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October 26, 1999

Your letters to my print column and this E-mail forum ask some serious questions about managing information technology in today's world. Since today's world is essentially absurd, my serious responses may sometimes sound a little whimsical, and my occasional whimsical ones, serious. In any case, if you want to participate, write to me at lovelace@home.com. I'll respond to those letters that I can. I reserve the right to edit for size and content. Just sign your E-mail the way you want it to appear online.

Dear Herb:
I am a first-year student in an MBA program at the University of Texas at Austin. The purpose of this message is to request your assistance in gaining some insight into problems facing users of enterprise legacy systems. Specifically, I'm interested in the issues relating to accessing data stored on mainframes. Since I need this information for my marketing class assignment, and since I'm not an IT whiz, the technical details are not as essential as the managerial perspective. My questions are:

How important are legacy systems for the Fortune 1,000 companies; i.e., how long might it take for them to migrate to enterprise resource planning systems such as SAP? Is it a matter of two to three years or at least a decade?

What are the most important and desirable features that buyers seek in the tools that corporate America uses to access data stored on legacy systems applications? Are they ability to access data from different platforms, time necessary to accomplish a query, accuracy?

How is such software marketed (pricing and distribution channels) and is it usually done directly by the company that developed a certain product, or by IT consulting firms that recommend and/or implement specific solutions?

I appreciate your help! Looking forward to hearing from you.

Tomasz S.

Dear Tomasz:
You've asked some interesting questions. In fact, a lot of money is spend both by software vendors and by purchasers trying to get the right answers to them.

To paraphrase the famous American writer, Mark Twain, the rumors of the death of the legacy system are greatly exaggerated. These systems are extremely important to the well-being of many of the Fortune 1,000 because they are deeply imbedded in their operational structures. It is no simple task to eliminate legacy systems by implementing an enterprisewide system such as SAP in a large corporation. The issue is not so much the installation of the software; rather, it is the changes required in the associated business processes needed to make the software useful to the corporation. For this reason, complete replacement of legacy systems are frequently traumatic events, stretching over three to five years and peppered with glitches in a company's order-receiving, manufacturing, and delivery chain, upsetting customers and disrupting operations.

Recently, one highly respected and very well-known icon of American industry reported that its quarterly earnings would be 10% lower than anticipated because of problems with installing its new enterprise resource planning system. As a result, the stock price took a meaningful hit. Imagine the reaction in the information technology organization to that public announcement; CIOs have always wanted to be important to the business, but I think not in this particular way.

Sometimes, people buy what is called middleware to access data stored in legacy systems so as to avoid or delay the hassle of replacing all their old systems. More sophisticated access and analysis tools are called data warehouses which can be used with either legacy or ERP systems. The attributes of such tools are the ability to look easily at data without having to write cumbersome reports or interface programs. Usually, the selling features are ease of access to disparate data residing within multiple systems and the flexibility to handle any request that can be specifically defined. The issue of accuracy that you raised is not so much in the tool that is used, but rather the quality of the data being retrieved.

ERP systems are in general marketed by the manufacturer; for example, SAP sells directly. However, large consulting practices have risen up around the ability to provide assistance in determining the need to install such a system and providing expertise (at a very meaningful price) in installing the software. To that extent, it is fair to say that the large consulting firms in their quest to help their clients frequently act as a marketing arm for software manufacturers. Certainly, their knowledge of a specific product enhances its likelihood of being recommended.

Pricing models vary greatly, limited only by the imagination of the marketing force and the clout of the customer. Frequently, software such as an ERP system is sold as one or a combination of the following pricing models: the number of seats (total number of people using the software), number of concurrent users, an enterprise license based on the size of the organization, and sometimes the power of the processor being used by the customer. A pricing methodology that is becoming popular is tier pricing, which means that individual license prices are based on the tasks that a user does. For example, a license for a person who just enters sales is less than that for a person who has access to the financial analysis functions.

Hope that the above answers have been of use to you and good luck with your marketing class.

Dear Herb:
I loved your article "Culture, Culture, Everywhere" on corporate culture. It was very entertaining. I am interested in the response you have received from Ms. Stone. You were rather harsh in your assessment of her personality. However, I feel that I may be writing this note in vain as you are most certainly in the hospital and unable to respond.

Toni

Dear Toni:
Thank you for your thoughtful note. I am pleased that you enjoyed the article and I appreciate it that you are thinking about my health. Not to fear, though. There was no concern, whatsoever, on my part that Stephanie Stone would react with physical violence toward me in retribution for my opinions. If she had put me into the hospital, it would have raised our company's health insurance costs and those dollars come out of her budget. And Stephanie, bless her heart, would never let anything interfere with her efforts to meet corporate financial targets.

Dear Herb:
I read "Culture, Culture, Everywhere." You work for my company, don't you?

Your column's reflections on corporate culture hit the nail on the head. About five years ago, we wasted untold hours on developing a mission statement, which was promptly ignored and forgotten. I could give you more incidents, but you get the drift.

Thank you for your insight.

Kevin K.

Dear Kevin:
No, Kevin, I don't work for your firm, but I think there is a logical explanation for the similarity of experiences. Keep in mind that there are only so many consulting firms out there to feed the egos of corporate executives and only so many business schools to institutionalize the new fads. So it should come as no surprise that companies begin to sound alike and think alike.

One of the fun things about writing my column is that I have found out that lots of companies adopt the same dysfunctional and nonproductive fads as we have. It is sort of comforting. The way I see it, by lowering the playing field rather than leveling it, the resulting handicap allows more firms to compete for the customers' dollars and keep all of us employed.

If you want to read more about mission statements, I suggest you take a look at "A Mission Is Our Mission" and "Mission Inversible" for more irreverent thoughts about that particular subject.

Dear Herb:
I could not agree with you more about corporate cultures--and I am a psychologist who often is asked to address "culture" issues. My initial (and unprofessional) thought is to hand the executive a mirror. Employees are better able to define what has to happen; interview/survey them.

Enjoyed your article (even though parts of it "smarted")

David B.

Dear David:
I wonder what would happen if you actually did ask them to look in the mirror. Well, I really don't wonder. They would nod gravely, compliment you on your clarity and forthright approach--and never invite you back for another consulting engagement.

It is amazing that too many people have never realized--whether in raising children or leading a company--that what counts are your actions, not your words.

Dear Herb:
I just wanted to pass along my concurrence (enjoyed reading your article titled "Culture, Culture, Everywhere") with your conclusions on the approach to the culture change dilemma. I previously worked for a large utility in the Philadelphia area, which professed to be instituting cultural change. At least in your case you only have one consultant to deal with; we hired an entire company of consultants: millions of dollars were wasted.

I clearly believe that the only way to drive culture change is to change your approach to your employees. The culture will only change when they feel accountable and responsible for the results. The only typical management approach that you forgot to mention is the one where when they do allow employees to make a decision, then they crucify them for the simplest mistake (too many bullet holes taken than I want to remember in this category).

John

Dear John:
Good point. The best way possible to destroy personal initiative is to really beat up someone when he makes a decision and it turns out to be a poor one. I have seen innumerable managers who have this behavior pattern and then wonder why they have developed a cadre of individuals who will not take any risk. Instead of deriding employees for their decisions, what we should do is ask them what we have learned from the experience. After all, we can do a lot more about the next decision than we can about the last one.

Herbert W. Lovelace is CIO at a multibillion-dollar international company. Herb practices his day job under an alias and has changed the names of colleagues to protect the guilty.