http://blogdg.ctl.ca/gagan/ en Copyright 2010 Mon, 31 May 2010 10:21:18 -0500 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss This is the age of specialization; companies are building on their strengths. Having in-house IT expertise is not essential when it is not part of the core business. The companies are looking for solutions outside their own organization and acquiring whatever makes sense of their businesses. Companies coming out of recession have two main objectives; reduce IT support costs, and invest in IT technology to create efficiencies. At times like this IT outsourcing has become a key business strategy irrespective of organization size and IT budget. In the last year over 60% of the businesses outsourced at least a portion of their IT. Some used IT outsourcing as a key strategy to trim their IT budget, which is often expected during recession period. Others took a more strategic approach; focusing on creating long term efficiencies using IT outsourcing. What is IT outsourcing and why are so many companies looking into IT outsourcing? IT outsourcing has been around for some time. Rapid growth in technology has triggered its acceptance among wide range of organizations. It is impossible to acquire enough in house talent to deal with issues across multiple problem domains. This is why organizations maintain IT staff focused on core-competencies of the business. Most of the tedious and mundane functions are generally first to get on the IT outsourcing list. The major categories of IT outsourcing include: 1) Software development This is probably the most talked about outsourcing strategy for IT. Large to mid-sized companies that develop software as part of ongoing software development, and deployment strategy mostly use this approach to create efficiencies at lower costs. The approach allows businesses to gain access to a greater pool of talent and at a relatively lower cost. 2) Application support The most commonly used among small and mid-sized organizations, this is highly effective way to manage some of the IT functions. Two prime example of software support strategy at work is subcontracting email and web hosting. Organizations benefit a lot by not having to build and support infrastructure required for supporting such applications. 3) Infrastructure management This area of outsourcing works for all types of organization. This is an effective strategy when you are trying to access a specific skill set, or when you would like to repurpose employee away from a tedious task. This approach allows you to maximize cost saving and dramatically reduce the management overhead. Generally, organizations may end up gaining some additional services that they didn’t have prior to outsourcing. 4) Service Desk support Large growing companies can benefit greatly form service desk outsourcing. It is important strategy when your organization cannot meet the user needs in an effective way. The quality of services can be greatly improved using this strategy. Depending on the size of the organization, each of the categories can result in major IT savings. In many cases organization outsource few or all of these. Of course organization must exercise caution when using any of these strategies however; a well executed strategy can not only save in the short-term but also be very effective in creating organization level efficiencies. In addition, by choosing the right partner, IT outsourcing allows sharing of responsibilities and opportunities available to the business manager to improve what is, in most organizations one of the key contributing services to business efficiency and effectiveness. The main benefits of IT outsourcing are as follows: 1) It allows organization to maintain Reliability, Maintainability, Serviceability, Resilience, and Security in their IT infrastructure and applications. 2) It allows organizations to quickly acquire right skill sets. 3) It allows organizations to transfers project responsibility to the outsourcers. 4) It frees up resources within the organization to concentrate in key areas. 5) Outsourcing IT can be used as tool to bring new knowledge into the company. 6) It can help organizations cut IT budget. Even though IT outsourcing is an effective business strategy, it must be evaluated carefully and managed by experts. It can represent a large change and it can have an adverse effect on IT performance. It is also important to set realistic goals and expectations. When engaging in such activity ensure that you treat your vendors are you partners and involve them in the overall IT strategy. It is often seen that vendors go through a natural staff turnover; if that happens, try not to get too involved in the vendors day-to-day activities. Maintain high level management of the vendor relying on weekly/monthly review processes. IT outsourcing must be on the top of your IT agenda. Almost all companies can benefit from it. The cost savings strategies will allow companies to free up resources, and to focus in areas that require greater http://blogdg.ctl.ca/gagan/2010/05/it_outsourcing_it_is_on_your_i.html http://blogdg.ctl.ca/gagan/2010/05/it_outsourcing_it_is_on_your_i.html Mon, 31 May 2010 10:21:18 -0500 The TPLs or third party logistics has shown the industry that they cater to customers special needs better than asset based transportation companies. This is probably the reason why they continue to thrive even as the rest of the industry is going through a tough recession, granted that recession has impact on the entire industry and no one is totally immune to it. Some may argue that this has to do with their structure, or their lower cost of operation, or their lower investment in fixed assets. Others may argue that their agility comes from their ability to strike better bargains with transportation companies using their portfolio size as leverage. Aside from the obvious, I believe the differences are far more subtle and lie within the fundamentals of the organization. Furthermore, “lower cost” argument is very sound considering TPLs invest heavily in technology and their margins are generally lower. One of the key differences is the systems development approach most TPLs follow, which I like to call customer focused design (CFD). Before I discuss the CFD, I would like to discuss three components that make a successful TPL; A good phone system, an effective computer system, and dedicated staff. The key difference between a TPL and another transportation company is that a good computer system is paramount for all TPLs to be successful which may or may not be the case for small to mid-sized transportation companies. Furthermore, CFD oriented computer system allows TPLs to separate themselves from their competition. So what is CFD? It is a methodology that systems must be designed with one objective: System must be able to meet all functional and non-functional requirements of the customer. As part of the CFD, TPLs focus on systems that allow them to establish long terms relationships with its customers. The system include, in no particular order: 1) Online reporting to help customers analyze end-to-end freight movement. 2) Purchase order system that allows customers to feed directly from their ERP systems. 3) Back-end integration with their suppliers to transfer information seamlessly using EDI, Web Services, Online portals. Most customers like to maintain control over their supply chain. TPLs cater to that need by allowing them to access their online portals to do number of key functions. In order to ensure the web portal is updated in timely fashion, TPLs constantly monitor their suppliers to maintain good information using some sort of reinforcement method. In many cases, we have seen penalties associated to failures. The bottom line is TPLs use information as a commodity to be sold to their customers as an add-on to customers transportation needs. Another example of the CFD is the Purchase Order System. This has been around for a very long time and many companies have built sophisticated PO management systems to simplify PO integration with their customers. PO integration is essential requirement for management supply chain for both TPLs, and customers. In addition to having access to information for planning movement, TPLs use PO systems to bridge information gap that is typically seen in the supply chain as freight moves from production facility to a consumer. A good purchase order system allows organizations to establish a special bond with its customers that can add significant value to the relationship. Using the information and having end-to-end visibility, allows companies to manage various aspects of the freight movement. This approach has been widely used, although not limited to the TPLs. There are a lot of transportation companies and freight forwarders who are using these systems to attract new business. Third component in the CFD model is back-end integration. As I highlighted earlier, the TPLs rely heavily on these systems. In order for these systems to work well, they have to be maintained and updated frequently. The fact that it is very expensive to maintain these systems manually, good back-end integration is essential. By back-end integration I am referring to capabilities required to interface with their customers and suppliers easily. Most of the TPLs are now using third party applications and connect directly to suppliers TMS systems. These systems rely on EDI and Web services, a cheaper alternative to EDI, to maintain constant information flow. This is why large TPLs are highly invested in these systems. Unlike transportation companies who invest a lot of resources in their fleets and facilities, TPLs are investing in these systems. Information awareness is making customers look for suppliers that can offer both: good service, and good information. It is my opinion that the balance of freight industry will tip towards organizations who will invest in the CFD oriented systems. Third Party Logistics have taken a head start and have shown that this approach does pay off. Similar approaches have been taken by some of the leading transportation companies, and it is paying off for them as well. By the end of this decade, these systems will be required to stay in this industry. Let’s get started! http://blogdg.ctl.ca/gagan/2010/03/customer_focused_design_cfd_me.html http://blogdg.ctl.ca/gagan/2010/03/customer_focused_design_cfd_me.html Thu, 18 Mar 2010 12:34:17 -0500 Dependent on routines to guide their everyday lives, people seem to shutter and panic at the very thought of change, or some unforeseen interruption. Whether it is Sunday night football or stopping at the Tim Hortons on our way to work, we are so dependent on our daily routine it’s not funny. Changes in our lives are rarely seen as a positive. This reluctance is what makes change so hard and particularly for an organization where multiple parties are often involved in change initiatives. The fear of change comes from not knowing how it will impact us, or alternate our lives. Organization that cannot mange change well will end up going through difficulties. This is even more crucial when economies go through an upward or downward swing. During a recession, organizations that are susceptible to change are more likely to survive and recover. Having said we all know that Change is enviable. Rather than focusing on isolating our lives to avoid change, what can we do to ensure change is not feared upon? What should we do to reduce the impact of upcoming change? What can we do to prepare ourselves for future? The best tool we have to deal with change is preparation. Our success in any change initiative is directly related to our level of preparation. The theory behind preparing individuals and organizations to deal with change initiatives is called change management. The change management practices allow us to deal with all aspects of the change including what, when, how, why, and what-if of an initiative. The first step in getting prepared requires us to answer some of the basic questions: • What is the purpose of the change? • What are the end results? • What are the benefits or losses of the change, and what is the net result? • What steps must be taken to complete the change? • Who is going to be impacted with the change? • Are there other alternatives? • How will the change be perceived by users, various associated parties? • What is the time-line? • Does organization have tools to measure progress, assess results, and manage the project? • Are there resources available to perform the change? The answers to these questions will allow management to assess if they are ready to go through the change and if the change is even necessary. If it is determined that change is necessary, we need to start focusing on how will it be done. There are many theoretical change management models that can help us guide through common mistakes. The purpose of these models is to increase our chances of success by highlighting best practices used by the industry. These models are designed to expose inherent weaknesses in most change initiatives. One of these models by PROSCI is called ADKAR. According to which there are five key success factors to any change initiatives. 1) Awareness – the model emphasizes that awareness is a key to any change initiative. In order to get Buy-in in any new initiative all beneficiary parties must be aware of upcoming changes. 2) Desire – The buy-in usually required to create a desire for change, and participate in the project. The Desire is also critical in reducing any push back. 3) Knowledge – Organizations that are willing change need to understand how to make these changes. This is why knowledge is such a critical part of the ADKAR model. In order to achieve the objectives, new skills and experience must be gained or acquired. 4) Ability – Organizations need to ensure that new skills and behaviors are available in the resource pool. They need to be prepared to get additional resources to compensate their current mix. 5) Reinforcement – Management need to maintain consistent behavior to reinforce recently made changes. According to the model, the reinforcement will stay in place until new change becomes a routine. These Principles help organizations systematically address potential hurdles as they put new initiative in place. Management support to these concepts is highly important as any of the failures will lead project delays. In addition to the principles mentioned above, these are some additional guidelines we can all use to avoid change management stress for everyone in the organization. 1) Learn about the organization and people within it. 2) List the current weakness or opportunities 3) Outline where organization needs to go and why that is important. 4) Define clearly what are the goals and milestones of the change initiative. 5) Formulate a plan that will list individual steps that will be taken to achieve goals 6) Create a reasonable timeline to achieve these goals or milestones. 7) Maintain communication with the group that is going to be impacted by the change. Keep in mind that as business processes get revamped or re-organized, work force has to be re-trained, and augmented to keep up. Sometimes it is cheaper to acquire additional resources from external sources to achieve the change initiative. The change has to be in line with overall organizational objectives. Every change is going to result in some costs and some benefits. Job of the management is to identify opportunities where change will result in net benefit to the organization as a whole. Objective of a sound change management strategy is to mitigate risk of change. http://blogdg.ctl.ca/gagan/2009/12/change_management_how_to_manage_fear_of_change.html http://blogdg.ctl.ca/gagan/2009/12/change_management_how_to_manage_fear_of_change.html Mon, 21 Dec 2009 16:19:47 -0500 Knowledge is at the foundation of wealth more than any other asset. Being invisible it is not often recognized as most other assets and neither is treated nor accounted for like most other assets. However, large organizations like IBM and Microsoft, which are regarded as knowledge abundant, have long been showing a huge value of their knowledge based assets in their financial statements. Finally, the market is coming to terms with it. As an example, in year 2000, Microsoft was valued at 86 Billion and IBM at 71 Billion. At the same time, the value of their tangible assets gives a totally opposite picture. Microsoft had 930 Million, and IBM had 17 Billon. In the last decade, the value has knowledge has increased many folds. Let’s start by defining Knowledge: it is a construct that is created in the mind of a user as a result of the cycle of accessing, processing and understanding information. Having the knowledge to make correct decisions at the correct time is what separates winners from losers. Hence, creating and managing knowledge can be a critical part of running any business. All businesses have some mechanism to capture knowledge in the form or data. How to manipulate data in order to make business sense is what allows some companies to outperform its competitors or to avoid major losses. Good knowledge management practices should help businesses avoid unnecessary risk and survive potential pitfalls. For the purpose of this document, I will only focus on Knowledge Manage (KM) as it relates to system development process within transportation and logistics sector. Transportation and logistics sector can benefit of knowledge management techniques. Business processes in our industry often lead to generation of a lot of information and most processes are cyclical in nature. Therefore it is highly beneficial to embed knowledge management practices within the system development process. Why? Transportation industry relies heavily on complex business arrangements with its customer and suppliers. Companies in our industry are forced to make decision on less than adequate information. For example: Evaluation of major tender based on existing cost structure and volume. Larger the undertaking, more risk we take when we engage a new prospect based on less than par information. It is also important that we harness the knowledge base of our staff so that others can benefit. If knowledge stays with individuals, we will lose it whenever there is a change in the staffing. A good development approach is to entrench knowledge capture methods in the core business process. It is common to see fragmented system processes where initial information is never matched with the newly created system record. One way to deal with this deficiency is to apply knowledge criteria in every IT development project. As part of system design process, we start by asking following questions: - Is this process going to generate addition information? - Is information required for decision making? - Are there processes in place to gather, filter, and decipher information? - Can processes be improved by applying gathered knowledge? In case the answer is no to the above questions, we need to improve our information model. This may require building of additional system and/or processes which can capture and process relevant information. In some case, we need to better understand the user environment, constraints, and level of expertise. Systems must be geared to gather financial or analytical information as well as capturing user’s cognitive behavior patterns. In a typical system process there are typically three components; Inputs, Processes, and Outputs. In the KM augmented solution, there are additional processes in place to maintain the KM construct, an additional processors to compliment new or existing processes. The main purpose of this addition is to improve the quality of information so that decision making process can be simplified. The KM construct is repository of key data elements gathered from various processes along with carefully generated KPIs specific for a user task. It is also important to capture the relationship between inputs and outputs and how they correlate with one another. Every time system goes through the decision making process, system captures additional information which is then used to make subsequent decisions. As knowledge base gets larger, the decision making process gets more refined. KM processor is a sophisticated process that can augment an existing or new process. Using this technique in the system development process can simplify most complicated business decisions while allowing businesses to automate most mundane business decisions http://blogdg.ctl.ca/gagan/2009/10/knowledge_management_missing_l.html http://blogdg.ctl.ca/gagan/2009/10/knowledge_management_missing_l.html Tue, 27 Oct 2009 07:50:20 -0500 Feedback]]> http://blogdg.ctl.ca/gagan/2009/09/is_internet_eating_away_at_you.html http://blogdg.ctl.ca/gagan/2009/09/is_internet_eating_away_at_you.html Tue, 08 Sep 2009 10:45:37 -0500 Feedback p.s. your feedback is highly important. ]]> http://blogdg.ctl.ca/gagan/2009/08/it_recap_two_decades_of_building.html http://blogdg.ctl.ca/gagan/2009/08/it_recap_two_decades_of_building.html Tue, 11 Aug 2009 12:46:45 -0500 7) Review and Renegotiate telecommunication contracts It is a good time to renegotiate IT and Telecom contracts. There is a lot of competition and number of viable options exists, at least in the major business centers. Before you start negotiation process, make sure you take a complete inventory of network and data lines across your organization. You might find that there are some unused lines or connections, or there might be redundant capacity at certain locations. Perform an audit to make sure you are not getting a duplicate billing from multiple telecom providers. At a recent audit we discovered duplicate charges involving two major Telecom providers. As a result of the audit, company ended up receiving a credit for $51K. Try to consolidate as many lines with one or two main telecom providers. This will cut down admin time to manage and support your network. With luck the review process should entail in significant savings. There are companies that can provide this service if you feel overwhelmed by the entire review process. Some companies guarantee savings without any out of pocket expenses. The renegotiation process is a little more involved and requires that you do your homework before you call a service provider. Most critical task is to understand exactly what you need to get out of the product or service before entering into the negotiation. An ability to prove price disparity makes your position strong. If you plan to renegotiate keep in mind that best deals command: - Good relationships with vendors can help you achieve your goals. - Best deals often come from the incumbent carrier or service provider. - Arrogant tactics may work providing you are a large account and you have multiple choices. - Emphasize on ongoing growth and future potential. - You still require quality service even though you are getting a better price There are some value-added services that are worth paying a little. - Network architecture evaluations and recommendations. - Technology planning. - Various consulting and training services. - Reduced maintenance and support costs. - Extended warranties. 8) Virtualization – Let’s Go Virtual There is a lot of talk about virtual servers so you may be familiar with the term. For those you are unfamiliar with this, let me give you a quick introduction. Over the years, technology has been consistently improving and the cost of hardware has been coming down at the same time. The result is that we have more powerful computers that are capable of handling multiple applications. A virtual machine lets you share the resources of a single physical computer across multiple virtual machines for maximum efficiency. A virtual machine behaves exactly like a physical machine except it is sharing the hardware platform with one or more virtual machines. Although there are many benefits for doing this; the most significant benefit is lower cost of ownership. Imagine that you have a powerful computer that is hosting many small virtual servers. As a result, your hardware maintenance costs go down significantly. You will have fewer servers in the computer room. This will result in less power consumption as well as lower cooling costs. It is a good way to consolidate servers. Other soft benefits of “going virtual” are that there are fewer components that can fail allowing your IT department to focus on other areas. Your servers will be fully utilized and the backup and recovery process is a lot simpler. In almost all cases, there are significant savings when and if you decide to use virtualization. Many major corporations are now solely depending on virtual servers due to significantly reduced recovery time. Transportation companies can definitely benefit for this. 9) Implement E-faxing Although most companies are now using emails to do majority of their day-to-day transactions, we still haven’t let go of that old fax machine. We are still generating paper, ordering toners, and paying telephone companies so we can receive bunch of junk flyers every morning. As far as I can see this is a total waste of money and poor use of company resources. I can see that you still need one fax machine in the office to use in case internet is down but, it cannot be your main form of communication. You may ask what the alternative is. Well, there are some good e-fax solutions out there. They are simple and easy to use. Basically, you get a monthly subscription that allows you receive all your faxes to an email. You can choose a local number or a toll free number. The service allows you to send faxes straight from your email. A small office that sends or receives a few pages, the subscription usually costs less than what you pay monthly for a fax line. Alternatively, you can setup your own fax server. A word of caution, unless you have in-house IT staff, I don’t think you want to setup and manage your own fax server. Fax servers require routine maintenance. For smaller locations, it is usually cheaper to deal with an external company. This initiative can save you a lot of money. Also keep in mind that most of these e-fax solutions will save you long distance charges on send and receive. 10) Slash your cellular budget It is very crucial to maintain control over the cellular costs. A regular audit of the cell phone usage within the company is a first step in establishing control. As a service, most mobile service providers offer this as a part of the package. However having an independent audit is a must in order to ensure that you are getting the "best bang for your buck". An audit can confirm your usage pattern as well as how well you are utilizing your cellular plan. Even if you have minute pooling option on your account, you can make minor adjustments which can lead you to major saving. Often there are hidden fees built into your plan which may go unnoticed. There was an article in a technology journal criticizing the notion of giving company phones to individuals within an organization. I guess the argument can be made for either case, whether you are a proponent of having company phones or not. One thing is clear though; a lot of us own personal cell phones or have access to one at all times. So is there a happy medium? I believe there is. I believe companies should have two tier cellular phone policy; one for the sales and operations group, that requires a cell phone all the time. For this group a cell phone is a lifeline and it is perfectly justifiable to have company phone. However, for the second category that doesn’t require a cell phone at all times, we should consider the reimbursement option. The reimbursement option gives individual to choose their own phone, type of plan, and personalized contract. Companies can reimburse all or portion of the expenses while staying out of long term cellular contracts. The best part is that individuals will monitor their own usage rather than company. It will cut abuse and unnecessary expenses. For organization that have number of cell phones and large cellular expenses. I urge you to look closely into your cellular bills. You will save money by consolidating your plans and by instituting cellular use policies. Closing remarks: I would like to thank everyone for reading this blog. Cost reduction is one of my favourite topics. I do welcome your feedback and appreciate all comments so, please keep them coming. These topics are fairly broad however, I would respond to your emails where you can ask more specific questions. Moving forward, I will be focusing on individual I.T. related topics. Gagan Goraya Feedback]]> http://blogdg.ctl.ca/gagan/2009/07/top_10_it_cost_savings_tips_fo.html http://blogdg.ctl.ca/gagan/2009/07/top_10_it_cost_savings_tips_fo.html Wed, 08 Jul 2009 18:04:10 -0500 4) Centralize IT payment processes Just like other departments like Finance, or H.R., I.T. services need to be centrally managed. It is critically important to have company I.T. policy clearly established and managed centrally, along with contract negotiations and telecommunication. Now here’s a kicker, one of the best spot to look for savings is in the bill payment area. If you organization is it setup such that all the reoccurring bill payments are going straight to Account Payables; you may want to change it. Just like the old say, “if you cannot measure it, you cannot manage it.” Having these costs go through I.T. allows you to constantly assess your costs, identify discrepancies, manage contract due dates, and look for new opportunties. In addition, having a centralize purchasing group allows organizations to get the best deal as well allows them to establish better vendor relationships. Without it, it would be impossible to proactively manage the expenses that are occurring at each location. Often IT department doesn’t want to get involved in the administration of these types of expenses due to lack of resources. A case can be made to either outsource these activities or manage it in-house with some administrative assistance. There are companies that specialize in this area and can do it in very cost effective manner. 5) Outsource IT There is a convincing argument that we need to manage key IT processes in house. However, keeping everything in-house may lead to additional costs in some cases. Tapping in external resources to get expert opinion can result in long term cost savings. External hosting, software development and externally managed network services are good candidates for outsourcing. In addition to the cost savings, this allows you to get expert services; it also allows you to start focusing on your business rather than IT. You can take comfort knowing that IT is managed by experts. There is a word of caution when it comes to outsourcing; this is a major undertaking and the cost of change is very high. Therefore you must take into account the following: * Vendor support – Does the vendor have necessary infrastructure to handle your current and future needs? On one side, small vendors might be able to customize a solution for your company; on the other side, they may not be able to grow with you needs. * Agreement terms – Make sure the agreement spells out clear terms, cost, and responsibilities of the vendor as well as yours, the customer. * Cost – it is a very important factor. Obviously companies would choose this route to save on their IT costs. The important thing is to compare apples to apples. If the company is offering you a better alternative, you cannot simply compare to your in-house option. Do account for hidden costs; and non-financial benefits of * Business complexity - It is a complex decision; you may need an independent expert advise. This is especially true for businesses that require specialized business knowledge. There may be tacit knowledge within your organization that cannot be easily replicated or replaced. 6) Establish computer and equipment renewal policies There is large number of opinions when it comes to server / PC replacement policies. Some would definitely want the latest and the greatest. Others would let systems fall to bits before replacing it. The cost of ownership at both ends of the spectrum is very high. If you replace the systems too quickly and acquire the best available in the market, you are bound to over spend. On the other hand, if you let equipment die before replacing it, it can lead to high administration cost, as well as loss of productivity. You could see your IT department spending valuable time fixing problems which could have been avoided. My opinion it to have a 4 to 5 year recycle plan. Every year you would replace a portion of your computers with whatever is readily available in the market, while sticking to one or two product lines. The focus is to get middle-range servers and computers. The cyclical replenishment approach can allow you to distribute costs over time. When replacing hardware, most companies will acquire brand new equipment; just keep in mind that there are some amazing deals in the pre-owned or after lease market. If you are not taking advantage of this, you might be paying too much. In terms of servers, keep in mind that your main servers can still play a key role as secondary servers once they are replaced. A similar approach must be taken for network and office equipment. Every time you purchase new equipment, I.T. must assess the business requirements as needs do change over time. Gagan Goraya Feedback ]]> http://blogdg.ctl.ca/gagan/2009/06/top_10_cost_savings_tips_for_t_1.html http://blogdg.ctl.ca/gagan/2009/06/top_10_cost_savings_tips_for_t_1.html Mon, 29 Jun 2009 14:58:03 -0500 Feedback Note: Special thanks to ctl.ca for allowing me to write a blog on their platform, especially Mr. Lou Smyrlis.]]> http://blogdg.ctl.ca/gagan/2009/06/top_10_cost_savings_tips_for_t.html http://blogdg.ctl.ca/gagan/2009/06/top_10_cost_savings_tips_for_t.html Mon, 15 Jun 2009 09:24:19 -0500