Metrics – Page 10 – IS Survivor Publishing

Potholes on the road to IT management

Last week I enjoyed my freedom from political correctness by ridiculing New Jersey for the state of its roads (D+ grade from the American Society of Civil Engineers), its correlatively low gas tax, and the consensus among its governor, legislature and citizens that tax increases are off the table.

Who to ridicule this week? I know … most of the private sector, because if you think this sort of behavior is limited to public governance, you aren’t paying attention to your own backyard.

For example …

I know of an insurance company that’s grown through acquisition to the point that it now has eleven functionally equivalent underwriting/policy administration systems. And no, it isn’t run as a holding company.

Whenever there’s a change to business logic, it has to make that change eleven different times in eleven different ways.

From all reports, the company’s IT department has become quite good at coordinating and implementing business logic changes. As it should, because when it comes to deciding what capabilities your organization needs it’s good to concentrate on what the business is likely to need from you.

The only choice that would be better would be to retire ten of the eleven systems.

Except that by just about every reasonable measure, the company in question is extraordinarily successful.

This is the sort of thing that keeps management consultants awake at night. If you’re metaphorically inclined, it’s as if, by policy, a state limited road maintenance to dumping asphalt into potholes and still became one of the nation’s primary transportation hubs.

But that isn’t what this week’s column is about. This week it’s about planning for the obvious and how organizational dynamics so easily prevents it.

Planning for the obvious first: If you add something to your fund of stuff, whether it’s a house or car for your household, or a machine, information system or facility if you’re a business, you’re going to have to spend money in the future to maintain it.

Otherwise your fund of stuff (from here on in, FoS) will deteriorate, losing its value or performance over time.

It’s a simple, inarguable equation: FoS increases, maintenance costs increase too, or else FoS value steadily decreases.

As a nation, during the Eisenhower administration we built our interstate highway system, and, in 1956, created the Highway Trust Fund, supported by a penny per gallon federal gas tax increase (to 3 cents, which, in case you care, is equivalent to 24 cents today, compared to the current federal gas tax rate of 18.4 cents).

Meanwhile, I’d bet good money (enough to pay five gallons worth of New Jersey gas tax) most KJR readers work in companies that, when they implement new information systems, don’t increase the IT budget by enough to cover the easily predicted need for ongoing maintenance.

Why not, given that any meteorologist would kill to be able to make predictions with this level of confidence?

Based on my exposure to and experience in quite a few businesses over the course of my career, it’s because of:

ROI computation: Proposed projects are usually evaluated on their financials. Include the cost of maintenance and the financials look worse, making the business case less attractive. Better to conveniently forget about them.
Tradition: This isn’t just the opening number for Fiddler on the Roof. If nobody else had to include maintenance costs in the past, why should my pet project be burdened with them now?
No good deed going unpunished: We haven’t increased the IT budget to support maintenance yet, and yet IT has managed to maintain everything so far. What’s changed?
Wishful thinking: Maintenance is a separate spending bucket. If IT needs to maintain a system, the maintenance will have to be cost-justified on its own merits.
Baumal’s Cost Disease: Everyone else is expected to continuously improve. Instead of increasing IT’s budget, IT should continuously improve enough to cover the difference.
Reality Distortion Fields: We can’t increase IT’s maintenance budget because we’re going to need this money to invest in new strategic initiatives.
Distrust: If we increase IT’s budget by enough to cover maintenance of this system, how do we know IT will actually spend the money on this system? (Several correspondents from New Jersey explained their anti-gas-tax-increase position on this basis.)
Siloes: If we increase IT’s budget by x to cover the cost of maintenance for someone else’s system, that will leave less on the table to cover the cost of the new systems and system enhancements I’m going to want.

Against these forces, the CIO is armed with nothing beyond logic and maybe a Gartner study or two.

It’s time to buy more asphalt.

New Jersey leads the way

It’s Independence Day weekend (as I write this) — a perfect time to talk about … Hmmm. Like maybe …

How awful most sequels are? Business tie-in: Special effects without plot are like IT without business purpose.

Nah.

The need for cap gun control, and how to make it constitutional?

Oh, don’t be that way. Click on the link. I’m not trying to take your guns away. I could probably stretch for a connection to information security. But probably not.

Hey, I know. Ridiculing New Jersey used to be a popular pastime. In this anti-political-correctness age, maybe it’s time to resurrect it.

Here we go.

New Jersey has won the national Worst Roads in the U.S.A. sweepstakes. How bad are they? New Jersey Governor Chris Christie has declared a state of emergency, because, according to the American Society of Civil Engineers as reported in The Washington Post, “… 42 percent of New Jersey’s roadway system is ‘deficient.’ Traffic jams cost the state $5.2 billion annually, or $861 per driver. And potholes, bumps, and otherwise poorly-maintained roads cost each New Jersey driver nearly $2,000 a year in increased vehicle maintenance fees.” And New Jersey’s transportation trust fund is empty.

New Jersey’s gas tax is second-lowest in the U.S.A (after Alaska). And yet, Chris Christie and the New Jersey legislature are in full agreement that a gas tax increase isn’t going to happen.

The fun part, and the tie-in: More New Jersey citizens are against a gas tax increase than favor one too, even though $200 per year in additional gas taxes would save an average New Jersey driver … let’s see, carry the one … make it $2,600 or so annually.

The problem: Not one New Jersey driver would be able to tell you when and in what form he or she saved it.

That’s right: In KJR-land, Independence Day is the perfect time to talk about metrics.

Because this is, deep at its core, a metrics story. Everything else is detail. Here’s why and why it matters.

Regular KJR readers might, if they stayed awake long enough, recall the four metrics fallacies:

Measuring the right things wrong.
Measuring the wrong things, right or wrong.
Failing to measure things that are important.
Extending business metrics to individual employees.

As is so often the case, Fallacy #3 is New Jersey’s root cause (in my not particularly humble opinion, supported by not one single piece of objective evidence, so sue me).

See, everyone’s tax burden is right there, in your face. A gas tax increase would be immediately apparent to every driver every time he or she fills the tank (insert teenager joke here).

Your tax burden is measured, in your face, and, all other things being equal, nearly everyone agrees which direction they’d like it to go (down, in case you weren’t sure). Nobody wants to pay higher taxes just because they like the experience.

What you get for paying your taxes, or, in the case of New Jersey’s roads, don’t get in exchange for not paying enough of them? That’s arguably more important, and yet it’s fair to say the value received from government in exchange for our taxes is completely and thoroughly unmeasured.

Anything you don’t measure you don’t get.

In business we have a metric called GS&A — general, sales, and administrative expense. It’s a fee business units pay to the mother ship in exchange for being owned by the mother ship. Most business unit heads call it a tax and resent paying it, because it detracts from their bottom-line financial performance.

Think any of them have access to the metric Financial Value Received In Exchange for GS&A? Maybe, but I’ve never seen it.

Way back when, in the early days of business consulting when Total Quality Management was all the rage, TQM’s gurus explained that while quality’s costs were obvious and apparent, it’s value was much higher than its costs, even though its value was nearly impossible to measure.

In the realm of Information Technology we all know the importance of good technical architecture — it’s the difference between a given change in functionality turning into a modest-sized one-person enhancement versus it requiring a project team and a few months to take care of.

All of these cases, and more besides have this one thing in common: Their costs are easy to measure, and to see. Their benefits are neither.

And anything you don’t measure you don’t get.