In 1911, Frederick Taylor wrote his seminal The Principles of Scientific Management.
It changed the way work was done and influenced thinking around
specialization and productivity measurement. And it has allowed many
efficiency and process improvement consultants to develop lucrative
practices along the way.
Technology services (systems integration, outsourcing, contract
staffing) valued annually at over $ 500 billion worldwide are procured
with the promise of making corporations even more efficient. As the
services market morphs (HP may be looking to acquire CSC, private
equity funds looking at ACS, BPO deals becoming bigger than ITO deals,
offshore vendors continuing their market share grab), the industry
should take a hard look at its own delivery models - and apply Taylor's
concepts to itself.
While most of these practices I list below are in use in the industry, their usage tend to be spotty:
a) Geographic optimization - Offshore vendors have shown they can perform 70 to 80% of work in remote locations.
But remote does not always mean thousands of miles away. It could be
low cost, rural locations. On the flip side, staff that need to be
assigned to client site should, to the extent possible, be local. The
tech services business keeps the airline industry alive. Long-term travel is not only expensive, it also saps staff and project productivity
b) Functional optimization: Through use of shared service centers
e.g. specialists servicing multiple clients at the same time - e.g.
DBAs monitoring performance of multiple client databases. And factories for coding, data conversion, testing, documentation etc with specialists armed with specialized tools.
c) Capacity optimization: Through sub-contracting arrangements,
just-in-time recruiting/ training capabilities, use of "shadow" teams,
"buffer zones" - concepts widely used in production and inventory
management provide clients the ability to rapidly ramp up or down
capacity. One of their biggest selling points to CIOs is the ability to
turn their fixed staff costs in to variable - but services vendors
promise that but seem to just end up being another, often higher fixed
cost.
d) Continuous improvement - Expect more from each staff and your
teams each year. It was considered inhuman a century ago when Taylor
designed time and motion studies. It is still considered inhuman - but
the brutal economic reality is pay raises without productivity
improvement equals inflation. The 5th Siebel project should take less
effort than the 1st, the 50th should take even less and so on. The
second year of an outsourcing contract should show improvements, the
third year even more. Offshore vendors cite continuous improvement
around their CMM, Six Sigma initiatives - but even there you have to
push them for tangible productivity improvement metrics to offset their
growing wage inflation.
e) Automation: It is starting to happen gradually around systems management, it needs to happen more around systems integration.
While services firms talk about selling "solutions", they really are
still very driven to sell bodies and time. Man and machine need to be
packaged - and optimized - in solutions. The key word is optimized - it
is infuriating to have an IVR go through security questions, then have
the call center rep ask the same ones. The other advantage services
companies can pass along to their customers is time shared software
licenses - much lower than each company licensing its own, wide array
of testing, conversion and infrastructure management tools.
Optimizing across geographic, functional, time zone. man-machine and
other constraints is complex . But, over the last century the industry
has taught its clients about the theory of constraints, economies of
scale, lean manufacturing. As they say at Microsoft - the industry
needs to eat more of its own dog food. With the seismic changes in the
industry that will be the only way to survive and thrive.
The Tofflers are Back
Alvin and Heidi of Future Shock fame are back with Revolutionary Wealth, a much more positive book than the future they foretold in the 70s. Lots of implications for blogging, open source etc.
"In their earlier work, the Tofflers coined the word “prosumer” for people who consume what they themselves produce. In Revolutionary Wealth they expand the concept to reveal how many of our activities—whether parenting or volunteering, blogging, painting our house, improving our diet, organizing a neighborhood council or even “mashing” music—pump “free lunch” from the “hidden” non-money economy into the money economy that economists track. Prosuming, they forecast, is about to explode and compel radical changes in the way we measure, make and manipulate wealth."
A NY Times review is here.
May 14, 2006 in Industry Commentary, Open Source and other communities | Permalink | Comments (0) | TrackBack (0)