Rationalizing socializing allocation_changes

Rationalizing and Socializing Allocation Changes

Copyright 2014 Thavron Solutions, LLC

Thavron Biases

• Systems Thinking

• Universal Business Service Model

• Manufacturing and Supply Chain roots

– Lean (MESA Lean Manufacturing Strategic Initiative Guidebook author, Toyota Method via GM/Delphi)

• Modeling/Frameworks

• Common Sense


Every Model is a Chargeback Model

IT costs impact everyone’s bottom line. This makes any change in IT costs important.


What Causes IT Costs to Change?

Consumption changes

Data Changes

Model/Allocation changes


The Business Changes their Behaviors

• Changes in headcount

• M&A/Divestiture

• New products

• Retiring products

• Changes in process

• …


When the Data goes bad

• Data Linkages

• Data Structure

• Data Corruption


Validate with monthly processes

• Regular governance processes

– Fallout

– Unexpected changes in source data

– Technical failure

– Include some feedback /corrective mechanism


Every Model will Change

• Organizational Changes

• Philosophical Changes

• Infrastructure Type changes

– Not linkages in the data

• Service Lifecycle impact

• Fundamental changes in source data


Everyone has a model

Input Calculation Output


Not every change is an event

• Define what is a material event for your company

– Any change to budgeted charges?

– Percent Variance tolerance ( 3-5% common)

– Street impact measures


When it goes wrong……

• Business loses confidence in:

– Model

– Team

– Process

– IT


Pitfalls

• Didn’t really understand the old method

• Data changed between versions

• Don’t really understand the new method

• Model implemented wasn’t properly validated and was wrong


When It really is an event…….


When It really is an event…….

Make it an Event!


The Ugly

• Tedious

• Financial Validations

• Time/resource intensive if the changes are extensive

• Excel will be your best friend


The Bad

• Almost always time constrained

• Finance Team does not have expertise to validate model code logic

• People forget to budget for the staffing to test and validate

• Team has never built or executed test cases before


The Good

Success Stories

– Change from no model , no services to implemented service costing

– Change from infrastructure only charges to Business Service charges

– Change from a “broken” model to “fixed” model

– Migrate from one vendor system to another

– Migrate from Excel to COTS package


How to make it work

• Plan to Plan

• High level Plan before you budget

– How many moving pieces?

– Availability and Condition of the data?

• Be honest about the skills and capabilities of your own staff

• Leverage internal expert knowledge in IT System change where possible

• Training


What do you need?

• Documented Use Cases for the system

• Test Cases that are adaptable to work for before and after

– If it is a full system change, will have to duplicate and update the test cases

• Validate both the model logic and the outcomes

• Have a plan and know what can be validated outside of the system

• Socialization with the consumers


Socialization

• Communication Plan

• Communicate

• Share the end tie outs – no need to drag everyone through the mud

• Bundle it up and make it infrequent


Keys to Success

• Clearly Defined Use and Test Cases

• Plan for Testing and Validation

• Know yourself and be honest about it

• Staff appropriately


Discussion


Follow up questions? Nan Braun [email protected] 765.252.4509 / http://thavron.com /@ThavronSol

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