capabilities

The art (and science) of non-linear trade-offs….

I’m currently in the process of a job-change after some big changes in my current company. This has caused me to think quite a bit about which part of a job that actually makes it interesting for me. To make a long story a bit shorter, I have come to the conclusion that most of the stuff that is really fun and where I feel I add value to my organistion involves what I have come to call “non-linear trade-offs”**. On talking to my current colleagues I get the impression I am not the only one who feels this way and so I thought the topic worth of a blog post here – it’s been a while since inspiration struck anyway so I can’t afford to be too picky 😀

The linear trade-offs in an organisation, e.g. whether to add more money, resources etc. to something are mostly the domain of Line-of-Business leaders and honestly not very interesting for an architect. They are also inherently linear (or at least approaching linearity within certain boundaries) – if you add more people to a department it will have a higher capacity but also a higher cost and so on. These tradeoffs therefore depend mostly on the available means and capabilities of the organisation, the risk appetite of senior management and also on the commitments to stakeholders outside the organisation which is normally within the remit of the leadership to work on anyway.

Non-linear tradeoffs on the other hand are the tradeoffs where a little change of one side of the tradeoff makes a big difference on the other side. This may be positive or negative, but it is actually surprisingly often the negative part that isn’t well-understood, i.e. that you sometimes can invest nearly all the time/money and still only achieve a fraction of the value. The non-linear tradeoff is therefore the obvious realm of the architect and other like-minded professionals that are able (and willing!) to see through the “illusion” of what a problem initially appears to be and through to the real root causes (or the real obstacles) that need to be addressed.

An example of a non-linear tradeoff that I have seen in practice quite recently involves management reporting. If you want a management report on your sales that shows a certain number of data points that has a cost to develop and run – so far so obvious. Now, you might be happy with a report that covers 50% of the information points, even if it comes at 80% of the cost, because there might be other benefits in terms of time-to-value etc of going with a limited solution and then building on it later. However, only an idiot would pay for a management report that covers all the data points but is only 50% accurate, so whether that report is 50% or 20% of the cost of the “real” solution is immaterial – it’s still worthless!. That is an example of a non-linear tradeoff that is negative – if you are not prepared to invest in what is required to get close to 100% accuracy, then you might as well not bother starting the project at all (or abandon it if it is already running).

Another recent example for me is a fairly long-winded discussion on which tool to use to manage and improve some underperforming data management processes. The push from the business is to invest in a dedicated governance solution because that’s what you normally do. The pushback from yours truly and some key colleagues is that it is not necessary though. On paper this is simple – you go for the “proper” option. However, as most of the problems with the process in question actually consists of lack of clarity of what happens in the process, lack of definitions of what information needs to be collected, lack of clear and enforced roles & responsibilities etc. it would be possible to achieve a substantial portion of the value by putting the process into any tool – because that will simply not be possible without addressing most of the basic business shortcomings first. Taking this approach would also cut implementation time as you will use an existing capability, reduce overall investments and not add to the capability footprint of the organisation etc.

Good old Pareto raises a hand over in the corner and that’s obviously correct, but not all non-linear tradeoffs are close to an 80/20-split. That’s also fine, the important part is recognising that they are non-linear and so there can be large benefits in spending time on finding an optimum here 🙂

Now where I am going it this? Well, as mentioned in the beginning it has actually helped me explain to myself (and a few others) what I enjoy doing – and why I don’t really care about some decisions but will spend a long time on others. I suspect it might also be helpful in my future endeavours as I prepare to (officially) enter the world of EA in a few weeks time 🙂

**I came up with this term recently, but it could be that it already exists and I’ve just seen it somewhere without realising it, so I’m not planning to trademark it – and please don’t shoot me if you’ve seen it somewhere else 🙂

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The cost of capabilities…

Do you understand the true cost of your capabilities?

The topic of this post first appeared in the comments section of a post by Gene Hughson and Gene latched on to my thoughts and posted a great follow-up of his own here. As the topic reappeared in some discussions at work over the last few weeks, I figured now was the time to write it up as a separate post here also 🙂

Imagine you buy a car and each month you pay off the loan/lease and the cost of running the car in full. When after 10 years of running the car and paying off every penny of buying and keeping it, it finally dies, you would think that you would be in the clear, right? You could now make a decision on whether to buy a new car based on the current cost of buying and maintaining a new car just as you did the first time. Well, if you are like most people you will have built you life around having the car and so you don’t really have a choice but to replace the old car when it’s finally dead – that’s the hidden cost of capabilities.

That cost of sustaining your capabilities also very much applies to IT-systems (you couldn’t really live without that CRM-system now, could you? 😀 ) but it is something that most organisations seem to overlook – and don’t think about until it is too late. It goes both for the “core” enterprise systems (ERP, CRM, SCM, PLM etc.) where it is probably mostly the cost of upgrades and patching rather than the cost of replacements that aren’t properly factored in, but still.

Where I would imagine it applies even more is when you delve into the more fast-paced layer of customer/consumer-facing applications in mobile etc. If you want to offer your customers a mobile application you have to consider the cost of updating it as new OS’es and new hardware comes along. Eventually, some of your underlying platform technologies may also die, but you still want to have the mobile app and so the cost of porting/converting/rebuilding it on to another technology stack comes on top.

This (hopefully) isn’t exactly rocket surgery, but as mentioned it does seemed to be overlooked quite often and it is also hard to predict what the real future costs are.

So, what to do about it? Well, if you can’t predict it, you have to find ways to minimise the impact when it does hit and so your two best friends are now architecture and strategy. Architecture to ensure that what is built will continue to be fit-for-purpose for as long as possible, and strategy to ensure that the new capabilities you add will be capabilities you need, and not just capabilities you want.

This way, there should be strategic support for continuing to invest in these capabilities and there should equally be an understanding (for management) that increasing your capability footprint will inevitably lead to an increase in your baseline cost.