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IT Management

Introduction

Last updated Jul 9, 2004.

This is the inaugural edition of a new Management Reference Guide. The purpose of thisguide is to serve as a source of current, meaningful information covering the entire

spectrum of IT management. Ive arranged the guide in a logical manner starting withstrategic management and following with other key management subjects dealing withcustomers, processes, suppliers, and other topics. As much as possible, the guide includesindustry best practices with actual business examples.

The intended audiences for this guide are team leads, supervisors, managers, andexecutives working in or closely associated with IT departments. One of the challenges inpresenting material designed for such a wide variety of audiences is gearing it to a degreethats not too detailed for seasoned executives, and not too high-level for entry-level teamleads. With this goal in mind, I tried to align most topics with the level of expectedaudiences. For example, strategic management by its nature discusses items at a higher

level, while infrastructure processes are handled at a more detailed level.

I encourage readers to submit comments and weblog entries. Ill respond to thesesubmissions as quickly as possible, usually within 48 hours. The true value of a referenceof this type often arises from spirited, interactive discussion among readers whose ownexperiences can confirm or alter the positions taken here.

I hope you enjoy this guide and find it beneficial to whatever position you hold, and inwhatever type of IT environment you work. I expect to add or modify at least one newtopic every week. This week I introduce strategic management and its associatedactivities: planning; the setting of goals and objectives; and the use of mission, vision,

and value statements.

2004 Pearson Education, Inc. InformIT. All rights reserved.

800 East 96th Street Indianapolis, Indiana 46240


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IT Management

Strategic Management


This section describes the various aspects of IT strategic management. I realize that teamleads and supervisors in many corporations may not be directly involved in these

activities. On the other hand, Ive worked with several small companies or startups inwhich the CIO, IT manager, supervisor, and team lead are all the same person. In theseorganizations, the realm of management planning spans the spectrum from strategic,long-range activities down to day-to-day tactical operations. So even if IT professionalsare not currently involved with strategic planning, they may very well be after the nextjob change.

I begin this section with a discussion of a primary responsibility of strategic management:establishing goals, objectives, and strategies. This part offers a definition for each ofthese three terms, shows how to distinguish one from another, and illustrates them withsome common examples.

The second part of this section describes how IT goals can and should be aligned withthose of the business enterprise. While this theme is frequently heard in IT executiveplanning circles, IT managers often bypass, overlook, or undermine this topic (eitherintentionally or unintentionally) by focusing on technology issues rather than businessissues. This section describes how to avoid these pitfalls and gain partnerships with thebusiness units of the enterprise at the same time.

The third segment presents several techniques for conducting effective planning sessions,including how to customize and enforce brainstorming rules; how to utilize a powerfulmethodology to identify, prioritize, and analyze a departments strengths, weaknesses,

opportunities, and threats; helpful hints to improve the management of planningmeetings; and how to determine appropriate logistics and attendees to make planningefforts successful.

The final three segments present the purpose and benefits of mission statements, visionstatements, and corporate values, and provide proven processes for developing thesestrategic guideposts. I placed this segment last because not all companies embrace theimportance of such statements. In fact, Ive seen companies do more harm than good withthese statements by implementing them poorly and then contradicting their intents. But inmany cases Ive seen such tools used effectively, and they can make a difference. These


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sections include numerous examples of these types of statements currently in use by well-known American companies.

Ill provide additional sections in future updates to this guide on such topics as proventechniques to instigate realistic budgeting practices, an overview of how to implementand enforce necessary policies and procedures in support of strategic management, and adiscussion of how to stay current with the ever-changing landscape of legal and privacyissues.




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objectives to performance appraisals and recognition programs. In some cases,executives tie an individuals performance on objectives to salary compensationand promotion opportunities. Team leads and supervisors can also adopt this

philosophy of management and performance by objectives.

Strategiesare the methods and approaches to be used in accomplishing short-termobjectives and longer-term goals. For example, one of my clients needed toimprove recovery time from a major disaster from 12 hours down to 4 hours. Thiswas their objective. Their strategy was to replicate data cross-country, and to testit every six months. The determination of these methods lends itself to theidentification of other necessary requirements to accomplish goals and objectives.These requirements may include training, budgets, and allotments of time andresources.

References

Good to Great: Why Some Companies Make the Leap...and Others Dont(HarperCollins,2001), by James Collins.




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IT Management

Aligning IT Goals with Corporate Business Goals


One of the characteristics that best demonstrates an IT departments value to a companyis the degree to which IT has aligned their goals with those of the corporation. There are

several reasons why its important for an IT organization to forge this alignment:

It encouragesif not outright forcesIT to better understand the directions,priorities, and constraints of various business units as well as the corporation as a

whole. This kind of knowledge can enable IT managers to plan projects more in

line with corporate goals. If a business impact analysis has been conducted, this

information can also be used to assess the relative priorities and value of various

business functions.

Business units are more likely to buy into IT projects that are outside of theirareas (such as infrastructure upgrades) when they're assured that IT understands

the business environment in which they're operating.

Aligning IT and business goals can prevent some projects from being delayed,replaced, or even canceled, because their dependencies and sponsorship are so

closely tied to corporate goals that are not as likely to change.

An obvious prerequisite to this alignment is a thorough working knowledge of corporate

business goals on the part of IT executive management. World-class IT organizations go

to great lengths to ensure this understanding and alignment, but many companies fall

short in this regard. Following are three of the most common causes of IT organizations

not aligning their own goals with those of the corporation:

Corporate or business unit executives are sometimes less than willing to share allof their goals, or the details of some of their critical goals, with IT seniormanagement. This sometimes happens when the relationship between IT and

other departments has become strained, indifferent, or hostile. Regardless of

whether the blame is on one side or the other, the relationship needs to be repaired

if long-term alignment of goals is to be realized.

Strange as it may sound, IT executives are sometimes unwilling to share all oftheir knowledge of corporate business goals with their IT senior management,

even if the executives have a thorough understanding of these goals. For some IT

executives, this knowledge represents power that they only selectively share with

subordinates to safeguard political positions. This can be a risky and dangerous


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approach that middle managers can mitigate by insisting on more full disclosuresof business goals.

The most common cause of IT goals not remaining aligned with corporatebusiness goals is senior managers being more committed to their own prioritiesthan to those of the corporation. This is often an insidious process. Well-intentioned managers may find themselves shifting priorities or becomingenamored with a new technology, or simply have a pet project that becomes all-consuming. Before they know it, corporate goals are pushed back to secondarystatus, and any hopes of alignment are lost.

Although the obstacles to aligning IT goals to corporate business goals are real andprevalent throughout industry today, they can be overcome. It remains the responsibilityof executive IT management to ensure that they fully understand the business goals oftheir company, to communicate them to their staffs, and to facilitate them as part of their

own IT strategic planning.

References

Built To Last: Successful Habits of Visionary Companies(HarperBusiness, 1994), byJames Collins and Jerry I. Porras.




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IT Management

Utilizing Effective Planning Techniques


A number of techniques exist to help transform marginal or mediocre strategy meetingsinto successful, effective planning sessions. This section provides some proven methods

on the use of brainstorming rules; on helpful hints about meeting management; ondetermining the best set of meeting logistics; on how to invite all, and only, appropriateindividuals to meetings; and on the analysis of strengths, weaknesses, opportunities, andthreats of an organization. These techniques can help to turn an average strategy meetinginto a very worthwhile planning session. Gatherings of this type can be expensive, time-consuming, and wasteful. With a little bit of planning and foresight, these sessions can betransformed into the efficient use of valuable staff time.

Brainstorming Rules

Almost any successful brainstorming session has a common set of rules to govern

behavior, logistics, and results. This certainly applies to a strategic planning session. Thefollowing helpful ground rules are not necessarily unique or groundbreaking, butensuring total buy-in to all of them prior to the start of any discussions, and adhering tostrict enforcement throughout the gathering, can provide a smoother-flowing meetingwith more successful results:

Agree on the clear objective(s) of the brainstorming. Stay focused on the objectives(s). Treat everyone as equals. Listen respectfully to each persons input. Participate honestly and candidly. Maintain confidentiality when appropriate. Keep an open mind; suspend personal agendas. Ask anythingthere are no dumb questions. Question anything you don't understand. Only one voice at a time; no side conversations. Ensure that everything relevant is written down. If prioritizing, agree on specific techniques. If attempting consensus, agree on voting method. Start and end on timesession, breaks, lunch. Critique the brainstorming session for improvements.


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Meeting Management

An effective meeting of any kind doesnt happen by accident. It seems only right that ameeting whose objective is to discuss strategic planning issues should be thoroughlyplanned for in the beginning. Following are twelve tips to more effective meetings:

1. State the objective of the meeting. Know what you hope to accomplish and thetype of meeting you plan to conductstatus, brainstorming, presentation, orevaluation.

2. Identify appropriate participants. Based on the objective and the type ofmeeting, determine all (and only) appropriate individuals. This topic is covered in

more detail in the next section.3. Schedule well in advance. Depending on who the participants are, the number

who need to attend, and the availability of rooms, schedule the meeting well

enough in advance to accommodate everyone's needs.

4. Provide an agenda.Develop an agenda. In some instances a timetable of keymeeting events may be appropriate. Include the meeting objective. Distribute the

agenda to all attendees. If an online calendaring facility such as Outlook is

available, take advantage of its confirmation feature.5. Assign a scribe. Arrange with an attendee to take notes. In the case of a

brainstorming session, you may want to assign more than one if multiple

flipcharts will be used.

6. Assign a timekeeper. Fast-paced, free-flowing meetings often run out of timebefore all key issues have been addressed. An assigned timekeeper can helpprevent this problem by keeping the meeting on track.

7. Clarify issues and move on. Not all issues can be resolved in a single meeting.Highly intelligent individuals usually have strong opinions and want to be heard.

A balance frequently needs to be struck between giving everyone a chance tocontribute and knowing when to move on to more important topics.

8. Agree on action items. Identify, assign, and schedule completion dates for allaction items.

9. Summarize results. Wrap up the meeting with a review of the results, especiallyconfirming the assignment and completion dates of action items.

10.Critique the meeting. Set aside a few minutes at the end of the meeting tocritique its value. Take note of what could be improved at future meetings.

11.Send out meeting minutes. The scribe or the person conducting the meetingshould distribute meeting minutes as soon as possible to everyone who was

invited, and anyone else deemed appropriate. Note who was invited and who

actually attended.12.Follow up on action items. Depending on the number of action items and their

completion dates, follow up on them at an appropriate frequency.

Meeting Logistics

The logistics of a meeting can often spell the difference between a rousing success and adismal failure. One of the first steps to take is to thoroughly understand the purpose and


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type of meeting to be conducted, the number and makeup of the attendees, and theestimated duration of the session. From those details, you can determine the best day ofthe week and hour of the day on which to schedule the meeting; the best location in terms

of room size; the best method of facilitation to use; and whether to hold the meeting in-house or offsite. Another consideration is the importance of meeting setup, visual aids,laptop hookups, lighting, acoustics, and so on. Finally, include provisions for meals,drinks, and refreshments if appropriate.

TIP

A possible alternative way to go offsite at marginal cost may be to use a company facilityat another campus or in another area in close proximity.

Appropriate Meeting Participants

The type and purpose of a meeting normally dictate who the appropriate meetingattendees should be. In the case of a strategic planning meeting, this group may includerepresentatives from senior or middle management, technical leads, and subject matterexperts. In some instances it may also include members from applicable business units orfrom appropriate nonIT support groups such as human resources, finance, facilities,contracts, or legal. Some strategy sessions may also include input from suppliers or

outside consultants. In these cases, an additional concern is to ensure that agreements ofconfidentiality and disclosure are fully understood and adhered to.

Analyzing Strengths, Weaknesses, Opportunities, and Threats (SWOT)

SWOT analysis is a process to identify the relative strengths, weaknesses, opportunities,

and threats of a person, a small team, a large organization, or an initiative, normally in abusiness environment. Many companies find the process useful as a preparation for

strategic planning. The results of a SWOT analysis can be used to help an organization

build on its strengths, minimize its weaknesses, exploit opportunities, and mitigate

threats.

A highly efficient SWOT session usually consists of four subprocesses:

"Round robin" method to identify items.Round robin is a fast-paced method toquickly identify items during a brainstorming session. The proper use of this

process results in virtually no lost time in gathering meaningful information. The

two keys to its success are brevity and handoffs. Participants sitting around a table

must choose to briefly offer a response or to hand off to the next person. One ormore assigned scribes record all responses. Individuals typically have only 1015

seconds to offer a suggestion, so short, quick responses are a necessity. Handoffsare very common, especially during the first few rounds. Rounds continue until

three full passes are made with no new responses.

Author/group consensus scheme to merge items.Some responses may turn outto be similar to ones previously mentioned. The author/group consensus scheme


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looks at those responses that may be merged and negotiates with the author of theresponse and the group to gain consensus on it.

Nominal group technique to prioritize items.The nominal group techniqueeffectively prioritizes large lists of items in a short time by having each individualapply a point value to just a few of their top choices. What may normally takehours to accomplish with other methods can be done in 1015 minutes using thismethod.

"Common threads" approach to categorize items.Once the items have beenidentified, merged, and prioritized, they can be grouped into major categories

according to common threads that stand out from the prioritized lists. This process

also should only take a few minutes to accomplish.

References

IT Systems Management: Designing, Implementing, and Managing World-ClassInfrastructures(Prentice Hall PTR, 2002, ISBN 013087678X), by Rich Schiesser.




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IT Management

Developing Worthwhile Mission Statements

Last updated Sep 2, 2004.

This section discusses what a mission statement is, describes some of the benefits anddrawbacks of mission statements, shows how to develop an effective mission statement

for almost any organization, and presents several examples of commonly known (orperhaps not so widely known) mission statements.

Introduction to Mission Statements

A mission statementis a concise description of who an organization is and what it does.When properly constructed, a mission statement can provide a clear, concise descriptionof an organizations overall purpose. This can enable large groups of individuals to workin a unified direction toward a common cause.

There are a few other entities that are often associated with mission statements. The most

common of these are vision statements and corporate values, each of which is covered inother sections of this guide. Other related items include charters, policy statements, andslogans:

A charterdescribes what an organization is expected to accomplish, usually overa specific timeframe, and usually specifies the amount of authority andresponsibility given to the participants. Team leads, supervisors, and projectmanagers often use charters to clearly define the overall purpose of teams,activities, initiatives, and projects that they are heading.

Policy statementsare rules of engagement or enforcement for issues involvingemployee behavior and the use of corporate assets.

Slogansare usually short-lived marketing-oriented statements that apply to aspecific product or service. Slogans often are tied directly or indirectly to theorganizations mission statement.

Mission statements can apply to a wide diversity of organizations whose size, scope, andgeography can vary greatly. For example, a huge multinational corporation may have onemission statement for the entire company, other mission statements for each of thedivisions, additional mission statements for each business unit within a division, and stillothers for each department in the business unit. Despite the variety of mission statementsthat may exist within one corporation, common attributes help to make any mission


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statement worthwhile. In addition to ensuring that the various statements support eachotheror, at the very least, don't contradict each otheran effective mission statementhas these key characteristics:

Clear:No complex words; no awkward wording. Concise:The fewer words the better; less than 25 if possible. Catchy:Snappy sounding without using slang or colloquialisms. Memorable:Easy to recall; easy to explain.

Steps To Developing Effective Mission Statements

The following procedure is a proven method for developing an effective mission

statement for almost any organization.

1. Selecta representative group to brainstorm an initial draft.2. Concuron brainstorming ground rules.3. Agreeon what your organization isand what it does.4. Identifykey phrases.5. Draft an initial mission statement using most or all of the key phrases.6. Wordsmiththe initial draft to reduce words and redundancies.7. Digestthe initial draft for a day or two.8. Finalizethe initial draft.9. Submitthe finalized statement to an appropriate authority for final approval.

Following these nine steps can help any group to create a useful mission statement that is

easy to market, quick to implement, and simple to apply.

Sample Mission Statements

The following are ten current mission statements considered to be effective in terms oftheir form and content. Note their common characteristics of briefly describing who theyare and what they do. These are all taken from a variety of well-known Americancompanies. How many of these organizations do you recognize, or could identify based

solely on their mission statements? The answers will be given next month.

A month has now gone by, so now it's time to reveal the companies who are the owners

of the following mission statements. How many of these did you answer correctly? Just

in case you want to try one final time to determine the identity of these companies, I willlist the answers at the very bottom of this section. So don't scroll ahead. For each answer

listed, I will offer a brief comment about characteristics of the mission statement and its

relationship to the organization it describes.

a. Ladies and gentlemen serving ladies and gentlemen.b. Our business is renting cars. Our mission is total customer satisfaction.c. The primary mission is to expand our world-wide leadership position in the spice,

seasoning, and flavoring markets.


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d. To be Americas best quick service restaurant chain. We will provide each guestgreat tasting, healthful, reasonably priced fish, seafood, and chicken in a fast,friendly manner on every visit.

e. To provide any customer a means of moving people and things up, down andsideways over short distances with higher reliability than any other similarenterprise in the world.

f. To offer all of the fine customers in our territories all of their household needs in amanner in which they continue to think of us fondly.

g. Provide shareholders a secure investment with a superior return.h. We will be our customers choice for high-value, high-quality data, voice and

video communications.i. To offer the fast food customer food prepared in the same high-quality manner

world-wide, tasty and reasonably priced, delivered in a consistent, low-key dcorand friendly atmosphere.

j. To offer the best possible personal computing technology, and to put thattechnology in the hands of as many people as possible.

The companies to whom the above mission statements apply are:

a. Ritz-Carlton Hotels - This is one of the briefest yet most effective missionstatements ever developed. With a mere seven words, it describes who they are

and how they expect their employees to behave; what they do; and the identity

and treatment of their customers.

b. Avis Rent-a Car - This statement distinguishes the company's business which isrental car focused, from the company's mission of total satisfaction which is

customer focused.c. McCormick and Company - This statement implies that the company has several

missions of which expanding its world-wide leadership is primary.

d. Long John Silver - This says it simply wants to be the best. It stresses thehealthful nature of fish and chicken.

e. Otis Elevator - This is a rare business-to-business mission statement. Theirprimary delineator is high reliability.

f. Wal-Mart - In keeping with its well-guarded image, Wal-Mart's mission statementis very down-home and wholesome sounding with phrases such as 'fine

customers' and wanting to be thought of "fondly'.

g. Exxon - This is short and direct: provide secure, profitability investments.Interesting in that nothing is mentioned about the quality of their petroleumproducts.

h. Bell South - This emphasizes the value and quality of their products and lists thecore products.

i. McDonald's - This statement stresses the consistency of their food preparation andof their surroundings. Similar to Long John Silver's, it also emphasizes low price,

speed and friendliness.

j. Apple Computer - Two simple ideas here: provide the best technology to themaximum number of people. In light of the many discounts and donations that


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Apple made early on, its interesting that it does not emphasize maximizing salesand profits, but maximizing the number of recipients.

The above list provides describes mission statements from a variety of companiescovering a diverse cross section of industries. Below are 13 additional statements fromwide assortment of organizations.

1. To provide quality financial products and services that create value by achievingsuperior customer satisfaction and sustainable financial returns in a challengingand rewarding environment for our associates. (Option One MortgageCorporation.

2. United Community Center is a human service agency providing emergencyassistance, daycare, social services and recreational activities for low-incomechildren and families at risk in inner city Atlanta, Georgia. (United Community

Center)3. To achieve quality land management under the sustainable multi-use management

concept to meet the diverse needs of people. (United States Forest Service)4. The YMCA of San Francisco, based on Judeo-Christian heritage, seeks to

enhance the lives of all people through programs designed to develop spirit, mindand body. (San Francisco YMCA)

5. Minimize the exposure to risk and maximize the capability to respond to eventsthat threaten or harm personnel, property, data or business continuity.

6. (California Independent Systems Operator (ISO))7. To market vehicles developed and manufactured in the U.S. that are world leaders

in quality, cost and customer satisfaction through the integration of people,

technology and business systems and to transfer knowledge, technology andexperience throughout GM.

8. (Saturn Division of GM)9. Our mission is to work for the success of people we serve by providing our

customers reliable electric service, energy information, and energy options thatbest satisfy their needs.

10.(Public Service Company of New Mexico)11.The mission is to improve the equality of human life; to enhance self-reliance and

concern for others; and to help people avoid, prepare for, and cope withemergencies.

12.(American Red Cross)13.To develop a reliable wireless network that empowers people with the freedom to

travel anywhere--across the hall or across the continent--and communicateeffortlessly.

14.(McCaw Cellular Communications)15.To provide all banks, S&Ls and investment firms with error-free financial

instruments delivered in a timely fashion. Error-free means absolutely no errors;timely means a 48-hour turnaround. (Deluxe Checks)

16.To provide economy and quality-minded travelers with a premiere, moderate-priced lodging facility which is consistently perceived as clean, comfortable, well


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maintained, and attractive, staffed by friendly, attentive and efficient people.(Courtyard by Marriott)

17.To appeal to a younger-thinking, style-conscious, moderate and better pricedcustomer by providing trend merchandising and superior service. Trend meansprivate labels, fast reaction, measured risks; service means warm, friendly, helpfulpeople in a convenient, efficient environment. (Dayton Hudson)

18.To satisfy our customers by providing quality cars & trucks, developing newproducts, reducing time it takes to bring new vehicles to market, improvingefficiency of all our plants & processes, & building on our teamwork withemployees, unions, dealers, & suppliers.

19.(Ford Motor Company)References

"What Should Our Mission Statement Say?" by Ron Meshanko. Internet NonprofitCenter, 1996.




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IT Management

Developing Worthwhile Vision Statements


Many companies use a vision statement as a companion proclamation to their missionstatements. This section begins with an introductory discussion of what a vision

statement is, how it differs from a mission statement, some of the benefits a visionstatement can provide, and some common characteristics of a worthwhile visionstatement. I follow this up with an explanation of the steps that managers can use todevelop an effective vision statement. The final portion shows several examples of visionstatements used by a variety of organizations.

(This section should be inserted in Strategic Management. It is an extension of theoriginal section on Vision Statements. The first two parts (1.5.1 and 1.5.2 are the same asbefore. The part in 1.5.3 has been extended.)

Introduction To Vision Statements

A vision statement usually addresses one or more of the following three questions: wherean organization wants to go; what an organization wants to become; or what anorganization wants to accomplish. It differs from a mission statement in that a missionstatement focuses on what an organization does, what business it is in, and what productor service it offers. A mission statement emphasizes the here and now, whereas a visionstatement points to the future. The primary benefit of a vision statement is that it canfocus an entire organization on a common goal, a worthwhile achievement, and themeans of measuring when the objective has been reached.

The following list explains some common characteristics of a worthwhile vision

statement. You may note that they are similar, but not identical, to those of an effectivemission statement.

a. clear (no complex words; no awkward wording)b. concise (the fewer words the better; less than 15 if possible)c. catchy (snappy sounding without using slang or colloquialisms)d. memorable (easy to recall; easy to explain)


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Steps To Developing An Effective Vision Statement

The following steps are a proven method for developing an effective vision statement.

a. selecta representative group to brainstorm an initial draftb. concuron brainstorming ground rulesc. agreeupon Where We Want To Go, What We Want To Accomplish, and How

We Plan to Measure Its Completion

d. identifykey phrasese. draftan initial vision statement using most all of the key phrasesf. word-smiththe initial draft to reduce words and redundanciesg. digestinitial draft for a day or twoh. finalizethe initial drafti. submitto appropriate authority for final approval

Sample Vision Statements

The following are actual vision statements used currently or in the past. They areexcellent examples of effective statements that clearly present where an organizationwants to go, what it wants to accomplish, and how it will measure its results. These areall taken from a variety of well-known American institutions and individuals. How manyof these do you recognize, or could identify based solely on their vision statements? Theanswers will be given next month.

Over a month has now gone by, so now its time to reveal the companies who are theowners of the following vision statements. How many of these did you identify correctly?Just in case you want to try one final time to determine the identity of these companies, Iwill list the answers at the very bottom of this section. So dont scroll ahead. For eachanswer listed, I will offer a brief comment about characteristics of the vision statementand its relationship to the organization it describes.

1. To be widely recognized as the premiere provider of innovative financial productsand services.

2. Within the next 3 years grow our company into a $40 million home productscompany specializing in manufacturing and distributing custom and replacement

garden windows and skylights for the upscale home and baby-boomer markets.3. Land a man on the moon and safely return him to earth by the end of this decade.4. I have a dream that all men will be judged by the merit of their character, not by

the color of their skin.5. To become the premiere supplier of reliable, high-quality, complex military

defense systems and commercial aerospace products.6. To be the worlds best in chemicals and electronic imaging.7. To build the premiere financial services company in the U.S.8. To be the lowest cost producer of aluminum & to outperform the average return

on equity of the Standard & Poors industrial stock index.


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9. To become the most competitive enterprise in the world by being number one ornumber two in market share in every business the company is in.

10.To become a low-cost, medium-size gold producer, producing in excess of125,000 ounces of gold a year and building gold reserves of 1,500,000.

11.To achieve return on equity at 20% or above, "real" earnings growth averaging5% or better over time, be a leading marketer of strong consumer brands, andimprove the profitability of low-return businesses or divest them.

The organizations or individuals who used the above entries as their vision statementsare:

1. Option One Mortgage - The three adjectives of widely, premiere, andinnovative define this companys desired scope of recognition, its expectedquality level as a provider, and how it hopes to delineate its products and services

from its competitors.2. Colorado Garden Windows Company - This is a good example of using very

specific quantities in a vision statement. In this case it gives a precise timeframe,an exact sales level, and specific products and markets.

3. President John F. Kennedy - This is the famous challenge President Kennedyissues to NASA in 1961. Note the simple, specific task and timeframe.

4. Rev. Dr. Martin Luther King - This is an exerpt of the famous I Have a Dreamspeech that Dr King gave at the conclusion of his Civil Rights march onWashington, D.C. While no timeframe is given, it is nonetheless very visionary innature.

5. Northrop Grumman - The first part of this statement voices a common theme ofwanting to become the premiere supplier of their products, but they distinguishthemselves with their descriptors of reliable, high-quality, and complex.

6. Eastman Kodak - Simple yet powerful vision to be the best. Compare to be theworlds best to just being recognized as being the worlds best.

7. Nations Bank - This companys statement is not to be the premiere company, oreven to be recognized as the premiere company, but to build the premierecompany implying it is very much in a growth phase. This is an example of acompany that will likely modify its vision statement in a few years aftersuccessful building has been accomplished.

8. Alcan - This statement has very specific financial visions, almost bordering ongoals and objectives. Reducing average product costs, and improving on the

average return on equity are easily measurable and understandable.9. General Electric - This statement was the famous challenge that CEO Jack Welch

issued to his division heads in the mid 1980s. Several divisions were shutdown asa result including the controversial RCA television division.

10.Atlas - This statement combines generic attributes as in low cost, medium-sizewith specific goals for quantities of production and reserves.

11.Quaker Oats Company - This statement also combines specific financial goals forreturn on equity and average earnings growth, with the more genericcharacteristics of market leadership and improved profitability.


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References

http://www.onepagebusinessplan.com, Writing a Great Vision Statement, 2003




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IT Management

Instituting Practical Corporate Values


This section discusses the concept of corporate values, covering the following topics:

What corporate values are and how they can benefit an organization Steps that managers can use to identify and elaborate on a set of values that best

suits their particular environment Some factors that can undermine corporate values Examples of corporate values in use today by a variety of companies

Introduction to Corporate Values

Corporate valuesare the core beliefs and principles that govern the behavior andcharacterize the essence of an organization. These value statements are intended toprovide a foundation for guiding the actions of people across the organization. Two

characteristics that form the cornerstones of effective corporate values are content andcontext.

Contentrefers to the meaningfulness of corporate values. Values having strongcontent are specific, authentic, tangible, and easily applicable to the everydaycorporate life of all employees. Values with poor content are generic anddisconnected from any meaningful guidelines to behavior.

Contextrefers to the degree to which values can be woven into the everydaythoughts and behaviors of employees. Values with strong context are realistic andtotally compatible with the operating principles of an organization. Values withpoor context are too idealistic to be practical, too incompatible with the core

beliefs of the organization.

Factors That Undermine Corporate Values

The two factors that most undermine the effective application of corporate values are lackof credibility and poor communication. Executives who espouse values that theythemselves fail to exhibit can do more damage to employee morale and to their owncredibility than if they had proposed no values at all. Similarly, values that are poorlycommunicated to staffs result in misunderstandings about what the values really meanand the likelihood that some employees learn nothing about the values.


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Sample Corporate Values

Following are nine sets of current corporate values from companies with a wide varietyof size, scope, and industry. The diversity of these companies also reflect the diversity ofcorporate values in terms of style, format, and length. Each set is similar to all others inthat each conveys those attributes of corporate culture that all of these organizationscherish and strive to achieve.

1. Do what is ethical, fair, and makes good business sense. Do our best. Treat othersas we want to be treated. Stimulate, anticipate, and embrace change. (Option OneMortgage)

2. Deliver superior customer satisfaction. Exhibit integrityin all business dealings.Design high qualityinto all products. Provide effective leadership consistently.Value allNorthrop Grumman People. Partner with suppliers. (NorthropGrumman)

3. We are committed to the delivery of innovative, proven solutions that enable ourcustomers to achieve their potential and do business in new and exciting ways.(Microsoft)

4. Our customers: We are driven by our customers needs. We understand the needsof our customers and deliver innovative products and services to meet thoseneeds. Our people: We respect each other. We work together as one BellSouthteam. This team reflects the diversity of the communities we serve. Ourcommunities: Everywhere we do business we strive to make our communities abetter place to live, work, and grow.Excellence: We strive for excellence ineverything that we do, including excellent customer service for our customers, agreat place to work for our employees, and outstanding performance for ourshareholders.Integrity: Every action we take reflects the highest ethical standards.We interact with our customers, our employees, and our shareholders withhonesty and integrity. (BellSouth)

5. Cooperation. Integrity. Lifelong learning. Continuous improvement. Respect.Flexibility. Personal accountability. Creating appreciative customers. (BentleyNetworks)

6. Customers. Innovation. People. Commitment. (JCA Software)7. Honesty. Integrity. Excellence. Trust. (Unocal-76)8. Service: To deliver outstanding and continuing service to our customers.

Commitment: To achieve strong, sustainable results. Continuous improvement: Tocontinuously improve our performance, our products, and our services.Long-termoutlook:To evaluate each endeavor and its impact on our long-term outlook.Teamwork:To communicate openly and work as a unified team to attain commongoals. (Del Monte Foods)

References

"Corporate Values, Revisited," Dewar Sloan, 2002.


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"Make Your Values Mean Something," by Patrick Lencioni.Harvard Business Review,July, 2002.

"Developing Value Statements: Lessons From War," by Scott Valentine.http://www.refresher.com, 2001.




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IT Management

Budgeting Considerations in an IT Environment

Last updated Sep 17, 2004.This section of the IT Management Reference Guide was written by Edward Galang.

Budgets play a critical role in any type of organization. This is especially true in an IT

environment as companies grow more dependent on IT for higher productivity, greatercompetitive advantage and increased profits. This section provides a brief, high-levelinsight to the budgeting process from my perspective and experiences as an IT executive.

Many IT leaders feel that budgeting is a long and painful process with very little returnon investment for the level of effort made. This feeling often stems from the immaturityof the organizations budgeting process and the lack of its understanding by IT leaders. Itis imperative that IT managers recognize and treat IT budgeting as a process, and realizethat enhancements to the IT budget process can produce significant rewards.

Factors that Undermine the Budgeting Process

I have worked for many different IT organizations over the years and have observed thefollowing four factors that consistently undermine the budgeting process:

1. Insufficient time- Most organizations provide insufficient time to plan andprepare a budget adequately. One company I worked at began their annualbudgeting process three months into the fiscal year and expected the budget to becompleted within two weeks.

2. Ad-hoc perception In this case the process is perceived as a one-time 'fire-drill' exercise. A former client of mine had the idea that once the budget was

complete, tracking of variances and forecasting trends were not required since the

budget already was approved. The thinking was that this exercise was notnecessary until next year and further enhancements to the process would be a

waste of time and resources.

3. Undefined expectations This arise when expectations from seniormanagement are not defined. Specific criteria, timeframes, and approval cycles

should be clear and understood. I worked at one firm that developed its budget in

a total vacuum. With no direction from the business units as far as strategic

initiatives for the upcoming year, expectations were not clearly defined which in

turn affected both capital and operating expenditures.


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4. Lengthy expenditure process- Once the budget is approved, you may still besubjected to a long and frustrating process to execute on the approvedexpenditures. This happened to me at a company that did not utilize the formalbudget process effectively. After enduring a long and arduous budget process, arequestor had to endure another lengthy approval process for each purchase ordergenerated.

Enhancing the Budgeting Process

As an IT organization matures with its processes and standards, the budgeting processbecomes more continual. The following are some of the enhancements one can make tothe budgeting process as an organization matures.

Consistently allow for sufficient time to plan. For example, start your budgetaryprocess in the same timeframe each year enterprise-wide such as the third quarterof your fiscal year.

Establish a standard template and format of the information being requested. Forinstance, ensure senior management clearly defines the data to collect and thefactors to consider.

Gather historical information that pertains to the budget and create a baselinefrom which to build.

As IT continues to evolve, organizations are realizing that previous budgeting decisionsare no longer valid and applicable. The passing of new governance laws and regulationsare forcing organizations to implement a more comprehensive financial managementmethodology framework. In light of recent developments, here are a few suggestions toenhance the IT budgeting process:

1. Use the investment portfolio approach. The investment portfolioapproach treats IT as a revenue generating entity. The objective is to ensure that

IT arrives at optimum decisions and realizes the desired results within the

expected timeframes and budgets. The payoff is a strategic and long-term outlook

that treats IT as an investment asset instead of an expensive liability; managers

compare costs against longer term requirements, needs and benefits.

2. Develop a consolidated projects list. - The IT budgetary process beginswith the organization identifying projects needed to grow their specific business

lines. The next steps are to prioritize the projects for IT to perform an assessment,

gather requirements, design both physically and conceptually, perform QA

testing, and implement into production. The objective is to provide the IT leaders

the complete picture of all proposed projects, the cost associated with these

projects, and their prioritization. This provides a level of objectivity in the

decision-making process that is lacking in many organizations. The payoff is that

it enables IT leaders to have all the information needed to demonstrate that the

business units, and not IT, are driving the costs.

3. Identify key costs and resource data.- Managing the IT budget provideskey costs and resource data. The objective is to have the ability to view both


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project related and recurring costs that are essential to formulate budgetaryjustifications. Managers can monitor these costs against the plan to identifydeviations that can be addressed or corrected instantaneously. The payoff, like the

previous suggestion above, provides IT leaders and management with a clearpicture of initiatives and their total cost of ownership. This enables a moreextensive analysis to be performed during planning and implementation. ITleaders gain insights in lieu of subjective or unreliable information.

IT leaders do not have to be subject matter experts when it comes to the budgetingprocess, but they must understand the basics. Upon acquiring this understanding offundamental budgeting concepts, IT leaders then have some of the necessary tools neededto improve IT planning and management.




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IT Management

Customer Management


This section describes the various aspects of IT customer management. It begins with adiscussion of internal and external customers. The first two segments describe how to

identify these individuals, and, more importantly, how and why to distinguish and limitthem to only a handful of key customers.

In future updates to this guide, Ill provide additional sections on customer management.Topics include how to meet the needs of Internet and intranet customers, negotiating withcustomers, managing customer expectations, and building and utilizing acustomer/supplier matrix.




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IT Management

Identifying Key External Customers


One of the best ways to ensure excellent customer service is to consistently meet orexceed the expectations of your key customers. While this may sound like an obvious and

almost trite statement, it incorporates some valuable aspects of customer service that ITprofessionals often overlook or choose to ignore. The statement touches on three separatebut highly critical activities:

Knowing who your key customers are is an identification activity. Agreeing on expectations of your customers is a negotiation activity. Consistently meeting or exceeding expectations is a measurement activity.

Each of these activities requires different skills and disciplines. The identification activityis the topic of this section. The upcoming section on service levels covers the subject ofnegotiation. That section, in concert with the section on process metrics, describes

measurement activities.

In transitioning to a service-oriented environment, infrastructure professionals sometimesstruggle with identifying who their key customers are. These IT professionals frequentlyrationalize that since most company employees in one way or another use IT services,then all company employees must be their key customers. There is an inherent problemof practicality with this approach. The best method to know and understand who yourcustomers are and what they expect is to personally meet and interview them. But itsimply is not practical or even possible to meet with hundreds of individuals on a regularbasis.

But one technique can give you almost the same results as interviewing large numbers ofcustomers: identifying key, representative customers of your services. These keycustomers can then provide you with meaningful information about the quality ofservices you provide; the services they truly need; their expectations of your services; andto what degree you are meeting, exceeding, or missing their expectations.

Usually just a small number of key representative customers can serve as a barometer forgood customer service and effective process improvements. For example, an operationsgroup responsible for restoring files that users may have accidentally deleted doesnt needto interview every user to gauge the quality of their needs. Knowing how to identify a


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small, representative group of users can save time and effort in measuring the true valueof what an IT department provides.

I developed this key customer identification process while heading up the main ITinfrastructure department at Northrop Grumman. The process evolved into what wecalled a customer/supplier matrix(CSM). It was so effective and successful that iteventually became a corporate standard for the entire company.

TIP

In defense contracting, this is no small accomplishment. Standards at defense contractorsare firmly set by defense department auditors, military specialists, and corporatecompliance people.

Customer/Supplier Matrix

Key Customers Key Services Key Processes Key Suppliers

Customers whoseuse of IT servicesis critical to theirsuccess and whoseexpectations arereasonable

Described in thesection "ServiceManagement"

Described in thesection "ProcessManagement"

Described in thesection "SupplierManagement"

One of the reasons that the CSM is so successful is its simplicity. It basically directs youto learn all of the following:

Who your customers are (key customers) What services they need (key services) What processes provide these services (key processes) What suppliers feed into these processes (key suppliers)

Key customers are customers whose use of IT services is critical to their success andwhose expectations are reasonable. Key services and processes pertain to both externaland internal customers, just as the key suppliers pertain to both external and internal

suppliers. (Ill focus on key customers here, and discuss key services, processes, andsuppliers in later sections.)

The next part of this section describes criteria that can be used to identify key externalcustomers. In this case, external customersare defined as users of IT services that resideoutside the IT department. These individuals may be within or outside of the company,but in either event they arent a direct part of IT.


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Criteria for Identifying Key External Customers

There are various criteria to help in determining which of your numerous customersqualify as key external customers. While these criteria are applicable to most ITenvironments, an IT department should determine those criteria that are most suitable foridentifying the key customers in their particular environment. The following criteria areuseful in most IT environments for identifying the key external customers of an ITorganization.

Someone whose success critically depends on the services you provide.Infrastructure groups typically serve a variety of departments in a company. Somedepartments are more essential to the core business of the company than others,just as some applications are considered mission-critical and others arent. Theheads or designated leads of these departments are usually good candidates forkey customer status.

Someone who, when satisfied, assures your success as an organization.Someindividuals hold positions of influence in a company and can help market thecredibility of an infrastructure organization. These customers may be insignificant staff positions such as those found in legal or public affairsdepartments. The high visibility of these positions may afford them theopportunity to highlight IT infrastructure achievements to other nonITdepartments. These achievements could include high availability of online

systems or reliable restorations of inadvertently deleted data.

Someone who fairly and thoroughly represents large customer organizations.The very nature of some of the services provided by IT infrastructures results in

these services being used by a large majority of a company's workforce. These

highly used services include email, Internet, and intranet services. An analysis of

the volume of use of these services by departments can determine which groups

are using which services the most. The heads or designated leads of these

departments would likely be good key customer candidates.

Someone whoor whose organizationfrequently uses your services.Somedepartments are major users of IT services by nature of their relationship within acompany. In an airline, it may be the department in charge of the reservationsystem. For a company supplying overnight package deliveries, the keydepartment may be the one overseeing the package tracking system. During thetime I headed the primary IT infrastructure groups at a leading defense contractorand later at a motion picture studio, I witnessed firsthand the key IT userdepartmentsdesign engineering (defense contractor) and theatrical distribution(motion picture company). Representatives from each of these groups were solid

key customer candidates.

Someone who constructively and objectively critiques the quality of yourservices.It's possible that a key customer is part of a department that doesn't have

a critical need for or high-volume use of IT services. A non-critical and low-

volume user may qualify as a key customer because of a keen insight into how an

infrastructure could effectively improve its services. These individuals typically


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IT Management

Identifying Key Internal Customers


You can use many of the criteria from the description of key external customers toidentify key internal customers. The obvious difference is that key internal customers

reside within an IT department instead of being external to it. Many individuals workingin an IT organization dont realize that they have key customers within their own ITdepartment. For example, you may design a change management process that dozens oreven hundreds of programmers use to control software modifications. But you wouldprobably need to involve only a handful of key programmer representatives to assist indesigning the process and measuring its effectiveness.

Criteria for Identifying Key Internal Customers

As mentioned previously, an IT department should identify those criteria that are themost suitable for identifying the key customers in their particular environment. The

following criteria are useful for identifying the key internal customers of an ITorganization. Internal customers may reside within any department of an IT organization.

Someone whose success critically depends on the services you provide.Infrastructure groups typically serve both their department and those ofapplications development within an IT organization. At any point, someapplication groups may be working on more critical projects than those of othergroups. The heads or designated leads of these areas are usually good candidatesfor key internal customers, rather than meeting with an entire systemsdevelopment organization.

Someone who, when satisfied, helps assure the success of an organization.Some individuals hold positions of major influence in an IT department and canhelp market the credibility of an infrastructure or development organization.These internal customers may be in significant staff positions such as chieftechnology officer or systems manager. Satisfying these individuals usuallyindicates that robust, well-executed processes and planning are in place. The highvisibility of these positions may afford them the opportunity to highlight ITdevelopment and infrastructure achievements to other areas within the ITdepartment. These achievements could include high availability of onlinesystems, successful implementation of upgrades, or reliable restorations of criticaldatabases.


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Someone who fairly and thoroughly represents large customer organizations.The very nature of some of the services provided by IT infrastructures results inthese services being used by a large majority of a companys workforce. These

highly used services include email, Internet, and intranet services. An analysis ofthe volume of use of these services by departments can determine which groupsare using which services the most. The heads or designated leads of thesedepartments would likely be good key customer candidates.

Someone whoor whose organizationfrequently uses IT services.Some ITdepartments are major users of their own services by the nature of their positionwithin IT. A web design team, for example, depends on the reliability of theircompanys intranets and extranets, and all of their associated components, ito besuccessful in their work. Similarly, a customer service desk within IT depends onreliable voice and data networks to perform their jobs diligently.

Someone who constructively and objectively critiques the quality of ITservices.Its possible that a key customer may be a part of IT that doesnt have arelatively critical need for or high-volume use of IT services. A non-critical andlow-volume user may qualify as a key customer because of a keen insight intohow different parts an IT organization could effectively improve its services.Groups that would fall into this category include planning, finance, businesscontinuity, and administration. Individuals in these areas typically have both theability and the willingness to offer candid, constructive criticism about how bestto improve IT services.

Someone who has significant business impact on IT as an organization.Themanagers of the major departments within an IT organization can serve well askey internal customers due to their unique positions to view and influence IT as a

business. Their input can be invaluable in improving the overall management ofand the quality of services from IT. This group would include the heads ofapplications development, applications maintenance, web development,infrastructure, risk management, and administration. The common thread amongthese key internal customers is that their use of IT services and their positionwithin the organization can greatly advance the business position of IT.

Someone with whom you have mutually agreed-upon reasonableexpectations.As mentioned previously, most infrastructure users may qualify askey customers if the IT customer and the IT supplier both have mutually agreed-upon reasonable expectations. Conversely, customers whose expectations areunreasonable should usually be excluded as key customers even if they reside

within the IT organization.

These seven criteria apply to any IT environment, regardless of size, scope, platforms,locations, or maturity levels. The primary issue in applying any of these criteria is tocouple the identification of these key internal customers with the services they use.

References

IT Systems Management: Designing, Implementing, and Managing World-ClassInfrastructures(Prentice Hall PTR, 2002, ISBN 013087678X), by Rich Schiesser.


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IT Management

Negotiating with Customers and SuppliersPart 1: An

Introduction


This is the first of two sections on the topic of negotiating. Both sections present helpfultips on negotiating agreements with customers. These agreements could include servicelevels, project schedules, system requirements, software budgets, or a variety of otherbusiness propositions. The ability to negotiate effectively is a valuable skill to acquireand use by most any IT manager. It is particularly important for IT managers to masterthis trait for dealing with customers whose expectations may be unreasonable and whosedemands may be unrealistic.

This section describes two important aspects of negotiation: common barriers andbuilding rapport. I begin with a brief explanation of common barriers to reachingagreement on any negotiable issue, and continue by describing a few methods for

building rapport between two negotiating parties. The discussions of both aspects includepractical applications to an IT environment.

Some of the material in this section is from the Harvard Negotiation Project sponsored bythe Harvard Business School. Harvard initiated the project as a result of the high numberof expensive lawsuits that were being litigated across the country. Project participantsfound that enabling litigating parties to settle out of court through effective negotiationwas far more beneficial, and economical, then conducting expensive, time-consuming,and often frivolous lawsuits. The concept of the project was that the more that peopleunderstood and practiced sound negotiating skills, the better off society would be ingeneral.

Barriers to Reaching Agreement

Past experiences, personal preferences, emotions, prejudices, assumptions and culturalupbringing all have the potential of creating barriers to reaching an agreement betweentwo opposing parties. These barriers fall into the two broad categories of physical andcognitive. Physical barriers include impediments such as poor eyesight or difficulty inhearing. An individual can usually mitigate these types of physical barriers throughvarious corrective means such eyeglasses or hearing aids. Cognitive barriers stem fromhow individuals think about themselves and events around them, and represent by far the


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majority of barriers to negotiated settlements. A recent study by Harvard Universitydetermined that 94% of all negotiation breakdowns occur because of cognitive barriers.

The cornerstone of cognitive barriers is a persons belief system, comprised of thosebeliefs an individual values the most. Beliefs, by definition, are based more on faith thanknowledge and therein lay the potential conflict. Two people attempting to negotiate anagreement may have vastly different belief systems. One may have very strong beliefsbased primarily on faith. The other may have few faith-based beliefs and rely mostly onfactual knowledge. The instance of a faith-based person negotiating with a knowledge-based person is a common source of conflict, and of failed negotiations. Another sourceof conflict can arise when a faith-based person has knowledge of a fact that a knowledge-based person can only have faith about. As an old adage states, the expectant wife hasknowledge that she is the childs mother but the husband can only have faith that he is thefather. Recognizing and understanding your own personal preferences and biases, and

those of the person with whom you are negotiating, can help the conversation approach amore common level of communication.

For example, a detailed-oriented analytical type of person from an InformationTechnology (IT) department may need to negotiate a service level with an end-user whois very big-picture oriented and not at all interested in details. If the negotiation is notgoing well, the IT person could try to steer the conversation to more high level issuesbefore arriving at the details of the service level. The degree to which cognitive barriersundermine a negotiation will vary from case to case, but the more you learn about yourown barriers, and particularly those of the party with whom youre negotiating, thegreater the likelihood of a successful agreement.

Building Rapport

Building rapport with the person with whom you are negotiating is an important pre-requisite to arriving at a mutual agreement. I define rapport as a mutual sense ofconnection, trust, and empathy between two individuals. Rapport is important innegations because two people in rapport with each other tend to move together in thesame direction, at the same pace, toward a common goal. We all establish rapport,consciously and sub-consciously, with visual, auditory, tactile, and behavioral cues. Withonly one chance to make a first impression, the physical cues we exhibit are extremelyimportant. We cannot not communicate when interacting with someone for the first time.The appropriateness of our clothing, the sound of our voice, the feel of our handshake,and our posture and facial expressions all combine to make a successful or unsuccessfulfirst impression. This initial encounter either supports or undermines our ability to buildrapport.

Another aspect of building rapport with someone is to recognize which of the fourprimary personality types best describe you and that person. These types are:

1. driver/adventurer characterized by a strong, hard-driving, results-orientedpersonality; interested in the big picture rather than small details; moderate need


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for social interaction; an example may be a manager on a manufacturing line withwhom you are negotiating service levels.

2. expressive/builder characterized by a very animated, outgoing personality; anexample may be a marketing person who is negotiating time, effort and costs with

you to spice up the company website.

3. amiable/catalysts characterized by a very empathetic, nurturing, patientpersonality; an example may be a human resources person negotiating IT

requirements with you for an employee benefits program.

4. analytical/explorer characterized by a quiet, serious personality; technicallyoriented; an example may be a programmer with whom you are negotiating

backup and testing procedures.

A number of simple surveys and tests can help determine an individual's primary

personality type. Two of the most common of these are the Jung-Myers-Briggs modal

profile test, and the Keirsey temperment study. While most people's personalities are acombination of these four categories, there is usually one dominant type that influences

the behavior and demeanor of an individual.

Understanding your own dominant personality trait can allow you to adjust it to be more

effective in negotiations, and to help recognize the dominant personality trait of the

person with whom you are negotiating. For example, if you are highly analytical and are

negotiating with a driver-type individual, it would be more effective for you to steer clear

of details and anecdotes and get right to the bottom line. This does not mean that you

should dispense with establishing some initial rapport, it just means to be quick, direct

and mindful of the driver's normal sense of urgency.

Combining both of these techniques of establishing rapport and factoring in personality

types can make your IT negotiations more productive and successful. In part two of this

series on negotiating, I will discuss three useful methods for reaching agreements:

positional bargaining, determining alternatives, and identifying zones of agreement

References

Fisher, R., Getting To Yes: Negotiating Agreement Without Giving In, 2ndEdition,Houghton Mifflin Company, 1992 (Based on the Harvard Negotiation Project)

Ertel, D and Fisher, R., Getting To Negotiate: The Getting to Yes Workbook,Houghton

Mifflin Company, 1995

Gallway, T., The Inner Game of Work, Random House, 1999

http://keirsey.com

http://www.humanmetrics.com


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IT Management

Negotiating With Customers and SuppliersPart 2:

Reaching Agreement


This is the second of two sections on the art of negotiating. Part one offered a briefexplanation of common barriers to reaching agreement on any negotiable issue, andcontinued with some methods for building rapport between two negotiating parties. Inthis section I explain three important aspects of negotiation: positional bargaining,determining best alternatives, and identifying zones of possible agreement.

As previously mentioned, some of the material in this section is from the HarvardNegotiation Project sponsored by the Harvard Business School. Harvard initiated theproject as a result of the high number of expensive lawsuits that were being litigatedacross the country. Project participants found that enabling litigating parties to settle outof court through effective negotiation was far more beneficial, and economical, then

conducting expensive, time-consuming, and often frivolous lawsuits. The concept of theproject was that the more that people understood and practiced sound negotiating skills,the better off society would be in general.

Positional Bargaining

Positional bargaining involves the choices you make on a variety of issues prior to thenegotiation, positions that can help or hinder the progress of the discussions. Sometypical issues are: do you view the opposing party as a friend or an adversary; do youperceive the end goal to be an agreement or a victory; will you be offering concessions tocultivate the relationship, or demanding concessions as a condition of relationship; will

you be making offers, or offering threats. The initial position you take often determinesthe pace of progress in a negotiation. When two opposing parties take a very hard linewith their initial positions, stalemates frequently occur. For example, an end-user mayinsists that their online system cannot be down over a weekend even though an ITdatabase specialist insists that if he does not perform mandatory maintenance databaseswill likely become corrupted. These two relatively hard lines will result in a deadlockuntil one or both parties adjust their positions.

An approach referred to as negotiating on merits adjusts a persons position by trying tofind a middle ground between the extremes of positioning bargaining. This techniqueattempts less at compromise and more at trying new approaches, e.g. instead of viewing


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the opposing party as either a friend or a foe, view him as a collaborative problem-solver;rather then agreement versus victory, try to arrive at a worthwhile outcome that isefficient and amicable. In the example of the end-user and database specialist, they may

determine that only one database needs to up during the maintenance period, and that atemporary copy can be used and later imported back into the original set.

A real life IT example of negotiating on merits occurred with me a few years ago when Iheaded up the infrastructure group of a major company. We had run on company Xsservers satisfactorily for several years, and were at a point where we needed to triple ourcapacity for much needed, and long over-due, enterprise applications. Factoring inanticipated growth over the next five years brought our estimated costs for new serversbetween $2-3 million. I approached company X with my requirements, fully expectingthey would offer a competitive bid to remain the incumbent vendor. Their only seriouscompetition came from company Y who began marketing their products and services

very aggressively. We had never used company Ys products where I then worked.

My initial position was that I really did not want to bring in a second vendor. We werealready locked in to company X with our legacy systems that would be around for severalmore years. Going with a new vendor would mean additional costs for training, or hiringexperienced staff, or both. But along the way, two surprising things happened. One wasthat company Y was far more aggressive than I had anticipated, slashing their purchaseand maintenance costs down to incredibly low figures, extending the give-back periodfrom 3 months to 6 months, and putting in writing their claims of industry-settingperformance and scalability. The other was the surprising lack of any significantmarketing efforts by company X, the incumbent. They presumably felt that they had the

deal wrapped up, and while their offering would have been competitive in a normalbidding situation, it was no match against what company Y was offering.

The upshot was that I eventually awarded the contract to company Y. Its claims aboutsupport, performance, reliability and scalability all proved to be true, and validated thedecision. If I had not adjusted my original position from a very rigid hard-line of notbeing open to considering a non-incumbent vendor, the company would have lost a greatopportunity. As it turned out, the company and the vendor both ended up winning on thisdeal.

Determining Best Alternatives

An important part of preparing for a negotiation is determining possible alternatives tothe desired outcome. One should include in this the bottom line value, sometimes referredto as the best and final offer. The reason this best alternative is so important is because itneeds to be the firm amount (or the final term or condition) from which you will walkaway from the negotiation if it is not met. In the IT arena, this may be the point at whichyou escalate your negotiation to senior management.

An experience I had evaluating large-volume storage suppliers will serve to illustrate.The company I worked for was enjoying rapid growth and approved substantial funds in


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my in infrastructure budget for a huge disk storage contract. My technical support teamitemized all of our requirements in a request for proposal (RFP), and sent it out to fivewell-known disk suppliers. One of our non-mandatory requirements suggested that the

prospective bidder provide an onsite demonstration of their equipment. This would allowus to kick the tires so to speak by verifying the units compatibility with our ownequipment and validating its performance claims. Four of the five vendors agreed toconduct these onsite tests.

My first reaction to the vendor who declined was that this would not help their cause.Their explanation only made matters worse. They stated that since their inventory waslow and demand for their product was high, they could not afford to free up valuableequipment for a proposal that was not yet a sure thing. The arrogance of the vendorcontinued with its total unwillingness to reduce its inflated costs for purchase andmaintenance. The enterprise I worked at was a Fortune 50 company that would be a

marquee account for any of the bidders, yet this particular vendors marketing team wasmaking little effort to secure what most considered a plumb of a contract.

During the course of the evaluations, we eliminated two other vendors who could notmeet several of our mandatory requirements. We eliminated a third after confirming poorperformance results with independent laboratories who conducted extensive tests forclients at their labs in northern California. Down to the last two, we conducted thoroughcustomer interviews with 5 to 10 clients of each finalist. Surprisingly, the vendor whorefused to test onsite received far and away the highest reviews from their customers.Even customers who acknowledged the vendors high price and low marketing skills hadto admit the product practically sold itself.

One of my initial negotiating alternatives was to go with the vendor who would be mostcost competitive and still meet our performance goals. But my best and final alternativeprior to evaluations centered on high availability. With all of our critical applicationsrunning on this new storage, we simply could not afford lengthy or frequent outages. Inthis category the vendor with the arrogant attitude was head and shoulders above all theothers. Total redundancy of components, remote diagnostics, and impressive proactivemaintenance all combined to make their product the most reliable on the market. Thesefeatures supporting high availability eventually won them the contract. The performanceand reliability of the product exceeded even our high expectations, so much so that weprocured more of the same two years later. While the company did improve their

marketing skills and cost competitiveness over time, the incident confirms the value ofdetermining your best alternatives prior to the negotiation.

Identifying Zones of Agreement

Identifying zones of agreement is a negotiating technique in which the two parties try toexplore common interests and mutual values that help move the negotiation forward.These areas of commonality may not be a direct part of the negotiation but significantenough to encourage meaningful dialogues when talks bog down.


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President Jimmy Carter used this technique very successfully in attempting to furthernegotiations between Egyptian President Anwar Sadat and Israeli Prime MinisterMenachem Begin. The common zone of agreement among all three parties was their deep

belief in religion. Even though they practiced three very different faiths, they shared amutual respect for each others convictions. While there were numerous other factorsinvolved, this common area of religious beliefs helped lead to the historic Camp DavidAccords in 1978 and the signing of a peace treaty with Israel in 1979. Though the signingeventually ended in tragedy when fundamentalist assassins gunned down President Sadattwo years later, historians agree that the act of getting these two arch-rivals together to sitand negotiate is one of President Carters greatest achievements.

A few years ago I began negotiating a contract with an IT disaster recovery serviceprovider for a major client. Initially, the positions of the service provider and me seemedto have little in common. I preferred local testing on equipment identical to that of my

client, with easy access for my technical staff. The vendor could not offer any of these.Their testing facility for this type of equipment was across the country; their models ofcomputers would be upgraded levels from what we were running; and only limitedpersonnel could be admitted.

In exploring these differences further, however, we realized that testing remotely wouldhelp us to simulate an actual disaster more realistically since some disasters wouldrequire a remote recovery. Running on upgraded equipment would likely enhanceperformance rather than degrade it. The vendors technical support proved to be excellentand eliminated the need for several of my staff to travel to the remote recovery site. Bysearching for zones of agreement in our negotiations, we found we had more in common

than not, leading to a worthwhile five-year contract. This technique of finding commonareas and mutual interests can be a powerful tool to add to your negotiating arsenal.

This second of a two-part series on negotiating covered the three important aspects ofpositional bargaining, determining best alternatives, and identifying zones of possibleagreement. The first part two explained two additional facets of barriers to agreementsand how to build rapport. Whether used individually or in combination, these fiveelements of bargaining can help anyone negotiate more successfully.

References

Fisher, R., Getting To Yes: Negotiating Agreement Without Giving In, 2ndEdition,Houghton Mifflin Company, 1992 (Based on the Harvard Negotiation Project)

Ertel, D and Fisher, R., Getting To Negotiate: The Getting to Yes Workbook,HoughtonMifflin Company, 1995

Gallway, T., The Inner Game of Work, Random House, 1999


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IT Management

Service Management


This section describes the various aspects of IT service management. It begins byidentifying key services for business users. The second section offers tips on developing

service-level agreements (SLAs) that really work.

Ill add other sections on service management to this guide over the summer and fall of2004. The focus of these articles is establishing mutually beneficial service metrics, helpdesk services, network services, infrastructure services, and web services.




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IT Management

Identifying Key Services for Business Users


Earlier sections of this guide described the need and prescribed a methodology foridentifying key customers of an IT department. The next step after identifying key

customers is to identify their key services. This section offers suggestions on how best toidentify these services, including the need to meet face-to-face, the importance of soundinterviewing techniques, and the value of negotiation.

Techniques for Identifying Key Services

Identifying which services key customers of an IT department use sounds obvious. Butmany IT managers merely presume to know the key IT services of their key customerswithout ever verifying which services those customers need most. Only by interactingdirectly with their key customers can managers understand the wants and needs of thesecustomers.

As I mentioned earlier, a customer/supplier matrix such as the one as below can be anextremely effective technique in improving the quality of customer services, as well asthe processes and suppliers that feed into them. The first essential aspect of using theCSM is to identify your key customers and to negotiate reasonable expectations. In thissection I describe the second essential aspect: identifying key processes that produce keyservices(processes that are critical to a customers success and whose delivery meetscustomer expectations).

Customer/Supplier Matrix

Key Customers Key Services Key Processes Key SuppliersCustomers whoseuse of IT servicesis critical to theirsuccess and whoseexpectations arereasonable

IT services that arecritical to acustomers successand whose deliverymeets customerexpectations

Described in thesection "ProcessManagement"

Described in thesection "SupplierManagement"

Infrastructure managers need to clearly distinguish between services their customers needto conduct the business of their departments, and services that they want but may not be


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able to cost-justify to the IT organization. For example, an engineering department mayneed sophisticated graphics software to design complex parts, and want to have all of theworkstations support oversized color monitors. The IT infrastructure may be able to meet

their expectations of the former but not the latter. This is where the importance ofnegotiating realistic customer expectations comes in.

Before any effective negotiation can occur, an IT service representative needs to arrangea face-to-face interview with needs to be set up. Again, this may seem straightforward,but a surprising number of IT leads and supervisors are reluctant to engage in personalinterviews with customers. IT staffers offer a variety of reasons for this reluctance,including the difficulty of scheduling a time or place, inability to interview effectively,the convenience of a ph

Inform IT_Management.

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