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 “Why is that server taking so long?”

 

As explained in an earlier blog, obtaining a new piece of hardware in a large IT organization can be a painful process. If the organization is moving to the Cloud, there may also be a central team controlling the authorization of Cloud resources. Even without the physical supply chain, people and process are still involved, which implies lead times.

 

The Agile movement often advocates ideals of self-organization and minimizing all external dependencies. In some organizations, this has led to teams purchasing services directly from Cloud providers by using company credit cards. Eventually, as assets and licenses are reconciled, the finance department notices 30 different invoices from Amazon, Rackspace and Microsoft for redundant services, which initiates sourcing discipline.

 

In this example, there is an Asset provisioning process which includes virtual assets being registered in a Configuration Management Database (CMDB) or Asset system. How can this be managed more effectively, especially in light of the previously mentioned blog about queuing and too much work in process? What happens when the process slows and becomes inefficient? There is an associated cost and often a shared service, such as Asset Provisioning, which will run its process on a “first-in, first-out” basis. More recently, however, thought leaders in the Agile and Lean Product Management spaces have proposed the idea of Cost of Delay to measure process inefficiencies.

 

Don Reinertsen is a product development specialist whose work is influential in the Agile and digital movements. In his book, The Principles of Product Development Flow, Reinertsen writes, “Cost of delay is the golden key that unlocks many doors. It has an astonishing power to totally transform the mind-set of a development organization.” It is applicable to many IT questions beyond development, as shown below.

 

What is Cost of Delay?

 

The definition is intuitive. It is the opportunity cost of *not* having a given product or service available for use, such as missed revenues and the cost of workarounds, as well as costs associated with inefficiencies.

 

If the Asset process becomes the critical path for a product or service’s release (a common experience), then the Asset process is responsible for that product or service’s Cost of Delay. Cost of Delay can take various forms, some of which are significant.

 

An example of one of those delays is a demonstration of a product to key clients at a trade show. This could be the company’s best opportunity to develop business. The sales team estimates $10 million in funnel opportunities that should result in at least $1 million in sales during the year, with projections of another $1 million in maintenance and contract renewals.

 

If the product is not ready, however, these benefits will not materialize. If everything else is ready, but the Asset process is delaying product readiness, then the Asset process is responsible for a $2-million cost of delay.

 

This is the challenge. The Asset provisioning process is clearly impacting significant business objectives and the P&L. The question, however, still needs to be asked, “What benefits do we receive from having an Asset process and an associated CMDB?”

 

As noted in previous blogs, there are certain quantifiable benefits to having an Asset repository and/or CMDB, and managing their data quality. These include:

 

  • Vendor leverage
  • Reduced support costs
  • Reduced risk (e.g. due to consistent security approaches)
  • Reduced capital costs

 

Are these benefits totaling $2 million a year? If not, your Asset process does not make good economic sense.

 

While this is an extreme case, it does illustrate a point. Cost of Delay has started to prove itself in the IT industry and has been incorporated into the Scaled Agile Framework, an approach to adopting Agile methods suitable for large-scale organizations. Simply assessing whether any work order has a high, medium or low Cost of Delay can be a good place to start. It is also important to ration each category, so teams don’t say everything is “high.”

 

By doing this, you can bypass blind “first-in, first-out” queuing and deliver better business value through your Asset process. If your process is overloaded, then at least you are doing the most economically important work first, and adding the most value you can with your Asset process and its associated CMDB.

 

The CMDB and the quality of the data it contains provide value and operational insight to downstream groups and should not be siloed within IT. The procurement process should use the same data and insight to pay the vendors on which agile asset managers rely for their servers as well as for ensuring software license compliance. This may sound complicated, and it is; however, complex does not mean difficult. Any provisioning process, regardless of the operational or logistical framework, can drive value across the organization if properly implemented, and using Data Quality Management as a foundational element can significantly increase your likelihood of success. Please visit us at www.Blazent.com for further details.