminishing returns. But to avoid increasing risks of reduced worker productivity, he recommends not simply applying a “free access” nor a “structured delivery” knowledge management approach, but tailor the approach to their specific types of work – neither imposed nor free-form.

Ultimately the answer lies in quality integrated systems that were “designed by customers”, where the integration ensures a single source of timely and accurate information that can be acted upon.

Today’s best performing organisations are customer and knowledge focused – focus on using knowledge captured to exceed customers’ expectations. They rarely talk about it, but just do it and all refer to the value they place on building knowledge at every opportunity – Apple, Lexus, Amazon, Samsung and GE.

'The Canary in the Mine' - Business risk management through systems performance monitoring

Thu, 05 May 2011 00:21:00 GMT

In this Senetas View you will find information about Systems Performance Monitoring, IT infrastructure performance monitoring, systems availability, capacity and early warning and detections of systems failures. It discusses the cost and management burdens and the business risks of damage to customer satisfaction and productivity of sub-optimal Systems Performance Monitoring and early warnings of potential IT systems failures and recommends a better business model to address these issues.

If you have ever arrived at an airport to find it in complete chaos with thousands of passengers unsuccessfully trying to check-in; or, attempted to log-in to get an important email only to be denied access; or, tried to down-load critical reports urgently only to miss the deadline and told to try again later; then it’s very likely an IT systems performance failure is to blame somewhere that staff, customers and other users consistently and continuously rely upon – a component has “gone down”, or a part of the system is experiencing a serious performance problem! It may only be one link in the chain, but the impact is similar and usually has significant flow-on consequences.

Surely there was a “canary in the mine” - an early warning alert users to a potential problem! In her assessment of 12 major IT systems performance failures, Ericka Chickowski of Baseline said: “…all have something in common: a chain reaction of pain that rippled through the entire business or organization. Whatever the specifics, breakdowns within the IT organization are rarely contained. They can lose a business customers, they can cause lawsuits, and in some instances they can even shut a business down”.

And just as systems components experience poor performance issues or even fail, circumstances might drive systems traffic and loads to a similar breaking point, such as when the Eurovision song contest voting traffic brought its systems to a sudden halt in front of 600 million viewers. Or similarly, the deliberate email traffic assault on American Express in 2010 by disgruntled WikiLeaks fans caused systems failures and damaging consequential problems. While extreme examples, it’s no help to just say the problem was unusual – tell that to the airline passengers whose connections have been delayed; the client whose legal matter has been disrupted because a deadline was not met; the financial analyst unable to complete a report for the CFO’s board meeting and the supplier unable to download critical inventory orders. Too often systems users and even customers become the systems’ monitoring tool and by then it’s too late – the risk and impact have gone from low to high. And today’s social media ensures that customer problems that were once known to only a few quickly become common knowledge to the many, adding to the risk of damaged reputation.

Whether extraordinary events or day-to-day activities, the causes of systems performance and failure issues are largely preventable, if not predictable as highlighted by Adam Turner in his paper “Making Disasters Virtually Avoidable”, published by CRN. All that is necessary to avoid damaging downstream consequences is a 21st century “canary in the mine”. But, as Symantec’s annual surveys indicate, system performance monitoring is too often seen as a cost burden to IT’s business requirements rather than an investment in insurance necessary to help maximise internal productivity and customer satisfaction.

While there are numerous high quality systems monitoring solutions available, a key issue is organisations’ resistance to cost, added overhead and the need for management. The solution lies in a better business model – a secure “variable infrastructure” solution where monitoring is seen as an investment under a variable, more cost effective and specialist service – through secure, flexible Software-as-a-Service (SaaS) or hosted solutions. This would address risks in the most critical business issues today – maximised customer value through satisfaction and efficient operational performance and productivity. Few organisations can afford to risk customer churn and defection through avoidable systems performance issues, or internal inefficiencies adversely affecting the organisation’s performance. Customers and users should not be the first line of defence - “the canary in the mine”. McKinsey & Company’s recent interview with David Cooper, CIO of TalkTalk, highlights the UK broadband provider’s growth through reduced systems inefficiencies and the resulting improved customer satisfaction.

Of the two systems disruptions – total failure and “intermittent” performance problems – it is the latter that is more easily underestimated (if not overlooked) and can lead to greater long term damage because such events are often seen in isolation rather than their collective impact over time. The long term damage costs of such poor performance issues is equally often underestimated, especially as such events risk being seen as part of “ordinary every-day business”.

Optimal IT strategies, based on clear business needs, should include a comprehensive risk assessment based, systems monitoring plan – preventative / predictive - avoiding business disruptions that undermine productivity; adversely affect customer satisfaction and disrupt suppliers and other stakeholders potentially causing significant consequential damage and long term lost confidence and brand damage. Peter Worlock in “Monitoring the System” highlights the mission-critical nature of IT and equally the criticality of its monitoring even in smaller organisations because of the way we do business today. A better business model will incorporate service level agreements designed to protect the organisation from reputation damaging systems performance issues.

Frequency of poor systems performance also risks being seen as a characteristic of doing business with the organisation and an undesirable brand trait. Customers who see minor systems failure as an inconvenience eventually drift away as they see more reliable competitive alternatives that are easier to do business with.

As technology has delivered exponential improvements in systems capabilities, connectivity and cost efficiencies through developments including cloud computing, intelligent mobile devices and “virtual machines”, small to medium and large organisations face challenges of systems complexity and greater exposure to performance and failure issues. While this demands increasingly comprehensive performance monitoring systems, organisations’ resistance highlights the need for a better business model. This is where a fully secured SaaS based approach to “variable infrastructure” is compelling. But, the key caveat is that such solutions be more secure than is commonly available through software security tools – encrypted with all components being tamper proof and without speed / latency overheads – “SaaS 2.0” providing the essential “canary in the mine” and reduced business risk.

Technology Strategy's Impact on the Organisation and Risk Exposure - The Hidden Risks of Cloud Technologies

Thu, 05 May 2011 00:21:00 GMT

In this Senetas View you will find information about cloud computing, risk management, organisation design and IT security. It discusses the need to re-think organisation design in the light of new and emerging technologies and the risks they expose organisations to including how new productivity tools expose organisations to a range of obvious and hidden risks.

The rapid adoption of new information technologies, “cloud” computing and mobile information devices in the quest for greater productivity and lower costs have placed technology strategies under increasing pressure.

Such strategies now require 2 additional components: rethinking the organisation’s structure and how exposure to new and more damaging risks (business and security) will be managed. Any technology strategy’s focus will impact on the organisation structure and how it functions. Re-thinking and planning the organisation in parallel with the technology strategy should ensure the strategy supports and enhances the targeted improvements, captures opportunities and manages new external and internal risks.

The fast pace of technology developments has led to the threat of “disruptive” change often threatening the existence of powerful organisations. For example, the rise of global on-line shopping imposes a competitive disadvantage on established local retailers. But, global on-line shopping is not new. Put together with large movements in currency values, the disruptive threat has caught traditional retailers without a plan! They have known of this risk for some years but have failed to address it in any substantive way.

And a recently reported in the New York Times by Ashlee Vance, new hardware “gadgets” and technologies bring information and infrastructure risks as well as opportunities. Not only do new “intelligent” mobile devices offer productivity benefits, they also open opportunities for external hackers and employee abuse adding greater privacy and confidentiality risks to data security (customer and organisation) as these devices are entrusted with increasingly sensitive data.

In a presentation on cloud computing security and opportunities, Roxana Bradescu (specialist in database security) noted that a survey of user groups revealed that more than half did not know all the data in their organisation that is sensitive. How then can their technology strategies effectively address organisation impact and risks?

While the need for organisational focus may be clear, the need for a risk management approach seems less apparent to many if the continuing number of reported security breaches is any indication. The feared catastrophe may not simply be the failure of infrastructure components or systems availability. It may be far less obvious, but just as insidious and far reaching, such as the unauthorised use of or theft of information, which may be even more damaging and expose organisations’ officers to serious legal attack from customers, shareholders and regulators!

Among the risk issues of rapid technological change are: How prepared is the organisation for the new threats to data and systems security? How will they address the need for more advanced infrastructure monitoring and management? Should they implement internal or external solutions? What sovereign risk and control issues arise from off-shore cloud based solutions?

To be ahead of new technologies’ opportunities and risks - the free flow of information; extended off-site work flexibilities; increased information support for complex decision making and even the “virtual” corporation - requires organisation planning that identifies emerging technologies and likely impacts and opportunities. This also requires risk assessments within technology strategies. Risks will also arise from inaction and failure to identify “disruptive” trends that may threaten the very reason for the organisation’s existence – the risk of becoming irrelevant.

Here is where re-thinking the organisation is critical, because the effectiveness of the organisation’s structure plays a key role in management’s ability to be proactive and responsive to technology opportunities as well as threats. But to successfully re-think the organisation in parallel with developing a technology strategy requires a critical success factor – to think outside the traditional paradigms, which may only hold it back.

Successful Business Strategy Requires Speed of Execution - 'Cloud Computing's' Hidden Benefit

Thu, 05 May 2011 00:22:00 GMT

In this Senetas View you will find information about cloud computing, business strategy, business performance management and productivity. It discusses features of cloud computing and its clear and hidden benefits – in particular as an enabler of optimal implementation of business strategies and new technologies that support them.

In their recent paper on management leadership in the Harvard Business Review (HBR's 10 Must Reads), Jocelyn Davis, Henry Frechette and Edwin Boswell highlight the importance of "strategic speed" as a key element of successful business strategy and execution. They refer to how executives agree that speed is necessary for a successful business - it is where "urgency meets execution".

Similarly executives comment that a significant frustration to plans for performance and productivity improvements is speed and inaction.

Their ability to overcome impediments to "making things happen" is often the driver of change and successful plans. Speed is a key issue - action, rollout and results. The issue is no less the case when developing IT based initiatives. The challenge is to identify what adversely affects "speed of execution" and how to address it.

A successful approach to this issue is to trial the initiative - prove the concept and do so in a low risk "contained" environment.

Change managers frequently use trials to gain acceptance and build a sense of commitment to the concept, which adds enthusiasm among those who have the biggest impact on speed of execution as the trial moves towards implementation.

Cloud computing or "the cloud" - the concept of a variable IT cost structure and scalable IT infrastructure and services - has obvious appeal explaining why its take-up is growing so rapidly. But, a key benefit may be cloud computing's most "hidden" benefit - speed - its ability to help enable speed of initiative and its execution!

Obviously speed in itself is rarely a benefit, but rather a feature. In the case of cloud computing' role in developing and implementing significant business performance and productivity related IT initiatives, most executives and IT professionals seem to agree that the biggest impediments to speed of execution are:

Potential disruption or perceived disruption to internal systems and infrastructure;
The upfront investment - in software and hardware;
Likely complexity of infrastructure and other internal systems considerations;

Here the "cloud" offers the opportunity to circumvent these impediments and maximise the speed of execution - even if its role is limited initially to prove the concept and its benefits.

Cloud computing (or off-site data-centre computing) enables more rapid "proof of concept" with little disruption without forcing a fixed cost commitment in a lower risk model to demonstrate the initiative's real value. As the initiative becomes proven, again it can be more rapidly rolled out and scaled as needed with less in-house disruption.

The impediments to speed of execution and addressing them can slow down the development and implementation of IT based business initiatives whatever the technology platform. They restrict the organisation's "strategic speed" - access to the valuable profitability, customer satisfaction, growth and operational efficiency benefits.

However, with all of its features that make cloud computing a compelling opportunity today, it is the ability to quickly develop and implement scalable business initiatives, or at least prove them, that can drive major performance benefits and a successful plan. Lost time is lost opportunity!

In conclusion, while cloud computing offers a range of benefits including variable cost structure; scalability; reduced overhead and asset management burdens, it is the "hidden" benefit of "speed of execution" that in some cases may provide the most significant financial and operational benefits.

Business Intelligence Systems - Why So Many Fail

Thu, 05 May 2011 00:23:00 GMT

In this Senetas View you will find information about Business Intelligence, Business Performance Management, IT business requirements, systems design responsibilities and IT health-checks. It discusses the reported failure of many business intelligence and performance management IT projects to deliver real value and recommends how to avoid the traps.

A variety of studies are highlighting the view of bottom line accountable executives that initial investments in business intelligence (BI) are often unsuccessful – in terms of Value Contribution (ROI) and overall business impact. The critical correlation here is that a large proportion of these executives were also not accountable for two key success factors in the business performance focused IT initiative:

• How the IT investments’ value contribution and impact will be measured;
• What the business intelligence requirements would be – information sought and objectives and specifications.

It would seem that if, as Sanjay Metha (CEO, MAIA Intelligence) put it in his recent essay about BI, BI is sold as an IT project then those responsible for business performance and productivity are too removed from it. Obviously the user must be responsible for both what BI will provide and its impact on the business. To do that successfully, clear value contribution criteria must be set and monitored.

While the obvious risk is that the outcome will be an unsuccessful attempt and some wasted resources in the process; importantly, the more damaging risk is the lost opportunity for performance improvements and damaged credibility to the concept within the organisation!

While BI is not new, it has increasingly been sold with great promise. In its latest global IT survey results, McKinsey & Company concluded that despite the GFC, investment in IT will remain strong – executives continue to focus on increased efficiencies, problem solving and greater integration among the “business” and IT – all of which are the domain of BI.

However, no matter what the IT strategy and investment, the critical issue is how effectively information is obtained, analysed and acted upon – from all management levels to the “coal-face”; how significant and direct the value contributed – demanding it be driven by those with business performance responsibility and accountability.
This approach will then enable clear first line BI Value Contribution measures, which can be monitored and acted upon consistent with the management paradigm that an organisation should only make those who influence outcomes accountable for them. Having determined BI’s requirements to meet the organisations’ needs, bottom line accountable management can then more successfully measure BI’s ROI and impact on the business.

When the “business” is not the driver of BI initiatives, common attributes among those that fail include:
1. Overly top-down and “historic” reporting focus;
2. Stakeholder frustration with obtaining a “single source of truth”;
3. Insufficient empowerment to influence and resolve problems by “coal-face” staff;

On the other hand, characteristics of those that are “business” driven highlight 4 key success factors:
1. Measurable indicators of the value contributed through better decision making;
2. Clear understanding of what data is captured versus what data should be captured and why;
3. Effective use of disparate sources of data to provide focused analyses and problem solving;
4. Ensure analyses and reporting drive results tracking, directly linked to key performance indicators and timely action / intervention.

To maximise the IT opportunities and minimise the risk of low BI Value Contribution, best practices see organisations use “health-checks”, which identify their effectiveness and value to the organisation and stakeholders and a direct impact contribution to the organisation’s key performance areas.