RECOVERY POINT OBJECTIVE, RECOVERY TIME OBJECTIVE, and WORKFORCE CONTINUITY

Three important aspects of any disaster recovery and/or business continuity plan are the so-called Recovery Point Objective, Recovery Time Objective, and the Workforce Continuity Plan.

In a September 11 post, I recounted five questions that the client must answer with clarity. Those questions should start the mind thinking about the likely and unlikely disasters they face and how they would respond to them.

Those five questions again are:

1. How will disaster impact your key assets?
2. What are the most likely disasters that could strike your business?
3. Which systems must be restored in priority sequence?
4. What are the possible points of failure in your current systems?
5. How much will you budget for disaster recovery?

Several readers noted that I missed at least three more important aspects. Although I originally felt that those aspects would have arisen during the brainstorming part of answering those five questions anyway, I decided that these aspects are important enough that they should be listed explicitly.

Recovery Point Objective (RPO)

This measures the amount of potential data loss that you can afford or are willing to lose. For example, would you be willing to lose a week's worth of accounting work? Possibly, since that work can be repeated. On the other hand, would you be willing to lose even a day's worth of sales transactions? Probably not, since it would be difficult, impossible, or embarrassing to try to reconstruct the sales transactions of a day.

Recovery Time Objective (RTO)

This measures the period of downtime you are willing to tolerate before your systems come back online. This is the length of time that elapses from the minute a disruption occurs to the minute it is restored. Similar to the RPO, your RTO may vary depending upon the importance of the system. For example, you may be willing to have an RTO of one week for your accounting system but only an RTO of one day for your sales and invoicing system.

Workforce Continuity Plan

Without your workforce, you cannot conduct your business. Have you identified the key people in your workforce? Do they know their roles in the event of an emergency? What facilities or equipment should be made available to them so that they can go about their work? Where will they work from? How will you handle medical and safety issues? Above all, how will you ensure that they can communicate?

To illustrate how these aspects are linked, consider email. Everyone relies on email. In fact, wouldn’t you agree that your email system is a critical system? Not only does it allow you to communicate, it also contains a lot of important documents. These documents may be in the form of email attachments or the body of the email itself may be the important message itself. Your email system figures prominently in your Workforce Continuity Plan as well as in prioritizing your RPO and RTO.

I hope the inclusion of these three aspects will help you facilitate your own planning process even more.

PROJECT MANAGEMENT: HOW TO DEAL WITH VAGUE OBJECTIVES

It’s not unusual for an objective to be initially defined vaguely for any number of reasons. It may be a first-time objective. It may not have been thought through all the way and it’s your assignment to flesh the objective.

Do not make the mistake of accepting a project that has a vague objective(s)!

In fact, even if the objective seems straightforward, I think it’s a good idea to check it against your SMARTs. This familiar technique—you can google it easily—ensures that the objective is really clear. If it doesn’t pass your SMARTs, then you have to push back and insist on further clarification.

Remember, you have to clarify it before you accept it.

SMART is an acronym for the five standards that must be met by your project objective.

Specific + Measurable + Agreed-upon + Realistic + Time-bound


Here are the details.

Specific

An objective must have enough specific detail so you know what the final product or service is supposed to resemble.

Measurable

Quantify the objective and use an objective standard if possible and desirable. Reduce subjectivity since it leaves too many things open for conflict.

Agreed-upon

The standards of performance must be established before the project gets underway. This is especially important when there are numerous stakeholders.

Realistic

Negotiate. Exploit the flexibility of the triple constraints. Frequently, a project seems too difficult or impossible because of the project’s constraints. If the constraints are negotiable, risk is lessened and the likelihood of success improves.

Time-bound

A deadline motivates action. A lack of urgency tempts people to procrastinate. Always have a time constraint.

Additional Remarks:

The SMART process is iterative, i.e., it uses successive rounds to zero in on the most precise solution. Be forewarned that this is a time-consuming process. On the other hand, time-consuming as it is, you can be sure that it will save even more time by preventing (or at least minimizing) the chance that you will have to re-do the project.

Try to meet all stakeholders at each round of the process. Do this for everyone’s sake. Stakeholders who are neglected or even just feel left out frequently tend to put pressure elsewhere on your project. Invite them since you need to protect their self-esteem and sense of participation.

Summarize and paraphrase each stakeholder’s input until the stakeholder agrees that you, the PM, understands.

At the end of each round, prepare a draft statement of the negotiated objectives and circulate it. Invite feedback and discussion.

You’ll know that the objective is clear when it passes the SMART test and is accepted by all stakeholders. Ideally, this group should include even those stakeholders whose objectives were eliminated. This group may not like the final decision but the important thing is their acknowledgment of the fact that their objectives will not be in the final project. Remember: the objective has to pass the SMART test and is accepted by all stakeholders.

This post originally appeared in my other blog. I transferred it here as part of the project to separate work-related materials from personal materials.

HOW A WELL PLANNED IT STRATEGY SAVED A WELDING COMPANY

This tale of a welding company is full of lessons. It's an actual company and our client.

Companies, like products, have a life cycle.

A start-up would have a different set of priorities from a mature company. A growing company taking giant steps to reach the next level would also differ from a market leader trying to maintain the course.

Business objectives can be categorized by time period. There are near-term, intermediate, and long-term objectives.

Objectives will also differ based on the company’s place in its life cycle and on the ambitiousness of its owners. Does it seek to simply maintain the status quo? To advance ahead of the pack? Or to innovate, jump to a higher level, and even create a new industry?



Whether they realize it or not, all organizations operate within this framework. Leaders who recognize this can tailor their strategies to optimize the investments they make to achieve their objectives.

Optimize, as used here, means reaping the highest possible return for the dollars and the effort.

Objectives dictate strategy. Strengths, weaknesses, opportunities, and threats shape it further.

Objectives must also be appropriate. How likely will a community bank’s plan to become a downtown commercial bank succeed? Within three years, probably not. Within 10 years, maybe.

Smart and purposeful strategies place the company’s objectives within this matrix.

Enter technology. We use it to achieve business objectives. That said, how do we connect IT strategy with this matrix of objectives?

ALIGNING YOUR IT STRATEGY WITH YOUR BUSINESS OBJECTIVES

Let’s take an actual company, trace its path in its life cycle, and show how it made smart investments in IT in order to meet the objectives in its matrix.

The subject is a growing manufacturer of welding supplies. Its premium products are sold to other manufacturers who share one common attribute. They’re all known for producing high quality products. Its welding supplies are used wherever superior welds are necessary. Its customers are in Japan, Germany, the U.S., and other industrialized countries. This manufacturer is competing globally in a niche with few players. It has decided that it wants to increase its market share and accomplish that by buying a larger but floundering competitor. Its matrix looks like this:



The numbers show how its IT investments are allocated. Notice how the allocation changes according to the nature of the business situation which, itself, depends on the company’s place in its life cycle as well as its place in its long-term strategy.

Let’s understand the nature of the objectives first.

THREE DIFFERENT KINDS OF BUSINESS OBJECTIVES

“Status quo” refers to simply maintaining the necessary infrastructure to operate the business. These investments cover such functions as e-mail, website & web-based services, and company records. These are core operations but also included are some not-so-obvious necessities like regulatory compliance.

The corporate scandals of 2001 spawned a host of legal and regulatory requirements. All publicly-traded companies, for instance, must comply with the Sarbanes-Oxley Act of 2002 (otherwise known as SOX).

SOX is a complex piece of legislation implemented by the Securities & Exchange Commission (SEC). SOX was written with broad brush strokes and this has allowed the SEC wide latitude in interpreting its provisions. It matters for many reasons and only one has to be stated here.

It lifts the mantle of accountability all the way up to the Board of Directors for essentially confirming the truth and accuracy of the company’s financial statements. This sharpens the line between the legal persona of a corporation and the actual persons who run it. Before, the corporation was its own legal entity and its officers stood legally distinct from it. SOX, arguably, still recognizes that but it also recognizes that real people run the corporation. SOX detractors make good points against it but, personally, I believe that SOX, overall, is justified because it brings the legal persona of a corporation closer and more down to earth. Corporate officers are real people. Corporate officers are stewards of money raised from the public. They use other people’s money and if some of that was your money, wouldn’t you demand some accountability for the way they used it?

Thanks to SOX, the Board and every corporate officer down the chain of command are now liable for violations of this law. This naturally compelled companies to establish oversight mechanisms for financial reporting. This means all publicly traded firms must spend IT dollars complying with SOX simply as a part of doing business.

“Advance” refers to advancing ahead of the pack. How do you advance? By creating competitive advantages. That management-speak refers to either of two things. Your costs of doing business are lower or your business is more productive than your competitors.

LOWER COSTS

Assume a competitor and your company spend $5 to create and sell one welding rod. You invested IT dollars to create a web-based service that allows your marketing, sales, manufacturing, and purchasing people to coordinate your company’s purchases of raw materials. This investment pays for itself by minimizing errors in ordering quantities and optimizing the timing of those orders so that you receive them only when you need them.

In management-speak, you created an intranet to improve your supply chain. If you opened up the intranet (that’s a company-wide internet meaning it’s only accessible within the organization) to your suppliers, your intranet has expanded to become an extranet. How do these “nets” help? They should lower your costs by extracting savings. The savings come from committing fewer errors, buying only when you need to, and, of course, from automating the entire process.

If I went grocery shopping and bought two extra milk jugs for a party this weekend and learned that the party had been postponed but I wasn’t informed, then I wasted money by buying two extra jugs, ahead of time, requiring me to choose between spending more time and gas to return the jugs or to keep them and have them spoil. All of these could have been avoided if I had just been informed.

GREATER PRODUCTIVITY

Your company is now using your intranet. Now purchasing is buying your raw materials in the right quantities at the right times and from the most competitive suppliers. Given all that, wouldn’t it be reasonable to expect a more efficient production floor? For example, I would expect fewer incidents of production shutdown because of raw material shortages.

That translates into increased productivity and you can measure it by dividing your overhead into your output of finished goods.

If your competitor and you had similar plants that produced 100,000 welding tips at a cost of $50,000 a month and your output increased to 125,000 simply because you never had shortages, your productivity quotient improved from 2.0 to 2.5

“Innovate” refers to revolutionary, as opposed to evolutionary, changes in the way you do business. The two terms, “revolutionary” and “evolutionary,” allude to the magnitude of change. The former means a radical change and the latter means a gradual change.

Apple’s iPods and personal GPS systems (Global Positioning Satellite) are two familiar consumer examples of product innovations. They were so revolutionary that:

• they didn’t fit in any existing product category; and
• they created new markets and will, in most likelihood, spawn new industries.

Apple knew it had a hit when iPod became a noun (just like “Google” became a verb) and companies in other industries created products to complement the iPod.

Bose®, for example, created its SoundDock® for the iPod.

The Bose® SoundDock® digital music system was specifically designed to expand and enhance your enjoyment of the music stored on your iPod. Just slip it into the iPod docking station for the Bose sound your favorite songs deserve. The iPod charges as it plays, so you enjoy music without interruption.

Innovative IT investments are undertaken on the premise and promise of revolutionary outcomes. Bear in mind that, as with most things, the potential for a greater reward is counterbalanced by the investment’s higher risk. What specifically makes innovative IT investments riskier?

1. The technology might be nascent, i.e., it recently came into existence.
2. The technology might have never been used for the purpose your company is planning to use it for.
3. There are typically fewer (or even just one) companies supporting the technology. What happens if they go out of business?
4. There are fewer qualified personnel to operate the technology.
5. The technology will be expensive. Early adopters of new technology pay a premium for the privilege of being the first consumers. On the other hand, their Return On Investment (ROI) might also be substantially higher than average.

Some risks can be mitigated while others may not.

Let me share these details about the high-risk, high-reward program of our subject welding company. The company is currently in the first half of a 24- to 30-month long $10-million dollar program consisting of three projects.

A program consists of two or more projects. A program has a large scope. Sending man to the moon is an example of a program.

The project managers are introducing a piece of the new technology as each project finishes. So far, so good. If it succeeds this company will be poised to offer new products and services faster than ever before. It will also help the company forge closer ties to its customers -- more so than its competitors presently can.

A PRIMER ON THE WELDING INDUSTRY

Talk about unglamorous but vital. Until I began working with this company, I didn’t give welding a second thought. I found welding to be as interesting as buttons. They hold things together and their absence would change our lives drastically. Unfortunately, they’re so mundane that they don’t even register on my radar screen.

Click here to read about the Welding Industry.

BEFORE WE ANALYZE THOSE NUMBERS

Here, again, is the IT Investment & Strategy Matrix.



At this point, we know the row headings classify business objectives by their nature. Is the objective to simply maintain the status quo? Is it to advance ahead of the pack? Or is it to innovate and aim to leapfrog the industry?

We also know the long-term plan of the company. Let’s refresh ourselves:

The subject is a growing manufacturer of welding supplies. Its premium products are sold to other manufacturers who share one common attribute. They’re all known for producing high quality products. Its welding supplies are used wherever superior welds are necessary. Its customers are in Japan, Germany, the U.S., and other industrialized countries. This manufacturer is competing globally in a niche with few players. It has decided that it wants to increase its market share and accomplish that by buying a larger but floundering competitor.

To that, I’ll add this much more.

THE CURRENT STATE OF THE WELDING INDUSTRY

The metal welding equipment and supplies industry primarily serves mature markets with fully developed technology. Major portions of the welding market are flat or growing proportionately with the Gross Domestic Product.

The U.S. welding industry faces three major challenges:

1. a chronic shortage of trained welders;
2. an increasing number of low-priced foreign competitors; and
3. the continued growth of alternative metal-joining technologies and alternative fabrication technologies.

You can substitute practically any industry in that paragraph and the list will not materially change. In other words, these are not new challenges.

My client realized this and concluded, correctly in my opinion, that the battle has to be taken overseas. Welding is one industry that clearly feels the impact of globalization. The battleground is not in North America; it is everywhere.

Take China’s emergence as an economic power. The average American doesn’t realize it but China has turned into a giant; it’s the biggest news outside the U.S. Its transformation into an industrialized country, has fueled an enormous demand for infrastructure. Infrastructure means roads, buildings, bridges, et al. And infrastructure requires a lot of welding.

It’s impossible to compete against inexpensive Chinese manpower but China requires high-quality welding equipment and supplies. Chinese imitations don’t make the grade. Yet.

Figures are hard to come by, even by the industry’s trade associations, because the industry lagged behind in uniting and creating common standards. In addition, most welding end-users perceive welding as a necessary production input for which costs must be controlled. Consequently, the overwhelming majority evaluate welding with the objective of reducing costs. Very few study the economics associated with it with the objective of increasing welding’s value-added contribution.

The size of the U.S. market was estimated at about $6 to $8 billion dollars in 2005. We’re talking about the market size for welding equipment and supplies. It’s so vague that my client could only make a rough guess about the size of the global market. His low and high estimates were $12 to $15 billion dollars. The $3 billion dollar variance doesn’t inspire confidence (it’s 25% of his low estimate). Independent reports are available but for this article, I wasn't going to spend $4,200 to buy the report to submit a more accurate figure.

We started working with him in 2004. Teamed up with one of my consultants, the owner and his staff, we created the matrix. His company is not publicly traded so SOX doesn’t concern him. On the other hand, in early-2004, his primary factory nearly burned down and took with it almost all his records. Like too many end-users, he ignored the peril of data loss. He paid lip service to a systematic approach to data backups.

That lackadaisical approach nearly killed his business. Studies show that as much as 50% of ongoing businesses that lose most of their data go out of business within 12 months. Another 25% will close its doors by the end of the 24th month. (This subject will be covered in a forthcoming blog post.)

He became our client after that near-disaster.

Our background information is complete.

ANALYZING THOSE NUMBERS

Here, again, is the IT Investment & Strategy Matrix.



In the first two years, my client devoted 80% of his IT budget to rebuilding and creating a robust IT infrastructure.

The phrase, “robust IT infrastructure,” sounds impressive and it is impressive. The IT infrastructure refers to the roads and parking lots that data is channeled through. These are the servers, networking gear, and security-ware.

Robust (as opposed to frail) refers to creating an IT department and a secure physical location staffed with the right people implementing the right processes.

Give data its due respect. My client had a small business mentality before his accident. IT was an afterthought (just like welding is for most end-users!). One observation will suffice. His son and his son’s friend were his part-time IT staff! This, for a business with 150 employees in the $40 million dollar range.

In '04 and ’05, he invested 20% of his IT budget in people and processes to advance his business ahead of the pack.

IT veterans may disagree (as I originally did) but, in this particular case, those investments consisted of creating the disaster recovery and business continuity processes. This consisted of storage and backup equipment and the services of an outside data center. And, of course, people. Always, people.

We agreed to classify this investment as one whose objective was to advance ahead of the pack because his competitors were still using their children to run their “data centers.”

Financial institutions, which are bound by more stringent requirements to protect their records, would classify this investment under the objective of simply maintaining the status quo.

I think you’ll agree that this investment gave him a competitive advantage; a significant one at that.

THE INTERMEDIATE TIME PERIOD: YEARS 3 AND 4

The past two years, 2006 and 2007, revealed the conviction of his aspirations. His company strengthened its market position and become financially stable. Forty percent of his IT dollars went to maintaining the status quo. Half of his budget went to beefing up his infrastructure and developing web-based services (his intranet). This made sense since his operations started leaning more and more on IT. He had to upgrade not only his existing capability but also his IT redundancy.

“Redundancy” refers to the fallback system that he could fall back on whenever his primary system went down.

This is where we patted ourselves on the back. His total operating budget in 2007 was about 30% larger than it was in 2004. This roughly mirrored his company’s growth.

Now for his IT budget. In 2004, his entire IT budget was a third of his total operating budget. Three years later, in 2007, IT consumed only 15% of his total.

IT Budget as a portion of the Total Budget

He was able to devote less of his total dollars to IT since he (with our guidance) had the foresight to build a strong foundation.

A strong foundation only requires regular preventive maintenance. Like a new car, it only requires fuel, oil (regular fluid changes), and lubrication. More significant expenses are incurred only when major components like tires and belts need to be replaced.



When the matrix is charted (below), you clearly see how his IT strategy directed the allocation of his IT dollars to accomplish specific objectives.



With time, he spends less and less of his IT dollars on maintaining his core operations. At the same time, he increases his investments in the Intermediate period to accommodate the needs of his organization after he makes the acquisition. It is also during this time period that he starts investing in cutting-edge concepts. He’s not actually using unproven technology. Rather he’s configuring them in ways intended to make his ideas a reality.

When the third phase begins in 2011, he plans to ramp up his investment in those cutting-edge concepts. He hopes to create a new kind of supply chain for the upstream and downstream. If he succeeds, he will change the rules not only of the welding industry and make an impact on the nature of supply chains in general.

He also thinks that within the next five years, his company could grow to become the third largest in the world. (The current number three grossed $153 million dollars in 2001. I know that was seven years ago but that’s the most current reliable figure I got for this article.)

WHAT DID WE LEARN?

I hope you enjoyed this story as much as you learned from it.

I’d like to emphasize these points.

1. Your data is valuable. Streamline the process of capturing the data. Massage it and make it available for use.
2. Protect it. Treat data for what it is—invaluable information. It’s intangible but in many ways, it’s more valuable than property, plant, and equipment.
3. Use technology to help you accomplish your business objectives. In management-speak, this is about aligning your IT strategy to drive your goals.
4. Understand and differentiate between the nature of your objectives. Align your IT investments accordingly. Budget your IT dollars purposefully.

This entry originally appeared in my other blog. It's been transferred here in order to separate the work-related materials from the personal materials.

PREPARING FOR DISASTER RECOVERY—CLEAR QUESTIONS THAT MUST BE ANSWERED

The recent photo above shows a building on fire in Karachi, Pakistan. Think it’s unlikely to happen to you? Well this was the second time in six months that this building caught on fire.

In a recent project involving disaster recovery, the owner insisted that we clarify the issues confronting his business very clearly. It forced us to look for the best (i.e., clearest) questions. Here they are. The questions were distilled from information that was found at Sungard, Iron Mountain, Forsythe.

November 3 update: I added three more important aspects to consider in your disaster recovery and business continuity planning. Click here.

We came up with five questions.

1. How will disaster impact your key assets? Your key assets are your people, your property, your computing systems, and your data.
2. What are the most likely disasters to strike your business? Prepare a response for each one. You might need different plans for a building fire and an earthquake.
3. Which systems must be restored in sequence? This requires you to prioritize your systems.
4. Identify the possible points of failure in your current systems. Can you plug those possible points of failure in your most critical systems?
5. How much will you budget for disaster recovery? To accurately budget for disaster recovery, quantify your possible losses from the interruption of your most critical systems.

YOUR KEY ASSETS
Let’s return to the four key assets. Questions are posed for each asset. Your answers will get you started.

1. People - How will your employees be notified and evacuated? How will they be able to work after the disaster? If your building burns down today, how will your people be able to work tomorrow to restore your business?
2. Property - What equipment will you need for your people during and after the disaster?
3. Systems - How much downtime can you tolerate? To be prudent, which systems must be duplicated before disaster strikes? If that wasn't done, which systems must be brought back online urgently?
4. Data - Identify your most critical data. How will you protect it before disaster strikes? How will you recover any lost data?

ABOUT OUR SOURCES
This information came from their respective websites:

• SunGard’s robust infrastructure, pressure-tested processes, and expertise keep client people and information connected. Sunguard helps 10,000 customers worldwide achieve uninterrupted access to their mission-critical data and systems
• Iron Mountain helps organizations around the world reduce the costs and risks associated with information protection and storage. Iron Mountain is a trusted partner to more than 120,000 corporate clients throughout North America, Europe, Latin America and the Pacific Rim.
• From the boardroom to the data center, Forsythe helps organizations solve business problems through technology. Forsythe can help you align & operate IT, manage risk, protect & manage data, optimize the data center, enhance IT infrastructure, and source & manage technology.

WHY YOU SHOULD HAVE A FRAMEWORK FOR MANAGING YOUR INFORMATION!

Information is now recognized as an asset. It enters an organization as raw data and until it’s processed, i.e., organized, filtered, and presented in a meaningful way, data has little value. An organization needs a framework to manage this process.

Like any asset information can be useful if handled properly and dangerous if handled carelessly. Consider medical records-the electronic kind although this applies to paper as well. One set of medical record will assist doctors understand a patient's condition. But if the same record falls into the wrong hands, the hospital is liable for damages since it violated government regulations (HIPAA, for example).

Managing information is crucial therefore. Just as you would protect your equipment from the elements, so should you handle information carefully. Information management is a complex function. Data originates from many sources. Data that’s important must be segregated and only valuable data should be collected.

Managing information begins by creating a framework. The framework must deal with four issues and, therefore, has four layers. These four issues are:

1. What is the company's policy towards its data?
2. Who will govern it data?
3. How will its data be processed, and presented?
4. How will its data be stored and protected?

We might say that the framework is concerned with policy, governance, operations, and infrastructure.

POLICY

Senior managers must identify the information the organization needs. It needs to determine using broad strokes how it will store, collect, and organize data so that it becomes useful information that decisions can be based upon. Aside from the obvious sources of data, e.g., customer and supplier transactions, thought must be given to email and other internal documents that contain the communication steps of decision-making and the decisions that were made.

GOVERNANCE

This is concerned with the actual infrastructure that will store the data and convert it into useful information. It is also concerned with developing the life cycle of information within the company. The life cycle starts when raw data is collected to when it becomes information that is used for making decisions to the point when the data is either archived or destroyed. The following acronym summarizes these steps-CARD. It stands for Creation-Access-Retention-Destruction. IT must map the flow of information from origin to the different departments and to the decision makers. The flowchart must include the input of all functional managers whose departments get touched by data.

OPERATIONS

Operations will be driven by the processes that were developed by the preceding layers. This issue squarely deals with issues relating to disaster recovery and business continuity. It also deals with the steps that need to be taken to comply with government regulations. How will the organization protect its data and comply with government regulations? What is the architecture of the information solution that will be able to collect, store, process, and control access to the information?

INFRASTRUCTURE

Infrastructure is primarily about technology and the people that will maintain it. Regardless of infrastructure type, IT must be able to deliver information in the required format to the person who needs it at the moment they need it. Infrastructure is concerned with meeting the demands of the previous layer.

SUMMARY - SUMMARY - SUMMARY

After seeing how some organizations struggle with developing an information structure the wrong way, I decided to write this. Basically, you don’t start with the technology and develop your strategy and policy from the existing technology. That's akin to the tail wagging the dog.

The correct way to develop an information framework is to start from the top. The effort should be led by senior managers. The organization’s IT department only guides the effort. The top layer-policy-should be created with a view to external, financial, and operational factors. From this policy will flow strategies for managing the information life cycle, storage, data protection, and the like.

For the final time, it’s very important for an organization-especially one that conducts its business based heavily on data-must create an information management framework. The framework has four layers: (1) policy, (2) governance, (3) operations, and (4) infrastructure. Start from the top and progressively elaborate, i.e., go into more and more detail, as you work through the layers.

CREATING A CLIENT-CENTERED PROPOSAL

To create a client-centered proposal, a client-centered solution must be developed first.

Uncover the answers to these questions. Base every proposal and sales presentation on the answers. These questions will help you develop the client-centered solution. The payoff: a better chance at landing the client's business.

What is the client's problem?

Look at it from the viewpoints of the major stakeholders. An IT manager sees the lack of online access to customer account information as a database integration problem. The VP of Sales sees it instead as a revenue problem since it hinders the sales force from identifying the profitability of clients.

Why is it a problem?

Who is affected and how are they affected? Trace this up the organizational ladder. This will give you a sense of the extent of the pain and the stakeholders.

What objectives does the client perceive constitutes a successful solution?

How will the client measure success? In terms of business, financial, organizational, or technological improvements?

Which are the two most important objectives?

Which one matters the most? This prioritizes your presentation of key outcomes. Put the client's most important outcome first. Knowing the most important objectives clues you in on the way to develop the value proposition.

What are the ways to solve the client's problem?

Brainstorm. Determine the "best" way since there are usually several.

What are the probably outcomes from each potential solution?

While any of the potential solutions may fix the problem, you want the outcome that will most closely match the client's expectations.

Which is the best solution?

At this point, the solution should be obvious if the previous six questions were answered.

This was originally posted in my other blog. It's been transferred here in order to separate work-related materials from personal-interest materials.

PROTECT YOURSELF IN THE HOSPITAL

I recently read an excellent book by Tom Sharon, “Protect Yourself in the Hospital: Insider Tips for Avoiding Hospital Mistakes for Yourself or Someone You Love.” I’ve spent a lot of time in hospitals (doing my job as an IT expert and not as a patient!) and had heard about the number of unnecessary deaths that occurred in hospitals. The book’s back cover stated that hospitals are responsible for 100,000 accidental deaths and many more injuries each year. Medical News Today, a website for the medical community estimates the average to be closer to 195,000. Regardless of the number, there’s a good chance that you may have heard of or even personally know someone who has experienced a preventable tragedy. I know of several myself, including one who lost his mother to hospital error. One of my uncles suffered a severe stroke that left him a vegetable until he thankfully passed away.

Mr. Sharon is a registered nurse who started a second career as a legal consultant who advises attorneys on cases involving hospitals that have been accused of preventable deaths.

The book is a sobering view of hospitals. I now view hospitals more carefully since the book has peeled off the veil of ignorance that I used to share with the general public about hospitals. Most people don’t shop around for good hospitals and they should, says Mr. Sharon. For my part, I have worked in one hospital where I know I wouldn’t want to be rushed to in the event of an accident. The network office was located in the basement in a room that was obviously an after-thought. Best of all, it was adjacent to the morgue! We had to descend a rusted staircase and walk through a corridor that was lined with gurneys. A gurney is “a mobile bed with wheels designed for transport of patients in hospitals and ambulances.” If it came out of the morgue, it’s not transporting a live patient anymore.

The hospital has since been replaced by a more modern and larger one but who knows whether the personnel have also been replaced? I would rather be in a hospital that didn’t have the latest gadgets but had staff that cared than one with the newest technology but had a staff that was apathetic and impersonal. So my point about that hospital still stands. I wouldn’t want to be brought there.

I have reproduced three sections that might persuade you to read the book. The first section summarizes the things you should evaluate in a hospital. When you’re aware of these things you can evaluate the hospital intelligently. The second section does the same thing for a hospital floor. And the third section discusses the accreditation process. Accreditation is an important process by an industry that polices itself. The accrediting body is known as the Joint Commission on Accreditation of Healthcare Organizations, or JCAHO for short. I thought JCAHO certification was ample proof of the hospital’s quality until I read Sharon’s account. That’s why I thought it should be reproduced.

SECTION-1: HOW TO FIND THE SAFEST HOSPITAL

For those of you who live in urban areas where there is more than one hospital to choose from, here is a list of what to look for when you engage in comparison “shopping.” This is especially important if you move into a new area. You need to choose your hospital at least as carefully as you choose your schools and place of worship. They are not all the same.

Dangerous Hospital

1. Cash-flow deficit
2. Poor labor relations
3. Equipment in corridors
4. Odor of human excrement coming from rooms
5. Care plan conferences exclude patient or family
6. Operating room closed at night with on-call staff
7. No formal nursing recruitment and retention program
8. Supervisors scramble desperately to find nurses
9. Some trauma seen as “unavoidable”
10. No expression of interest in patient satisfaction

Acceptable Hospital

1. Balanced budget
2. Good labor relations
3. All corridors clear
4. Free of foul odors
5. Care plan conferences include patient or family
6. Operating room staffed twenty-four hours/day
7. Nursing recruitment and retention program
8. Staffing prescheduled with adequate numbers
9. Zero tolerance for patient trauma
10. Patient satisfaction survey forms provided

Here's what the author said about labor relations (the second item above):

…this important factor can determine the quality of your care. Disgruntled employees are not the people I would want to rely on for safe health-care services. Moreover, hospital managers who deal with strikes by importing personnel to cross picket lines are wreaking havoc with life and limb. I have seen many help wanted ads for nurses from agencies who specialize in this endeavor. The large print says, “Nurses desperately needed for critical care, operating rooms and other areas, one hundred dollars per hour.” The small print states, “Labor dispute exists.” The hospital managers are not going to properly screen such nurses because this is not a normal hiring situation with multiple interviews and reference checks. Any nurse with a license and a warm body who is willing to cross a picket line and lacks professional ethics will be standing at your bedside. It does not take much for a physician or a nurse to inadvertently transform an intravenous medication to a lethal injection. If there is any history of a nurse’s strike in your institution, call the Nurses’ Association of your state and find out what the issues were and how the managers conducted themselves during the dispute. Again, if you cannot stay away from such a place, you should know the kind of people who are in command.

SECTION-2: HOW TO TELL WHEN A HOSPITAL FLOOR IS DANGEROUS

Dangerous Hospital Floor

1. There is one nurses' station for the entire floor. Some rooms are not within earshot.
2. Emergency equipment is missing or broken.
3. Emergency equipment is shared with another floor.
4. Some supplies are missing or stored elsewhere.
5. Skill level checks are not consistently checked.
6. Nurses are filing “unsafe staffing” reports with the supervisors.
7. Nurses refuse to answer questions.
8. Call lights flash unanswered for more than two minutes.
9. The attending physician rarely or never sees the patient.
10. Medical care is fragmented-there is no coordination.

Reasonably Safe Hospital Floor

1. All rooms are within earshot of a nurses’ station (circular design or substations).
2. Each floor has what it needs.
3. Emergency equipment is present and working.
4. All required supplies are on hand.
5. All nurses’ procedure skill levels are up to date.
6. Nurses are satisfied with staffing levels.
7. Nurses answer interview questions.
8. All call lights are answered immediately.
9. The attending physician visits with the patient daily.
10. The primary physician coordinates all medical care.

SECTION-3: THE HOSPITAL ACCREDITATION PROCESS

This description of the process came from the website of the Rhode Island Department of Health.

Hospital Information for the Public about JCAHO Accreditation

By choosing to participate in the accreditation process, an organization asks to be measured against national standards that reflect what health care professionals agree is most conducive to providing quality care in organized health care delivery settings. Achieving accreditation means that an organization substantially complies with JCAHO standards and continuously makes efforts to improve the care and services it provides.

During an accreditation survey, specially trained JCAHO surveyors evaluate the level of an organization’s compliance to JCAHO standards and identify the organization's strengths and weaknesses.

Accreditation surveys result in performance reports, or report cards, which can be utilized by consumers and health care organizations to ascertain the performance of a given health care organization. The report lists:

1. the accreditation status
2. the date of the survey
3. an evaluation of key areas reviewed during the accreditation survey
4. the results of any follow-up activity
5. areas needing improvement

The Performance Reports are available to the public. To facilitate access to these reports and comparison of hospitals with one another, the Division has created this web site. To further clarify any terms utilized on this site please visit the glossary of terms webpage.

Accreditation Duration

The time period (three-year) during which a health care organization, found to be in compliance with Joint Commission standards, is awarded accreditation. To maintain accreditation for a three-year or two-year period, satisfactory resolution of any identified issues is required.

Sounds impressive, doesn’t it?

In the last paragraph, note that the surveys are done on a triennial basis (every three years). Now, this is what the author, Mr. Sharon, said about it.

The Joint Commission Survey and What It Tells You

In most hospitals, when you enter the lobby you will see a large plaque on the wall stating that the facility was “accredited” or “accredited with commendation” by the Joint Commission on Accreditation of Healthcare Organizations. JCAHO is a not-for-profit organization whose members are hospitals, nursing homes, home-care agencies, and in-home surgical supply and medical equipment vendors. The surveyors thoroughly inspect all areas of the health-care facility for environmental safety, cleanliness, documentation, emergency procedures, patient care protocols, and credentialing of professional staff, just to name a few. They also work from a clearly delineated set of standards and rate the hospital as to its percentage of compliance with all the criteria. This system is one of self-regulation and based on the now known fact that accredited hospitals accidentally kill approximately 100,000 and injure about 300,000 people per year, it is an abject failure.

Notwithstanding the sophistication and meticulousness of these surveys, there is one major reason for the gargantuan letdown: in all cases JCAHO notifies the surveyed facilities about three months in advance of the inspection, which occurs once every three years. Therefore, any representation that a JCAHO accreditation assures quality of care is suspect. The accreditation only shows that the facility has been compliant with JCAHO standards for about thirty days before and during the survey once every three years.

Moving forward, the hospital scene during the three-month period prior to the inspection is a flurry of activity, with mock surveys, managers’ meetings, staff meetings, and scrambling to provide previously neglected in-service and to update personnel files and patient documentation. The level of management scrutiny and dedication to upholding the highest standards is at its peak during this period, and it is a time of high levels of stress and anxiety, long hours, and fear of job loss. The period that follows is one of celebration for the relief from the stress. Unfortunately, this is followed by the relaxation phase when everything slides back to the “normal” way of doing things, with the supervision becoming much less stringent. In many instances, the usual way of managing is blatantly substandard, with an illusion of propriety displayed for the surveyors during their stay. As soon as the survey is finished, the mirage evaporates.

For example, a hospital in New York City spent about $30 million building a high-tech emergency suite designated as a level I trauma center. The problem was that it was too small to serve the needs of the surrounding community. Consequently, the hospital management adopted a policy of placing two patients in each of the cubicles that were designed for only one. This was being done in violation of JCAHO standards and health department regulations. The CEO issued strict instructions prohibiting the diversion of patients to other facilities because diverting patients is equivalent to diverting revenue.

After a year of this state-of-the-art facility’s being continuously operated in the aforesaid substandard mode, JCAHO notified the hospital that the surveyors were coming in ninety days for the accreditation inspection. The management immediately instituted a hospital-wide program of mock surveys, in-service conferences, patient chart review, and examination of the professional credentialing files to bring everything up to standard. Not surprisingly, during the week that the surveyors were on the premises, the emergency department had only one patient per cubicle. This was accomplished by diverting ambulances to other hospitals during peak times and speeding up the process of admitting or discharging patients from the emergency room. In short, the hospital became generally more efficient during the survey with more staff people working overtime. The over-crowding and chaotic ambience [sic] resumed as soon as the inspectors were gone because the ambulances were no longer being diverted and the extra overtime was eliminated.

The contrast is striking, isn’t it? I strongly suggest you read the book.

PROJECT MANAGERS NEED BUSINESS ANALYSTS TO SUCCEED. WHY?

I was fortunate to have started as a Business Analyst before becoming a Project Manager. In many ways I think it’s an ideal career path to project management and, eventually, program or portfolio management. In this entry, I explain the reason for that.

Projects are everywhere. We work on them constantly even though we don’t realize it.

Typically, three types are found in anyone’s list of things-to-do. Tasks. Projects. And goals.

Tasks are straightforward activities. Clean the room. Replace the car battery. Walk the dog.

Projects consist of several tasks. Prepare the car for the long trip may consist of tasks like making an appointment with the mechanic, waiting for the mechanic to identify the parts that need to be replaced, tuned up, or repaired, and arranging an alternative means of transportation while the car is being prepared.

Goals are objectives, broadly speaking. Join the family reunion is a goal. Among its projects may be preparing the car for the long trip as well as scheduling time off from work. In this example goal, the explicit objective is to drive a safe and tuned car for the long trip. The idea is to reach the destination safely and minimize the possibility of developing car trouble during the trip.

It’s no different in business. A goal is established and projects emerge to accomplish the goal. Projects, therefore, are essential to the fulfillment of goals and, broadly speaking again, goals are established to either cut costs or increase revenue. All organizations have goals. Therefore, all organizations engage in projects. Projects, therefore, are everywhere. We work on them constantly even while we don't realize it.

ACCELERATION THROUGH TECHNOLOGY

Today, technology has sped up the pace of life. Consequently, competition is more intense. Imagine a company with a better-designed product. It must generate revenue from that product with a sense of urgency. Why? Because it’ll only be a matter of time before competitors introduce their own improved product. The very website that markets the product (technology) is also the window that alerts competitors. There are several ways for competitors to come up with an improved product. For example, it can engineer its own and do so with the same people who created the original. The competitor simply hires the company’s employees. Whether the competitor hires them directly or through a recruiter, technology in the form of email or the mobile phone enables it quickly and discreetly.

This holds true even for a company that possesses a strategic advantage—“strategic” in the sense that its advantage is major or more permanent. Take a company with a grocery store in a better location. Perhaps, it may even be the only grocery in a rural area. The combination of human intelligence augmented by technology—this time for example, in the form of targeted direct mail—can level the field.

MAKING BUSINESS PROCESSES MORE EFFECTIVE

Today, goals tend to revolve around making the organization more competitive. For example, if a hospital can forecast the peak times of its Emergency Department (more commonly known to the public as “ER,” for Emergency Room), then it can schedule its personnel more effectively. Why have four ER personnel during the Tuesday morning shift when it knows that more cases are more likely to arrive that evening? Is it possible to do this? After all, how can it predict the future? Sure, it can and with a high level of accuracy. The majority of hospitals have never applied the statistical principles of forecasting that airlines use. Even long-established methods of manufacturing (like quality control) can contribute to the forecasting.

More effective processes create cost savings, a better bottom line, and a competitive advantage. Most goals, therefore, revolve around improving these processes—re-engineering them to make them more efficient and, ultimately, more effective.

EFFICIENT & EFFECTIVE

What’s the difference between efficient and effective? The best definitions I’ve encountered are succinct: efficient means doing things right (the first time) but effective means doing the right things.

To continue, business processes are frequently a combination of workflows and IT processes. A workflow combines human action and practices. When a patient arrives at the ER, the patient’s information must be collected. Will the workflow consist of the admission clerk writing the information on a paper form or keying it into a computer?

Today, it’s mostly the latter. Data and information, therefore, are two critical components of business processes. Many projects, therefore, are IT-based.

DATA & INFORMATION

What’s the difference between data and information? This is the distinction I prefer: data becomes information when data is put in context. The numeral 2, for example, is data. However, if 1 is the code for male and 2 is the code for female, then the numeral 2, in that context, becomes information.

To continue, projects, especially ones that tinker with processes, must be carefully implemented. An important factor that improves the success rate of projects is careful preparation. In particular, the early phases of any project must be focused on understanding the requirements of the project. Requirements must be clarified in order to ensure that the objective of the project is satisfactorily met.

If the project created an accurate ER forecasting system but the project manager (and his sponsors) failed to ensure the availability of the right combination of medical staff, then the hospital may even be worse off than before. A similar situation may arise if the hospital did not adjust its resources to equip the ER with enough equipment to handle the forecast.

THE COLLABORATION OF THE PROJECT MANAGER AND BUSINESS ANALYST

Successfully implementing a project requires two persons. First is the Project Manager (PM). He focuses on leading the project to its successful completion. However, to ensure that the project’s objective delivers the intended benefit, another person is necessary. This is the Business Analyst (BA). The BA is concerned with managing the business requirements of the project. The business requirements refer to the business benefit of the objective (e.g., cost savings) and to the things necessary to achieve that objective. Poor business analysis leads to inadequate information that, in turn, generates incorrect requirements. Incorrect requirements lead to inaccurate estimates and any project that begins with an inaccurate baseline will likely fall short of its objective.

A project’s requirements span the range from understanding the business case to identifying the processes that will be affected to defining the exact outcome. The last may seem strange but it’s critical to know how the outcome will look like. Will the project objective be met when the forecasting system is in place? Or will it be considered met after the budget has been changed and approved?

Now, isn’t it obvious that a project’s requirements must be captured and fully understood before the project plan is finalized?

The BA has the responsibility of bridging the gap between the user community and the IT personnel. From the former, the BA uncovers their requirements. From the latter, the BA collaborates to design the solution.

In some ways, the BA is more essential to a project’s success than the IT experts. Technical skills can be outsourced but the BA and his skills need to be present in order to uncover the project’s requirements. With that in mind, doesn’t it appear that business analysis should not be treated as subordinate to technical expertise? Many IT experts do not possess the temperament or personality to gather, understand, and analyze business requirements from the user community. Fewer still are able to create realistic solutions that address these requirements since many solutions are a combination of technology and processes.

Many processes involve workflows and, as mentioned earlier, people are typically involved in workflows. Persuading people to change their habits is not an easy task. Changing work habits is especially difficult since workers naturally do not want to be blamed for undesirable results. So delicate and important is this that change, in today’s environment, has evolved into its own management discipline—called, appropriately enough, change management.

Many projects that fail share this condition. The project is initiated, planned, and implemented before the project team and project stakeholders understand the business requirements clearly. This is due, in large part, to our natural belief in technical wizardry and our impatience in old-fashioned techniques of surveys and brainstorming. Too often, the latter activities are rushed. Capable PMs that take over failing projects will realize the problem and force mid-course corrections. Unfortunately, even if the project eventually meets its objective, it will invariably have exceeded its original budget and schedule.

A BA makes valuable contributions in numerous ways. He has created sub-objectives from the primary objective based on a clear understanding of the business case for the project. He has gathered the requirements that the project must meet. He has analyzed these requirements with respect to risk, resources, and time. He has shared these with the PM and project team and assisted them with devise the solution.

This blogpost, I trust, should have made it clear why I think that Project Managers need Business Analysts to succeed.

Business Analysts have a professional organization of their own, like Project Managers. BAs have the International Institute of Business Analysis. PMs have the Project Management Institute.


Link to this blogpost

MICROSOFT’S TECH SUPPORT

The outcry against employing foreign workers.

Everywhere you turn around, it seems, IT professionals are concerned that their jobs will be outsourced. In many cases, this outsourcing goes offshore to foreign workers. Alternatively, foreign IT talent is imported through the much-reviled H1-B visa. (The H-1B is a non-immigrant visa. It allows US employers to employ foreign guest workers in specialty occupations.)

From an academic point of view, offshoring is a phenomena that reflects the growing globalization of resources. Work that was previously done by Americans has now been shifted to foreign-based workers. This kind of work varies from the high-end, application development (or what used to be called “programming” before) to the customer-intensive (call centers) to the mundane but necessary (transcripting of medical records). The latter transcribes the spoken notes of the physician to written form. There are several advantages to the offshoring trend. First, rates inexpensive relative to American wages. Second, these are the rates paid to numerous skilled English-speaking educated workers. And third, most offshoring destinations are in Asia—principally India and the Philippines. When it’s night time here, it’s day time there. That allows work to be literally turned over overnight.

Let’s recognize that offshoring is not a new practice. It’s never been on the radar as prominently as it is now because in the recent past, offshoring involved manufacturing jobs—many of which required technical expertise. A good example is Boeing. Many airplane components are built overseas—not in Asia but in Europe. That’s offshoring too.

Offshoring is a major burden for Americans who lose their jobs. However, economically speaking, it makes a lot of sense. Offshoring is a part of the trend towards specialization in skilled services. In fact, it’s easier understood when you think of it as international trading in services.

The US has a sizable trade surplus with other nations. In fact, we have a trade surplus in services only. In goods, we have huge deficits with the rest of the world.

The US “wins” by specializing in high-value services such as transportation (UPS, FedEx, and DHL), accounting (Ernst & Young which are respected names around the world), consulting (McKinsey & Co.), and others. As a country, we trade away our lower-value services, such as call centers and data entry work (of which medical transcription is one of them) in exchange for high-value services.

Offshoring increases the demand for complementary jobs in the US. The lower cost of time-intensive transcription work reduces the cost of that piece of medical administration. And heaven knows how much more we need to reduce that cost. Complementary jobs take the form of nurses, physician assistants, therapists, and the like. If transcription work wasn’t offshored, these jobs would be in short supply. (They already are so the problem would be exacerbated!) Offshoring has another less apparent benefit. The cost advantage it gives American companies make them more competitive in the global market. Offshoring jobs may actually be thought of as importing competitiveness.

HIPAA’S ADMINISTRATIVE SIMPLIFICATION REQUIREMENTS

It surprised me at how many affected healthcare providers and business partners were still trying to finish the steps that are needed to comply with HIPAA. This is the substance of a primer I prepared on August 16, 2003, exactly two months before the compliance deadline. That was three and a half years ago. The last physician clinic we helped become compliant was in summer 2006. I wouldn’t be surprised if we got several more engagements like that.

This primer covers HIPAA’s key administrative aspects.

One of HIPAA's important objectives is to simplify the administrative requirements of the healthcare industry. The administrative simplification requirements consist of four parts:

1. Electronic transactions and code sets
2. Security
3. Unique identifiers
4. Privacy

If (you) the healthcare provider or its billing company or clearinghouse transacts business electronically, then all related parties are covered by HIPAA.

Business transactions are any of the following:

1. Claims
2. Payment and remittance advices
3. Claim status inquiries and responses
4. Eligibility inquiries and responses
5. Referral authorization inquiries and responses

HIPAA strongly encourages the designation of a “point of contact” in the covered entity. This could be your office manager. This person is responsible for all HIPAA-related activities. You should provide this person with some level of authority, resources, and assistance.

Your office

1. Ensure that your medical office administrative software is HIPAA-compliant. Check with your vendor.
2. Clarify the documents that are transmitted electronically and on paper. Determine what needs to be done differently. Under HIPAA, certain data are required that your existing paper forms do not have.

The health insurance payers

1. If they haven’t done so yet, learn when they will distribute a guide for HIPAA-mandated coding and transaction requirements. Local codes have been eliminated by HIPAA as part of its administrative simplification objective.
2. Confirm whether they will provide you with partner agreements that specify transmission methods as well as the coding and transaction requirements specified above.
3. Ensure that they have tested their software for HIPAA-compliance. Ensure that you participated in these tests.

I edited this entry to add this link to the coding system. The next version of the coding system was released after I wrote that entry although the substance is virtually identical.