Standardising is so inherently appealing that most people happily accept it as a good thing, until the time comes to make it work. Are you to be like the company with 800 desktop builds for each 1000 staff? What are the costs, benefits, limits and practicalities of standardising service practice?
Standardisation can apply to many things: commercial terms; processes; components; architecture; suppliers; measures; policies; interfaces; data; software. All are within the scope of this discussion. Essentially, it is the controlled limitation of variety in accordance with a deliberate plan. Unless you insist on buying your services from Hobson, there will always be more than one option, and he went out of business (OK, died) in 1631.1 Standardisation does not equate to the elimination of choice, just its containment to manageable levels.
Why Standardise?
Suppliers provide much of the drive for standardisation. Suppliers like standards as the limited variation allows them to simplify, automate, specialise and so reduce the costs of production. Thus they can reduce prices and sell more, increase margins or both. The same factors have a marked effect on the consistency of production and hence the costs of quality and the levels of service that can be supplied. These effects can be huge. Rolls Royce sell heavily customised cars for rather more than Toyota sell standard models. This change in value does not flow from marketing or financial whimsy but from effective engineering.
Advantages for Customers
The same factors work in the interests of customers. They benefit from the price – performance dividend. Most will willingly buy a commodity item that gives them most of what they need. Few of us commissions a custom mobile phone, or would even know where to seek one. We accept what Apple, HTC or our other supplier offers. When searching the subject of custom mobile phones I found covers made to order, some who gold-plate and lots of apps, but few that went to the core of operation. To do so would add little value but a great deal of cost.
Standardisation also simplifies and accelerates the process of selection, reducing the transaction costs for customers. Occasionally negotiation can be fun. We all like a bargain. Sometimes though, I just want to know that I am getting a fair offer quickly and conveniently. Perhaps not the very top offer in the market this second, but close enough not to worry about the difference.
Disruption and Novelty
One of my passions is the disruptive application of novel techniques. Much of the effective application of eCommerce techniques flows not from a single enterprise, but a network of associated organisations. Think eBay, Amazon and their ecosystems. eCommerce has unleashed a storm of creative disruption. I can locate, buy and receive an ancient and obscure textbook years out of print, knowing that organisations like Alibris and BetterWorldBooks make a living buying the redundant stock from libraries and reselling a small proportion to me for a pittance. The value comes from the network, constantly growing through experimental development. Would Darwin have been a strategy consultant if working today?
To work effectively in such a network, the aspirant must adopt the industry standard interfaces as a price of entry. If only those implementing SIAM devoted as much attention to these as to beating suppliers up on price per transaction, they may actually realise a little more value. An array of uncommunicative islands is not much of a supply network.
The Limits
If standardisation is such a good thing, what stops us implementing them consistently? A number of factors often occur. Some of these can be managed in practice or in perception by customers and suppliers:
Immaturity
Making a bet on standards can be a big call. A client has core systems built on mainframes that are 25 years old. It looks on replacements as having a similar expected lifetime. If you think that a standards war is on, you are likely to sit it out rather than risk backing the wrong side and face a re-write. The world keeps moving and it is often unclear which (if any) will emerge as a winner. Has anyone bought a Windows mobile phone recently?
Unsatisfactory Options
What to do if all offerings in a market are poor? The fact that there is a standard does not mean that it is a good one, as anyone who has bought from an ISO 9000 accredited organisation will know. I would rather not be locked in to a standard than find it is consistently bad and will seek either flexibility or defer.
Valuable exceptions
Most decisions to adopt a non-standard option are not capricious. They arise for good business reasons for one part that may be unprofitable for the business as a whole. This customer segment has value and different needs, so if we are not to lose it (and my bonus depends on that), we must serve their needs with this feature. The catch comes in that the costs of proliferation are less obvious than the benefits of adding the feature.
Legacy
An organisation that has been around for a while will have been through several cycles of standard approach. This causes Applications Support Managers untold grief. Some systems were old when Babbage was a boy, whilst others launched last week. Nobody would choose such an estate, but any attempt to cull the ancient and disreputable is seen as difficult, expensive, risky and with low immediate benefit. Postponement is the obvious option and often defeats attempts to rationalise the portfolio.
These arguments are not in themselves justification for the sort of proliferation that standardisation fights against. They do however influence how committed we should be to one option over another. Your governance bodies may choose selectively to reserve some options. Every one has a cost, although it can be wise to do at times. It can be done at the risk of terminal indecision.
The arguments for valuable exceptions and legacy are commonly heard but can lead to dangerous thinking. They are associated with progressive entanglement that can bring an organisation to its knees. Just look at the public record of some venerable high-street banks’ IT for a case study. Attempting to pay a bill and finding your bank will not honour it can be embarrassing enough to prompt defection.
Maintaining Standards
To maintain your standards effectively, you need to:
- Establish good governance.
- Prepare the ground.
- Follow through.
Establish Good Governance
The maintenance of standards is an aspect of governance. Guidance on the control objectives for IT are to be found in COBIT 5.2 This states the following five core principles:
- Meeting stakeholder needs.
- Covering the enterprise end-to-end.
- Applying a single integrated framework.
- Enabling a holistic approach.
- Separating governance from management.
The amplification of the first principle states “Enterprises exist to create value for their stakeholders by maintaining a balance between the realisation of benefits and the optimisation of risk and use of resources.” This is about balance and value, it does not equate to the instant gratification of every whim. Especially so when combined with the second principle. Here there may be competing interests between parts of an organisation. The third encompasses the many IT disciplines and processes, attempting to get them all to play by the same (or at least consistent) rules.
Architectural Governance
For Architects, TOGAF provides a set of principles to apply to that discipline within the over-arching context of IT Governance and COBIT.3 This states:
PRINCIPLE 5: COMMON USE APPLICATIONS
Statement: Development of applications used across the enterprise is preferred over the development of similar or duplicative applications which are only provided to a particular organization.
Rationale: Duplicative capability is expensive and proliferates conflicting data.”
TOGAF 9.1 Section 23.6.1 Business Principles
The implication of these is that the task of establishing and maintaining standards rests centrally with IT Governance, taking advice from such information management, architecture and other subject matter experts as it sees fit to consult. The degree to which the governance body is at times robust or flexible in their application is a reflection of the personalities involved both within governance and the business. Weak governance is ineffective and costs the business dear, caving in to he who shouts loudest. Strong governance is not dogmatic but is persistently inquisitive and challenging. It requires evidence and weighs the arguments. Unimpressed by bluster and unsupported assertion, it stimulates debate and adjudicates.
Some cultures find this desperately difficult. Effective governance requires a level of personal maturity and accountability that is associated with determined decisiveness. I have worked in some organisations where such people whilst not being common are liberally scattered. Convening a balanced governance body is not difficult (but herding them is always a challenge).
In others, the individuals exist and shine as stars in the firmament, surrounded by a dull morass of talentless void. Dealing with such dead-wood saps vitality and destroys initiative. This affects the quality of staff that service providers can retain on an account, as well as employees of the customer.
If your governance is spineless and irresolute, add at least 30% to your service cost estimates (sometimes much more).
Prepare the Ground
In a major endeavour, it is impossible to do everything at once. You need to schedule some before others because of time, dependency and interaction. In a desktop delivery programme, you first have to ensure the applications are compatible, before rolling out the desktops on which they are to operate. Engage a well-informed architect, project manager and cost analyst to work out the options and prepare the ground thoroughly if the most is to be made of the potential for change.
Some time ago I was engaged to build a new hosting infrastructure. This was to be the client’s platform for the future for many years to come. We designed it afresh from the ground-up to achieve aggressive cost targets. Entirely standardised service levels, commercial terms, customer incentives, maintenance windows, pricing, backup and resilience levels, change and release, service management processes, configured tooling and limited architectural options. If the client wanted to take advantage of them, the package was available off-the-shelf without negotiation. If a user project asked for customisation beyond the offered options, all bets were off. The incentive to stick with the standard was immensely strong, but it did not suit all parts of the business and so custom options were initially sometimes selected.
That was fine for the platform supplier, who saw progressive adoption at a sustainable rate. The customer’s CIO saw a rapid and continuing decline in the cost of service as adoption increased. Existing business applications tended to review their decision on whether to make the move at the time of other major changes. None of this would have been possible without the first major project to prepare the infrastructure to receive the applications and set the integrated standards.
Portfolio Management
Beyond the basics of good governance, the customer needs to manage the portfolio of investment in a balanced manner. Portfolio perspectives tend to look for balance across a wide number of views, each aligned to an aspect of corporate strategy. These may include:
- Sustaining existing business; building growth for the future; harvesting those in decline.
- Customer market segments and business units.
- Geographies.
- Business functions.
- Compliance and obligation.
Reliable Data
An effective governance operation requires well-prepared and reliable data to inform decisions. This does not spontaneously appear. It requires an understanding of the issues and options to be decided upon, instrumentation of the business and effort to process the updates every period.
Such an operation coaches and prepares those who wish to submit investment proposals such that those that do not align to the strategic priorities are either helped to show alignment, or are convinced at an early stage that they will be unlikely to receive funding so should close with minimal effort wasted.
An important part of preparing the ground is to align incentives. Recognise and respect the objectives of each player upon which success depends. Regard incentives as a variable to be managed; if they do not promote the desired behaviours, change them. Incentives include commercial obligations, measures, targets, payments and other forms of reward.
Follow-Through
Internal and external participants will quickly form judgements about the sustainability of a new arrangement. They will also look for signals that indicate how serious the proponents are. Those who proclaim “you have my complete support, but no you cannot have the resources you ask for” deserve every ounce of cynicism they provoke.
Reputations have always been of immense value, not least within organisations. Senior staff soon learn whose promises they can trust and whose needs to be discounted. A petition for investment funds involves the making and acceptance of promises; if you give me £xm, my project will deliver this to customer service and £yk a year annual savings. One of the reasons for the incredible claims often seen in business cases is the asymmetry of incentives. These over-promise in order to get started, and to under-deliver, because nobody making the initial decisions has the attention-span to keep watching actual outcomes. The ways to do this are well known [Ref 4] and are frequently neglected.4
One of the greatest challenges for senior staff is on the allocation of their time. This tends to focus on the areas of greatest risk to either their career survival or the delivery of their results. This is understandable, but is only half the story. The other necessary side is what they have to do to make sure the right things do happen and the harvest is brought in. Governance and the progressive application of standards is such an aspect. This must be balanced in time and effort with crisis management. This is of course desperately difficult. Those who rise to the top learn the skills of hard choices. Have you?
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This article was first published in Outsource Magazine and is reproduced with permission.
REFERENCES
- https://en.wikipedia.org/wiki/Hobson%27s_choice ↩︎
- COBIT 5. ISACA 2012. ↩︎
- https://www.opengroup.org/togaf ↩︎
- Remind Me: Why are we Doing This? ↩︎
