Adam Seligman - ISM101 by linzhengnd

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									ISM101 Discussion, 10.21.04

Notes from the Field


Adam Seligman
Platform Strategy Advisor
Microsoft Corporation
Agenda
 The Business – Technology Gap
 The Web Services Revolution
 Thoughts on selling technology
 Thoughts on Microsoft
A bit about me
Agenda
 The Business – Technology Gap
 The Web Services Revolution
 Thoughts on selling technology
 Thoughts on Microsoft
Business Value &
Technology

  or, why executives don’t care about
  developer productivity


  Adam Seligman, .NET Agitator
2 Minute MBA
 $1 tomorrow is not the same as $1 today
 Difference is called “discount rate”

 10% annual discount rate means:
      “$1.10 in a year == $1 today”
Discounted Cash Flow
    Write down your cash inputs and outputs
    Discount each one
    Sum them

                 year           1            2            3            4
           cash flows $ (100)       $1,000       $1,000       $1,000
       discount factor   1.00        0.85         0.72         0.61
   discounted dollars $ (100)       $ 850        $ 723        $ 614

         NPV @ 15% $2,087
Advanced Management
Business Case Development
     Guesstimate cash flows for projects

Portfolio analysis and management
     Pick projects with positive NPV

Don’t drop the ball
     Don’t drop the ball
Graduation!


                 MBA

              ISM101 Fall 2004
How do Business Execs think
about projects?
    Invest some cash up front
    Get a big inflow of cash later
    Positive NPV


                 year           1            2            3            4
           cash flows $ (100)       $1,000       $1,000       $1,000
       discount factor   1.00        0.85         0.72         0.61
   discounted dollars $ (100)       $ 850        $ 723        $ 614

         NPV @ 15% $2,087
Cut Development Cost by 50%
              year            1           2           3           4
        cash flows $    (50)      $1,000      $1,000      $1,000
    discount factor    1.00        0.85        0.72        0.61
discounted dollars $    (50)      $ 850       $ 723       $ 614

      NPV @ 15% $2,137
Add Some Project Delay
              year            1              2           3           4           5
        cash flows $    (50)      $     -        $1,000      $1,000      $1,000
    discount factor    1.00           0.85        0.72        0.61        0.52
discounted dollars $    (50)      $     -        $ 723       $ 614       $ 522

      NPV @ 15% $1,809
Three Scenarios
Old technology         NPV = $2,087

New technology         NPV= $2,137
50% dev cost savings                  (+$50)


New technology         NPV = $1,809
with delay                            (-$278)
Observations
 Fat tail end of projects determine returns
 Developer productivity is low priority
 Project risk = Delay of return
 New technology has a lot more downside
 than uspide
What do technical people think
of business people?
What do business people think
of technical people?
How we hear, think differently,
examples of problems this
causes
Market Challenges
  Earnings pressure
     Lowering costs
        Rising Consumerism
           Regulatory Pressure
             Competition
                 Security issues
                      New technologies
    Growth is Difficult
     • Research 130 businesses
     • H&R Block, Lowe’s, Johnson Controls, Medtronic,
       Mohawk Industries, Wal-Mart, Harley-Davidson,
       Dell, etc.,
     • Findings
           •     1997-2002 the thirty companies that make up the Dow
                 Jones Industrial Average grew at a collective rate of
                 4.9% in revenue, 4% in gross profit and 0.5% in after-tax
                 profit
           •     If you take out the top five performers the remaining 25
                 companies grew revenues at 2.3% - about the rate of
                 inflation
           •     Root causes – management systems, management
                 tools and techniques have not kept pace

Source: Michael Treacy’s Double-Digit Growth, 2003
Advances in Management
Tools
“The major differentiator between companies
  now is their agility – their ability to create
  value quicker than their competitors. This
  may be the only differentiator in the future,
  as every other innovation can be copied.”

-Rolf Jester
Chief Analyst – IT Services Market Asia/Pacific
Gartner
The Debate About IT
Fundamental Business Questions

 What is the “basis of competition” in the
 market(s) where my company competes?
 How will we know when the this basis of
 competition shifts ?
 How do the velocity of information and the
 agility of my organization impact my
 company’s ability to compete ?
 How does the Microsoft platform help me
 realize strategic competitive advantage ?
Agenda
 The Business – Technology Gap
 The Web Services Revolution
 Thoughts on selling technology
 Thoughts on Microsoft
What’s all this WS stuff about?
Business IT today
If You Invest …Then Tomorrow
10 Years Later
What Actually Happened
No Application Is An Island
Payment Systems and Card Mgmt    Treasury / Forex
                 3D Secure                             Trading / Back office




                                                                  Wealth Management
                                                                      Core Banking


                                                                                Branch Banking


        EAI                                                                            Internet Banking

 Business Intelligence


Straight through Processing
                           CRM

                                                                               Aggregation
                                                                       Wireless

                                                    ATM / POS
No Company Is An Island
    Partners                                             Partners
                                Customers




                    Suppliers               Employees




  Customers                     Partners                 Suppliers




               Employees                     Suppliers
What are XML Web Services?
 Industry standards for applications to talk to
 each other
   Extend basic web concepts… (HTTP, HTML)
   To applications (SOAP, XML, WSDL, UDDI)
 Designed to work across platforms &
 languages
 Coexist well with firewalls and networks
 Standards body defining the specs:
   Participation by all the major players
What is .NET?
 .NET is our brand for our XML and WS stacks
 Microsoft is delivering XML and Web
 Services capability across our product line
   Windows OS, BizTalk, SharePoint, etc.
 New applications use the .NET framework,
 which includes WS and XML tools
 Use Visual Studio to develop applications on
 the .NET framework from a variety of
 languages
   C#, C++, J#, VB.NET, (and many others)
Service-Oriented Architecture
 An approach to take existing IT assets
 Think of these assets as technical
 capabilities: “services”
 Use these services, along with new services,
 to support business processes
 Reconfigure these services flexibly to
 support changes in business process
Agenda
 The Business – Technology Gap
 The Web Services Revolution
 Thoughts on selling technology
 Thoughts on Microsoft
What does a customer think of
a vendor?
What does a vendor think of a
customer?
1. Writing a Business Case
 Start with your core business objectives
   Top line: growth, new customers, expand market
   Cost savings: simplify, consolidate, shutdown old
   systems
 Build a business case with champions from both IT
 and business
   4 sections:
      1 background & strategic need
      2 what you want to do
      3 benefits to your firm
      4 economics (cost & benefit)
2. Pitching Technology to Mgmt
 Get a clear “GO” or “NO-GO” from
 management
   Force the point
   Make a pitch
   Make a clear “ask” for funding and sponsorship
 Use a core team of both business and IT
 staff to map out the project
   Build a real project plan – don’t just pitch for $
   Program manage project aggressively
   Enforce phase-gates/milestones and reviews
Getting “unstuck”
 Strategies for “NO-GO” or on the fence…
   Wrap an existing system as a service and deliver
   value to a business process where there’s a
   clear pain
   Use case studies from
   http://www.microsoft.com to demonstrate
   value of .NET Architecture in your industry
   Take a “challenge” – a hard problem that
   nobody else has a good solution to, and deliver
   past expectations
Still stuck?



 Is this a company that is using technology to
             its strategic advantage?
Agenda
 The Business – Technology Gap
 The Web Services Revolution
 Thoughts on selling technology
 Thoughts on Microsoft
Microsoft cheerleading
 R&D spend, financials
 What we’re good at, what we’re bad at
 Roles & Org
 A day in my life

								
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