Midwest IT Survival

Financial transparency with employees is key to long term success?

As I look back over my almost 20 years of corporate IT employment in multiple MidWestern companies, I’m starting to detect a pattern.  And for those that know me or read my bio know, I’ve working in multiple industries supporting multiple business groups in both public and privately held companies large and small.  Those groups span retail, commodities trading, natural resource exploration, mining and refining, banking and financial services, legal services and manufacturing.  The pattern or trend I am referring to is:

“The degree of success a company or business unit experiences seems to be proportional to the degree of financial transparency reported to employees.”

The more transparent the company or group was with profits or losses, costs and expenditures, revenues and margin, the more successful the company or business unit was growth-wise.  The more secretive and obfuscated the financials the more downward trending the company or business unit as a whole.  I can even recall the same business unit switching from transparent to obfuscated coinciding with a positive to negative growth switch.

The transparency I’ve referring to is not only the quarterly and yearly reports filed with the SEC and available to the investor community.  It is taking some time out of the daily work schedule to bring employees together and explain the business decisions, strategy, budget and market conditions that are behind and driving those numbers.

In recalling my MBA coursework, I had an excellent course on family owned businesses by Ernesto J. Poza, author of “Family Business”.  Ernesto J. Poza is now the Professor of Global Family Enterprise at the Thunderbird School of Global Management.  I believe he also made this link in his course I took at the Weatherhead School of Management at Case Western Reserve University.  His focus was family owned rather than publicly owned businesses, but I believe the theme can be extended to both.  I recently took a continuing education course through Weatherhead and met a CFO of a small, nearby Internet creative design firm who mentioned his company was experiencing measured growth even through the great recession.  He also spoke of the owners having a monthly financial update where a straight review of the prior month’s numbers gives all employees a direct sense of the health of the company.

The straight reporting of the financial health of a company or business unit gives everyone a clear picture of where the company is headed.  If repeated quarters of downward trending financial indicators are given, then no one should be surprised that costs, including employee overhead, needs to be seriously considered for adjustments.  Managing technical teams is more straight forward when everyone on the team knows the health of the overall company or unit.

Can anyone confirm the link between company and/or business unit growth and financial transparent reporting to employees?  Any disagree?

How to marry the classic IT budget and Agile?

I’ve been reading more and more about managing large projects with Agile.  I am wondering how best to optimize the merger of the classic IT yearly budget cycle for large scale projects with the Agile principles and agile project delivery.  There has to be a way to balance the constraints of an upfront budget process with the benefits of agile-ly deployed business prioritized deliverables.  Or in other words, how does one keep the dollars and cents focused people happy and the business project sponsors enjoying the benefits of Agile delivery?

The classic IT yearly budget cycle I’m referring to is one of wild guesses at capital such as servers or software licenses, maintenance, expense and internal plus external resource costs to complete projects that involve IT in the next yearly financial calendar.  Projects maybe completely IT driven with IT as the end customer or projects maybe requested by the business to deliver business value that need IT support in delivering that value.  In either case, the classic budgeting versus agility challenges is the same.  Take the typical project mixing IT and business changes:

New Project Request Form:

Project: A456 Enable Call Center Order Confirmation

Scope: Upgrade the FlimFlam call center system from 5.0 to 6.0 to enable the customer communication widget and change the call center workflow to use the widget and not carrier pigeon to confirm orders with customers.

Budget Questions:

• How much does the upgrade cost?  (easy, ask software vendor)
• How many consulting hours and dollars are needed to support upgrade? (medium, ask software vendor’s professional services for a typical customer upgrade number, then add fudge factors to map over to your company)
• How many hours from your internal shared IT resources to support the entire effort? (hard, don’t have the time to go through the project requirements gathering and design phase or collect all stories, get story points, etc., etc., so take a wild guess based on past projects or other similar work, add fudge factors, add more fudge factors, then double it … you get the idea)

Project Budget Submission Criteria:

? = Capital

? = Maintenance

? = Expense

? = Internal Resource Hours

? = External Resources Hours

? = External Resources Hourly Rate

? = Total External Labor Costs

The budget process demands a number to be provided for each question mark.  You know that certain magic number thresholds, if cross, will doom your project or almost as bad, push it into a category that requires a whole new level of business case and ROI sizing effort. This classic IT project budgeting process doesn’t seem to support the majority of the Agile project delivery process.

Does anyone have any experience or references to best practices in this area of marring legacy budgeting and agility?