Third Cure: Default to Simplicity

"It's harder to do simple, but it's better to do simple," says Accenture's Modruson, because the more difficult task of simplifying the design up front results in easier implementation down the road.

In 2005, Motorola's Morrison says, she had 60 customer data models. That made application and business process integration extremely difficult. Then the business requested an accounts receivable project, and Morrison used it as a driver to simplify those 60 data models. "We established a global common customer master data model; we didn't make it optional. All projects now use it as a blueprint," she says. "The result is we now work on one customer master; we modify and maintain one, as opposed to a mountain of them. It's just a massive reduction in work and overhead, and an improvement in agility."

It's easy to end up with unnecessary complexity due to technological and business-process diversity, notes Fifth Third Bancorp CIO Raymond Dury. "Each additional technology wasn't a tipping point; it was just one more thing. But at some point you realize you've reached a tipping point where simplifying is a benefit."

"Mature companies need disciplined teams and change controls to minimize the risk [of increasing complexity]. That's why they've failed in the past; they don't look at the lifecycle," says Wal-Mart's Ford. "All of a sudden, they hit the wall."

But driving to simplicity can be tricky. It's hard to get resources to revamp older systems or to pay for the initial architectural efforts. And the work can take years. "It can't take too long; otherwise people will seek exceptions. So you need to get resources fast," Morrison warns. Some of those resources need to come from your internal savings, some in the form of business investments. Internal savings typically come from two areas: efficiencies and vendor management.

CIOs can achieve efficiencies -- and reduce IT complexity along with costs -- through a variety of complementary tactics, including disciplined data management, employing change-control techniques to their application development and integration efforts, using Six Sigma techniques for post-deployment defect management, increasing automation, deploying cost-savings technologies such as virtualization, outsourcing some technologies, "ruthlessly" standardizing (using Accenture's Modruson's adverb), consolidating duplicate technologies and retiring older systems. "When you do things rationally, you can actually cut the budget," says Special Olympics' Mendes, as he discovered when, as CIO of PBS a few years ago, he cut the interconnection asked from the federal government from $177 million to $120 million while, he says, introducing new technology that substantially improved services.

The key area to focus on internally is your data architecture, says Motorola's Morrison. "If you focus on master data -- customer, pricing, bills of materials and so on -- and get those very defined, the number of applications you have will become less of a complexity problem," she maintains. That's because much of the integration effort across applications involves managing all the point-to-point data transformations when applications interact. Having a consistent data architecture eliminates much of that effort by allowing one to use repeatable processes at the integration layer. That results in both immediate and long-term savings that can help the CIO make other efficiency and simplification investments.

Two approaches to achieving savings and simplification -- technology consolidation and retirement -- can be tricky, notes Peter Ruggerello, VP of applications development of pharmaceutical distributor AmerisourceBergen, because there are often undocumented dependencies between what you want to keep and what you want to get rid of. A classic example is that "a customer order entry system is being retired and you find that a job to receive EDI [electronic data interchange] orders was using the same subsystem to validate data received before it was passed on to a new process in the back-end order-entry systems," he says.

That's no reason to shy away from getting rid of technologies that are no longer needed, but it does require mapping dependencies -- and keeping the map updated -- so you can remove the older technologies more efficiently when the time comes, Ruggerello suggests.

Accenture spent quite a bit of effort when in 2004 it replaced 450 financial applications with a single SAP ERP instance, and migrated 277 of its 280 business applications to a single platform. More recently, the consultancy undertook the same consolidation effort with its recruiting systems, replacing 46 with one. "Today, we have a theory of one: We have just one of anything," Modruson says.

"Even though it was hard to get there, what we have today is a lot better," says Modruson. The cost of IT as a percentage of net revenue has been cut in half, he notes, with a "significant" portion coming from reduced complexity.

Paradoxically, achieving savings through consolidation isn't achieved merely by consolidating. "You can take 30 inefficient data centres and create three inefficient data centres from them," warns ING's Vincent. "What takes the most time [to do it right] is figuring out what your target is. Only with that in place can you optimize the operations," he says. It's the Goldilocks principle of determining what's just right, being just as simple as you need to be.

The easily appreciated benefits of consolidation include reducing license costs (by reducing the number of licenses you need) and personnel (by having fewer data centre managers). But these savings are finite. Once you achieve them, you're done. You can accomplish more by, for example, moving to different types of servers or adopting new approaches such as virtualization. But these require thinking first about what the future needs of your organization are likely to be and how changes to your processes might anticipate them, or at least not get in the way, Vincent says.

Savings through vendor management typically come as a result of consolidation, Fifth Third's Dury notes. The basic equation, he says, is simple: "If you'll share these efficiencies with us, you'll get more of our business." Savings -- and simplifications -- can also come from educating your vendors about your architecture, says ING's Vincent, "so they don't bring incompatible products to the table." Another way to use your vendors to reduce complexity is to challenge each one to identify two existing products that you can eliminate by buying their one, says Gartner's McDonald.

Such internal improvements cannot be undertaken just for IT's sake. The real goal remains serving business's changing needs by having a responsive, flexible technology base.