Strategy and Tactics – Page 151 – IS Survivor Publishing

A common thread (first appeared in InfoWorld)

A bunch of stuff has hit my desk recently. It all seems related somehow. See if you can find the thread that connects them:

While cleaning out old magazines I found the October issue of Darwin magazine, which published its “Fittest 50” list. Yup — there was Enron. Still, Darwin is a fine publication. Lots of others fell for Enron’s buzz, too.

Speaking of magazine articles, one in Twin Cities Business Monthly by Burt Cohen caught my eye. It wasn’t the first article I’ve seen excoriating the common business practice of placating Wall Street by focusing solely on this quarter’s results no matter how much you mortgage your future, but Cohen did say it well.

Which leads us back to Enron. How? Among the many guilty parties identified in the ongoing blamefest is Wall Street. Turns out that many of those analysts who insist on great this-quarter results looked at Enron in more friendly terms. Why? Their employers wanted Enron’s investment banking business, that’s why. With luck, Wall Street’s analysts will lose some of their clout and we can all stop being deliberately stupid just to please these geniuses.

USA Today printed something useful, too: A piece by Stephanie Armour about companies that refuse to lay off employees just to make the numbers. In it she cites a study by Watson Wyatt (www.watsonwyatt.com) showing, among other happy conclusions, that excellence in recruiting and retention results in increased shareholder value – nearly 8% more, in fact.

Back to Twin Cities Business Monthly, which profiled Joel and John Schwieters, who own eight local companies in the home construction industry. They frame and finish houses twice as fast as most construction companies; their projects lack the debris that usually litters construction sites, they’re known for exceptional quality, and they’re growing by more than 20% per year.

How do they achieve these results? Unlike nearly every other construction company, they don’t subcontract their workforce — they employ their builders, paying them a regular salary, excellent benefits, and a shared bonus pool. Even more interesting is that they’re expanding into their supply chain. Where the popular core/context theory applauds companies that prefer outsourcing any activity that’s “non-core,” (that is, not a marketplace differentiator) the Schwieters understand that controlling the supply and delivery of doors, trim, pre-built staircases and such will improve their margins.

I suppose I should mention — they’re innovative in their use of information technology, too.

Web services will make integration less hard, not easy (first appeared in InfoWorld)

Long before ManagementSpeak graced these pages, Mad Magazine had mastered the art of translation. My favorite:

What they say: It isn’t the money. It’s the principle of the thing.

What they mean: It’s the money.

To run IT, you need both money and principles, of course. Among the core principles for running a typical IT organization:

Buy when you can, build when you have to.
Minimize data redundancy.
Maximize software re-use.

Pick two.

If you buy when you can and build when you have to, you’ll use applications from more than one software vendor, your databases will be tied to your applications, and you’ll have redundant data. On the other hand, most vendors now write to an n-tier software architecture, which means you can get at the underlying logic, so you achieve software re-use.

Want to minimize data redundancy or maximize software re-use? Build everything yourself, or at least everything you can’t get from your primary ERP vendor. You’ll have full control over your code, too which gives you a fighting chance at re-use. Too bad you can’t afford either the budget or time to choose this option.

Web services promises to eliminate these trade-offs. The use of components instead of full-blown objects means logic is easily accessible while data is still defined separately, and the use of HTTP and XML means vendors can write general-purpose components and make money by renting them out. That means (blare of trumpets!) you’ll easily assemble enterprise applications out of commercially available components from all over the world.

It won’t happen — not because of technological obstacles, but because an enterprise application is more than a collection of general-purpose utility routines.

Software is an opinion about how a business should run. It’s expressed in code rather than English, but its an opinion nonetheless, so when you buy software from multiple vendors you’re buying differing opinions. Interfaces are where they clash. To state the obvious: Technology can’t resolve a difference of opinion.

Imagine you’re a retailer. Web services can solve some irritating problems for you, like managing the sales tax logic in multiple states, so as CTO you decide to adopt the architecture to run your whole business.

That’s when you discover: The different vendors from whom you’re going to rent components disagree on some very fundamental issues, such as how to define “customer.” One considers “customer” to be an individual. For a second it’s a household. A third, oriented toward hardware stores, perhaps, remembers that building contractors buy a lot of stuff and use a definition that includes companies and everyone in the company authorized to make a purchase.

Think you’ll just ship customer data into and out of components from all three vendors with impunity?

Think again.

The grand vision of Web services is that easy integration of independently engineered components will happen by just connecting them together like Tinkertoys. The reality: Integration is hard, even when designed into an application.

It won’t happen by accident, grand visions notwithstanding.