Managing inefficiency by objectives

Some of you sent feedback on my latest blog entry about Application Management. Application Management is a specific kind of outsourcing, where you outsource maintenance and continuous improvement of custom applications. Two managers asked the same question: “How can it possibly be more efficient to outsource custom applications than to maintain them in house? The outsourcer has no knowledge of the application’s specifics and economies of scale don’t apply! If the Application Management provider really is more efficient, then the in house crew simply hasn’t been doing their job.”

Good reasoning. But we at syngenio have been doing Application Management for years and there has always been a cost reduction through efficiency improvement. Very rarely it is lower than 10%, sometimes up to 20%. How come?

Believe me, it’s not because your employees are not doing their job. It’s because they are. They are working towards the objectives that have been established. And these objectives need to be relatively short term objectives – because management needs them to monitor progress, because your employees need them as feedback on their personal performance. What we are talking about here is the entire process of building and maintaining custom applications, also known as the “application lifecycle”. That lifecycle can be long, several years at least. So it’s no good to set up the objective “Optimize ROI over the entire application lifecycle.” You couldn’t properly evaluate that criterion before you shut down the application.
Instead, other objectives are being used. Let’s look at the project manager of the project that creates the custom application in the first place. He is responsible for time and budget. Of the project, that is. And the project ends with the custom application going live. That way, any responsible project manager is practically forced to compensate for deviations from the plan by cutting short anything out of scope – such as optimizing the application for efficient maintenance. That is the objective we have set for him.

You may hope that the operations department will counterbalance such strategies by bringing in their own requirements. In fact, they can only do that in a very basic way: They can bring up general requirements, not more. They do not know the specifics of the application yet. It is business and development who discuss and define the application. Again, that is the reasonable way to organize it, because the complexity of applications stems mainly from business needs, not from IT needs. So let’s focus on getting the business part right first.

Later, when everything is up and running, there is a new objective for employees: Efficient day to day maintenance. Whether it is set up officially or not, it is in place de facto: simply because it is the only way to meet up to daily requirements. Urgent tasks get higher priorities than important tasks. In the end, the important task of really understanding that custom application and its potential for improved efficiency never gets done.

By themselves, all those objectives make perfect sense: focus on the success of the development project, focus on business needs, focus on availability and mandatory changes first in operations. But in the end, they prevent us from focussing on the real goal: Optimizing ROI over the entire application lifecycle.

Let’s face it: we are actively organizing inefficiency.

What do we learn from it? There is an old saying: “Quality is free.” Tom de Marco wrote years ago that it should better be spelled “Quality is free for those who are willing to invest into it.” Meaning: It is possible to achieve lower cost full quality application operation – if you make the investment to include that separate phase into your application lifecycle: application management setup. Yes, it needs to be a separate phase in order to have its own objective: understanding the application and its potential for efficiency improvement from an operations point of view. Application Management providers include that phase. They convince you to make the investment and thus you get that 10% plus overall improvement.

My advice: select some of your custom applications and outsource them to an application management provider. This will free some internal resources to work on the necessary improvements on the remaining applications.

 Upcoming blog entries: (a) how to select an application management provider and (b) the mechanics of achieving the efficiency improvements. Stay tuned – or stay in contact at

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