In a world where things are getting smaller, why are big IT projects still getting approved?

What do I mean when I say ‘things are getting smaller?’. In short, personalisation.

This manifests itself in a variety of forms such as customisation and user-defined choices. We are all expecting that when we want a product or service, we will have a number of choices as to how it is made and how we get it. In order to provide the relevant options (or choices), manufacturers and service providers have had to develop very flexible processes and partnerships with their suppliers to do so. This inherent requirement for flexibility challenges the often rigid and quite formal structures, systems and processes found in many companies. This is particularly true with regard to information services.

In many large organisations, the information systems are managed through a central IT function. They are usually charged with the development, acquisition, provision and support of information systems to the organisation. In short, they have complete control of access and use. The rationale for this is understandable, but as data and information in digital form is now pervasive across all aspects of society, this approach is rapidly becoming unsustainable.

The first casualty may well be the large IT projects that cost much and delivered little. That they have survived for so long is more due to the lengthy timeframes and vague ROI (Return on Investment) measurements. Either they are broken down into manageable chunks that can be completed quickly, or developed within a flexible framework that allows for constant iterative revision, whilst still delivering capability.

This has been recognised by the analyst firm AMR, who recently published a study analysing the issue: Supply Chain Initiatives Require an Iterative Approach. Their main conclusions are:

Rule No. 1: Big bangs don't work. This is not a matter of project management; it is a practical reality for the following reasons:

• Too much integration
• Data quality problems
• Too long
• These factors are cumulative and compounding

Rule No. 2: Iterative steps work. Use simple and practical approaches to ROI (size of potential benefit, execution risk, time to benefit) and link business process improvements and associated software functionality through operating metrics to financial impact. Factors include the following:

• Limit the scope
• Short timeframes
• Single budget period

Rule No. 3: Incentives favor the big project-Beware. As a legacy of ERP, the structural incentives in the software and consulting businesses still foster the long-term commitment.

In other words, major software vendors and consulting houses are more comfortable with long term projects where the compensation models are based on 'time and materials' rather than value added.

As an increasing number of solutions are made available as subscription ‘services’ across the internet and people increasingly consume digital information on a variety of devices, anytime, (almost) anywhere, the challenge for the IT department is clear.

They have to either change or become irrelevant.

We first designed VisibleLogistics for sell-side order management, where a 'seller' would use it to track orders that he ships to his customers. However, when we showed an early version to someone she asked if she could enter a 'purchase order', where she would be the buyer, so she could track products she has ordered from her suppliers.

This question made us realise that our intended simplification of designing for sellers was really just an unnecessary restriction. VisibleLogistics now lets you enter orders acting as any one of buyer, carrier or seller, so you have more flexibility in what you use the system for.

The best part of all this, of course, is that we were about to start using VisibleLogistics ourselves to track things that our development team buys: wine and new computers. This turns out to be really useful in our organisation, because we do not have support staff who handle tasks like buying stuff, so members of the team deal with suppliers directly. This can sometimes be a pain, when a supplier telephones about an order and the person who answers the call does not know anything about it.

Now, with our company VisibleLogistics account, order status notifications are sent to an internal e-mail list, so everyone knows what is on order. Also, if a supplier telephones, it is easy to go to the VisibleLogistics dashboard and find the order in the list of open orders. Even better, when we add a telephone message as a comment on an order, the colleague whose order it is stays in the loop.

Blue Sky Logistics just posted an article about The Long Tail of Supply Chain IT Projects, which points out how The Long Tail applies to supply chain IT projects:

I think the long tail theory can be applied to IT projects, specifically in the area of supply chain collaboration. Traditional supply chain IT spending has gone to large, monolithic software packages that handle an entire functional area of the business: warehouse management, ERP, purchasing […]

With the growth of on-demand applications, faster and more dynamic software development, and XML standards, a company can test the waters with smaller projects and smaller risk[…] With a hosted application, there is much less upfront spending which lowers a big traditional risk of trying to make these kinds of changes.

This actually describes the rationale behind VisibleLogistics pretty well - simple low-cost hosted on-line supply chain collaboration software. The long tail is the large number of small supply chain partners who cannot individually justify or achieve expensive integration with traditional supply chain software, but who collectively represent a huge opportunity for improved collaboration.