A few weeks ago I interviewed Paul Michaels, CEO of business technology consultancy ImprovIT, about a methodology for modelling decision-making. In this guest blog post Robert Saxby, consulting director at ImprovIT, explains a bit more about how the methodology, called Virtual Modelling, works, and the business benefits.
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When it comes to re-engineering IT environments to save money or achieve best practice, a trial-and-error approach can be both complicated and costly. Virtual Modelling is a new business tool uses ‘what if?’ scenarios to simulate real world outcomes and identify efficiencies, future strategies and best sourcing options without chopping, changing or disruptive ongoing operations.
CIOs today are caught between a rock and a hard place: Having to slash IT costs while retaining productivity and service quality – often due to government mandate. Of course cost cutting pressures are nothing new, and for many there is little blood left in the stone. The question now is: “How and where can we make further reductions without knee-capping the entire operation?” There are plenty of apocryphal tales about organisations axing staff and abandoning efficiency enabling technology projects only to discover their actions have mortally wounded deliverables and reputation. The result: a panicked and costly rehiring and/or re-purchasing exercise to redress the balance.
Finding the cost/quality balance
Wouldn’t it be great if you could work out the exact cost and productivity balance without the cost and disruption of making changes on a trial-and-error basis? Virtual modelling creates scenarios that are based on real, current and accurate data mined from your own ICT operation that can predict real world outcomes without impacting current operations. But it can only do this based on available KPI data, and if it doesn’t already exist it must be generated via benchmarking studies. For as Lord Kelvin, the 19th c. physicist once said: ‘If you cannot measure it, you cannot improve it.’
Measure it first
All of this information is then used to create ‘what if’ scenarios, typically dealing with areas such as: Cost/Price, Volumes, Staffing, Quality & Service Levels, Service Scope, Complexity, Project Efficiency and Process Maturity. Providing the model has been mapped with well-researched data, the outcomes obtained offer accurate indicators that can be used to make decisions about outsourcing, staffing, process re-engineering, cloud migration or anything else.
In the video below, Paul Michaels, CEO of ImprovIT, discusses how our Virtual Modelling methodology helps decision-making within a project.
Building up the model
Virtual modelling is designed to pinpoint the impact of one or more project parameters upon all the others. For example: If I change Service Quality (SLAs) and/or ‘Service Scope’ what effect will this have on ‘Cost? Or: If I reduce ‘Complexity’ what effect will this have on ‘Processes’? It also shows the changing balances of the whole picture when one or more parameters are altered. For example: ‘If I want to increase ‘Volumes’ or ‘Service Quality’ what changes do I need to make to all the other segments and how will this impact the enterprise as a whole?
Virtual Modelling System
So, to find the Goldilocks balance between IT cost and service quality let’s start by feeding staffing metrics into the simulation model, given the high impact of staffing on cost. But this isn’t just about a straightforward set of numbers: it also has to allow for a range of ‘soft’ factors such as varying levels of knowledge, skill sets and the specialist expertise that can make an individual or team difficult to replace.
Process maturity also impacts the cost/performance balance. There are industry standards which provide best practice guidelines, such as ITIL (IT Infrastructure Library) ‘Agile’ and ‘Lean’ (a production practice that looks to reduce resource expenditure down to the minimum required to deliver value to the customer). Comparisons with these guidelines can indicate where improvements can be made, but virtual modeling can determine what will cost and whether it’s worth the disruption to operations. It’s also worth noting that achieving process maturity is rarely a quick win: it takes time and requires clear, unequivocal goals and plans led from the top.
Given the chequered history of public sector IT projects, and the challenges that so many ITC departments are going through in making decisions about things like whether, when and how to migrate to the cloud, and how to optimise resources on an ever-diminishing budget, using Virtual Modelling to run scenarios on all the available options provides new decision-making tools that help to identify the best roadmap ahead while avoiding wrong roads and dead-ends.
Robert Saxby is consulting director, ImprovIT