Thought Paper: IT Strategies in a Tough Economy

When budgets are shrinking or constrained, IT has to shift its focus.

Joe Kosco Chief Operating Officer Network Automation, Inc. 654 South Western Avenue Los Angeles, CA 90005 888-786-4796 NetworkAutomation.com

IT Strategies in a Tough Economy

Introduction In good economic times, success simply means keeping pace. After all, the market is demanding your companys products and services, and your responsibility is simple: keep up with the demand no matter what it takes. Most managers, whether they are business managers or technology managers respond to this situation the same way. They hire more people to shoulder the increased load. Sales managers seek out more sales reps. Foremen bring more assembly workers online. Customer service beefs up the call center. And IT managers hire more administrators to maintain the constant flux of demands from users, applications, systems, and networks. In tough economic times, hiring your way out of a jam is not an option. There simply is no budget for adding people. And for whatever reason, the workload never seems to wane the way business can. The companys revenues may be in decline, but the number of server crashes remains the same. And somebody has got to fix it now! To make matters even worse, a certain moodiness can pervade the workplace that makes users even more demanding and less patient when the server is down, or their data isnt ready, or the network isnt up, or they cant send an email. People are naturally on edge in downtimes, especially when the whiff of layoffs is in the air, so anything that gets in their way or prevents them from doing their job ahem, IT [cough] will take the brunt of their frustration. So what is a CIO or IT Manager to do? The obvious answer is to do more with less.

How We Got Here In a way, this has always been the case, even in the best of economic times. No department has enabled more change and dynamism than the IT department over the past 40 years, and yet it rarely gets the credit it deserves. Remember that project to improve the cash collection cycle in accounts receivable Good job, Accounting! Oh, and how about that system that provides customers with faster response and better service Marketing, you really outdid yourself on that one! That reminds me we need a system that can better track the flow of goods from our suppliers so we can reduce waste and slash inventory costs IT, get me ROI on that project that will pay us back in six months. As these scenarios showcase, IT is seen as a necessary burden for making the rest of the business work better. But when the company is focused on weathering the storm of a depressed economy rather than expanding and enhancing operations, large IT budgets and expenditures are no longer viewed as necessary. Instead, they are prime candidates for the proverbial paring knife. But while IT faces the prospect of cutbacks, its core responsibilities are not going away. The legacy technology infrastructure put in place over a period of decades must be maintained and supported, and in many cases, modified so other departments can accomplish more with less.

So, with intra-company demands as high as ever and business survival at stake, a new and fundamentally different approach is needed. Naturally, CIOs and IT managers are interested in knowing what options they have. They need to know how to accomplish the seemingly impossible feat of doing more with less. There is a silver lining here. With all the improvements IT has been working on in Sales, Finance, Accounting, and Operations, it hasnt had much time to look inward. Consequently, there is a huge opportunity for improvement, and needless to say, there is a lot of low hanging fruit.

Where to Begin? When deciding where to focus attention on improving efficiency and effectiveness, the first step is to understand your business processes (also referred to as work processes). Business processes are defined as the series of actions that must be executed to deliver a benefit for downstream employees or customers. Business processes can be small (i.e., involving one IT worker) or far-reaching (i.e., involving many workers, servers, applications, departments, and end users). And lest you be confused, business processes are not merely simple tasks isolated in a vacuum from other business processes. Business processes are inherently interlinked, so a deficiency or problem in one area can have a rippling effect, causing errors, delay, and downtime in other business processes. They have a reach and impact beyond themselves. The opposite is also true: streamlining, foolproofing, and automating a small business process can have a dramatic positive impact on other, seemingly unrelated, larger business processes. Regardless of business process size, reach, and impact, IT managers must do a much better job of understanding them than they have historically. In the past, a thorough understanding of business processes was unnecessary; managers could simply throw more resources at any problem to fix it. However, this option is no longer available. Now, managers must understand their business processes so they can then improve them. They need to understand these processes as is, so they can visualize the weak points and eliminate them. So, more specifically, where does one begin in this quest for understanding business processes? First, you have to understand that business processes (whether they are manual, automatic, or a combination of both) are composed of events, decision-points, and actions. Events are the shotgun start for business processes. They are the way in which business processes are initiated or triggered. An event could be an end user needing help; it could be the receipt of an order via fax; it could be the appearance of a specific file on the network; it could be a server freezing up. Once an event triggers a business process, a series of actions and decision-points ensues. For example, if the event is the appearance of a file that contains important data, actions involving reading the data and parsing the data for specific information would follow. Now, lets imagine that the important data contained in the file is the inventory level of widgets at warehouse Z. A decision is now necessary whether to order more widgets or not. To make that decision, we would want to know how many outstanding orders for the widget we placed previously, and how many orders have been placed on backorder by our customers. Once we collect that information from other systems (via another set of actions, of course!), we can make the decision whether or not to order more widgets.
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And remember, the business process above impacts other business processes. For example, if the widget is out of stock and cannot be reordered immediately, we would want to inform backordered customers that they should expect delay in their shipments. If we fail to link these business processes, we will leave customers in the dark regarding their orders, leading to their ultimate pique and frustration. We will also dramatically increase the amount of time customer service representatives spend on after-the-fact damage repair activities. Well coordinated and integrated business processes proactively prevent many undesirable situations, and the resulting resource drain, from arising in the first place.

What to Scrutinize? Understanding your business processes isnt just busy work. It is an essential step in identifying what is inefficient, broken, or even wrong with the process. Your work here will not be in vain.

The waiting is the hardest part The first area of scrutiny (and potential opportunity) in any business process are its waits or delays. These are points in which workers, machines, and applications are waiting for some event to transpire or some threshold to be attained before the business process can begin or proceed. For example, a worker (lets call her Madge) might be responsible for entering faxed orders into the ERP system. Perhaps Madge waits until 3:00 pm each workday before beginning this task which usually takes about an hour to perform. This means that orders collected in Madges in-basket can wait for nearly a day before they are entered. And what happens when an order arrives at 4:30 pm on Friday? Well, that can wait until Monday. And what happens if Madge calls in sick on Monday? And who steps up when Madge goes on vacation? My advice to you: Look for the waits and delays in your business processes first and foremost, for there you shall find opportunity for streamlining, automation, and process improvement (no offense, Madge). In the process above, one can easily imagine a system that routes faxes to email with a PDF of the order. This service is extremely inexpensive, and adds the addition benefit of an electronic copy and audit trail compared with traditional faxing. Next, common automation software can detect the email, download the PDF, and automatically scan it with OCR technology. Key information from the order (customer, address, SKU, quantity, price, etc.) can be gleaned from the order and automatically entered into the ERP system. While the IT department isnt usually responsible for order entry, it is responsible for accelerating the timeliness and flow of information. How information is received from outside corporate walls, to how it is transferred within via files or databases, is the domain of IT. IT must be on the lookout for situations where data, files, and information wait for batch processing. These are potential business process points that should be streamlined and automated. As a general rule, reducing and eliminating waits will vastly improve a business process and lessen the negative impact that can often result from excessive or abnormal waits.

To err is human, but taking the blame is a whole nother thing The next place to look for inefficiencies and opportunity for improvement is business process errors. The tricky thing about process errors is that they might not occur very often. They might even occur rarely. But when they do happen, errors are very disruptive, costly, and time-consuming. Talking about Madge, she really is great, but every once in a while, she enters 100 for the order quantity when the customer only orders 10 units. Then, the factory goes wild. They hire people to work overtime to keep up with demand. Purchasing buys a slew of raw materials. The place really ramps up because you know the customer is #1. In IT, lost data or a server going down at exactly the wrong time can have enormous consequences. Look in areas where errors (human or machine generated) have happened in the past, or where a future error could cause severe damage. Here you will find significant opportunities for automation and business process improvement.

Should I stay or should I go now? Some decisions require thought. They require the collection of data and facts that cannot be known prior to the decision. The decision-maker must analyze this information, identify unknowns and ambiguities, mull the pros and cons of each decision scenario, and ultimately take a course of action. For whatever reason, human beings (most of us anyway no offense Madge) evolved brilliantly in this direction. Human beings are vastly superior to machines when it comes to thinking. Examples of business processes involving thought include analyzing reports and business intelligence. Another one that comes to mind is understanding and optimizing business processes. Other decisions only require rote logic. The facts, at least the variables and their importance, can be known in advance. All one needs to do is set up the decision tree, and let the data make the decision. Human beings are mediocre at this skill. Machines are incredible. Examples of business processes that only require facts and logic include restarting an important computer service that has stopped working, extracting data from a file, and generating and distributing reports. The key here is to let the humans do what they do best, and let the machines do what they do best. That means IT managers should look at the types of decisions their people are making, and they should ask themselves which ones require thought and which ones require only logic. After separating the two types, the focus should turn to automating the latter.

Working in a coal mine Another font of promise for generating enormous productivity gains lies in eliminating repetitive, manual tasks so many IT workers engage in each day. Any computer-related activity that someone
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engages in more than two times is a ripe candidate for automation. Gone should be the days when someone performs a repetitive, manual task because thats my job. Machines can perform these activities much better than human beings. Repetitive, manual activities fall into two categories: monitoring and execution. In this day and age, nobody should be monitoring anything. Employees need to be notified when key events take place, threshold limits are exceeded, or exceptions/deviations occur. These can all be known in advance and planned for, and automation can be relied on to monitor, notify, and if you get really crazy, automatically respond to and rectify any situation outside the norm. Execution should also be automated. If you do it more than twice, you do it using a computer, and you can lay out a logical sequence of steps to executed the process should be automated end of story. You and your people have more important things to do thinking and planning.

Going the extra mile Streamlining, automation, and process improvement often lead to unexpected opportunities to positively impact a customers experience and other interconnected business processes. In the conventional order entry example discussed above, Madge never gave customers a written confirmation of their orders, complete with a tracking number and details about order quantity and SKU numbers. She never even called them to confirm order receipt. This is just too time-consuming and complex to do over the phone, and most legacy ERP systems are not designed for this functionality. Yet we all know that customers value the piece-of-mind that comes with updates and confirmations. Customers want to be in the loop whether that means receiving good or bad news because this knowledge manifests as peace-of-mind. Good news is reassuring; bad news is actionable and provides enough time to rectify a small error before it becomes a big problem. So in either situation, the customer comes out ahead. In the automated order entry process, however, it is very easy to add the benefit of transparency. With automation, it is very straightforward to send a confirmation email to the customer with the tracking number and order details. This would make customers feel more confident and provide them the opportunity to make a change in the event anything was entered incorrectly. This small change represents a huge boost in the business processs value in the eyes of the customer. Automation, properly planned and implemented, does more than merely automate a given business process. It allows for orchestration of multiple, complex, interconnected business processes. In this context, orchestration is defined as the coordinated, intelligent execution of business processes that span departments, applications, and computing resources. As such, orchestration enables organizations to think in terms of the macro business processes that deliver value to customers, partners, and employees and provides a pathway for optimizing and enhancing these macro business processes.

Business Process Automation Software As the arguments above suggest, IT organizations need to pursue aggressive business process automation strategies in order to increase productivity, slash costs, and provide better customer service. In many cases, people inside the organization understand what needs to be accomplished. The problem is that they dont have the tools necessary for successful execution of the strategy.
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The real answer is business process automation software. The right software package an automation platform, really can provide the IT organization with the power it needs to start streamlining and automating time-consuming and costly business processes quickly, be they simple or complex. The payback on selecting the right platform can be immediate upon the first implementation, so choosing wisely is paramount. But choosing the right software package can be an extremely daunting task, especially in hard economic times when budgets are hogtied. That is why the 11-point evaluation checklist detailed below should be extremely helpful.

11-Point Evaluation Checklist for Choosing the Right Automation Software Package 1. Cost Justification You are in a very tight budget position, and any expenditure must be examined very closely. You simply cannot spend a fortune on an automation software package. Heres a benchmark to consider: Redmond Magazines 2008 Salary Survey shows the median base salary for an IT worker is nearly $80,000. If you are considering an automation software package with a price tag more than half that amount, or $40,000, you are probably making a big mistake. The software must pay for itself in weeks or months, not years. 2. No Code Required You need to start realizing the benefit of automation immediately. You cant afford to hire script developers, and you dont have time to train your people on an entirely new set of skills. You need to procure automation software that does not require your people to learn a new programming language. Consequently, you need no code automation software that provides drag-and-drop, fill-in-the-blank, plain-English tools for comprehensive automation. 3. Visual Interface to Harmonize Business Processes with IT Infrastructure You need software that bridges the gap between ITs physical assets the servers, applications, systems, and networks and your business processes. Leading software packages include components that allow people to design workflows, or flow charts, of business processes. This greatly helps in understanding current-state business processes and how they will be automated, as well as communicating the desired changes to other team members or non-technical users outside of IT. The best automation packages provide a graphic mechanism for enhanced collaboration as well as tools for managing collaboration between team members. 4. Wide Range of Tools for Automating Common Tasks No-code, graphical automation does nothing if the capabilities are limited. Make sure the package you choose is feature rich. It should contain many tools in the hundreds for automating common IT business processes. These include tools for event detection (file, system, event log, etc.), data automation (SQL, XML, data within files, etc.), data and file transport and integration (Windows network, telnet, FTP, HTTP, etc.), and support for commonly used applications (Active Directory,
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Microsoft Excel, etc.). Dont limit yourself by choosing a package that simply meets your needs now. Allow yourself the flexibility to have the application grow with your future demands and ever-changing business processes. 5. Support for Standards You need an automation platform that will integrate with your existing environment, as well as support and enable future changes in IT infrastructure. Consequently, it must support the common standards for applications and networks including FTP/SFTP, OLE/ODBC, HTTP, XML, POP3, SNMP, SNMP, WMI, and more. Some applications offer direct tie-ins to specific applications but only support some of the common standards listed above. Make sure you choose a solution that can support your entire infrastructure, not just a few applications. 6. Orchestration Chances are that you have more than one server that will be involved in automation, so you will need to intelligently coordinate automated execution across these machines. The platform you choose must enable you to assign and execute the basic building blocks of automation events, tasks, and decisionpoints to the correct resource or server. 7. Multi-User Support You may have a team of people responsible for designing, building, testing, and maintaining automation throughout your organization. You need a tool that helps administrators delegate work and track progress of team members and their automation projects. This also ensures that only authorized individuals are involved in the process. 8. Centralization You dont want automation scripts and batch files floating loose across your organization. It simply isnt secure, and it cannot be controlled. You need an automation package that enables you to centralize automation and its management, but at the same time, gives you the capability to execute automation in a decentralized manner. The only way this can be accomplished is through a sophisticated client/server architecture, whereby information and communication is centralized at the server and execution is performed by the clients. 9. Automation Reporting and Information You need a package that provides you with meaningful and actionable intelligence regarding important automation events. You dont want to be bombarded with noise. You need to quickly detect errors so that you and your team can proactively respond to and fix any problem. The platform you choose should provide alerts for events you define as critical, plus a reporting component that summarizes and synthesizes the wealth of data generated by leading automation solutions. 10. Installed Base You want software that has been stressed, tested, and put through the wringer not only by the manufacturer, but most importantly by thousands of installations with different environments, including
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those similar to yours. Purchasing software from vendors who have no proof that their software is widely used, scalable, reliable and accepted is extremely risky. You cant afford for this decision to backfire on you given the current economic climate. 11. Third Party Endorsements Another way to reduce your risk is to look at product reviews from knowledgeable third parties such as trade publications and analysts. You can also ask vendors for case studies showing how they have solved various automation issues. If the vendor doesnt have this information readily available, you will be taking a leap of faith to move forward with their software.

Summary Business process automation is the answer for many organizations and IT departments struggling with tough economic conditions and constrained budgets. Planned and executed properly, it will lead to enormous costs savings, productivity improvements, robust processes, and better customer service. Organizations that embark on this path must choose a comprehensive software platform that will help them achieve these goals without breaking their budgets. Those that follow the common-sense strategies outlined in this white paper will succeed.

About the Author Joe Kosco is the Chief Operating Officer for Network Automation, based in Los Angeles. Network Automation, Inc. is the mid-market leader and innovator in automation software designed to orchestrate, integrate, and automate processes in IT and across the organization. Network Automations sole focus is creating tools that reduce the complexity of building and maintaining automation solutions. The companys flagship product, called AutoMate BPA Server, is known for a combination rarely seen in the software industry power and simplicity. Over 15,000 customers realize the value of Network Automations software every day. This includes hundreds of large organizations like NASA, IBM, Kaiser Permanente, Verizon, FedEx and thousands of small companies you have never even heard of.