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Hitch Your Wagon to a Wild Horse?

Written By: J. Dowling
Published On: April 4 2000

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IT Management Issue

WWW is short for both World Wide Web and Wild Wild Web. It is truly a new frontier. Likened to the Americas of the 19th century, the pathfinders have made it to the Pacific Ocean and back a few times but many losses have been suffered along the way. As in those times, people who want to make the journey to the gold fields of the West choose among a number of guides who tell them what to pack, what supplies to buy and how to prepare their gear for the journey. The guides were in the business of making money and were driven by adventure. Records show that they did not hold a detailed briefing of the dangers and choices that would be made over the three month journey until after several days on the trail. So too the e-Builders of today.

e-Commerce initiatives are being driven by the need for speed, resistance to expansion of information technology departments, difficulty obtaining skilled technicians, lack of knowledge about Web-building tools and techniques, and concern over making investments in capabilities that will have a short payback period. All of these forces drive companies to e-Builders and/or Application Service Providers to get online quickly and minimize investment risk. Do they get either?

Following are some section titles from the most recent annual report from Inktomi, a very successful player in the e-Business infrastructure marketplace:

The business model is untested:

"We have a history of operating losses, expect to incur future losses, and cannot be certain that we will become a profitable company."

"Our efforts to increase our presence in markets outside of the United States may be unsuccessful and could result in losses."

"Our success depends on our ability to expand our sales and support organizations."

The marketplace is volatile:

"The markets in which we operate are highly competitive and we may be unable to compete successfully against new entrants and established companies with greater resources."

"The infrastructure market is rapidly changing and we must develop and introduce new products and technologies to remain competitive."

There are strong uncontrollable forces:

"The legal environment in which we operate is uncertain and claims against us could cause our business to suffer."

"Internet related laws could adversely affect our business."

New resources and capabilities will be in constant demand:

"Our success depends on our ability to manage growing and changing operations."

"We may not be able to recruit and retain the personnel we need to succeed."

"Any acquisitions that we make could adversely affect our operations or financial results."

Does this describe a good guide through the perilous journey into the Wild Wild Web? Perhaps not but, at this point in time, it describes many guides. It is an honest appraisal of the environment within which all of the e-Builders and e-Business enablers operate and will continue to operate for some time.

e-Builders, Enablers, and Service Providers have not been in business long enough to have established repeatable processes, standardized infrastructure, and stable software development platforms. Hiring practices for deployment staff is driven by aggressiveness, intellect, malleability, skill, and experience, usually in that order. Experience and skill are highly desirable traits, but due to explosive growth in demand for e-Business capabilities, the required numbers of skilled and experienced people are not there.

The tools that e-Builders use change substantially twice each year and significantly each quarter. It is just not practical to keep current. Depending on where a client's project comes in the technology refresh cycle of a supplier, last generation or next generation tools will be applied. What happened to current generation tools? They don't exist! To assure a client that its Web solution will be state-of-the-art, next generation tools must be employed. Unfortunately, this only creates another source of risk.

It may sound as though mission-critical systems are being built by inexperienced people who both make up the process each time and use unproven tools. This is an exaggeration - but not by too much. Welcome back to Electronic Data Processing of the sixties and seventies.

Business Implications

The web is the ultimate Experience-based market: A web site will present the Brand, Image and Values of an enterprise to more people in less time that any other medium. It will create a global customer engagement channel over night. Those that visit the site will expect an experience that equals or exceeds what they receive at competitor's sites and often competitors, in web terms, may sell a completely unrelated product line and target totally different markets. The web is the ultimate Experience-based market.

Web-based services demand integration of a complex set of technologies: Most e-Business initiatives will combine external services such as Credit Card Authorization, Installment Billing, Retail Banking, and Knowledge-bases with internal capabilities such as Inventory Management, Pricing, and Logistics. The pace of development and deployment will demand unprecedented coordination to achieve schedule, cost, and performance goals.

Selecting enabling technologies demands a holistic approach: Selecting e-Builders and associated service providers demands a much higher degree of business and technology intensity than the selection of other information systems such as Enterprise Requirements Planning or Human Resource Management systems. e-Builders must have strength in business strategy development, business process design, web creative design, web technology, network security, legacy systems integration, performance management and a number of supporting design, development, deployment and management capabilities. A successful initiative needs a good deal of strength in all domains; unfortunately such a provider is rare.

Deployment demands a process focus and project management: e-Commerce initiatives are processes, not projects. They never end, and each stage introduces new capabilities and additional complexity. Complexity drives cost and risk. Consequently, they must be designed as a succession of stages.

For example:

  1. Brochure-ware could be deployed first to introduce the company, management, products, value proposition, and current channels.

  2. A Self-selection capability would follow to help prospects find solutions to their issues within the set of promoted products.

  3. Product Sales and Customer Service capabilities might be layered next.

  4. Subsequent stage might add tutorials, decision support tools, and other devices to hold a relationship with customers.

While stage one is in production, stage two is in construction, stage three is in design and concepts for stage four would be in development. With two or more stages designed and scheduled well in advance, the technical team has a good opportunity to maximize leverage, reuse and productivity. Business managers and information technology managers must share accountability for e-Commerce program success.

Information Technology Management Implications

e-Business systems are built using a highly interactive and iterative development methodology. It appears as a spiral beginning at a point in the center where basic capability and appearance goals are shared. Concepts are designed and built then reviewed with the client. What works is carried forward and what does not is discarded. Part of the design moves towards the outside of the spiral (the end product), part stays at a given level for more work and part is sent back down a level for re-consideration. Essential elements must continually make progress towards the outer shell of the finished product or project runaway will result.

Little software documentation: When the product is 'finished' there will be little documentation of the steps along the way, what parts were successful and what was abandoned. Spiral software development is a 'you have to be there to understand it' experience. At the same time, most development will consist of many linked (with some modification) building blocks each of which can be understood and reused.

System performance management complexity: When Application Service Providers are part of the system configuration, security, availability, adaptability, performance and integrity issues are distributed across all internal and external providers. Consequently system performance management extends beyond the points of connection and into the remote infrastructure.

Compensation Issues: e-Business technologists demand high total-compensation packages. This has impact on two fronts. Consulting and contract labor costs will be high causing high cost burn-rates. Additionally, the difference between internal and external labor costs can cause retention and morale issues. Both impacts suggest that attention be paid to the caliber and apparent productivity of external staff.

Risk: Volatile information technology tools and infrastructure components can disrupt the technology environment. Decisions must be made between adopting such technologies and passing them by for a future generation. Forward-looking information technology architecture planning is necessary to separate the one-off products from new-standard candidates. The same issues need to be addressed regarding skills and competency levels for internal staff.

Ownership of responsibility for success: One information technology management issue is pervasive. Project management is the responsibility of the buyer. There are too many facets to these programs to abdicate responsibility for the delivery of either work products or business results by assigning the role to external staff.

Architecture Impacts

  1. e-Business infrastructure is very different from that of mainframe, distributed computing, and client-server environments.

    • The user count can be several orders of magnitude greater.

    • Transaction volumes grow much more rapidly.

    • International presence is instantaneous.

    • Security issues are totally new and change weekly.

    • The toolkit is made up of many more low-level components.

    • Staffing and competency management issues are much more severe.

    • Cycle-times are dramatically reduced.

    • Technical complexity is much greater.

  2. When Application Service Providers are employed, their architecture can influence that of the client. Enterprise architecture must be adaptable to change within the enterprise as well as changes to current and potential external providers.

  3. Adopting services from external providers stresses the clarity and governance of an enterprise technical architecture.

Business Management Response

  1. Be as clear as you can about your business goals. Pay particular attention to Image, Branding, Market Penetration, Revenue, and Cost goals. Set measures and time frames and share all of this information with internal and external teams.

  2. Understand that web site development is a divergent process. Customer expectations demand a frequent (several months) renewal cycle of their experience and the change cycle is only a bit shorter than the need allows.

  3. Insist that you and your partners share a common vision of:

    • Image and Branding

    • Your customer's expectations

    • Future refresh cycles

    • Transaction growth expectations

  4. Assure business continuity contractually and through knowledge transfer.

  5. Don't think that a 25 yr old company will necessarily be more reliable than one that is 24 weeks old. They draw from the same short experience, staffing pools, and tool boxes.

Information Technology Management Response

  1. Assess the technical capability of all external and internal technical staff either directly or with an unbiased partner. Verify the tool kit, skills, knowledge-transfer ability, and delivery methods to minimize program risk.

  2. Examine the architecture of external service providers (and those that may be providers in the near future) and alter the enterprise architecture accordingly.

  3. Examine the interconnection capabilities of external service providers (and those that may be providers in the near future) and alter enterprise infrastructure accordingly.

  4. Consider the impact of the external partner's technologies, skills, and compensation on internal staff and take defensive measures proactively.

  5. Use the knowledge gap between internal and external staff to pull the internal staff forward.

  6. Involve internal and external staff in decisions around architecture, infrastructur, and standards changes.

  7. Identify essential new technology components and assign shadows from the internal staff to acquire critical skills during the development process.

  8. Make the hard decisions concerning products that will become standards and skills that will be adopted.

  9. Take the lead on risk management regarding all information technology capabilities.

 
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