Wednesday, April 16, 2014

Margin for Innovation

Does this look familiar?

Usually when I go in to speak to my customers, I draw something like this on the whiteboard or a sheet of paper.  I explain how most of my customers are faced with plateauing budgets, while the demands and associated costs keep going up.  As new application projects and mandates come in, they become a part of the operating and maintenance budget (O&M) for the next period.  When the budget doesn't scale with the demands of the business, you eventually hit the ceiling of your funding.  From that point on, you either have to go begging for additional funding (good luck with that) or you have to start chucking things out of your portfolio ("farewell training and documentation").  At this point I usually see a room full of heads nodding in agreement and "knowing smiles" being given between Line of Business owners.  I recently had a customer stop me at this point and say "Have you been spying on us?  We had a two hour meeting on this very topic yesterday."  That was very pleasant for me to hear, but the truth is that this is pain is so severe it feels personal, but it is really universal.

The first thing to go to make room in the budget is innovation.  I use innovation as a categorical way to sum up all business improving activities that are not directed by a line of business, or absolutely necessary to support the line of business.  Though not a complete rule or definition, here is my quick and easy little telltale sign as to whether something is innovation:
"We are going to do <project/task/initiative> if...."
"If we have the money/time left over...."
...or the most telling...
"I would love to be able to do <project/task/initiative> if..."
Once you have given the pink slip to innovation, the next time you hit the budget ceiling you have nowhere else to turn to lighten the load but to projects or initiatives.  We all have to make tough choices as to which application initiatives/projects deserve our time and money, this is a part of the budgeting process.  But now that innovation is gone, you find that you are spending more money and time each day doing things the old and expensive way.  That, in turn, means that your O&M grows and competes for budget/timeline room with the new application projects and initiatives.  Some new projects will be put off until a later time when funding is available (a.k.a. indefinitely) and some in-flight struggling projects will be sent on to that great project manager in the sky ("goodbye self-service product catalog").  But just when you feel like we have coped with your loss, in comes the expectedly unexpected: Mandates.

These are new and not-budgeted application project requirements that you have no choice but to address. Affordable Care Act or "Heartbleed Bug", anyone?  Ones like I just mentioned can create such a significant development disruption, that projects can be delayed by months or years and cost additional millions of dollars. You have no choice but to comply with the mandates, which means you now have to either find a new source of funds for your application project, or you have to scrap it entirely.

Because of your over-allocated budget, bloated antiquated O&M, and the inevitable and untimely appearance of mandates (surely I am not the only one who wonders why they show up the Friday before my vacation), you have have no agility and ability to react to the demands of the business.  What you need is a "Margin for Innovation" and a "Margin for Mandates".  A Margin for Innovation allows you to get to all of those projects that you need to improve service delivery, such as developing a more intuitive user interface, building a knowledge management module for your application, or converting those manual development setup/tear down/reset tasks into automated script-driven activities.  A Margin for Mandates gives you the budgeted operating room to respond to those in-flight mandated changes that have to be completed "yesterday."

The Delphix Agile Data Platform is already helping the U.S. Government and over 100 Fortune 500 accounts deliver more application projects, and deliver those projects in half the time and at higher quality.  Delphix transforms the process and economics of your application projects and maintenance, unlocking your IT budget so that you can provide that Margin for Innovation/Margin for Mandates back to the business.

Watch a short video on how Delphix can help you deliver innovation back your business at the link below.

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