3 years, 11 months ago

CFO and CTO Versus CPO

The CFO and CTOIn this age, 1990 to 2020, the Chief Financial Officer (a financial engineer) is boss in most companies and corporations and the goal is “INCREASING STOCKHOLDER VALUE”.  This includes everything from selling the company, to cooking …

7 years, 6 months ago

Enterprise Architecture, Systems Engineering, and Regulations: Process Rudders or Process Brakes

Regulations: The “Must Meet” Requirements

Regulations directly affect all organizations, products, systems, and services. Further, they can be a rudder guiding the organization or a brake causing the organization to stop making any progress in meeting its charter, goal, or in completing its mission.  This post discusses laws, rules, specifications, standard, regulations (or simply regulations) as a part of any enterprise architecture or systems engineering effort.

The Customer Requirements Identification and Management tool that I’ve developed, CARRMA®, uses the concept of Must Meet requirements to store both the regulations and the metrics for meeting the regulation.  If more than one project has a particular regulation imposed on it, the CARRMA®’s data store will allow for reuse.

Regulations the rudders of an organization

Any commandment, law, rule, specification, standard, or regulation creates process friction, by its very nature.  It inhibits what can be done or defines what must be done. For example, saying “Thou Shall not Kill” means that it’s not nice to end a vehemently intense discussion by bouncing your opponent “six feet under”, though that might be very satisfying at the moment.  That is, killing is not a good solution to an intra-group disagreement since it doesn’t promote understanding, knowledge and therefore value growth of the group and doesn’t instill trust with other groups.

Hoping that I’ve made the point that regulations curb action or ensure action, by an over-the-top example, a regulation acts like a rudder, making it difficult for a process and thus a strategy to go one way, thereby making it easier to go another.  This, in turn, may directly affect the organization’s charter, mission, or goal.  In any rational system it should enable both the charter/mission/goal and the strategies and processes for achieving these.
Fortunately or more importantly, unfortunately systems and organizations built by humans are not entirely rational and sometimes not rational at all.  If the economy is the engine that powers the ship-of-state in an organization, then each commandment, law, rule, specification, standard, or regulation enacted is a rudder with its own wheel guided by part of the crew steering the organization toward their own Avalon.

Arrow’s Paradox and Catch 22s

At some point the number of rudders pointing at all points of the compass are such that the organization be it private or a ship-of-state either comes to a complete halt or turns in tight circles.  The rudders have formed a damn that effectively stops all forward progress of the organization, which no amount of churning by the organization’s economic engine can overcome.  Some of these regulation rudders are small and some are very large.  Twist the large ones hard and the ship brakes to a crawl and it may not turn at all. 

Arrow’s Paradox

A bigger problem is that too many regulation rudders will simply cause the organizational ship to stop and not make any of the ports.  Dr. Kenneth Arrow’s is known for “Arrow’s Impossibility Theorem” [Sidebar: For which he won the Nobel Prize], which is also known as Arrow’s Paradox.  He demonstrated mathematically that if an organization has three or more goals that they want to optimize, they will be able to only optimize on two (or I suspect they can sub-optimize on all three).

The point here isn’t that organizations can’t have more than one goal or objective; it is that if the organization attempts to define more than two (or maybe three) objectives using the “policy/regulation” strategy, the organization will slow down, wobble around, and achieve none of the objectives.

If you add in that in a democracy the goals and objectives change as controlling constituencies change, normally you end up with more and more laws, regulations, rules, and standards each attempting to use its regulatory rudder to change the course of the ship-of-state to reach the objective for which it was enacted.  The net result is that either the ship-of-state will end up on the rocks or going in circles.

From personal experience with federal contracts and from a recent DoD report, I can illustrate the problem.  One goal, which probably should be the only goal of DoD contracting, is to provide the most effective weapons in the world for the US Military.  That is, the weapons should be the greatest force multiplier.

However, the contracting office is faced with a second objective (a second rudder) of acquiring these weapons cost efficiently.  There are two metrics for cost efficiency, the initial cost (including research, development, and construction), and life-cycle costs (maintenance, upgrades, and disposal).  The question for the contracting officer is, “Do you contract for the cheapest initial cost product or for the one that will cost the least over the product’s projected lifespan?”

Then there is a third rudder in the form of the dependability of the product, system, or service. “Dependability encompasses all of the “illities”, including reliability, maintainability, serviceability, and so on.  Each of these has metrics and standards that must be met.  In some cases the metrics for the standard or policy is either untestable in a timely manner or in a few infeasible or impossible to meet.  All of these rudders will force addition time and expense into the effort.

A fourth rudder is reconfigurability and upgradeability of the product, system, or service.  Before the US Civil War, the rate of change of weapons and support systems was such that weapons and weapons systems had no need for this “Must Meet” requirement/policy.  The weapon would be worn out long be the technology changed.  However, since then it’s obvious that technology has and is continuing to accelerate (to the point that for many systems, they must be upgraded before their development and implementation is completed).  These continue to increase the initial design costs. [Sidebar: Services Oriented Architecture can reduce these costs greatly for IT systems, and modular systems/product can do the same for hardware of all types.]

A fifth rudder, and first one that is politically/social motivated as well as costly is the implied policy that all congressional districts and states should have jobs related to weapons and intelligence system development, especially where the senator or representative sits on committees dealing with budgets and military programs.  A recent DoD study has shown that this can add 20 to 25 percent to the cost of a product, system, or service for the DoD.
Then comes the politically motivated socially liberal welfare policy rudders (those intended to regulate social welfare and social change).  For weapons and intelligence tools, these require that a certain percent of the work on the product be from female owned companies and another percentage be from “minority” owned businesses.  [Sidebar:  The social actives’ idea was that the only way these groups could break into DoD contracting was through regulation.  I think they were correct because most of the work they did that I observed over the 25 years I was associate with government contracted engineering demonstrated beyond a doubt that they were incompetent to compete with a level playing field.  Many times the prime contractor had to supply the engineering capability to complete the job over schedule and way over cost.]  While it isn’t Politically Correct to attempt to define how much money was spent on this contracting welfare, from personal experience I expect that it is very significant.

The point of this section is not to discuss the problems with the regulations and informal policies of DoD contracting, rather it’s to demonstrate that as more laws, policies, regulations, business rules, standards, and so on (the “Must Meet” requirements) are imposed on a program, especially, extraneous ones, that both the effectiveness of product and the cost efficiency of the project or program are reduced.  And at some point there are so many “Must Meet” requirements that the effort, even at the enterprise architectural level will fail.


The extreme case of Arrow’s Paradox is the famous Catch-22 where two regulations are diametrically opposed leaving whatever effort, project, program, organization, or enterprise going in circles and making no progress in any direction. Even with a ship-of-state the size of the United States (which is a supertanker sized economy), given enough Catch-22s and nothing will get done; too many steersmen, too many rudders, and too many goals (targets, harbors, or whatever).

A good current and everyday example of regulatory Catch-22 is deicing roads.  Having icy sidewalks can be very exciting and occasionally lethal—so it really is not a good thing.  So deicing the sidewalks is mandatory.  Deicing calls for the use chemicals like sodium chloride (salt).

The problem is that there are regulations (must meet) requirements for the use and storage of “salt” because it “pollutes the environment” (and it does, you should see my grass near the sidewalk and road).  So you must use chemicals to save lives but you must not to save the environment.  Two regulatory “must meet” requirements (rudders) are in opposition, one to save lives and one to save the environment.  This is a small example of a big problem that can and will bring the economic ship-of-state to a dead stop.

Reducing the Number of Regulatory Brakes but Keeping the Rudders

To get any organization to at least head to a goal it should be clear that removing internal policies that interfere with the attainment of the goal is necessary.  For large organizations with many sub-organizations, the issue becomes one of identifying which regulations guide the organization in the direction its charter, goal, or mission state and which are braking it to a stop.  For many organizations, but especially democratic style governments, there will always conflicting goals and missions and therefore conflicting regulations.  So how should a large organization or government determine which are rudders and which are brakes?
To my mind, this is a good place to apply Enterprise Architecture and the architectural model that I set out both in my book and in this blog.  The nice thing about that architectural model is that it can start as a static model that can be used to identify customer requirements and end up as a dynamic model of the enterprise (even the Ship-of-State).  As such, it can identify policies that are braking or causing bottlenecks in the processes enabling the strategies for attaining the goal or mission.  Until you can dynamically model the enterprise, you will never really be able to identify the unintended consequences and negative externalities of any policy, standard, or regulation.  Nor, as the goal or mission changes can you identify those policies, standards, or regulations that truly impede progress in the changed direction (though many politicians in the organization will be able to tell you, or so they believe).

For those policies and standards internal to the organization, the leadership should be able to understand which regulations support the organization’s strategies and process and which don’t.  Additionally, the leadership can propose changes, deletions, and new regulations, which the enterprise architect can then model to determine the likely consequences, both intended and unintended.  Once the enterprise architects have oriented the changes the leadership proposes [Sidebar: See the OODA loop] the leadership can then choose what internal policies, standards, and regulations to change and which changes to implement with a much lower risk while seeing the their organization move more quickly toward achieving its goal.  [Sidebar: The modeling will also show where leaders and managers of sub-units are working on their own agenda which might or might not be steering toward the overall goal.  Remember the Systems Engineering axiom, “Optimizing the sub-systems sub-optimizes the system.”]

For governments, especially for the legislative branch, architectural modeling is particularly important both to determine conflicting laws, regulations, rules, standards and codes.  If, as the architectural models mature and their predictions help to make better decisions, there may even be fewer vehemently intense discussions about which laws, regulations, rules, standards, and codes to enact and which to remove or rewrite…Interesting.
7 years, 6 months ago

If You Want to Create an Enterprise Architecture; Don’t!

One of the last presentations I made as an Enterprise Architect for a major DoD contractor was to the Chief Architect of the US Veterans Administration.  I walked in with a fully prepared presentation that was to take about 10 minutes of the time …

7 years, 6 months ago

If You Want to Create an Enterprise Architecture; Don’t!

One of the last presentations I made as an Enterprise Architect for a major DoD contractor was to the Chief Architect of the US Veterans Administration.  I walked in with a fully prepared presentation that was to take about 10 minutes of the time allotted to our team only to find the Chief Architect cutting the presentation off with a question, “How do we go about creating an IT architecture for the VA?”  Even though I had a very good answer and had applied it on a couple of occasion, my mind blanked.  I want to share with you his problem and the answer I should have given.

The Problem

The problem that the Chief Architect of the VA has is the same problem that plagues CA’s of all large organization and most of medium and smaller organizations.  That question is base on the very logical idea very much the analog of the idea that before you start changing the plumbing, you should know design of the current plumbing; that is, before you can create a “to be” or “next step” architecture you need to have a “current architecture”.  Obviously, if you don’t know which pipes connect where and start making changes to the plumbing you could end up with some very interesting and exciting results for which you may need to call your insurance company.  Likewise, if you want to improve the effectiveness and/or the cost efficiency of the organizational processes and information systems, most Enterprise Architects assume they must first define and delimit the “as-is” processes and information systems for the organization.

The conundrum is that, in today’s technological environment, by the time an IT architecture team has mapped out (structured and ordered) an “as is” architecture, some, most, or all of the elements and data of the architecture will be obsolete and out of date.  For something as large as a major corporation, a department within a state or the federal government, the cost and effort involved would require a tour de force on a very large perhaps unprecedented scale.  This cost and level of effort would be such that the senior management would cut funding to the effort as a waste of time and money, since having an “as-is” architecture by itself produces little in value to the organization.

As can be found in the literature, there are many ways to “solve” or at least ameliorate the problem of creating an “as-is” architecture.  For example, one of the best, that almost works, is to chop the organization into its components and create an “as-is” architecture for each component separately.  Then try to stitch the architectures together.  I’ve tried this and it works up to a point.

There is a truism in Systems Engineering, Systems Architecture, and Enterprise Architecture, “Optimizing the sub-systems will sub-optimize the system”.  I have demonstrated this to many people many times and experienced it several times.  But this is crux of the problem for those that try to create an Enterprise Architecture for a large organization.

The Solution

The simple answer is “Don’t”.  That is, “Don’t attempt to create an “as is” architecture for an organization, especially a large organization, because it will create itself with the proper procedures in place.  So how would I do it?

 Define, delimited, and structured an initial set of classes and attributes for the Organization’s Enterprise Architecture.  These should include:

  • Its Charter, Mission, Goal

  • Its Strategies for achieving its charter, mission, or goal

  • Its Processes supporting its strategies

  • Its Tooling and infrastructure

  • Its Governance that affects any of the above, including:

  • Internal Policies and Standards

  • External Regulations and Standards

I worked with one Enterprise Architecture database that had over fifty classes, each class with ten or more attributes.  This was a fairly mature architecture.  My recommendation, don’t try to think of all the classes you may need or all of the attributes for each class; that’s way over thinking.  Instead, start simple and add through the cycles

2. Once you have designed and structured the initial set of classed and attributes, create a data base structured according to the design.

 Here is the key to creating an “As-Is” Architecture by not creating it…Huh?  Design and implement processes to capture the current state of strategies, processes, and tooling/infrastructure as part of review of funding for revision and upgrades to the current systems and processes.  

 When personnel in the organization propose a project insist that these personnel demonstrate the value of the process or procedure that they intend to update or upgrade. The “value” would include demonstrating which of and how the current product, system, or service enables the processes, strategies, and charter, mission, or goal of the organization. My experience has been that the initial attempts will be fuzzy and incomplete, but that as the number of proposed projects in the database (which is generally called the Asset Management System and on which the “as-is” architecture is built) increases both the completeness and clarity of the current enterprise architecture will increase.

The reason I say “Don’t” try to create an “as-is” architecture is that
 every 3 to 7 years every component of the organization’s information system will need replacement.  This means that within 3 to 5 years simply by documenting and structuring the inputs from all of the efforts the organization’s “as-is” architecture will be synergistically created (and at minimal cost) [Sidebar: There will be some cost because the project proposers will need to think through how their current charter, mission, or goal and the strategies they support links to and supports the overall charter, mission, or goal of the organization.  This is not necessarily a bad thing.]  For large organizations, no matter how much time or effort is put into attempting to create an “As-Is” Enterprise Architecture, it will take a minimum of a year and a great deal of funding; so it simply makes no sense.

As this Enterprise Architecture evolves you will begin to see a number of things that managers want to obfuscate or hide completely.  For example, a number of processes and component or sub-organizations will be demonstrated to be obsolete.  In this case obsolete means that the process or component organization no longer supports any of the organization’s strategies or its goal.  Since managers want to build or at least keep their fiefdoms they will not appreciate this much.  Additionally, it will demonstrate which internal policies, regulations, and standards help the organization and which hurt it in meeting its goal.  Again, the gatekeepers of these policies, regulations, and standards will object–strenuously.  

But there are two more insidious problems that a good “As-Is” Enterprise Architecture will reveal, nepotism and the famous “Catch-22s”.  


Nepotism in this case is more broadly defined than what most people think of as “nepotism”.  In the sense I mean, nepotism can include creating a non-level economic playing field. In all large organizations, but especially in the U.S. Federal government (probably in all governments) the type of nepotism I’m identifying is rampant.  In fact a December 2016 report from the Department of Defense highlights what most federal employees and DoD contractors have known for years, because representatives and senators will only vote for a large program if their district or state gets a part of it, the DoD estimates that the cost of the program increases approximately 20 percent.  This is “jobs welfare” on a massive scale.  Some major defense contractors have plants in every state for just this reason, not because it make any sense from a cost efficiency perspective.  Further, Congress had passed laws to ensure that minority and female owned businesses.  The reason is that minorities and women scream that the good old boy network doesn’t allow them to compete for sub-contracts [Sidebar: Actually the reason for the “good ole boy” network is that the prime contractors have sub-contractors that actually know what their doing.  In my experience, many times primes will “encourage”–read subsidize–inexperienced and frequently incompetent minority and female owned businesses in order to meet these regulations imposed on their proposals.]  Again, this is a form of social welfare to ensure all political constituents that scream loudly are appeased.  This adds up to the DoD being one of the larger governmental welfare organizations. [Sidebar: While, seemingly, I’ve picked on government organizations, especially the U.S. DoD, and while I have found that all governmental organizations in a democracy will have this type of nepotism.  This is what lobbing is all about.  Only when it goes so far that it’s plain to all and when it’s not openly enacted into law that we call it graft and corruption.]  And it’s not only governments that suffer from this type of nepotism, all large organizations have the same problems, though generally on a smaller scale.  For example, sometimes the nepotism is written into union contracts.  Along with finance engineering, the auto industry in Detroit suffered a near collapse due to contractual nepotism.

This presents a problem for any Enterprise Architect.  The as-is architecture will highlight the nepotism of this type more clearly than any report.  The Enterprise Architect won’t need to report it to the management, it will be self-evident.  I’ve experienced a situation, as I suspect many of you have, where the management kills the messenger in order to not address the problem.  In my case, three times I’ve been chased off programs when I reported that the effort was subsidizing silliness.


The second significant problem that policies, regulations, and standards become contradictory to each other or in combination make it impossible for the organization to achieve its goal.  Again, a good enterprise architecture will highlight these, though frequently, when management from one generation of technology with its set of policies and standards, finds the next upon them, they will refuse to resend or modify the existing regulations, preferring instead, again, to kill the messenger.  So like Systems Engineers, I’ve found that enterprise architects are only respected by other enterprise architects.

 When the development and implementation team completes a project, and once it goes into operation, then as a final step in their effort, they should review the data they gave to the enterprise architect, revising the data to accurately reflect the “as-built” instead of the “as-proposed”.  The as-built documentation must include all component, assembly or functional, and customer acceptance testing, and all post production required changes.  This documentation will inevitably lead to additional class attributes of the Asset Management System and structure in the enterprise architecture.

 As the Asset Management System and the Enterprise Architecture matures, management should prepare for a paradigm shift in the way projects and other efforts are proposed.  This is where Enterprise Architecture really demonstrates how it can make the organization both more effective and cost efficient.

A mature enterprise architecture can serve as the basis for a dynamic business or organizational process model for the organization.  Management can use this model to identify obsolete processes, (and as discussed) policies, regulations, and standards; ones that the organization should eliminate.  Additionally, with the help of the Enterprise Architect, management can identify missing or inhibiting processes and tools, and identify bottlenecks and dams in process flows.

Further, they can model what happens when the missing and inhibiting processes and tools are added or when the bottlenecks are eliminated or reduced.  This modeling will then indicate where there is a need for new efforts and to some degree the effectiveness and cost efficiency of such efforts.  It’s a paradigm shift in that no longer to component or sub-units of the organization propose changes.  Instead, senior management working with the Enterprise Architect and the component or sub-units will identify and fund efforts.  They now have a way to measure the potential of the change in meeting the organizational goal, which means senior management has a better way of managing organizational change.

Finally, once management has identified targets for change or upgrade, the enterprise architect together with a system architect can define alternatives to meet the effort’s requirements.  They can model alternative process and tooling changes to forecast which has the lowest potential risk, the highest potential return, the least disruption of current activities, lowest initial cost, lowest lifecycle cost, the most adaptable or agile, or any number of other targets defined by the senior management.  This will make the organization much more cost efficient, and perhaps more cost effective; and this is the purpose of Enterprise Architecture,

To sum up, using this six step, high-level process is an effective way to create both an Asset Management System (an “As-Is” Architecture) and an effective Enterprise Architecture process; perhaps the only way.  

7 years, 6 months ago

Agility, SOA, Virtual Extended Enterprise, Swarming Tactics, and Architecture

Agility and the Virtual Extended EnterpriseIn the 1990s, The Agility Forum of Lehigh University defined Agility as “The ability to successfully respond to unexpected challenges and opportunities.” The forum chartered a technical committe…

7 years, 6 months ago

Agility, SOA, Virtual Extended Enterprise, Swarming Tactics, and Architecture

Agility and the Virtual Extended EnterpriseIn the 1990s, The Agility Forum of Lehigh University defined Agility as “The ability to successfully respond to unexpected challenges and opportunities.” The forum chartered a technical committe…

12 years, 6 months ago

Enterprise Portfolio Management and Enterprise Architecture Paper Available

I have added another paper to my list of papers.  This one is on the central role of the Enterprise Architect in the Enterprise Portfolio Management Process and how Systems Engineering, System Architecture, and Enterprise Architecture are inter-re…

12 years, 6 months ago

Enterprise Portfolio Management and Enterprise Architecture Paper Available

I have added another paper to my list of papers.  This one is on the central role of the Enterprise Architect in the Enterprise Portfolio Management Process and how Systems Engineering, System Architecture, and Enterprise Architecture are inter-re…

12 years, 11 months ago

The Cost of Rockets Built by NASA: Waterfall Process vs Short-cycle and Agile Processes

ShortcomingsThis post is really not about the shortcomings of NASA, it’s more about the inevitability poor, high cost deliverables when a) an organization looses its focus because of a constantly changing Vision and Mission; b) a development process fo…

13 years, 17 days ago

Systems Engineering, Product/System/Service Implementing, and Program Management

A Pattern for Development and Transformation Efforts

Recently a discussion started in a LinkedIn Group that recruiters, HR, and Management was using the term “Systems Engineer” indiscriminately.   The conclusion was that the discipline of Systems Engineering and the role of the Systems Engineer in Development and Transformation Efforts is poorly understood by most people, and perhaps by many claiming to be Systems Engineers.  In my experience of building a Systems Engineer group from 5 to 55, I can attest to this conclusion.
Currently, I am working on a second book, with the working title of “Systems Engineering, System Architecture, and Enterprise Architecture“.  In the book, I’m attempting to distill 45+ years of experience and observation of many efforts, from minor report revisions to the Lunar Module, F-14, B-2, and X-29 aircraft creation efforts, to statewide IT outsourcing efforts.  This post contains excerpts of several concepts from this manuscript.
The Archetypal Pattern for Product/System/Service Development and Transformation
At a high level there is an architectural process pattern for Product/System/Service development and transformation.  I discuss this pattern in my current book, Organizational Economics: The Formation of Wealth, and it is one key pattern for my next book.  This pattern is shown in Figure 1.
Figure 1–The Three Legged Stool Pattern

As shown in Figure 1, the architectural process model posits that all development and transformation efforts are based on the interactions of three functions (or sub-processes), Systems Engineering, Design and Implementation, and Program Management.  This is true whether a homeowner is replacing a kitchen faucet or NASA is building a new spacecraft.  Each of these sub-processes is a role with a given set of skills.

Consequently, as shown in Figure 1, I call this process pattern “The Three-legged Stool” pattern for development and transformation.  I will discuss each sub-process as a role with requirements.  Therefore, this is what I see as the needs or requirements for the process and the skills for the role.  In my next book, I will discuss more about how these can be done.

As shown in Figure 1, the program management role is to enable and support the other two roles with financial resources and expect results, in the form of a product/system/service meeting the customer’s requirements.
Systems Engineering (and System Architecture) Role
The first role is the Systems Engineer/System Architect.  This role works with the customer to determine the requirements–“what is needed.”  I’ve discussed this role in several posts including Enterprise Architecture and System Architecture and The Definition of the Disciplines of Systems Engineering.  Three key functions of this sub-process are:
These are the key responsibilities for the role, though from the posts, cited above, “The devil (and complexity of these) is in the detail“.
The key issue with the Systems Engineering/System Architect role within a project/program/effort is that the requirements analysis procedure becomes analysis paralysis.  That is, the Systems Engineer (at least within the “waterfall” style effort, that assumes that all of the requirements are known upfront) will spend an inordinate amount of time “requirements gathering”; holding the effort up, to attempt to insure that all of the requirements are “know”–which is patently impossible.
 I will discuss solutions to this issue in the last two sections of this post.
Design and Implementation Role
When compared with Systems Engineering, the Design and Implementation functions, procedures, methods, and role are very well understood, taught, trained, and supported with tooling.  This role determines “How to meet the customer’s needs“, as expressed in the “What is needed (requirements)”, as shown in Figure 1.  These are the product/system/service designer, developers, and implementers of the transformation; the Subject Matter Experts (SMEs) that actually create and implement.  These skills are taught in Community Colleges, Colleges, Universities, Trade Schools, and on-line classes.  The key sub-processes, procedures, functions, and methods are as varied as the departments in the various institutions of higher learning just mentioned.

There is a significant issue with designers and implementers, they attempt to create the “best” product ever and go into a never ending set of design cycles.  Like the Systems Engineering “analysis paralysis”, this burns budget and time without producing a deliverable for the customer.  One part of this problem is that the SMEs too often forget is that they are developing or transforming against as set of requirements (The “What’s Needed“).  In the hundreds of small, medium, and large efforts in which I’ve been involved, I would say that the overwhelming percentage of time, the SMEs never read the customer’s requirements because they understand the process, procedure, function, or method far better than the customer.  Therefore, they implement a product/system/service that does not do what the customer wants, but does do many functions that the customer does not want.  Then the defect management process takes over to rectify these two; which blows the budget and schedule entirely, while making the customer unhappy, to say the least. The second part of this problem is that each SME role is convinced that their role is key to the effort.  Consequently, they develop their portion to maximize its internal efficiency while completely neglecting the effectiveness of the product/system/service.  While I may be overstating this part somewhat, at least half the time, I’ve seen efforts where, security for example, attempts to create the equivalent of “write only memory”; the data on it can never be used because the memory cannot be read from.  This too, burns budget and schedule while adding no value.

Again, I will discuss solutions to this issue in the last two sections of this post.

Program Management Role
As shown in Figure 1, the role, procedures, and methods of Program Management is to support and facilitate Systems Engineering and Design and Implementation roles.   This is called Leadership.   An excellent definition of leadership is attributed to Lao Tzu, the Chinese philosopher of approximately 2500 years ago.  As I quoted in my book, Organizational Economics: The Formation of Wealth:
  • The best of all leaders is the one who helps people so that, eventually, they don’t need him.
  • Then comes the one they love and admire.
  • Then comes the one they fear.
  • The worst is the one who lets people push him around.
Where there is no trust, people will act in bad faith.  The best leader doesn’t say much, but what he says carries weight.  When he is finished with his work, the people say, “It happened naturally“.”[1]
[1] Lao Tzu, This quote is attributed to Lao Tzu, but no source of the quote has been discovered.
If the program manager does his or her job correctly, they should never be visible to the customer or suppliers; instead they should be the conductor and coordinator of resources for the effort.  Too often the project and program managers forget that this is their role and what the best type of leader is. Instead, they consider themselves as the only person responsible for the success of the effort and “in control” of the effort.  The method for this control is to manage the customer’s programmatic requirements (the financial resources and schedule).  This is the the way it works today.

The Way This Works Today: The Program Management Control Pattern

There are two ways to resolve the “requirements analysis paralysis” and the “design the best” issues, either by the Program Manager resolving it, or through the use of a process that is designed to move the effort around these two landmines.

The first way is to give control of the effort to manager.  This is the “traditional” approach and the way most organization’s run development and transformation efforts .  The effort’s manager manages the customer’s programmatic requirements, (budget and schedule), so the manager plans out the effort including its schedule.  This project plan is based on “the requirements”, most often plan includes “requirements analysis”.

[Rant 1, sorry about this: My question has always been, “How is it possible to plan a project based on requirements when the first task is to analyze the requirements to determine the real requirements?”  AND, I have seen major efforts (hundreds of millions to billions) which had no real requirements identified…Huh?]

The Program or Project Manager tells the Systems Engineer and Developer/Implementer when each task is complete; because that’s when the time and or money for that task on the schedule is done, regardless of the quality of the work products from the task.  “Good” managers keep a “management reserve” in case things don’t go as planned.  Often, if nothing is going as planned, the manager’s knee jerk reaction is to “replan”; which means creating an inch-stone schedule.  I’ve seen and been involved in large efforts where the next level of detail would be to schedule “bathroom breaks”.  This method for resolution of “analysis paralysis” and “design the best” will almost inevitably cause cost and schedule overruns, unhappy customers, and defective products because the effort’s control function to control costs and schedules.

The Program Management Control Pattern
Figure 2 shows the Program Management Control Pattern.  The size of the elipse shows the percieved importance of each of the three roles.

Figure 2–The Program Management Control Pattern

First, the entire “Three Legged Stool” Pattern is turned upside down is the Program Management Control Pattern.  Rather than the Program Manager enabling and supporting the development process by understanding and supporting the development or transformation process, the Program Manager “controls” the process.  In Lao Tzu leadership taxonomy, this process pattern makes the Program Manager one of the latter increasingly ineffective types.  It also reverses importance of who produces the value in the effort.

To be able to “Control” the effort, the Program Manager requires many intermediate artifacts, schedules, budgets, and status reports, which use up the resources of the efforts and  are non-valued work products, the customer might look at these artifacts once during a PMR, PDR, CDR, or other “XDR” (Rant 2: Calling these review Program Management Reviews, instead of some type of Design Review”, Preliminary, Critical, etc., demonstrates the overwhelming perceived importance of the programmatic requirements by Program Managers.)  I submit that all of these intermediate artifacts are non-value added because 3 months after the effort is completed, the customer or anyone else will not look at any of them except if the customer is suing the the development or transformation organization over the poor quality of the product.  All of these management reviews require resources from the Developers/Implementers and the Systems Engineers.

One extreme example of this management review procedure was the procedures used in development of new aircraft for the US Air Force and Navy during the 1980s and 90s–sometimes facts are stranger than fantasy.  The DoD required some type of “Development Review” every 3 months.  Typically, these were week-long reviews with a large customer team descending on the aircraft’s Prime Contractor.  Program Management (perhaps, rightly) considered these of ultimate importance to keeping the contract and therefore wanted everyone ready.  Consequently, all hands on the effort stopped work 2 weeks prior to work on status reports and presentation rehearsals.  Then, after the “review” all hands would spend most of an additional week reviewing the customer’s feedback and trying to replan the effort to resolve issues and reduce risk.  If you add this up, the team was spending 1 month in every 3 on status reporting.  And I have been part of information technology efforts, in this day of instant access to everything on a project where essentially the same thing is happening.  Think about it, these aircraft programs spent one third of their budget, and lengthened the programs by 1/3 just for status for what?  Intermediate artifacts of no persistent value–Who looked at the presentations of the first Preliminary Design Review after the aircraft was put into operations?  [Rant 3: Did the American citizen get value for the investment or was this just another Program Management Entitlement Program funded by the DoD?]

Second, as shown in Figure 2, the Systems Engineering role is substantially reduced  in the perception of the Program Manager.  An example of this was brought home to me on a multi-billion program, when I asked the chief engineer where the requirements were stored, he quoted the Program’s Director as saying, “We don’t need no damn requirements, we’re too busy doing the work.”  This Director underlined this thinking; he kept hiring more program management, schedule planners, earned value analysts, and so on, while continuous reducing then eliminating the entire Systems Engineering team and leaving only a few System Architects.  He justified this by the need to increased control and cost reduction to meet his budget [Rant 4: and therefore to get his “management bonus”–no one ever heard of the Design or a System Engineering Bonus].  Actually, I’ve seen this strategy put into play on large (more than $20M) three programs with which I was associated and I’ve heard about it on several more within the organization I was work for and in other organizations, over the past 10 years.  

Another program that I worked on as the Lead Systems Engineer that had the same perception of the Systems Engineer (including the System Architect’s role within the Systems Engineering discipline/role).  It is an extreme example of all that can go wrong because of lack of Systems Engineering.  This effort was development of a portal capability for the organization.  It started with a that had 10 management personnel and myself.  They articulated a series of ill-thought-out capability statements, continued by defining a series products that had to be used (with no not identification of Customer System or IT Functional requirements), with a 6 weeks schedule, and ended with a  budget that was 50 percent of what even the most optimistic budgeteers could “guessitmate”.  They (the three or four levels of management represented at the meeting) charged me with the equivalent of “Making bricks without straw or mud in the dark”, that is, creating the portal.  Otherwise, my chances of getting on the Reduction In Force (RIF) list would be drastically increased.

Given that charge, I immediately contacted the software supplier and the development team members from two successful efforts within the organization to determine if there was any hope of the effort within the programmatic constraints to accomplish the task.  All three agreed, it could not be done in less than 6 months.  Faced with this overwhelming and documented evidence, they asked me what can be done.  The result was based on their “capability” statements, and “Requirements (?)” documents from the other two projects, I was able to cobble together a System Architecture Document (SAD) that these managers could point to as visible progress.  Additionally, I used a home grown risk tool to document risks as I bumped into them.  Additionally, I instituted a risk watch list report on a weekly basis, which all the managers ignored.

At this point one fiscal year ended and with the new year, I was able to have the whole, nationwide, team get together, in part, to get everyones requirements and design constraints.  Additionally, I presented an implementation plan for the capabilities I understood they needed.  This plan included segmenting the functions for an IOC build in May, followed by several additional several additional builds.  Since this management team was used to the waterfall development process, the rejected this with no consideration; they wanted it all by May 15th.  In turn, I gave them a plan for producing, more or less, an acceptable number of functions, and an associated risk report with a large number of high probability/catastrophic impact risks.  They accepted the plan.  The plan failed; here is an example of why.

One of the risks was getting the hardware for the staging and production systems in by March 15th.  I submitted the Bill of Materials (BOM) to the PM the first week in February.  The suppliers of the hardware that I recommended indicated that the hardware would be shipped within 7 days of the time the order was received.  When I handed the BOM to the PM, I also indicated the risk if we didn’t get the systems by March 15th.  On March 1st, I told him that we would have a day for day slippage in the schedule for every day we didn’t receive the hardware.  The long and the short of it was that I was called on the carpet for a wire brushing on July 28th when we had the program held up because of lack of hardware.  Since I could show the high-level manager that, in fact, I had reported the risk (then issue) week after week in the risk report she received, her ire finally turned on the PM, who felt he had the responsibility.

The net result of these and several other risks induced either by lack of requirements or lack of paying attention to risks resulted in a system that was ready for staging the following December.  Management took it upon themselves to roll the portal into production without the verification and validation testing.  The final result was a total failure of the effort due to management issues coming from near the top of the management pyramid.  Again, this was due to a complete lack of understanding of the role of Systems Engineering and Architecture.  In fact, this is a minor sample of the errors and issues–maybe I will write a post on this entire effort as an example of what not to do.

In fact the DoD has acknowledged the pattern shown in Figure 2 and countered it by creating System Engineering Technical Advisory (SETA) contracts.

The Utility of Program Management

[Rant 5: Here’s where I become a Heritic to many, for my out of the warehouse thinking.]  In the extreme, or so it may seem it is possible that projects don’t need a project manager.  I don’t consider that a rant because it is a fact.  Here are two questions that makes the point.  “Can an excellent PM with a team of poorly skilled Subject Matter Experts (SMEs) create a top notch product?” and  “Can a poor PM with a team of excellent SMEs create a top notch product?”  The answer to the first is “Only with an exceptional amount of luck”, while the answer to the second is “Yes! Unless the PM creates too much inter-team friction.”  In other words, except for reducing inter-team friction, which uses resources unproductively, and for guiding and facilitating the use of resources, the PM produces no value, in fact, the PM creates no value, just reduces friction, which preserves value and potential value.

None of the latter three types of leaders, as described by Lao Tzu, can perform perform this service to the team, the ones I call in my book, the Charismatic, the Dictator, or the Incompetent. In other words, the PM can’t say and act as if “The floggings will continue until morale improves”.

Instead, the PM must be a leader of the first type as described by Lao Tzu and as I called in my book as “the coach or conductor”.  And any team member can be that leader.  As a Lead Developer and as a Systems Engineer, I’ve run medium sized projects without a program manager and been highly successful–success in this case being measured by bringing the effort in under cost, ahead of schedule, while meeting or exceeding the customers requirements  Yet, on those none of the programs, for which I was the lead systems engineer and which had a program manager and who’s mission was to bring in the effort on time and within budget, was successful.  On the other hand, I’ve been on two programs where the PM listened with his/her ears rather than his/her month and both paid attention to the System Requirements; those efforts were highly successful.

The net of this is that a coaching/conducting PM can make a good team better, but cannot make a bad team good, while a PM in creating better projects plans, producing better and more frequent status reports, and creating and managing to more detailed schedules will always burn budget and push the schedule to the right.

A Short Cycle Process: The Way It Could and Should Work
As noted near the start of this post, there are two ways to resolve the “requirements analysis paralysis” and the “design the best” issues, either by Program Management Control, or through the use of a process that is designed to move the effort around these two landmines.
This second solution uses a development or transformation process that assumes that “Not all requirements are known upfront“.  This single change of assumption makes all the difference.  The development and transformation process must, by necessity, take this assumption into account (see my post The Generalize Agile Development and Implementation Process for Software and Hardware for an outline of such a process).  This takes the pressure off the customer and Systems Engineer to determine all of the requirements upfront and the Developer/Implementer to “design the best” product initially.  That is, since not all of the requirements are assumed to be known upfront, the Systems Engineer can document and have the customer sign off on an initial set of known requirements early in the process (within the first couple of weeks), with the expectation that more requirements will be identified by the customer during the process.  The Developer/Implementer can start to design and implement the new product/system/service based on these requirements with the understanding that as the customer and Systems Engineer identify and prioritize more the of the customer’s real system requirements.  Therefore, they don’t have to worry about designing the “best” the first time; simply because they realize that without all the requirements, they can’t.
Changing this single assumption has additional consequences for Program Management.  First, there is really no way to plan and schedule the effort; the assumption that not all the requirements are known upfront means that if a PM attempts to “plan and schedule” the effort is an “exercise in futility.”  What I mean by that is if the requirements change at the end/start of the new cycle, then the value of a schedule of more than the length of one cycle is zero because at the end of the cycle the plan and schedule, by definition of the process, change.  With the RAD process I created, this was the most culturally difficult issue I faced with getting PM and management to understand and accept.  In fact, a year after I moved to a new position, the process team imposed a schedule on the process.
Second, the assumptions forces the programmatic effort into a Level Of Effort (LOE) type of budgeting and scheduling procedure.  Since there is no way to know what requirements are going to be the customer’s highest priority in succeeding cycles, the Program Manager, together with the team must assess the LOE to meet each of the requirements from the highest priority down.  They would do this by assessing the complexity of the requirement and the level of risk with creating the solution that meets the requirement.  As soon as the team runs out of resources forecast for that cycle, they have reached the cutoff point for that cycle.  They would present the set to the customer for the customer’s concurrence.  Once they have customer sign off, they would start the cycle.  Sometimes a single Use Case-based requirement with its design constraints will require more resources than are available to the team during one cycle.  In that case, the team, not the PM, must refactor the requirement. 
For example, suppose there is a mathematically complex transaction, within a knowledge-based management system, which requires an additional level of access control, new hardware, new COTS software, new networking capablities, new inputs and input feeds, new graphics and displays, and transformed reporting.  This is definitely sufficiently complex that no matter how many high quality designers, developers, and implementers you up on the effort, it cannot be completed within one to perhaps even three months (This is  the “9 women can’t make a baby in a month” principle).  Then the team must refactor (divide up) the requirement into chunks that are doable by the team within the cycle’s period, say one to three months.  For example, the first cycle might define and delimit the hardware required and develop the new level of access control; and so on for the number of cycles needed to meet the requirement.
Third, with this assumption of “not having all the requirements”, the PM must pay most attention to the requirements, their verification and validation, and to risk reduction.  All of these functions lay within the responsibility of the Systems Engineer; but the PM must pay attention to them to help best allocate the budget and time resources.
Fourth, there is no real need for PMRs, status reports, or Earned Value metrics.  The reason is simple, high customer involvement.  The customer must review the progress of the effort every month at a minimum, generally every week.  This review is given by the developers demonstrating the functions of the product, system, or service on which they are working.  And if the customer is always reviewing the actual development work, why is there a need for status, especially for an LOE effort?
Fifth, rolling a new system or service has significant implications for the customer.for the timing and size of the ROI for the development or transformation effort.  With an IOC product, system, or service, the customer can start to use it and in using the IOC will be able to, at a minimum, identify missing requirements.  In some cases, much more.  For example, in one effort, in which I performed the systems engineering role, during the first cycle the team created the access control system and the data input functions for a transactional website.  During the second cycle, the customer inserted data into the data store for the system.  While doing this, the customer discovered sufficient errors in the data to pay for the effort.  Consequently, they were delighted with the system and were able to fund additional functionality, further improving their productivity.  If the effort had been based on the waterfall, the customer would have had to wait until the entire effort was complete, may not have been as satisfied with the final product (more design defects because of unknown requirements), would not have discovered the errors, and therefore, would not have funded an extension to the effort.  So it turned out for a win for the customer– more functionality and greater productivity–and for the supply–more work.
In using a short cycle process based on assuming “unknown requirements”, there will always be unfulfilled customer system requirements at the end of this type of development or transformation process.  This is OK.  It’s OK for the customer because the development or transformation team spent the available budgetary and time requirements in creating a product, system, or service that meets the customer’s highest priority requirements, even if those requirements were not initially identified; that is, the customer “got the biggest bang for the buck”.  It’s OK for the team because a delighted customer tends to work hard at getting funding for the additional system requirements.  When such a process is used in a highly disciplined manner, the customer invariably comes up with additional funding.  This has been my experience on over 50 projects with which I was associated, and many others that were reported to me as Lead Systems Engineer for a Large IT organization.
Conclusions and Opinions
The following are my conclusions on this topic:
  1. If a development or transformation effort focuses on meeting the customer’s system requirements, the effort has a much better chance of success than if the focus is on meeting the programmatic requirements.
  2. If the single fundamental assumption is changed from “All the requirements are known up front” to “Not all the requirements are known up front” the effort has the opportunity to be successful or much more successful by the only metric that counts, the customer is getting more of what he or she wants, and that increases customer satisfaction.
  3. If the development or transformation effort can roll out small increments will increase the customer’s ROI for the product, system, or service.
  4. Having a Program Manager, who’s only independent responsibility is managing resources be accountable for an effort is like having the CEO of an organization report to the CFO; you get cost efficient, but not effective products, systems, or services.  [Final Rant: I know good PMs have value, but if a team works, that is because the PM is a leader of the first type: a coach and conductor.] Having a Program Manager that understands the “three legged stool” pattern for development or transformation, and who executes to it will greatly enhance the chance for success of the effort.

13 years, 27 days ago

Transformation Benefits Measurement, the Political and Technical Hard Part of Mission Alignment and Enterprise Architecture

This post will sound argumentative (and a bit of Ranting–in fact, I will denote the rants in color.  Some will agree, some will laugh, and Management and Finance Engineering may become defensive), and probably shows my experiences with management and finance engineering (Business Management Incorporated, that owns all businesses) in attempting benefits measurement.  However, I’m trying to point out the PC landmines (especially in the Rants) that I stepped on so that other Systems Engineers, System Architects, and Enterprise Architects don’t step on these particular landmines–there are still plenty of others, so find your own, then let me know.

A good many of the issues result from a poor understanding by economists and Finance Engineers of the underlying organizational economic model embodied in Adam Smith’s work, which is the foundation of Capitalism.  The result of this poor understanding is an incomplete model, as I describe in Organizational Economics: The Formation of Wealth.

Transformation Benefits Measurement Issues
As Adam Smith discussed in Chapter 1, Book 1, of his Magna Opus, commonly called The Wealth of Nations, a transformation of process and the insertion of tools transforms the productivity processes.  Adam Smith called the process transformation “The division of labour“, or more commonly today, the assembly line.  At the time, 1776, where all industry of “cottage industry” this transformation Enterprise Architecture was revolutionary.  He did this using an example of straight pin production.  Further, he discussed that concept that tooling makes this process even more effective, since tools are process multipliers. In the military, their tools, weapons, are “force multipliers”, which for the military is a major part of their process. Therefore, both transformation of processes and transforming tooling should increase the productivity of an organization.  Productivity is increasing the effectiveness of the processes of an organization to achieve its Vision or meet the requirements of it various Missions supporting the vision.
The current global business cultural, especial finance from Wall St. to the individual CFOs and other “finance engineers”, militates against reasonable benefits measurement of the transformation of processes and insertion and maintenance of tools.  The problem is that finance engineers do not believe in either increased process effectiveness or cost avoidance (to increase the cost efficiency of a process).
Issue #1 the GFI Process
Part of the problem is the way most organizations decide on IT investments in processes and tooling.  The traditional method is the GFI (Go For It) methodology that involves two functions, a “beauty contest” and “backroom political dickering”.  That is, every function within an organization has its own pet projects to make its function better (and thereby its management’s bonuses larger).  The GFI decision support process is usually served up with strong dashes of NIH (Not Invented Here) and LSI (Last Salesman In) syndromes.
This is like every station on an assembly line dickering for funding to better perform its function.  The more PC functions would have an air conditioned room to watch the automated tooling perform the task, while those less PC would have their personnel chained to the workstation, while they used hand tools to perform their function; and not any hand tools, but the ones management thought they needed–useful or not.  Contrast this with the way the Manufacturing Engineering units of most manufacturing companies work.  And please don’t think I’m using hyperbole because I can cite chapter and verse where I’ve seen it, and in after hours discussions with cohorts from other organizations, they’ve told me the same story.
As I’ve discussed in A Model of an Organization’s Control Function using IDEF0 Model, The OODA Loop, and Enterprise Architecture, the Enterprise Architect and System Architect can serve in the “Manufacturing Engineer” role for many types of investment decisions.  However, this is still culturally unpalatable in many organizations since it gives less wiggle room to finance engineers and managers.
Issue #2 Poorly Formalized Increased Process Effectiveness Measuring Procedures
One key reason (or at least rationale) why management and especially finance engineers find wiggle room is that organizations (management and finance engineering) is unable (unwilling) to fund the procedures and tooling to accurately determine pre- and post-transformation process effectiveness because performing the procedures and maintaining the tools uses resources, while providing no ROI–this quarter. [Better to use the money for Management Incentives, rather than measuring the decisions management makes].
To demonstrate how poorly the finance engineering religion understands the concept of Increased Process Effectiveness, I will use the example of Cost Avoidance, which is not necessarily even Process Effectiveness, but is usually Cost Efficiency.  Typically, Cost Avoidance is investing in training, process design, or tooling now to reduce the cost of operating or maintaining the processes and tooling later. 
[Rant 1: a good basic academic definition and explanation cost avoidance is found at http://www.esourcingwiki.com/index.php/Cost_Reduction_and_Avoidance.  It includes this definition:

“Cost avoidance is a cost reduction that results from a spend that is lower then the spend that would have otherwise been required if the cost avoidance exercise had not been undertaken.” ]

As discussed in the article just cited, in the religion of Finance Engineering, cost avoidance is considered as “soft” or “intangible”.  The reason finance engineer cite for not believing cost avoidance number is that the “savings classified as avoidance (are suspect) due to a lack of historical comparison.” 
[Rant 2: Of course Cost Reduction Saving is like that of avoiding a risk (an unknown) by changing the design is not valid, see my post The Risk Management Process because the risk never turned into an issue (a problem).] 
This is as opposed to cost reduction, where the Finance Engineer can measure the results in ROI.  This makes cost reduction efforts much more palatable to Finance Engineers, managers, and Wall St. Traders.  Consequently, increased cost efficiency is much more highly valued by this group than Increased Process Effectiveness.  Yet, as discussed above, the reason for tools (and process transformations) is to Increase Process Effectiveness.   So, Finance Engineering puts the “emphassus on the wrong salobul“.
They are aided an abetted by (transactional and other non-leader) management.  A discussed recently on CNBC Squawk Box, the recent the CEOs of major corporations cite for their obscenely high salaries is that they make decisions that avoid risk. 
[Rant 3: Of course this is ignoring the fact that going into and operating a business is risky, by definition; and any company that avoids risk is on the “going out of business curve”.  So most executives in US Companies today are paid 7 figure salaries to put their companies on “the going out of business curve”–interesting]
However, Cost Avoidance is one of two ways to grow a business.  The first is to invent a new product or innovate on an existing product (e.g., the IPAD) such that the company generates new business.  The second, is to Increase Process Effectiveness. 
Management, especially mid- and upper-level management, does not want to acknowledge the role of process transformation or the addition or upgrade of tooling as increasing the effectiveness of a process, procedure, method, or function.  The reason is simple, it undermines the ability for them to claim it as their own ability to manage their assets (read employees) better and therefore “earn” a bonus or promotion.  Consequently, this leaves those Enterprise and System Architects always attempting to “prove their worth” without using the metric that irrefutably prove the point.
These are the key cultural issue (problems) in selling real Enterprise Architecture and System Architecture.  And frankly, the only organizations that will accept this cultural type of change are entrepreneurial, and those large organization in a panic or desperation.  These are the only ones that are willing to change their culture.
Benefits Measurement within the OODA Loop
Being an Enterprise and an Organizational Process Architect, as well as a Systems Engineer and System Architect, I know well that measuring the benefits of a transformation (i.e., cost avoidance) is technically difficult at best; and is especially so, if the only metrics “management” considers are financial. 
Measuring Increased Process Effectiveness
In an internal paper I did in 2008, Measuring the Process Effectiveness of Deliverable of a Program [Rant 4: ignored with dignity by at least two organizations when I proposed R&D to create a benefits measurement procedure], I cited a paper: John Ward, Peter Murray and Elizabeth Daniel, Benefits Management Best Practice Guidelines (2004, Document Number: ISRC-BM-200401: Information Systems Research Centre Cranfield School of Management), that posits four types of metric that can be used to measure benefits (a very good paper by the way).
  1. Financial–Obviously
  2. Quantifiable–Metrics that organization is currently using to measure its process(es) performance and dependability that will predictably change with the development or transformation; the metrics will demonstrate the benefits (or lack thereof).  This type of metric will provide hard, but not financial, evidence that the transformation has benefits.  Typically, the organization knows both the minimum and maximum for the metric (e.g., 0% to 100%).
  3. Measurable–Metrics that organization is not currently using to measure its performance, but that should measurably demonstrate the benefits of the development or transformation.  Typically, these metrics have a minimum, like 0, but no obvious maximum.  For example, I’m currently tracking the number of pages accessed per day.  I know that if no one reads a page the metric will be zero.  However, I have no idea of the potential readership for anyone post because most of the ideas presented here are concepts that will be of utility in the future. [Rant 5: I had one VP who was letting me know he was going to lay me off from an organization that claimed it was an advance technology integrator that “he was beginning to understand was I had been talking about two years before”–that’s from a VP of an organization claiming to be advanced in their thinking about technology integration–Huh….]  Still, I have a good idea of the readership of each post from the data,  what the readership is interested in and what falls flat on its face.  Measurable metrics will show or demonstrate the benefits, but cannot be used to forecast those benefits.  Another example is of a RAD process I created in 2000.  This process was the first RAD process that I know of, that the SEI considered as Conformant; that is, found in conformance by an SEI Auditor.  At the time, I had no way to measure its success except by project adoption rate (0 being no projects used it).  By 2004, within the organization I worked for, that did several hundred small, medium, and large efforts per year, over half of them were using the process.  I wanted to move from measurable to quantitative, using metrics like defects per roll out, customer satisfaction, additional customer funding, effort spent per requirement (use case), and so on, but “the management considered collecting this data, analyzing and storing it to be an expense, not an investment and since the organization was only CMMI level 3 and not level 4, this proved infeasible.   [Rant 6: It seems to me that weather forecasters and Wall St. Market Analysts are the only ones that can be paid to use measurable metrics to forecast, whether they are right wrong, or indifferent–and the Wall St. analysts are paid a great deal even when they are wrong.]
  4. Observable–Observable is the least quantitative, which is to say the most qualitative, of the metric types.  These are metrics with no definite minimum or maximum.  Instead, they are metrics that the participants agree on ahead of time–requirements? (see my post Types of Requirements.)  These metrics are really little more than any positive change that occurs after the transformation.  At worst they are anecdotal evidence.  Unfortunately, because Financial Engineers and Managers (for reasons discussed above) are not willing to invest in procedures and tooling for better metrics like those above, unless they are forced into it by customers, (e.g., requiring CMMI Level 5), Enterprise Architects, System Architects, and Systems Engineer must rely on anecdotal evidence, the weakest kind, to validate the benefits of a transformation.
Metric Context Dimensions
Having metrics to measure the benefits is good, if and only if, the metrics are in context.  In my internal paper, Measuring the Process Effectiveness of Deliverable of a Program, which I cited above, I found a total of four contextual dimensions, and since I have discovered a fifth.  I give two, to illustrate what I mean.
In several previous posts I’ve used the IDEF0 pattern as a model of the organization (see Figure 1 in A Model of an Organization’s Control Function using IDEF0 Model, The OODA Loop, and Enterprise Architecture in particular).  One context for the metrics is whether the particular metric is measuring improvement in the process, the mechanisms (tooling), or in the control functions; a transformation may affect all three.  If it affects two of the pattern’s abstract components or all three, the transformation may affect each either by increasing or decreasing the benefit.  Then the Enterprise Architect must determine the “net benefit.”
The key to this “net benefit” is to determine how well the metric(s) of each component measures the organization’s movement or change in velocity of movement toward achieving its Vision and/or Mission.  This is a second context.  As I said, there are at least three more.
Measuring Increased Cost Efficiency
While measuring the Benefits that accrue from a transformation is difficult (just plain hard), measuring the increased cost efficiency is simple and easy–relatively–because it is based on cost reduction, not cost avoidance.  The operative word is “relatively”, since management and others will claim that their skill and knowledge reduced the cost, not the effort of the transformation team or the Enterprise Architecture team that analyzed, discovered, and recommended the transformation.  [Rant 7: More times than I can count, I have had and seen efforts where management did everything possible to kill off a transformation effort, then when it was obvious to all that the effort was producing results “pile on” to attempt to garner as much credit for the effort as possible.  One very minor example for my experience was that in 2000, my boss at the time told me that I should not be “wasting so much time on creating a CMMI Level 3 RAD process, but instead should be doing real work.”  I call this behavior the “Al Gore” or “Project Credit Piling On” Syndrome (In his election bid Al Gore attempted to take all the credit for the Internet and having participated in its development for years prior, I and all of my cohorts resented the attempt).  Sir Arthur Clarke captured this syndrome in his Law of Revolutionary Development.

“Every revolutionary idea evokes three stages of reaction. They can be summed up as:
–It is Impossible—don’t Waste My Time!
–It is Possible, but not Worth Doing!
–I Said it was a Good Idea All Along!”]

Consequently, “proving” that the engineering and implementation of the transformation actually reduced the cost, and not the “manager’s superior management abilities” is difficult at best–if it weren’t the manager’s ability, then why pay him or her the “management bonus” [Rant 8: which is were the Management Protective Association kicks in to protect their own].

The Benefits Measurement Process

The two hardest activities of Mission Alignment and Implementation Process are Observe and Orient, as defined within the OODA Loop (see A Model of an Organization’s Control Function using IDEF0 Model, The OODA Loop, and Enterprise Architecture for the definitions of these tasks or functions of the OODA Loop).  To really observe processes the results and affects of a process transformation requires an organizational process as described, in part, by the CMMI Level 4 Key Practices or some of the requirements of the ISO 9001 standards.

As usual, I will submit to the reader that the keys (culturally and in a business sense) to getting the the organization to measure the success (benefits) of its investment decisions and its policy and management decisions is twofold.  The first high-level activity is a quick, (and therefore, necessarily incomplete) inventory of its Mission(s), Strategies, Processes and tooling assets.  As I describe in Initially implementing an Asset and Enterprise Architecture Process and an AEAR, this might consist of documenting and inserting the data of the final configuration of each new transformation effort as it is rolled out into an AEAR during an initial 3 month period; and additionally inserting current Policies and Standards (with their associate Business Rules) into the AEAR.  Second, analyze the requirements of each effort (the metrics associated with the requirements, really) to determine the effort’s success metrics.  Using the Benefits Context Matrix determine where these metrics are incomplete (in some cases), over defined (in others), obtuse and opaque, or conflicting among themselves.  The Enterprise Architect would present the results of these analyses to management, together with recommendations for better metrics and more Process Effective transformation efforts (projects an programs).

The second high-level activity is to implement procedures and tooling to more effectively to efficiently observe and orient the benefits through the metrics (as well as the rest of the Mission Alignment/Mission Implementation Cycles).  Both of these activities should have demonstrable results (an Initial Operating Capability, IOC) by the end of the first 3 month Mission Alignment cycle.  The IOC need not be much, but it must be implemented, not some notional or conceptual design.  This forces the organization to invest resources in measurements of benefits and perhaps, in which component the benefits exist, control, process, or mechanisms.

Initially, expect that the results from the Benefits Metrics to be lousy for at least three reasons.  First, the AEAR is skeletal at best.  Second, the organization and all the participants, including the Enterprise Architect have a learning curve with respect to the process.  Third, the initially set of benefits metrics will not really measure the benefits, or at least not effectively measure the benefits. 

For example,I have been told, and believe to be true, that several years ago, the management of a Fortune 500 company chose IBM’s MQSeries as middleware, to interlink many of its “standalone” systems in its fragmented architecture.  This was a good to excellent decision in the age before SOA, since the average maintenance cost for a business critical custom link was about $100 per link per month and the company had several hundred business critical links.  The IBM solution standardized the procedure for inter-linkage in a central communications hub using an IBM standard protocol.  Using the MQSeries communications solution required standardized messaging connectors.  Each new installation of a connector was a cost to the organization.  But, since connectors could be reused, IBM could right claim that the Total Cost of Ownership (TCO) for the inter-linkage would be significantly reduced. 

However, since the “benefit” of migrating to the IBM solution was “Cost Reduction“, not Increased Process Effectiveness [RANT 9: Cost Avoidance in Finance Engineering parlance], Management and Finance Engineering (Yes, both had to agree), directed that the company would migrate its systems.  That was good, until they identified the “Benefit Metric” on which the management would get their bonuses.  That benefit metric was “The number of new connector installed“.  While it sounds reasonable, the result was hundreds of new connectors were installed, but few connectors were reused because the management was not rewarded for reuse, just new connectors.  Finance Engineering took a look at the IBM Invoice and had apoplexy!  It cost more in a situation where they had a guarantee from the supplier that it would cost less [RANT 10: And an IBM guarantee reduced risk to zero].  The result was that the benefit (increased cost efficiency) metric was changed to “The number of interfaces reusing existing connectors, or where not possible new connectors”.  Since clear identification and delineation of metrics is difficult even for Increased Cost Efficiency (Cost Reduction), it will be more so for Increased Process Effectiveness (Cost Avoidance).

Having effectively rained on every one’s parade, I still maintain that with the support of the organization’ s leadership, the Enterprise Architect, can create a Transformation Benefits Measurement procedure with good benefit (Increased Process Effectiveness) metrics in 3 to 4 cycles of the Mission Alignment Process.  And customer’s requiring the suppliers to follow CMMI Level 5 Key Practices, SOA as an architectural pattern or functional design, together with Business Process Modeling, and Business Activity Monitoring and Management (BAMM) tooling will all help drive the effort.

For example, BAMM used in conjunction with SOA-based Services will enable the Enterprise Architect to determine such prosaic metrics as Process Throughput (in addition to determining bottlenecks) before and after a ttransformation. [RANT 11: Management and Finance Engineering are nearly psychologically incapable of allowing a team to measure a Process, System, or Service after its been put into production, let alone measuring these before the transformation.  This is the reason I recommend that the Enterprise Architecture processes, Like Mission Alignment be short cycles instead of straight through one off processes like the waterfall process–each cycle allow the Enterprise Architect to measure the results and correct defects in the transformation and in the metrics.  It’s also the reason I recommend that the Enterprise Architect be on the CEO staff, rather that a hired consulting firm.] Other BAMM-derived metrics might be the cost and time used per unit produced across the process, the increase in quality (decreased defects), up-time of functions of the process, customer satisfaction, employee satisfaction (employee morale increases with successful processes), and so on.  These all help the Enterprise Architect Observe and Orient the changes in the process due to the transformation, as part of the OODA Loop-based Mission Alignment/Mission Implementation process.