practical techniques to optimize software efficiency

8/10/2019 Practical Techniques to Optimize Software Efficiency

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THE BUSINESS SOFTWARE CENTRE

Practical Techniques tooptimize Software Efficiency www.rentsoftmeter.com

PHIL HAMES

10/1/2014


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www.rentsoftmeter.com Page 1

PRACTICAL TECHNIQUES TO OPTIMIZE SOFTWARE EFFICIENCY

Background

Isaac Newton

I stand on the shoulders of giants

Isaac Newton explained his great leaps forward in scientific knowledge and methods because hebenefitted from the discoveries and work done by his predecessors. It is the same for managerstoday, we can achieve great results by using the methods and techniques developed by ourpredecessors.

I first discovered some of these techniques at University of Bradford Business School and later atXerox where for over 13 years I benefitted from being trained in how to apply quality managementprocesses to disciplines such as product development, distribution, sales and marketing. Over theyears I have used these techniques to achieve the following results:

A 70% reduction in costs of manufacturing oscilloscope probes An increase in UK market share from 24% to 69% for an American software company Growing European sales of technology based consumables from $25million to over $250

million in just 3 years Identification of 50% license cost savings for a well-known public sector organisation

I now apply the techniques explained in this document to IT and specifically in the area of softwareefficiency and procurement. This is not an academic document it is a practical guide to getting thingsdone to achieve significant efficiency savings.


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PRACTICAL TECHNIQUES TO OPTIMIZE SOFTWARE EFFICIENCY

Contents

Abstract ................................................................................................................................................... 3

1. Make IT Simple ................................................................................................................................ 4

1.1. Effectiveness vs Efficiency ........................................................................................................ 4

1.2. Know where you are and where you want to get to ............................................................... 5

2. Where do you start? ....................................................................................................................... 6

3. Create an action plan ...................................................................................................................... 9

4. Kaizen Continuous Improvement ............................................................................................... 11

5. Histograms .................................................................................................................................... 13

6. Software Efficiency Rating Chart ................................................................................................... 15

Summary ............................................................................................................................................... 16


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Abstract

People talk about lean processes and efficiency with regard to IT but in reality there is confusionabout what this actually means. There tends to be a focus on effectiveness or get the job done for

most IT professionals their prime concern is keeping everything running. If systems go downeveryone shouts so of course they want to ensure that everything is working rather than savingevery last penny. However efficiency need not be achieved at the cost of effectiveness and in factoften the two aspects are complementary.

There are three aspects to bear in mind:

Quality standards e.g. ensuring that ITIL standard are applied and adhered to

Flexibility and improvements in functionality e.g. implementation of Agile development processes

Efficiency this looks at maximising value and reducing waste. This is the area I want cover. I deal

primarily with software usage and the efficiency benefits that can be derived from increasingsoftware usage rates and reducing wasted expenditure on unused software and services. Softwarelicensing is a bit like the tip of the iceberg you see the cost of the licenses but it is harder to quantifythe hidden costs such as the costs of support staff, security, hoisting, hardware and softwareupdates, staff costs, procurement etc. when you purchase software assets that are not used. If youcan optimise your software usage then you will also give cost efficiencies throughout your IT.


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1 Make IT SimpleI was talking with IT director recently and he told me his FD had the view that the IT was tooexpensive and money was being wasted. In actual fact the company in question has over 90% usage,

one of the most efficiently used systems I know of. The problem comes because to most people IT isinvisible and it hard to understand if the IT is really cost efficient. For example if a CEO looks out ofthe window and sees a fleet of vans and every day half of them drive out and half stay in the car parkthen he would say why are those vans in the car park get them used or sell them. Unfortunatelymanaging software assets is not so simple they are invisible to almost everyone. So it can beconfusing and frustrating for most senior managers to understand if they are investing wisely in theirIT assets. On the other side it can be again frustrating for the IT manager who is trying to keep thesystems working when senior management are constantly examining costs and questioningefficiency.

This problem is not unique to IT, other areas of business management have faced the sameproblems and have largely overcome them by using some standard management techniques that aidefficiency and show others what progress is being made. In many cases these techniques can beused by IT managers to improve their efficiency and explain to other where progress is being made.

1 1 Effectiveness vs Efficiency

Many IT managers will say My area is already efficient, we are meeting all our KPIs and keeping tobudget. This really means that the IT area is effective but not nece ssarily efficient, two people canbe effective in getting a job done but they can have different efficiency levels. For example twopeople could travel from London to Edinburgh, they both get there and they are effective in reachingtheir goal however one takes roads which are less direct and therefore uses more fuel and takeslonger than the other therefore one is less efficient than the other. In summary effectiveness is ameasuring if you are doing a task whereas efficiency measures how well you are doing the task.

Our goal as managers should be to achieve effectiveness in the most efficient way.

Explaining Efficiency

Lets face it IT can be confusing to many people including senior managers. They often struggle tounderstand the technology and also struggle to understand IT efficiency levels, but it need not be


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that way. Other areas of management are complex but they have some easy to understand ways toshow what is going on and how the resources are being used. They also manage to explain why theyneed further investment and get their projects implemented.

The answer for IT management is to use some of the techniques used in other areas to show

efficiency and how improvements are being made so everyone can understand. As Woody Guthriethe American singer/songwriter said Any fool can make things look complicated but it takes geniusto make them look simple.

1 2 Know where you are and where you want to get to

In any task that you are doing you have to set goals. The goals should be easy to understand andmeasureable. You also need to measure where you are starting from. The difference between thesetwo measures is your progress in improving your efficiency over time. For example if you are tryingto become more efficient in the usage of a software asset and you start in November at 64% usage

and by the following May you are using 85% of the same software product then you have achievedan increase in your efficiency over a six month period. The methods to achieve the increase in usage% we will deal with later but at this stage we are just looking at how we measure the effects of whatwe are doing.


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2 Where do you start?

Upon his capture in 1934 the legendary bank robber, Willie Sutton, was asked by FBI agents Why doyou keep robbing banks, Willie? His answer was simple Because thats where the money is.

The same reasoning can be applied to our search for efficiency. If you are going to prioritise yourdrive for efficiency then go where the money is i.e. get the biggest savings first if you can. This isbasic prioritization and we can do this by using a common sense management technique calledPareto analysis.

This technique is named after Vilfredo Pareto who analysed the distribution of wealth in 19th

centuryItaly. He found that 80% of the wealth was in the hands of 20% of people. Still today this rule holdsfor most societies. Pareto and others applied his findings to other situations and came up with the80/20 rule as we know it. We find that 20% of sales people in a team sell 80% of the products, 20%of support issues account for 80% of the user calls and we can find that 80% of potential softwareefficiency savings will come from just 20% of the software titles.

To use Pareto analysis on software licensing efficiency you need to identify your variances betweenwhat you use on a regular basis and what you have licensed, e.g. if you have licenses for 1000 of asoftware product but you only use 200 then you have a positive variance of 800 licenses i.e. toomany licenses. You may find that in some cases you are using more software than you have licensedin which case you have a negative variance and you have bought too few licenses. Both situationsare a measure of inefficiency.


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Your next step is to apply a cost to each variance. For example if it costs $100 per year per licenseand you have 800 too many licenses then your costed variance is $80,000. To do your Pareto analysisyou simply rank all your costed variances. If you do this in a graph you will see that your biggest costsaving opportunities are grouped at one end of the graph and you can easily see which are thebiggest. Showing the data as a pie chart is even clearer in showing which are your bestopportunities. When you show the cumulative ranked potential savings in a graph then the typical

Pareto chart can be seen which shows clearly what percentage of savings are potentially availablefrom just a few software titles.


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One final way to show the information is to group your software titles and potential savings bysupplier and rank the suppliers for total potential savings. Showing this as a pie chart will show youwhich suppliers you want to look at first as often just a few discussions will bring you large results.


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In summary Pareto analysis gives you the priority of software titles and suppliers to tackle first. Youcan also explain your strategy to anyone very quickly by showing them this information. You canstart doing something now to increase your efficiency by planning your actions.

3 Create an action plan

A problem solving process will help you create an action plan and implement it. You will need toinnovate and implement to solve problems. The simplex problem solving process is an ideal way tocreate do this and it is easily adapted to software efficiency management.

The simplex problem solving process was developed by Min Basadur in his book the power ofinnovation. It is a structured closed loop approach which is both easy to use and ensures qualityaction plans which are aimed at delivering tangible results. It also ensures robust implementationwhich can be measured and refined.


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There are 4 key stages:

Assess if you have already done your data gathering and Pareto analysis you have done this stage.You know what you are using and what you are paying for and how much potentially can be saved.

Analyse - You have also done your rankings to see where the best opportunities lie. You will need todo some further work in identifying if any of these saving are possible in the time frame you areworking to. For example if you have just signed a 3 year agreement for software licenses with no

option to change the terms and conditions then you can put this supplier to one side and move tothe next opportunity. Any opportunities in your action plan timeframe can be included in yourplanning process.

Planning This means generating the ideas for efficiency improvement and filtering them to create alist of actions. The actions need timeframes, people responsible and efficiency targets (ideallymeasureable in cost savings). The actions that deliver the best cost savings in the timeframe you areworking on should be your priority.

Implement The next step is doing the actions. You implement and measure the results. This couldbe a supplier re-negotiation. You will know what you want to achieve before going into the

negotiation and then you can measure your success against this. The most important aspects is toclose the loop and analyse your efficiency after you have implemented your action plans. Then goround the process again for your next round of actions to improve your efficiency.

All the 4 stages have to be aimed at the goals you have set for your efficiency project. If you canmake it simple then all the better. Time and money are the best two variables to measure, forexample you could have goals of saving $100,000 over a period of 6 month.


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In planning your goals build them up from the key actions you are taking such as contractrenegotiations, getting alternative quotes, selling unused licenses etc.

Actions for efficiency improvements are not a one-off exercise. You should look for continuousimprovement. Inefficiencies just happen if you dont have a process to keep improving efficiencythen you will go backwards. The answer is a continuous improvement process.

4 Kaizen Continuous Improvement

W Edwards Demming is a legend in production management and quality improvement. Much of theearly work was done at Toyota in Japan where continuous improvement was known as Kaizen. Thereal idea is to change the mind-set so we are continuously looking at how we can become moreefficient. We are not just working in our jobs but working on our jobs to see how we become moreefficient in everything we do. Although Kaizen started in production management is can be applied

to many other disciplines including software efficiency management. It also links into the problemsolving process very well.


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Your problem solving process is providing innovative actions and making sure that they getimplemented and assessed. If your string a number of cycles together then you have a Kaizenprocess working with incremental progress in efficiency levels. Sometimes you will make many smallimprovements and at other times you may get some big wins which provide major step changes(sometimes referred to as Kaikaku). Overall the cumulative effective will show how much progressyou are making over time.

It is quite easy to show your monthly efficiency improvements and your cumulative improvementsas a plan and what has actually been delivered. Such a chart is a great way to show the overall effectof your efficiency improvement over time and get buy in from everyo ne concerned.


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5 Histograms

There is another simple way to show how effective you are being in driving efficiency acrosssoftware utilization across an organization, this is by using Histograms.

Karl Pearson pioneered the use of histograms as a way of showing variations against a set pointacross a population. For example we could plot the number of people with certain heights against anaverage height. We will normally find a large amount of the population grouped around the mid-point and less people as we reach the very tall and small members of the population. This graph

usually shows a typical bell curve and is called a normal distribution curve. If we were to thenlook at two different populations e.g. Vietnam vs Netherland around the same central heights wewould find a different skew to the distribution curves for the two populations.


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In software efficiency we are mainly concerned about variations against a zero difference betweenwhat has been licensed and what is actually being used (not what has been deployed). If you havethese variances plot them against a zero variance. There are two key things to look for in thesehistograms:

The breadth of the base. If you have a short fat distribution curve then you have a wide variation.This is a sign of inefficiency as you have lots of variations from your optimum point (zero variations).If your distribution curve is tall and thin with most software products near to zero variance then youare highly efficient

The skew of the graph. If your histogram is skewed towards having too many licenses then thismeans you are consistently over-purchasing. If you are skewed to the negative values then you arenot purchasing enough licenses.


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6 Software Efficiency Rating ChartIf you are going to create one chart to show your software efficiency then it should be a softwareefficiency rating chart. It shows a widely understood way of showing efficiency against somestandard variables rated A to G. A and B levels are benchmark whereas D to G mean you should havean active improvement process in place. Ideally you will plot where you are currently and thenwhere you want to get to within a particular timeframe. The improvements should also be costed toshow the benefits you expect from this process. Month by month you can show your efficiency leveland how you have improved from your start point.

Case study

Current usage =47%

Potential usage = 81%

Estimated savings

- Software= 150k- Maintenance=250

=> Total= 400k


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SummaryWhat gets measured gets managed Peter Drucker

Peter Drucker was right when he said what gets measured gets managed but once you measuredthings you need the right tools to analyse the data so that you can make the best decisions quickly.

Then you need to implement and measure the outcomes of your actions. Once you make someprogress dont stop there, start the cycle again with your continuous improvement process.

Remember the six steps to software efficiency:

1. Gather usage information2. Prioritization Pareto analysis3. Action planning Problem solving process4. Continuous improvement Kaizen5. Measuring efficiency - Histograms6. Show your success Software efficiency rating

Relate everything back to your goals so that you show progress over time. Do this and you cannotfail to make better use of your software assets and associated IT.

practical techniques to optimize software efficiency

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