Policies and Procedures – Page 87 – IS Survivor Publishing

Everyone knows …

Everyone knows most Americans have five pounds of undigested beef in their intestines. They know it because a character in Beverly Hills Cop said so. From there it became accepted truth, just because everyone knows it.

Just because everyone knows something doesn’t make it right.

Let’s start 2005 the right way … by ridiculing other people, ideas, and events, and in particular, what everyone knows.

For example, last year most Americans were thrilled when Burt Rutan’s privately funded SpaceShipOne reached outer space. Me too.

Everyone knows the flight demonstrated the power of private enterprise. It’s the BIG/GAS (Business Is Great/Government and Academics are Stupid) theory in full flower: The flight just barely exceeded what the government-funded X-15 achieved in the 1960s. Somehow, achieving parity four decades later doesn’t strike me as a demonstration of the free market’s superiority, no matter how exciting the accomplishment.

My apologies for the tedious nitpicking.

Everyone also knows that:

The U.S. economy is roaring back. The state of the economy has a lot to do with what you as an IT leader will have to contend with this year, so a prediction at the year’s start doesn’t seem inappropriate.Despite what everyone knows, the economy is dreadfully fragile. I’ll spare you the detailed economic analysis and jump to the clincher: Every administration in history, Democratic as well as Republican, has done everything possible to inflate the economy prior to a presidential election. If what we saw in the fourth quarter of 2004 was the best the incumbent could manage, imagine how bad it’s going to be now that the election is over. Plan accordingly. At worst you’ll be pleasantly surprised.

You should move to a Service-Oriented Architecture (SOA). And I agree, SOAs are a superior way to organize, build, and integrate applications, although the methodologies for deciding how to decompose your business into services are less mature than those used to design object hierarchies.What everyone doesn’t know is how to move to an SOA when you have only limited influence over the architecture of vendor-supplied applications. Agreeing that SOAs are the future is easier than figuring out how to make them the present.

Storage management is a big honking expense for IT. Except that storage now costs, in round numbers, nothing. It’s less than a dollar per gigabyte on a PC. You can add a terabyte or so of network attached storage (NAS) for chump change. But lots of smart people say, over and over again, that storage management is eating CIOs alive.If storage costs next to nothing, and storage management is such a huge expense, spend your money on storage, not on storage management. Yes, I know it can’t be that simple. I just don’t know what I’m missing. Help me out.

Spyware is the next big security threat. Everyone knows this. And this time, everyone is right. Spyware is a mess. It’s far worse than spam because legitimate businesses use it every day, assuming, of course, that you consider Doubleclick’s clients legitimate businesses.This is a repetitively self-inflicted wound, too. For decades, American business has mounted a huge BIG/GAS lobby to de-legitimize any and all governmental regulation. For years, American businesses have craved as much information about their customer’s habits as they can get. And for years, American software companies have lobbied and litigated to make sure their software licenses give buyers as few of the traditional rights of ownership as possible.We’re reached the point where a PC’s putative owner has little more right to control its use and contents than the providers of the software that runs on it and the owners of the websites it visits.So when Doubleclick pioneered the technique of surreptitiously installing code on PCs to track users’ browsing habits, who would complain? Too many corporate victims are also perpetrators, using Doubleclick or similar services for marketing purposes. As for consumers, who, other than Ralph Nader, cares about them?
In the up-is-down world of computer software, the pattern has been set, and it doesn’t support the right of the PC owner or user. The result: American businesses are simultaneously on the receiving end of a world of customer information and of IT aggravation.

If you haven’t already, have your security team select a high-quality, enterprise-class spyware detection system in 2005. Purveyors of spyware might have a legal right to install it, but you have an equally legal right to uninstall it. Let’s hope it stays that way.

* * *

I suppose I should end on an optimistic note. This is, after all, the start of a new year, and the notions of clean starts and limitless possibilities are traditional.

As they should be. 2005 will bring its share of challenges. So has every other year. That’s the problem with not living in utopia. But that’s okay.

Utopia would, after all, be an incredibly boring place to live.

Limits to growth

I entered college shortly after the first Earth Day. The book Limits to Growth was popular back then — it made the point, now unpopular but still mathematically inescapable, that there are … well, the title says it.

It’s like this: The earth’s population now exceeds 6 billion people, and it doubles every 50 years or so. Think the year 2000 caused headaches? If the population continues to grow at its current rate, in the year 3000 our descendants will each live out their lives standing in a three inch circle. It’s the miracle of compound interest. Maybe if they stand on tip toe they’ll be able to make it work.

And no, we can’t just ship the excess population into space. To do so, in 50 years we’d have to create the technology and capacity to put 120 million people a year into space, just to stay even.

“Well sure,” I hear you say, “but the population won’t continue to grow at that rate.”

Exactly. The only question is what’s going to stop it, when, and how many people will live on the planet when the population levels off. That there are limits to growth is a matter of arithmetic, which means you don’t get to argue.

It isn’t only the human population that has limits to growth. Marketplaces do too. Look at it this way: If you’re McDonald’s, and every human being is already eating three fast-food meals a day, you’d better figure out a better expansion plan than to open more restaurants. You’ve saturated the market.

Right about here it gets complicated. “Marketplace” isn’t easily defined. For example, the American restaurant marketplace is close to saturated — just how many more meals can we all eat out, after all? The fast-food marketplace is also close to saturated, I imagine. The non-traditional-Mexican-fast-food marketplace is, it appears, expanding rapidly, though, which explains McDonald’s investment in Chipotle.

In theory, companies can operate successfully in both mature (the code word for saturated) and growing marketplaces. In principle, it’s a rare company that succeeds at both, because so many of the factors that drive success are very different between the two.

In a growing marketplace, sales and marketing are missionary in nature, and new customer acquisition is everything. You have to explain an unfamiliar concept and its benefits to customers who, when you start, have no idea what you’re talking about. Whether it was the personal computer in 1980, the PDA in the mid 1990s, or for that matter fast food when White Castle opened its doors, the challenge is persuading potential customers to buy anything at all.

In a mature marketplace, in contrast, sales and marketing are comparative. Car manufacturers don’t have to explain what a car is for, how it works, and what the benefits are from owning one. They do need to persuade you that buying the ones they sell is a better idea than buying the ones someone else sells. In this kind of environment, growth is incremental, not exponential.

Companies organized to support exponential growth look very different from those organized to support incremental growth. Margins are different, internal controls are different, the whole budgeting process is different. It all has to be. When revenue growth can be exponential, spending is a high-return investment. When revenue can only grow incrementally, all spending is suspect, because cost management has a much greater impact on net profitability.

The trade-offs among speed, cost and quality are quite different, too. In a high growth situation, speed matters most, because the revenue lost due to a delay in capitalizing on an opportunity compounds exponentially. In a low-growth situation, the excess long-term cost that results from quick-and-dirty work far outweighs any short-term gains.

The corporate risk-profiles for the two situations are quite different, too: With high growth comes both an appetite for and a need to take risks, since the alternative is being left behind. With significant marketshare and only incremental growth, it’s far easier to lose ground than to gain it. Companies in mature marketplaces are, and should be, more risk averse.

And there you sit, leading an IT organization. Chances are good you’ve read a bunch of material about IT best practices. Perhaps you worry that you aren’t following them. Or maybe you’re worried that you are, and they aren’t working as well as they’re supposed to. So here’s a question:

Where did those “best practices” come from? Who decides, for you and your company, what’s really best?

There are limits to growth, whether for a population or a marketplace. The idea of “best practices” suggests there’s also a limited number of good ways to run an IT organization. Namely, one.

Just an opinion: Even if there is such a limit, we haven’t reached it yet.