Thursday, October 16, 2003

Web Services Value Proposition

by Asim Jalis

Here are some more thoughts on the value proposition of WSM: 1. WSM will sell in a recession economy. The basic idea is that the IS manager will save money because he will be able to step back and see how the IS resources are being utilitized. By improving the allocation of resources the company can save money. It can do more with less. This will be a process of continuous improvement, much like zero inventory for manufacturing. 2. A hardware company selling WSM is like a dentist selling Sonicare toothbrushes. I don't mean that facetiously. It actually makes sense for the dentist to encourage his patients to take care of their teeth. For one thing it helps the relationship. Not only do you buy my services but I will also help you maximize the return on them. 3. However, for WSM to play this resource allocation role properly, they must have the ability to analyze historical data and to generate periodic reports. If a framework is only good at taking snapshots then it is only valuable in putting out fires. It cannot help do the generative learning (Senge) that can save companies money through continuous savings streams. 4. A lumpsum payment is frequently less lucrative than a smaller payment stream (this is why cable subscription costs more than the TV even though it doesn't feel that way; and also why the cable company could make money by giving people full-screen TVs if they sign a long enough subscription contract). Similarly, a snapshot solution only offers a burst of savings. It does not offer ongoing savings. It saves you a million dollars on that one day when all hell was breaking loose. But it does not save you money every day without your active involvement. 5. A useful way to investigate the value proposition of WSM would be to compare the features of the main providers and to compare their value propositions. The main providers are: HP, TB, IBM, CA. There are some smaller pure-plays. 6. WSM solutions that provide historical reports can create a perspective in which generative learning (in the sense of Peter Senge) can take place. Instead of just reacting to patterns IS organizations can solve the systemic problem. 7. The same idea was expressed by Toyota's Taichi Ohno, who recommends asking "Why?" five times to get to the root cause of every problem. Here is an excerpt from his book the Toyota Production System. The key: root cause analysis. 8. Gartner reports that the best IT organizations spend less time firefighting and more time making systemic improvements to their infrastructure. The WSM framework could be a valuable tool that can enable middle level IS organizations to achieve the same stability and predictability that the best-of-breed IS organizations have. 9. There is a connection between this and between Six Sigma. An IT organization that regularly firefights has a system with a much higher variance than an organization which takes a step back and makes systemic improvements. The systemic improvements will have the effect of reducing the variance of the organizations processes, which will in turn reduce the likelihood of fires. 10. The CMM model in software is another example of an approach to reduce risks. 11. The main selling point of the WSM solution is that it reduces risks, lowers variances, improves allocation of resources, and allows the IS organization to run like a lean mean machine. 12. The argument for systemic problem solving is that it catches defects early. A stitch in time saves nine. This familiar saying is the essense of Six Sigma and many consultants have made large sums of money simply by preaching what is ancient wisdom. The mathematical justification for this proverb is that defect rates grow exponentially. Defect rates along a serial process multiply. If the problems are only caught at the end -- when the fire alarms are going off -- then the solutions are going to be more expensive, and the problems are going to be more frequent. WSM frameworks allow IT organizations to put that stitch in time. 13. I should talk to my IT contacts from previous jobs to flesh out these value propositions.