Business Operations
What is Midsize?
I was at an Oracle event this week being updated on their new Enterprise Manager 11g. It will be the subject of a future blog post so I won’t go into it now. I went there to see how this software could be of use to the midsize manufacturing and E&P industries as well as the service companies that market to them. As I watched the presentations I was struck by the fact that I was uncertain of the value this tool for the market segment I was focused on.
Then I realized that the reason I was uncertain was that I have been relying on a vague, generalized notion of what midsize meant. We have all seen a simple pyramid like the one shown on the left to represent market segments. The sections are defined by clean, straight lines. In this pyramid I have shown clouds around those clean, straight lines as an indication that they actually have fluffy, vague locations on the chart. I knew that I had to firm up my definition of what midsize meant.
So what is involved in defining midsize as it relates to businesses? First, we have to realize that one variable is the industry that business is in. For example a midsize bakery is not the same size as a midsize refinery. Another popular definition is the number of employees. In both cases, the definition depends on the industry. The dilemma for those of us who have to worry about marketing is that definitions more complex than the ones already noted are not useful for sorting available data into market segments. By that I mean that data on number of employees, revenue and industry are readily available from various sources. Those criteria can be easily plugged in to database searches to generate categorized lists for marketing campaigns.
I believe what is needed is a two pass approach. First, use the simple criteria noted above for a first cut on the data. Then use a more elaborate rating system 
to fine tune and validate the list. It’s more work for sure but will generate higher quality marketing data. My rating system focuses on the notion that the complexity of a business is more useful metric for defining midsize. The list represented by the radar chart on the right identifies a number of attributes to be evaluated. Not all of the attributes listed are complex, like revenue and employees, but most are. For example, one of the attributes is the use of social media tools by a business. Clearly, most businesses do not use them very much at this time but the trend is for increased use in the future for most businesses. Increased use of social media incrementally increases the complexity of the business.
My rating system gives each attribute definitions for each of five ratings. Each attribute is considered for the subject business and given a rating. For those of us who prefer visual representation of data a radar chart provides a shape that corresponds to the overall complexity of the business.
I suggest that this approach would be helpful for the subject businesses themselves. This rating system is basically a simple methodology to focus on each segment of their business, decide where it is today and where they want to go in the future. The results can then be used to decide what projects to pursue and what priorities to set. Large enterprises already have very complex and sophisticated approaches to doing the same thing. Smaller businesses have neither the time nor specialized resources for complex approaches. My rating system can be used in a limited amount of time by non-specialists.
I hope my pitch for a rating system to assess business complexity as the definition of midsize provides some food for thought for customers and vendors alike. I’m not sure referring to my market as mid-complexity businesses would be right thing to do. Maybe I’ll just keep referring to midsize businesses as my market and send a link to this blog post as follow-up.
Thanks for stopping buy. Stay tuned for more…
Microsoft and the Energy Industry
The new issue of Digital Energy Journal (Issue 25) is just out. In it is an article about Microsoft’s new products and directions relevant to the energy industry. With my interests in IT leadership, manufacturing operations and E&P surface operations, I was immediately compelled to read it. Since I have a long history with Microsoft both as a customer and a channel partner I have some well entrenched ideas about how Microsoft fits into the manufacturing and energy world (mostly good with a dash of frustration).
As I read the article, a couple of points jumped out at me. First is the use of the Xbox 360 with the upcoming Kinect user interface device (shown in the image on the right). It is a controller-less device that allows the user to control a game like a Nintendo Wii but without any hand held controllers. This device is primarily intended for the gaming world but has potential for the manufacturing and E&P worlds as well. For example, Halliburton Landmark has just announced a new application called GeoGraphix Discovery 3D. It will build on their GeoGraphix product and make that visualization environment easier to navigate.
What got me excited is the ability to apply an Xbox/PC/Network system to create business visualization environment at an affordable cost. Many of us are old enough to remember when cell phones were big, expensive and had to be installed in your car by a technician. We can also remember what happened to their use when cell phones got cheaper and more portable. Their use grew geometrically as well as their applications. Now consider the large and hugely expensive visualization environments now sold to the E&P industry. Then consider what happens when you can have something acceptably close to the same functionality but on commodity hardware. The cell phone evolution gets replayed for visualization systems.
Now let’s consider what happens when that same commodity visualization environment gets connected to 3-D CAD environments of manufacturing plants and E&P surface operations along with other business applications. Now combine that new mix of tools with a more highly regulated and monitored operational environment. That will happen thanks to incidents like the current BP spill in the Gulf of Mexico and numerous industrial explosions, fires and chemical releases. The best way to image what I’m talking about is through an example.
Let’s image we’re in an ordinary conference room. We’re facing a wall with three large screen monitors in a row. On the middle monitor is a 3-D model of a process manufacturing plant, offshore platform or some other organized industrial collection of pipes, tanks, buildings and equipment. As we walk through this facility we can reach down and touch a piece of equipment as we pass it. When we touch it, its spec sheet and maintenance history are displayed on the screen on the left. If we are concerned about what we see we touch the equipment again with another gesture of our hand and we dictate a note to be attached on that piece of equipment. That note appears on the screen on the right and a flag appears on the equipment shown on the center screen, indicating the need for follow up. All of this data can also be displayed and accessed in a more tradition way on PCs or laptops located elsewhere (or in the same room). This kind of scenario could have applications for the management of these operations to be able to more easily survey and diagnose issues in their facilities. Connecting to a master data management system would allow such a system to be applied to multiple, similar facilities and managed together more easily. Environmental, maintenance and operational data can be displayed together in more intuitive ways. That can lead to the avoidance of future problems of all sorts. This is industrial strength business-IT alignment.
You can use the above example as a base from which to imagine a scenario more specific to your own experiences. Just don’t forget that we’re seeing this using commodity hardware and lower cost software. This puts such a system within reach of mid-sized manufacturers, energy and service companies. That’s a game changer for those mid-size companies.
The second point that jumped out to me in the article was Steve Balmer’s vision of the energy industry’s migration toward cloud computing. He’s probably right but I struggle with that idea when applied to large quantities of data that need to be brought down to a local system for use and analysis. It really depends on how cloud computing standards, security and infrastructure evolve. I have commented on cloud computing issues in the past so I won’t do it again here. If you’re interested, just click on the cloud computing tag in the tag cloud to the right of this post.
In summary, I think that whether you love or hate Microsoft they are one of the very few companies that can provide a sufficiently diverse, integrated set of applications and devices to allow the creation of such architectures at relatively low cost. Let’s hope that Steve Balmer’s vision for the energy industry can become reality and not get bogged down in bureaucracy or drifting priorities along the way.
Thanks for stopping by. Stay tuned for more…
Brokering Clouds
I recently attended an interesting presentation on cloud computing (I’m a sucker for the topic). It was just another perk for being a member of the Houston SIM (Society of Information Management) chapter. The presenter was Gene Phifer, Managing Vice President at Gartner. It covered a history and other background information as well as an interesting perspective from Gartner. I have included a couple of slides here but, unfortunately, I am not able to provide the entire presentation.
While acknowledging the benefits that we have all come to appreciate, he also included a warning of the existing problems. As I have pointed out in previous posts, there is a lot of excitement on the benefits but not enough attention to the risks (they will all eventually be addressed, but not for a while). In my official role as the cloud computing Grinch I want to be sure to draw your attention to the risks associated with those tantalizing benefits. From the Gartner presentation they are:
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Data/Process Location & Isolation
- Security, privacy & ownership
- Security, privacy & ownership
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Regulatory, Compliance & Policies
- Limits, e-discovery, investigations
- Limits, e-discovery, investigations
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Portability between Providers
- Lack of standards, vendor lock-in
- Lack of standards, vendor lock-in
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Provider Trust Management
- Transparency to provider operations
- Immature vendors and certifications
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Uncertain Failure Remediation
- SLA guarantees, redundancy
- SLA guarantees, redundancy
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Integration and Process Integrity across the cloud
- Technical & Support issues
- Technical & Support issues
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Bandwidth & Latency
- Accessing or integrating “clouds”
- Accessing or integrating “clouds”
- Licensing Issues
- Uncertain Financial Models
Now that I have fulfilled my “party pooper” responsibilities I can return to my usual optimistic tone. His presentation went on to highlight the aggressive expansion of both Microsoft and Google into more sophisticated cloud offerings. While Google’s preferences are not surprising, seeing all of Microsoft’s offerings shown on one slide was interesting. While I was aware of each of their cloud based products, seeing them listed together was enlightening. Microsoft is making a real push into cloud computing, which is quite a balancing act for them.
Then the presentation moved into its most interesting phase for me. We started covering the development of cloud applications and assembling them into solutions to business problems. There is now a large selection of application development environments available and covering a broad range of sophistication. The Spectrum of Cloud Computing slide above showed up in this section of the presentation. I like it because it captures the various cloud environments that are possible. It’s easy for the definitions of public, private and hybrid cloud environments to blur. This slide captures the spectrum with a little more granularity and 
clarity.
One point that stood out to me was the idea of cloud brokers. While I’ve heard of cloud brokers before, I hadn’t paid much attention to the concept. It’s actually an intriguing concept once you imagine a future where the cloud-based applications and services are more plentiful, complex and available. The slide on the right is handy for visualizing the attributes of brokers.
There were other slides in the presentation that emphasized how complex these ecosystems will become and the need for brokers will grow. I found a handy resource guide for such brokers as of this moment in time. Its link is here. I found another article on selecting a cloud service broker that is consistent with this presentation. Its link is here.
I am now convinced that the notion of cloud service brokers will become very important to our business. Our target markets are mid-size manufacturers, mid-size manufacturing related service business and independent E&P companies with interest in the notion of Digital Energy. Understanding the cloud service broker universe is now a priority for us. It’s moved way up the priority list. I believe that the risks listed above will provide a useful list of metrics against which to evaluate these brokers. As we get into it, the list may vary a little but this list will provide a good starting point.
Since I am unable to provide you with a copy of the presentation, I would like to provide some alternative. I found a complimentary eWeek article and provide the link here. Stay tuned for future posts on cloud service brokers. They should be interesting.
Thanks for stopping by. See you next time…
Cloud Alignment – Part IV(Privacy)
This post is the last of the series on Cloud Computing addressing the business application of cloud based resources, focusing on midsize companies. It will also include the conclusion for the series which was originally was going to be Part V. The previous posts in this series are:
In this post we’ll focus on a recent report from the World Privacy Forum titled “Privacy in the Clouds: Risks to Privacy and Confidentially from Cloud Computing”. You can pick up a full copy of the report at their website. Recently, I also attended a presentation on cloud computing. The speaker is a Managing VP at Gartner. It was an interesting presentation and will be the subject of a future post. His pitch was very consistent with my earlier posts on the subject and has influenced this post. Agreement with my views just proves that Gartner has some visionary people on staff.
The tone of this report is sober and cautious. It emphasizes the exposure the terms and conditions impose on the customer by their cloud provider(s). I agree with this concern. As I’ve mentioned before, cloud computing is growing faster than it’s maturing. Standards and regulations are catching up but still have far to go. Another valid concern is the physical location of the data. For example, if the data is located on a server in the US it is subject to disclosure to the Federal Government (with a subpoena) under the Patriot Act. Many foreign companies specifically exclude US servers in their cloud contracts for just that reason.
For many midsize companies, the cost benefits are hard to resist. Essentially, a company exchanges the capital costs associated with building a data center for the operating expenses associated with buying computing power as services. That can be intoxicating and result in a smaller company rushing into the arms of immature cloud service providers. Clearly, it is not advisable at this time for companies to put their proprietary intellectual property in the cloud unless it’s a private cloud behind your own firewall. The main concern is the public cloud but that is also the most accessible source of cloud services.
The health care industry has its own issues with HIPAA and is a major issue in this report. The unintended release of health records for any individual to unauthorized use is about as severe a breach of privacy as you can get. There can be some circumstances where the Patriot Act and HIPPA conflict. I’m not a lawyer or politician so I don’t want to even think about that scenario.
One issue that I had not thought about directly is the scenario when a cloud provider goes out of business. There are now thousands of small companies growing up around cloud computing services. As we have seen over and over again in the technology world, a new technology is born, large numbers of companies vie for their piece of the rock, the field gets overcrowded and a “rationalization” occurs where the strongest survive and the weak can go down hard and fast. There may be some contractual language in the service agreements of those weak companies, but trying to determine how the customer’s data was managed during the dying company’s last days may be impossible to determine with confidence.
The WPF website offers these tips for business and government:
- Beware of “ad hoc” cloud computing. Any organization should have standardized rules in place telling employees when and if they may utilize cloud computing and for what data.
- Don’t put anything in the cloud you wouldn’t want a competitor, your government, or another government to see.
- Read the Terms of Service. Then read the Terms of Service again.
- Make sure that you are not violating any law or policy, by putting data in the cloud, and think twice before putting any consumer data in the cloud.
- Consult with your technical, security or corporate governance advisors about the advisability of putting data in the cloud.
These are simple, sensible guidelines to follow in your voyage into cloud computing. Check out their website for more details.
Conclusion
As we’ve seen over this series, cloud computing is here, it’s not going away and it’s going to grow faster than it matures. The promise is compelling and worth exploring, but cautiously. There are public, private and hybrid clouds. Each of which is appropriate for different purposes. Most of us are already using some form of cloud computing (have you every booked a ticket on an airplane, rented a car online or attended a webinar?) It makes sense that we embrace this technology carefully and expend the effort to be informed consumers.
I believe that eventually, most the problems and risks will be addressed to the point where we can sleep at night. That’s going to take a while. Until then, staying on the sidelines is overly cautious. Try out cloud computing on small, low risk projects until you’re comfortable and more knowledgeable. Then use it for where it makes sense.
I hope this series has been of value. Thanks for stopping by.
A Consulting Ecosystem
I recently attended a dinner meeting addressing, among other things, the future of work. That reminded me of a book that I read a long time ago in which the same thing was discussed. That book is titled “The Future of Work”. An image of that book cover is shown here (click on it to see that book on Amazon.com). I’m not going to attempt to do a book review here. I will address one of the points made in the book and what it means to the consulting business.
In Grantham’s book he describes the “Hollywood Model”. That business model is based on the movie making business in Hollywood where teams of independent, self-supporting specialists group together for a project. At the completion of the project, these teams disband. These specialist entities may be individuals, small organizations, larger organizations or yet another small team of specialists. As this idea evolves we start to envision a network of entities that begin to look like a complex molecule.
Maybe it would be more meaningful to refer to a molecular consulting ecosystem. Just for kicks I did a Google search for “molecular consulting ecosystem” and got no hits. I think I’ll include that phrase in my keywords for this post. Or not. Back to a serious note, the notion of comparing coordinated groups of independent entities for some common purpose to something like a molecule is not a new idea. Actually, if you think about it, we are talking about a fairly structured collection of entities focusing on very specific goals or projects. I think the best analogy is a crystal. Crystals are composed of atoms in a very specific structure. They tend to be stronger and more predictable than more typical organic molecules. They also tend to last a long time. Maybe naming such a business model after a crystalline structure is a good idea.
So what should be done to actually use this idea in a more general purpose consulting environment? Let’s think about a few more details and specific goals of such an arrangement. So what are the basic goals for the group?
- The entities (individuals or small groups) must be knowledgeable.
- The entities (individuals or small groups) must be perceived as knowledgeable by the group’s clients.
- The entities (individuals or small groups) must be safe to do business with.
- The entities (individuals or small groups) must be perceived as safe to do business with by the group’s clients.
- The group must have a means of generating new opportunities.
- The group must have a means of presenting a unified presence to the marketplace.
- The group must have an accepted means of distributing revenue among the entities.
- The group must have an accepted means of distributing operating costs among the entities.
- The group must have an accepted means of distributing liability among the entities or centralizing it as appropriate.
- The group must have an accepted means of recruiting and vetting new entities.
- The group must have an accepted means of allocating rights and access to any intellectual property generated by the group during an engagement and not the exclusive property of the client.
- The group must have access to systems to support collaboration among the entities for skills exchange and training.
- The group must not be constrained by national boundaries.
- The group must have access to systems to allow the collaboration on work product documents and proposals.
- The group must be able to scale to perform various sizes of engagements.
- The group must be able to include external entities as necessary for specific engagements.
- The group must be able to include clients as appropriate.
Basically, the group must be able to function very much like a company but maintain the ability to expand and contract as needed. It strikes me that what the group needs is an infrastructure that looks much like a PMO, or Project Management Office. That PMO must have some of the attributes of a business and not just a department within a larger organization. Going back to our crystal analogy, there must be a seed crystal around which other crystals form or connect. That seed crystal becomes the key to making everything else stable and effective. The seed crystal contains the PMO.
Maybe I’ll just call this the “Crystal Consulting Model”. Google doesn’t have anything for that phrase either. Anyway, consider this a part of an upcoming series of posts. I don’t know how many or when they will appear but this topic is important to our business so defining it more clearly is very important to us.
Thanks for stopping by. Any comments would be much appreciated. See you next time…