Keynote from the Nov 2011 Government EA Conference - Part 2 - "Solving for Yellow"

This is Part 2 of the 8 November Keynote.

Please read Part 1 here.

THE JOURNEY - Aera Energy

One company we worked with, Aera Energy of Bakersfield, California, stands out as being successful with EAP, and spectacularly so. There are several places you can read up on Aera's story. Wikipedia has an article, and The Gartner Group also did a case study on Aera. Here’s a quick picture.

As you may know, Oil Exploration and Production companies organize themselves around exploitation opportunities: the oil and gas reservoirs, which are known as “assets”in industry parlance. Aera was a result of an M&A of nearly a dozen such assets from three different oil companies.

Here’s a schematic. It represents 11 oil fields. I think of them as fairly independent divisions or production centers, each with its own disciplines in engineering, run by its own managers, supported by its own systems and processes, and each of them having developed distinct cultures over time. I show only Well Management (above the ground) and Reservoir Management (under the ground) across all eleven. And, of course, they all have, to varying degrees, HR and Finance, and Equipment Maintenance and so forth.

Steve Spewak would have called this a true Winchester House of independently acquired infrastructure and plenty of redundant applications and systems. Their problem was clearly one of inefficiency. In 1999 Aera engaged EAI to come and help. The EAP was concluded in 2000 and below are a few excerpts from the public record on how Aera fared with their EAP Implementation.

In their March 2001 presentation to the Society of Petroleum Engineers Aera reported on its EAP project and they said that their project had delivered exactly what Classic EAP calls for: an Infrastructure Migration Plan and an Application Consolidation plan; and they said that they expected their biggest challenge to be change management.

In the ensuing years they continued implementing the plan. They stayed the EA course. In fact, in their May 2004 Presentation to DAMA, “A Strategic Approach to Improving Data Quality and Restructuring Information Management” Aera said that they had identified 61,000 Spreadsheets; 4,400 Access Databases, and 620 other systems, and that their Application Implementation plan -- consolidating all those into some 90 Architected Applications -- had achieved 36% of plan. They were behind schedule but overall they were doing fine and were staying the course. They also reported that the 2000 EAP plan had withstood the test of time..

In 2008 The Gartner Group did a case study: Aera Energy's Comprehensive Focus on Data Quality Generates Competitive Advantage

I’ll just mention a few of the things Gartner observed:

Aera Energy demonstrates many best practices in data quality improvement. By

embedding data quality deeply within business process, Aera has generated significant gains in productivity and improved its accuracy of decision making.

Key Findings

• Strong executive sponsorship is a critical success factor in data quality improvement

initiatives.

• Ongoing monitoring of data quality, rather than just focusing on data quality at the point

of new system implementation, yields the greatest benefits.

By 2009, Salym Petroleum Development, Aera’s sister company in Moscow, in their internal magazine HORIZON, reported that

“... Aera’s business people insist on quality data and they request from their IT department the “delivery of quality information” and not the “delivery of another computer system.”

“In fact, since Aera started EAP in 2000, they had removed 50,000 spreadsheets, 4,000 Access databases and replaced 500 other systems with just a few data capture systems and a single Enterprise Reporting Warehouse (ERW) from which all reporting and analysis is supported. “

Aera received visitors from oil companies all over world to see what hey had achieved, and how they had done it. As Aera likes to tell the story, by 3 PM in the afternoon the visitors were shown empty offices; everybody had gone home because the work scheduled for that day was done. Pretty unbelievable. Aera became the poster child of how to transform a business;

But, what should have caught your attention here is the timeline: A business transformation spanning a period from 1999 through 2009.

Aera never gave up!

That’s a nice thing to say of something abstract like a company but If I give credit where it’s due:

Aera’s Management Provided “Constancy of Purpose “

So, early 2009 I get this call from Lance Reed, Chief Enterprise Architect at Aera, except I didn’t catch his name or company name, so I wasn’t aware whom I was speaking with.

“Is this Stefan DeVocht, with EAI?”

Who is this guy? “Huh, Yeah”

Are you guys still in business?

Careful now, this could be the IRS, "Huh Yeah???"

Do you still do EAP?

It took a little longer before I said “Yes.” It’s always simplest to tell the truth.

“Well, we have this sister company in Russia. They came and visited us, they liked what they saw and want what we’ve got. And we told them that we did an EAP to plan our transformation. Can I give your contact info to the Russians?”

Two weeks later we received an email from the the Moscow program manager who said “I would be grateful to hear your views on how you could help us make this project a success.”

I was on my way to Moscow.

On my way to Moscow I just had to swing by Bakersfield first and see for myself what the Russians had seen in Bakersfield that they wanted to repeat in Moscow, and, more, I needed to figure out what the secret sauce was of the Bakersfield success.

So I met with the CIO, the Chief EA, Chief Data Architect, the programmers, the VP of Process Excellence, and the Head of DQM .

Aera’s Business Transformation

As I began to understand this success, it rapidly became clear to me that in their 1999 EAP planning effort Aera had not just defined architectures and had not just developed a plan to implement them. And in their 9 year EA Implementation, they had not just migrated their messy technology infrastructure to one clean integrated architected infrastructure, they had not just removed 50,000 spreadsheets and 2000 MS Access databases. They had done something much more profound.

To appreciate the magnitude of what they pulled off, imagine the EAP Team walking into the CEO’s office and saying:

“Sir, we got breakthrough, we had an epiphany of sorts. We have found a way for you to fly this baby on instruments rather than by, you know. We have devised dashboard with a single dial to steer this company towards operational excellence and this single dial is Data Quality. We know this will work because we have connected all the dots from idea to policy, from corporate principle to an individual’s pay plan, all the way to improved productivity. There’s one thing though. We need you to operate the company differently.”

Just stay with me now, you need to suspend disbelief just a little bit longer. So the EAP team leader continues his presentation to the CEO and says:

“Sir, we developed a vision of how you ought to operate the company. As part of that we are proposing new policy, new governance, new accountability, a new organization structure, new pay plans, new process managent and a new Information Management. The plan that we have covers pretty much everything that you would want, except if we could just ask for one thing, Sir.

“It would really be helpful, if at the senior leadership meetings that you show that you are behind this DQ thing, actually are leading it by requesting to be notified on DQ matters. And if we may, Sir, we’d like to suggest specific action from your part and that is that you want a report on your desk within 24 hours when any or our processes makes a step backwards in DQ. And that’s it. What do you think?”

It doesn’t matter how the presentation in the CEO’s office actually went at the time, what matters now is that it allows me two share with you two (of three) cornerstones of a successful EAP. Breakthrough and Accountability. (later I’ll discuss the third leg to that stool ;)

What the Aera EAP team proposed to senior management had gone beyond accepting that the IT infrastructure was a problem, that maintaining 11 different well management systems was sheer madness, or that they needed a plan to fix infrastructure and application duplication.
Instead of using the traditional “What Have we Got, What Have we Not Got, Bridge the (technology) Gap Approach,” the team had started solving for “Changing the Way We Work.’

Consistent with the colors of this picture, let’s call that “Solving for Yellow”I In this presentation I shall keep drawing that contrast between “Solving for Yellow” and solving for Blue.

What did that mean in Aera’s case, this “solving for yellow”

First, during their nine month EAP project, the team redefined the way they looked at their business. They saw, or they chose to see, that the major objects of their business, that they were dealing with on a day to day basis, like wells, pumps, pipelines, the oil itself, and so on, were all assets. And that the corporation’s major value-add processes were in fact the processes of managing those assets. The Team further realized that all asset management was basically the same, or could be “made” the same: Plan, Define, Acquire, Exploit, Maintain, Dispose, etc … The Team extended that asset-view of things to everything else that is managed in a business. People, real estate, spare parts, money, regulations, even data itself. This particular view on “work” provided, in essence, a standard approach to solving any (work) problem in their business, and it would ultimately provide a clear logic to develop systems solutions.

Second, Aera’s EAP team developed another breakthrough insight, and that was that a single measure: Data Quality, could drive all process improvement. The Team was convinced that improving data quality would require fixing poor processes, which would in turn lead to yet better data, which would lead to better decisions, which would ultimately lead to greater productivity. Data quality was to be measured and reported around the clock; and the success and failure of data quality improvement efforts were to be discussed at the highest levels in the company.

As a note on the side, Aera is not unique in selecting a single measure as the yardstick to transform a company Alcoa, the world’s leading producer of aluminum, used employee safety as the single measure to “change the way they work” and transformed itself into the world’s most profitable aluminum producer.

Thus, what the conversation in the CEO’s office amounted to, was the EAP team asking their boss to run the business based on a standard business processes, inclusive of the Information Management processes. By doing so, the EAP team created insight in a technological solution that would be required inside the context of conducting business differently. This is breakthrough, this is full insight into the technology problem, in full context.

So, I believe that successfully Solving for Yellow, must start with Achieving Breakthrough.

The best visualization of breakthrough ever, I think, is the famous 1984 Apple Macintosch Commercial. . In the 8 November keynote I used several screenshots from that commercial to simulate the dynamic of a breakthrough. You remember the woman athlete running and hurtling a sledge hammer at the Big Brother screen. For this blog, just picture the hammer shattering the screen and the light breaking through.

In EAP 2.0 we facilitate the development of two components in breakthrough: Research and Solution:

1. Research. A complete understanding of, and total insight in, the problem space. In the graph above research is represented by the Ishikawa diagram normally used in root cause analysis.
2. Solution. On the right in the graph you see a “connect the dots” game. It represents identifying what it will take to change . Dots represent desired outcomes, interim benefits, solutions for problems identified on the Ishikawa diagram, needed changes to deeply rooted, but counter productive practices, stifling customs and wasteful habits. The dots represent all the hurdles we’ll face in changing the culture. When we develop the plan, each such hurdle will need to be addressed explicitly in the project’s WBS.

Here’s an example of what I mean with connecting the dots.

Let’s say, for the sake of the example that we, like Aera commit to Data Quality. To provide users and processes with quality information, our workers, as part of their daily work, would need to record process outcomes in an unambiguous way. To suit our purpose, the data must be correct, and we must know or trust that it is correct. In short, our workers create data with standard definitions and standard measures of quality. One way to produce standard data is through standard processes. So, let’s say that our first goal, “Dot #1”, is achieving Standard Process

To that end, Aera’s EAP team created “process owners” or Integrated Process Owners (IPO), and they were ultimately responsible and accountable for deploying standard process across business units. Let’s say that we select the same approach, thus IPO’s become our Dot #2.

To make that task possible the EAP team proposed that the company change governance; and place the authority to invest in process automation and process changes solely in the hand of the process owner. Change Governance; Dot #3.

We all have seen this kind of recommendation before: Appoint Data Stewards and Process Owners. But without authority to invest and without being held accountable for a defined outcome, nothing much happens, nothing much can happen, really.

Aera however, fully connected to that dot, and actually transferred authority. This didn’t happen overnight or by fiat. It required Process Owners to work closely with operating unit managers, and to define standard process together, and to work out how pay-plans and incentive systems were going to be adjusted. But Aera worked the issue till they got it right.

In this simplified example, achieving quality data required three interim outcomes. Three different dots that we needed to connect to.

This brings us to the second aspect of “Solving for Yellow”. Accountability.

Aera was successful because it was clear on accountability.

First, the CEO was the ultimate driver of Aera’s transformation. He provided constancy of purpose, protected the transformation effort from business impatience, and connected the difficult dots, like taking budget authority away from “silo managers”.

Second, data quality and process improvement became the job of dedicated process owners, who had authority and were held accountable.

Third, IPOs were are also responsible for changing the way work was done in the field, for changing the data culture.

How does one change culture? This again required identifying a dots: Data Quality Principles, Policies that implement them, and Pay Plans to enforce them.

Aera developed 10 Data Quality Principles, and I’ll paraphrase two of them:

1. In doing work, I am not done until the information about the work is in the system.
2. In doing work, I realize that there are many users, or processes, downstream from my process that need my data, and I am not done unless I produce data of a quality that satisfies all of them.

In the picture below you see how these two principles were turned into posters and promulgated throughout the Moscow company.

Having principles in poster form is not enough, of course. Ken Rogers from “State” made that perfectly clear when he said in Monday’s panel discussion that “Culture will Eat Principles for Lunch.” Pride in culture, pride in the way we do things around here, is perhaps the greatest barrier to changing the way we work. You will need to identify AND connect the dots from the posters all the way through to a changed pride, and you’’ll have to be clear on accountability. In the case of Aera, Process Owners were accountable for making the Data Quality culture change happen.

So far, I have spoken about two important prerequisites for a successful business transformation . Breakthrough insight on how you want to operate differently, and clear accountability to push through change.

But there is a third change required, because a significant amount of technology support will be necessary to enable process owners to change their processes.

Aera created a Corporate Information Factory (CIF), represented by the 4 blue layers in the graph below.

The structure of the CIF itself is pretty standard and can be found in the literature. The technicians among us. I’m sure are very familiar with the layers.

1. DCS: This bottom layer holds the portfolio of systems that support standardized business processes; These are the data capture systems (DCS), or the transaction capture systems; that capture data about the outcomes of business processes.
2. ETL: Above that is an integration layer; it represents the middle-ware that synchronizes key data across the DCSs, and the ETLs that update the ERW layer above that.
3. ERW: The Enterprise Reporting Warehouse, the single – logical -- place that holds authoritative data on the operations of the enterprise;
4. BI: The ERW, of course, provides the source data for the Business Intelligence Layer which supports management decision making.

Here’s what’s important about the CIF -- and it’s not the technology; everybody can build technology.

1. Information Management Culture change in IT. Aera developed a methodology for, and became very proficient at, building out the CIF, piece by piece, data class by data class, over time, and according to plan. In effect, the IT development culture shifted away from stand-alone application development in favor of data management and systems integration through the CIF.

What this means is that Aera transformed its IT Delivery Process. It transformed the processes of the CIO

2. IM Culture Change in Business. Aera as a corporation succeeded in using the CIF as its corporate standard mechanism to share information. The CIF was a philosophy, a business philosophy, for information management and it was given shape in the form of a Technology Infrastructure. Its acceptance by business people, became standard practice then part of the fabric of the enterprise.

What this means is that the availability of the CIF, and the acceptance of the CIF became the practical enabler for people to change the way they work.

Remember that absent that acceptance and daily use, the company will continue to share data through a variety of means such as phone calls and emails, shared files and data bases, with content spread over copies of, again emails, documents, power points, spreadsheets, and so on. Non adherence leads to not knowing which information can be trusted, and the implicit IM process, carried out by each individual in pursuit of authoritative data, then remains the “invisible choke point of productivity.”

3. This is where the Aera Transformation achieved that business leaders stop asking for systems and ask for information instead

You may ask what the paperweight is doing next to the CIF. Nothing really, it’s just a reminder that if the CIF is not used to share information, it’s use is that of an expensive paperweight.

Anyway, that third change that I believe is necessary, is a change how the business sees IT, how IT itself sees its responsibilities, and new best practices that reflect that new view. Again, for lack of a better term, I called it IT Delivery Process Modernization. I’ll accept suggestions.

Let’s sum up what we learned from Aera.

If we review how Aera achieved its business transformation it’s clear that they went beyond Classic EAP: defining architectures and plans to implement them.

Aera achieved three things, and thereby “Solved for Yellow”

1. Breakthrough. Develop deep insight on how to operate the business differently.
2. Accountability: Identify what needs doing (connecting the dots) and hold people to it
3. The IT Delivery Process. Deliver integrated capability. Ensure the Business uses it

With respect to accountability, I believe that the Aera team had it easier than most CIO-managed IPT Teams. It’s clear that early on Aera realized that their EAP was beyond IT, that their’s was a business transformation effort: there would be business dots that would need connecting. The fact that the EAP Team got the CEO to lead, would mean that any two dots the team had difficulty connecting got rapidly attention from the boss. CIO led IT efforts, or even business transformation efforts, will not have it that easy, since the CIO’s authority stretches only so far.

Fundamentally, I think, there’s a mismatch between the CIO’s responsibilities and his accountability. Since accountability is so important to EAP 2.0, I want to share a few more thoughts on it before I continue the journey of EAP’s evolution.

There is another company, also founded by two Steve’s,

that is known for focus on accountability:

Apple Computer

To be continued