Papers

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As a part of their activities Farrell & Associates consultants spend time in researching various areas of management principles, techniques and methodologies. This research is documented in the form of white papers which are then peer reviewed and refined to provide the marketplace with the latest concepts on management and emerging trends in the marketplace.

Following are some of the research papers which have been produced as a result of this research:

Services Sourcing Triage - How to source your services for maximum value & advantage

Although many organisations provide a wide range of services internally across various departments and internal service providers (e.g. Human Resources, Legal, IT, Accounting, etc.) it is extremely rare for the organisation to provide all the required services purely with its own staff. In some cases it is better, for reasons of cost, availability or required expertise, to source some services from external vendors, while at the same time managing the delivery of those services through internal management.

In the latest wave of outsourcing, many organizations have adopted a dual strategy of multi-sourcing and / or selective sourcing to obtain the most cost effective services for the organisation. Multi-sourcing refers to obtaining the required services from various service providers based on their ability to provide a specific, related set of services. Selective sourcing refers to the process of analysing the services required by the organization and only outsourcing certain services, the remainder being kept in-house to be provided internally. This paper discusses the methodology of Services Sourcing Triage (from the French "trier" meaning "to sort"), which can be used by an organization to identify which of its services should be outsourced, which should definitely not be outsourced and, from the rest of the services, which could be outsourced.

Services Sourcing Triage.pdf

Is your organisation ready for SLAs (Service Level Agreements)?

A service level agreement (SLA) can be an extremely effective communications tool for creating a common understanding between two parties regarding services, expectations, responsibilities and priorities. However, if it is established at the wrong time, for the wrong reasons, or in the wrong way, it can create bigger problems than those it is trying to solve.

Many organizations however, are not ready to establish SLAs, even though there may be compelling reasons why management wants to implement SLAs in their organization. Setting up SLAs before the organization is ready, or for the wrong reasons, is a recipe for disaster – and the marketplace is littered with numerous examples.

There are many reasons why organisations want to set up SLAs. This paper looks at some of these reasons, provides a guide for organisations to see whether they are ready to set them up and a roadmap to ensure all the necessary foundations are in place before beginning the journey of setting up SLAs.

Is Your Organisation Ready for SLAs.pdf

IT Outsourcing: Facts & Fantasies

Information Technology (IT) Outsourcing has become a multibillion industry worldwide in the last ten years. Almost every organisation either has outsourced its IT or is looking at the possibility. It appears however that outsourcing may not be the panacea that many organisations had been promised. Over the last few years there have been numerous reports in the media about the problems that organisations have found when they did pass control of their IT to a third party.

This paper explores the concept of IT outsourcing and identifies just what are the major problems, issues and concerns that organisations face when they outsource all or part of their IT.

IT Outsourcing Facts & Fantasies (pdf) 

Strategic Planning

Strategic planning is recognized as vital to the effective management of all organisations It is normally applied at the highest level and progressively applied throughout all levels of the best run organisations. This overview introduces some of the broad concepts underlying strategic planning to outline the important foundation on which Strategy Reengineering is based.

Introduction to Strategic Planning (pdf) 

Strategy Reengineering

This paper is the result of several years of research into the problems of strategic planning and the development of a methodology which turns strategic planning from an art form into a proven, disciplined method. In addition the paper discusses the development of a software product which provides automated support to Strategy Reengineering.

Introduction to Strategy Reengineering (pdf)

 

The Strategy Blueprint

It is said that a picture is worth a thousand words. If all the words that go into describing a strategic plan could be converted meaningfully into pictures, it could then be viewed and analysed far more easily, saving days and possibly weeks of analysis.

The Strategy Blueprint does exactly that. Using Strategy Reengineering (see the paper above) strategic planners have the ability to represent the strategic plans of the organisation in a graphic form - called the Strategy Blueprint. Similar to an architect's blueprint of a building, the Strategy Blueprint can be viewed by the business managers to ensure that all their strategic planning requirements have been included, are represented correctly and are in the right place. This paper outlines how the Strategy Blueprint can represent an organisation's strategic plans graphically, and be used to quickly and easily identify strategic gaps

The Strategy Blueprint (pdf)

 

S3 Analysis

Most organisations consider that strategic planning is a linear process with a documented strategic plan as its final outcome. With the rapid rate of change in business today, together with the ever-changing technology, such a process is flawed. By the time the plan is complete its usually out of date.

S3 analysis overcomes this by treating planning as a circular process involving structure, strategy and systems.  This paper describes the process.

Introduction to S3 Analysis (pdf)

 

Benchmarking IT Services

One of the difficulties that many organisations face when outsourcing their IT services, is ascertaining whether they receive value for money from their IT services supplier. A major problem with benchmarking IT services is that it is rarely an apples-for-apples comparison. IT services can vary substantially from one organisation to another, not only in the processes and procedures involved in the service delivery, but particularly in terms of the response and resolution times required by the organisation.

In early 2002, Farrell & Associates conducted a benchmarking study into the fees charged by IT suppliers for IT services in Australia. The aim of the study was to ascertain the range of market prices for IT services that were being charged by IT suppliers as part of their outsourcing strategies, and to provide organisations with a guide as to whether the fees they were paying for their IT services were comparable with the marketplace. This paper provides an outline of the benchmarking study.

Benchmarking IT Services (pdf)

 

The Next Wave of Outsourcing

Outsourcing is not new – its been around for centuries. Its just that we’ve only called it outsourcing since the late 1980s when the first large outsourcing deals were made - Kodak and Enron. The impetus for these outsourcing deals was the “oil shock” of 1988 which impacted many organisations’ cash flows.  This method of outsourcing enabled organisations to take all their IT infrastructure off balance sheet and restore much needed capital and cash flow. 

During the 1990s new technologies were appearing which would fundamentally change the way organisations did business. The growth in computing power continued as it had for the previous 30 years, doubling in power every two to three years. These new technologies required whole new skills which were not readily available in the marketplace, and created whole new problems in managing the organisation’s information technology or IT as it was now being called. Outsourcing, which was already gaining popularity, was looked at as being the way to overcome these problems.

By the mid to late 1990s however, IT was being considered more as a strategic part of the business. Organisations were now looking at how they could align IT to the goals and objectives of the organisation. The present concept of outsourcing didn’t fit this model and so by the beginning of the 21st century new forms of outsourcing began to surface. This paper discusses the origins of outsourcing and presents the framework for what is being called "The Next Wave of Outsourcing".

The Origins of Outsourcing (pdf)

 

Best Practice versus Good Practice According to the supporters of Best Practice, organisations must adopt Best Practice techniques in everything they do if they want to gain competitive advantage, lower costs, streamline processes, increase profits, etc. But is this necessarily true, and just what is "Best Practice"? Our placement of the term “Best Practice” in inverted commas is deliberate.  We have found it extremely difficult to pin down “best practice” – different organisations have different views about what it is. Furthermore, "Best Practice" seems to be a moving target – as soon as you think that you’ve got it well and truly fixed someone comes out with a new improved version!

According to Michael Porter:  "Best practice competition eventually leads to competitive convergence, with many companies doing the same things in the same ways". In other words, if all organisations adopt best practice, we will eventually have an undifferentiated and unprofitable marketplace.

The paper below discusses the concept of Best Practice versus Good Practice. In more than a few cases with organisations, we consider that "Good" is better then "Best". We would be interested in your comments.

Best Practice versus Good Practice (pdf)

 

Outsourcing & "Demerging" Traps & Opportunities Outsourcing has become part of many organisations' corporate strategy. At the same time, as economies wax and wane, and markets continue to be volatile, many organisations are using other strategies such as corporate restructuring as part of their grab-bag of strategies. The danger is that, without proper planning, these strategies can in fact work against each other. For example, as organisations divest their non-core entities ( or demerge, as the new buzz word describes it), this divestment can have severe repercussions on an outsourcing agreement. Recent government legislation is making demerging more tax effective and thus more popular, and even government departments are getting into the act (watch for demerging of the government clusters in the near future)

The paper below describes this phenomenon and the traps and opportunities that exist for both organisations and IT vendors.

Outsourcing & Demerging (pdf)

 

Defining IT Services According to a wealth of research going back to the mid 1990s, one of the main reasons for the failure of outsourcing agreements is due to organisations not fully defining their IT requirements. In other words, if organisations do not fully and concisely specify the IT services they require, then there is little hope that an IT services supplier will be able to deliver those services as required. In many cases this results in confusion and disagreement between the organisation and the supplier over what was said versus what was meant in the outsourcing agreement. Typically, this ends up with the supplier stating that, if a particular service wasn’t explicitly stated in the outsourcing agreement and the organisation required it, then it would be considered “out of scope” and thus additional charges would apply.

These “out of scope” items are one of the main reasons for outsourcing costs exceeding the original budget. In some cases we have seen them consume almost the entire IT budget for the organisation. This paper introduces a methodology for defining IT services, developed over the last ten years. Organisations who have used the methodology to define their services have told us that using properly defined IT services had provided enormous benefits to the organisation, eliminating misunderstandings between them and their suppliers. In many cases it had saved the organisation considerable costs, as there were no longer any of the “out of scope” problems they had encountered previously.

Defining IT Services (pdf)

 

Costing IT Services One of the problems with outsourcing IT services is that organisations don't always know how much the services cost before they outsource. This leads to problems when they discover that outsourcing has not save the organisation money, and IT costs increase rather than decrease, even when those services have been defined (see the paper above: " Defining IT Services").

Traditional accounting methods and other methodologies such as Activity Based Costing (ABC) have not been able to capture all the costs of services, due to the very different nature of how a service is comprised, compared with the way a product is manufactured. Another methodology developed during the 1990s, Services Based Costing™, has been successful in calculating the true cost of services. This paper discusses the nature of services and introduces the concept of Services based Costing™.

Costing IT Services - An Introduction to Services Based Costing™ (pdf)

 

Stress and the Workplace Recent research indicates that workplace stress is a major contributor to ill health in workers.  It has been estimated that stress-related absences may cost organisations ten times as many lost working days as does industrial action. In NSW the recent change in legislation has put the onus of responsibility for occupational health & safety (which includes such things as workplace stress) fairly and squarely on the shoulders of the directors and management of the organisation.

Workplace stress however is preventable. There are numerous changes that can be made to the average workplace to eliminate or at least minimise stress. The first step is to recognise the signs & symptoms of stress and what is causing the stress ("the stressors"), and then take steps to eliminate the stressors in your workplace. This paper highlights the results of research that we have been conducting since the mid 1990s on workplace stress - how to recognise it and how to eliminate or at least minimise it.

Stress & the Workplace (pdf)

 

IT Alignment Thesis This is an extract of the thesis that our founder, Jonathan Farrell, submitted to Macquarie University for his Doctorate of Business Administration. It documents his research into the alignment of an organisation's IT with its corporate objectives, a task which took over five and a half years to complete. This extract includes the first and last chapters of the thesis, plus the bibliography. Dr Farrell was awarded his doctorate in October 2003.

IT Alignment Thesis (pdf)

 

The MBA Keyword Generator The MBA Keyword Generator is a light-hearted way of helping people to improve the quality of their reports, emails, memos, etc. by giving them a way of sprinkling their documents with impressive phrases such as: creative marketing management, modern portfolio theory, global strategic correction, and the like. The resulting document will look like its been written by an MBA graduate, but you won't have to spend the thousands of dollars on getting the degree, just download the file and start using it.

Caution, be careful using it on someone who does have an MBA. They will either be very impressed with the document, or they could ask you to clarify your creative reporting behaviour.

The MBA Keyword Generator (pdf)