Monday, September 7, 2009

Taking Stock

In my experience, most organizations do not have a good understanding of their capabilities. I do not mean that they have not taken a good inventory of what they possess. Sure, they probably have a list of how many laptops and desktops are scattered around the office and the number of employees pounding the keyboards. They know how many licenses of Windows and Office are out there and the number of desks and chairs. The problem is that they do not have a good understanding of their organization’s capabilities; what the organization can achieve in how much time and more importantly what it cannot achieve.

The definition of an asset in the context of IT is a combination of resources and capabilities. Resources are defined as direct inputs for production and some examples are financial capital, applications, infrastructure and people. Capabilities represent an organization’s capacity, competency and capability for action. Some examples of capabilities are management, knowledge and processes. Generally organizations maintain a good checklist of their physical resources but have a poor idea and understanding of the less tangible capabilities that they possess. This lack of understanding makes management more challenging and in particular, makes improvements difficult to implement. After all, how can you improve that which you don’t understand in the first place?

Improvement is by no means the only aspect that suffers when an organization does not have a good understanding of itself. The ability for IT to align itself with business and to support business processes also suffers. So does agility and the ability to make quick changes which is crucial in today’s world. Financial estimating is also highly inaccurate when the capabilities of an organization are not understood completely.

Therefore, it is clear that an organization must understand its capabilities completely and move beyond just an inventory stock keeping of its resources. How does an organization go about understanding its capabilities properly? The first step, of course, is to keep a good stock of the organization’s resources as they are the building blocks of capability. A well setup Configuration Management system is crucial in achieving the ability to keep tabs on the resource items. The configuration Management System should also maintain relationships between the items that allow for an understanding of how a change in one item will affect another item or a system.

Next, a reliable process of documentation must be setup and maintained. Arm in arm with the documentation process, a system of collecting and analyzing metrics must be created and maintained as well. Metrics must be carefully collected and archived for future reference.

Finally a system of modeling should be setup that utilizes all the aforementioned data to provide a realistic estimate of the organization’s capabilities. The modeling should be set up to predict finances and costs, schedules, technical complexities and project and service deliverables.

With all this setup and relevant information available, management can make crucial decisions with confidence. Furthermore, the organization will make accurate estimates and will be extremely agile and better aligned to customer’s requirements. Simply by understanding one’s own self.

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