Going banana

Hardly a day goes by without me doing a sales pitch for CGI. My thinking is, a CEO doesn't participate in the sales effort, who will?

Like last Thursday, my staff was behaving and I found no error in any of the spreadsheets that were submitted for approval. It was - theoretically - a perfect day. Until I went downstairs to grab a muffin at around 4:32 to sustain my mental energy under dinner, when I learned that the store was out of the banana variety.

Sure, they had blueberry, bran & raisin, oatmeal galore, even that inedible double chocolate, but my mood and historical data pertaining to my personal consumptions of muffins indicated that a banana muffin was my personal optimal choice at that very moment.

But they had none. No banana muffin.

I questioned the store clerk about what market events had triggered such banana muffin shortage, if senior managers at the store had been briefed on the incident as it will surely impact their next quarterly earnings in a small yet significant way, if there was a glitch in the supply chain and in such case could this be optimized by calling a SAP expert.

Do you know what the simple-minded store clerk said to me?

"Well, it's just we ran out of banana muffin, come back tomorrow"

This careless behaviour was unacceptable to me as a customer, and I'm positively sure the store owner would be terrified to learn he had lost a sale due to bad strategic planning. How come there was still five, STILL FIVE double-chocolate muffins and no trace of banana muffin? Who runs this ship? Did anyone learn a lesson from the downfall of Zellers in Canada?

Clearly, the daily production of said muffins was improvised. No, it was botched. Even lobotomized monkeys under the influence of illegal substance would do a better job.

I dully informed the clerk of the situation and how CGI could help their company improve dramatically their core business processes. Had he heard about our centre of excellence in Troy, Alabama ?

CGI could even put the muffins in the cloud, therefore any sales clerk would be able to check the banana supply from a mobile device anywhere in the world, understand the trend in customer taste in real time and dispatch production orders to ensure timely delivery of warm, fresh banana muffins. Such understanding of the marketplace would push the muffin store on a straight path to profitable growth and…

At that point I realized the clerk was looking at me in way that did not indicate a complete and thorough understanding of the free analysis I was delivering. Plus, 5 people were waiting in line, right behind me.

It's lonely at the top, but everyday I realize that there are many bozos in base camps...

68% of all IT projects fail

Yet, consulting firms make tons of money, isn't that amazing? Good article in the Financial Post this week, the author does a pretty job of painting a gloomy picture of our industry and blame human beings - not technology per se - for screwing up projects.

Money quote: The first failure is that of the project manager to adequately understand the business's requirements. This might be due to not talking to enough users of the system or not talking to managers and really understanding the problem it is supposed to solve.

The thing is, moronic clients can quickly say what they DON'T want with unprecedented level of details, but when prompted to say what they WANT, you are left with a blank stare. They're like kiddos to whom you serve a broccoli soup, they say yuck, you ask them what kind of soup they want, and they answer I don't know.

You can put clients into long therapy session to extract bits of information here and there, you can fill half a page maybe (using large font size), and this becomes the scope of work for a multi-million dollar project. We'll figure out the details down the road, the client says. Since consulting usually work on a hourly basis, it's a match made in heaven.

The second is a failure to involve the systems users in its design, which often results in the users rejecting the system, even if its design meets the business's requirements.

It takes way too long to involve system users in the decision process, they don't know jack about what they want either - just like their bosses, and they'll have conflicting views. Did Steve Jobs involved focus groups when designing the iPod? No, because people don't know anything and they have a hard time defining something that they can only dream of. So when designing an IT system piggybacking an overly complex business process, you can bet your pants that we won't involve end users. It's a pain to manage. Better knock on the door of the dude managing IT budgets, he should be your next best friend.

The third, which Prof. Neufeld believes to be the most important, is a failure of senior management to get involved in the project, whether it is the chief executive, chief financial officer or chief information officer.

Senior management is sitting in their comfy chair and planning their next golf tournament, the last thing they want to hear is that their business is so twisted with layers of insanity built upon layers of nonsense that it's impossible to design an IT system to meet the requirements. That would require straightening the business, and it's as much fun as a getting a vasectomy performed by a plumber. Therefore senior managers delegate the job to hapless middle managers who are not authorized to make any decisions (hence the word "middle").

Let me tell you something. If people could spend their days on YouTube instead of making important decisions that would improve everyone's life, they'd do it without hesitating. It's human nature.

Quick poll on failure

My VPs convinced me recently to put up a quick poll on our Web site where we ask visitors what is the most common risk associated with managing IT projects. As if this was a mystery of some sort. I said okay, just to keep them happy and busy.

There are only 3 possible answers, you don’t get to win anything. Let's take a closer at the possible answers, shall we?

Lack of required resources and skills might mean many things. For instance the consulting firm initially proposed a team of seasoned senior guys, really top shelf, but on Day 1 they claimed some “availability issues” and sent a mismatched bunch of junior guys who happened to be on the bench the previous week. Or the firm managed to send good people to the client, only to realize internal resources had as much as brain power as a tooth brush. Either way, the project is doomed to fail.

What does inaquate oversight and communication mean? Well it might mean that the PM is a total douche bag who doesn’t care much about what happens on the floor, he’s just in for the paycheck and to add another line in his resume. Or he is a smart person who has been dropped in the middle of multiple wars raging between organizational units. He’ll just be another casualty after a few months, the firm already has a short list of mildly depressed PMs ready to replace him.

As for disconnect between business needs and technology, and it’s still the same old story, a fight for cash and glory. This is one of the shameful disease you get when you hire someone let’s say from IBM, Microsoft or HP/EDS (totally random example, don't know how those got into my head). Those guys want to make your project a relatively good success but as long as you buy their shit.

Snakeoil top salesmen come in and their first task is to identity the internal dweebs who will act as external “spokesmen” for the company. Microsoft Certified A-holes are very good at this, they can pinpoint internal employees who built their careers by spreading the Redmond gospel all over. The MS horsemen then slightly praise those employees for their “exceptional knowledge” of Windows (ahem), and next thing you know those employees will work day and night to provide reasons for the organization to purchase Microsoft products and nothing but. The project as a whole might fail, but it won’t be because the client chose a disarray of products from multiple vendors.

But in the end, keep in mind that failure is not a critical factor for an IT consulting firm. What matters is whether or not you can manage to bill top rate for whatever acts your clowns can perform, as long as possible.

Reader's Column : Profitable growth

Mike, you’ve been hammering the profitable growth theme at CGI for quite a long time but would you care to explain to us mortals what it is?

I’ll be happy to answer this one, as profitable growth has been and will always be a theme very dear to me. The short answer as to what profitable growth is “high profitability and sustainable profit growth”, in order words a fat mark-up that’s getting bigger everyday with no end in sight.

One could argue that it is a totally delusional perspective because, well anything that is highly profitable is bound to enter a situation where more competitors join the fray, prices get lower due competition, and that fat mark-up becomes unsustainable. The recent mortgage meltdown is another example where high-profitability could not be maintained forever.

So if you’re in an industry whose capital is entirely human like CGI, the first thing you must tackle is cost. Humans are insanely expensive, you need to be fiercely control salaries, bonuses and profit-sharing. But – humans are a renewable resource – so if you must loose someone because of salary issues, just do it and never negotiate. There will be always others, and some of them will ask for less. Less money for them means higher profit for the company.

The second thing is focus, meaning not diversify into markets or fields where you have no expertise. For CGI, it means focus on service, not on frivolous things such as software or hardware. Those require regular investments in R&D and maintenance, and such expense is a direct hit to the bottom line.

And there’s the question of bias. Once you paint yourself with a specific color, customers expect you to use that color every time. I mean, it’s like the sex market. If you advertise yourself as a BDSM expert, people won’t call you because they have a foot fetish or they want to wear a diaper. You want to offer the larger broader array of service without locking yourself in a niche that may prove to be too narrow on the long term. So focus while being wide open, this sounds kind of weird but this is the philosophy.

The 3^rd element is almost a secret ingredient, although others unfortunately know about it. It’s called the government. This is where your fat profits can live on forever. You see, when a company does all the wrong things, it eventually runs out of money and disappears in a puff of Chapter 11. When a political party does a bunch of crazy actions that undermine the country, the voters will realize (it may take a while though) that the stupid bastards need to be thrown out of the office.

But government? That bottomless barrel of bureaucracy never runs out of money because they take yours, and history proves that it is an infinite cycle (well almost, like the French said in 1789). If one agency blows a hundred million dollars on a doomed project, no public servant will of course lose their job since no one is really accountable for anything, and they’ll get a budget increase the next year. Why? Because failure brought them more experience, meaning they can handle bigger things. It’s all bull of course and they will repeat the same flawed behaviour with the same dubious technology and the next project will also go down the drain. Failure is definitely sustainable.

But you know what? It doesn’t matter from the IT service company perspective. For CGI and its competitors, it means a bigger contract and bigger profits in the end. If you do the right thing in a project and the project goes to hell due to forces outside your control, the customer will still like you. And love saves the day. Once the doomed project has been folded and new budgets have been voted, who will the customer call? Someone unknown? Of course not, the customer will call you because you did a half-decent job. And he likes your face. Success – or failure – is irrelevant, what matters is the relationship. Once you’re in the circle of trust, all you have to do is show up at work the rest will take care of itself.

So my thinking is that profitable growth is something we can build on indefinitely as long we maintain tight control on cost, focus on service and open ourselves to more government projects. This, dear members, is the ground on which CGI is built.