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Soft Skills 201

Soft skills at the 201 level attempt to inject higher level business awareness and practices into an otherwise sound technical operations person to create a senior operations engineer.

Soft skills at the 201 level include positioning, budgeting and the financial process, using metrics effectively, demonstrating impact, risk management, managing customer preference, and thinking strategically.

Business Acumen in Operations

What is business acumen? Business acumen as a leadership competency simply defined as a general understanding of business principles that leads to an organization's success. While operations professionals do not need to be senior executives, development of business acumen as applied to operations can help to bridge the gap between the organization's senior leadership and the operations team. Business acumen as applied to operations works on multiple levels. In many organizations, operations is a service unit within the larger organization but it also serves the needs of the organization as a whole. The savvy operations person will look at operations within that context, applying the following skills to appropriately position operations and act with the best interests of the greater organization in mind. This also helps when trying to make the organization DevOps friendly.

Distilling the definition of business acumen for operations yields the following important skillsets:

  • Understand the role of operations within the context of the organization to correctly position operations.
  • Think broadly about decisions and act decisively.
  • Support and promote change as needed.
  • Develop basic business skills that allow operations to communicate within the executive suite.

Understanding the role of operations

Under any of the operations professions, the most fundamental role of the operations person is to deliver services to a set of customers. To build upon this further, the operations person maintains existing IT infrastructures, translates customer requirements into tangible and actionable solutions, assists in the protection of customer information and services, and advises stakeholders on application of technology under existing limitations of time, money, or capabilities.

By thinking of operations as a business unit instead of a forgotten office within the organization, the operations engineer is already thinking at the correct level to assess how to support the needs of the organization.

Understand how the organization competes within its industry. Commercial entities, non-profits, educational institutions, government agencies all measure success in some way. For commerce, it will be sales and profit. For educational institutions, it might be numbers of incoming students and retention rate of students. For a non-profit it might be the number of people willing to give to support the work of the organization and the number of people who use its services.

All of this leads to correct positioning of operations within the organization.

  • What are the core competencies of operations and how do they serve the internal business units and the organization as a whole?
  • What core competencies should operations develop in order to better support the organization's mission?

Maintaining Existing IT Infrastructures

The most visible role of Operations is to maintain the status quo. For the system administrator this means maintaining servers and processes such as logging, monitoring, backups, authentication, or naming services. For the network administrator it means maintaining routers, switches, the edge network, gateways, or the relationship with the corporate Internet Service Provider (ISP). A security engineer might be responsible for maintaining a vulnerability scanning capability, incident response policy and processes, intrusion detection systems, firewalls, and a customer security awareness training program. Operations may also be responsible for maintaining access to internal services (e.g. financial systems, corporate content management systems, procurement systems, etc.) that may impact the various business units within the organization. These roles are distinct but there is sometimes overlap between them in smaller organizations where fewer people serve in multiple roles.

Translating Customer Requirements

Operations roles are customer service positions. These careers require a level of customer interaction because the services delivered by the Operations professional must be driven by customer needs. In this case, customer is used to mean the business, organization, or other entity that is employing the Operations professional. Some questions to ask to help the Operations person understand requirements from the customer perspective:

  • What is the core mission of this organization?
  • How does Operations support, hinder, or allow the organization to innovate for the mission?
  • Who are the core customers (internal, external, or both)?
  • What does the organization need from the Operations professionals?
  • Why should this organization come to these Operations people for this service or solution? What is the value proposition for Operations within this organization?
  • How could Operations provide more value: higher level of competitiveness, faster service delivery, stronger security, or other benefit that aligns with the mission?

Translating customer requirements is key to focusing the efforts of Operations. Operations work can be a slippery slope where the professionals are spreading themselves too thin on projects and deliverables that do not serve the organization's mission. One way to focus the efforts of Operations is to answer these questions and to ensure that the Operations organization, whether insourced or outsourced, is delivering services that provide the most value.

Protection of Information and Services

Often the Operations professionals in an organization are the people who most completely understand the technical risk to organizational assets from an IT perspective. Senior management within an organization will usually understand risks related to financials, competition, manufacturing, etc. but they often do not understand IT enough to make an informed decision. Operations professionals are the ones with the deep technical expertise required to comprehend risks, threats, vulnerabilities, and countermeasures. They use this expertise to express their concerns in a way suitable for senior management. This is another area where the Operations professional is communicating with the organization's leaders to advise on appropriate actions to address IT security where it makes sense for the organization.

Areas where organizations need the Operations professional to advise on IT security could include threats to data from internal and external sources, hardware failure, site availability or resilience, data preservation, and information integrity. Again, these areas are dependent on the organization's mission.

For example: an ecommerce organization will most likely want strong site availability and protection of customer personal information. The operations professionals might build a site with high resilience and availability including use of Content Delivery Networks (CDNs); strong encryption (not only for the ecommerce session but also data at rest); role-based access for internal employees accessing customer information, to reduce access to only those people who need it. Organizational leaders often do not understand how these solutions are implemented so it is up to the Operations professional to communicate the threat, solution, cost, impact to the organization of implementing the solution.

Advising within Current Limitations

The Operations professional who advises an organization must also consider limitations that impact the potential solution. Cost, timing, expertise within the organization, available time of the people who would implement the solution, or IT security issues may be considerations. For example, decision makers within the organization will need to know what is possible and at what cost so they can decide how to spend the organization's money. Good, fast, or cheap (pick two). It may be the operations professional's responsibility to explain this concept from an IT perspective.

Thinking broadly

Broad thinkers can look at a problem from the viewpoint of other people and business units within the organization. Instead of insular thinking, they approach problems with a broad-minded perspective. How do decisions impact other areas of the organization and, alternatively, how does the organization view this particular issue? Those with strong acuity for business will see the big picture and be able to understand the implications of a decision on more than just operations.

In some cases it may not be a problem, but an opportunity that injects potential life into an organization or recalibrates it. Business leaders, stakeholders and customers often don't understand what technology can do for them. Operations should understand the organization well enough to see where technology can support innovation. This leads into change as a constant.

What would it take to make this happen? What are the missing ingredients for success?

Promoting Change

The operations world changes rapidly, more rapidly than other sectors. Operations people cannot afford to cling to a specific operating environment, hardware platform, or technical solution because the industry has already started moving toward the next innovation.

Once operations understands how the organization competes to stay viable in its marketplace, operations can leverage technology to support those needs. Operations may be the first business unit to grasp the importance of a technology innovation that would improve the mission work of the business.

Identifying that change is only the first step. Next operations must be able to demonstrate the benefit of the innovation to the organization's leaders in a meaningful way to promote change.

Building basic business skills

Basic business skills include simple tasks such as learning to use Excel to build a basic budget and navigating internal business systems such as procurement, capital expenditures (CapEx) and contracts. Some skills are the same everywhere (e.g. Excel) and some require study of the internal organization (e.g. procurement). Understanding CapEx means being able to understand what is or isn't a capital expenditure (e.g. some hardware purchases may be) within your organization and knowledge of your organization's depreciation process.

Budgeting and Financial Skills

A basic knowledge of Excel includes formulas, formatting for readability, using multiple worksheets and importing external data. More advanced Excel knowledge includes use of macros, pivot tables and pivot charts.

Some operations folks use other Excel-like programs such as OpenOffice or LibreOffice spreadsheet programs. Use caution when using something that the senior leaders do not use. If the whole organization has adopted LibreOffice as the standard spreadsheet application, that works. The problem occurs when the boss wants to share the spreadsheet with some of the organization's senior leaders and the file format doesn't translate exactly or the file is unreadable to them. In this case, try to bridge the gap between operations and the executive suite by using the same tools. Formats do not always translate between two different spreadsheet programs.

Building a basic budget requires institutional knowledge. How is employee labor computed? Understand operations' income and where it comes from. Are any employees billable to other projects? Is there a flat budgetary structure with a single cost center for all labor or are there multiple cost centers. Is there any income that has special restrictions? How are purchases handled: things such as parts, services, software, contractor services? Does operations have to account for overages or money not spent at the end of the fiscal year?

Generally, organizations have financial people who can provide reports for various cost centers. If operations fits neatly within one or more cost centers, these reports can help build a budget. If operations is combined with other projects or business units, then the work of separating operation's budget becomes a bit more complex. Starting with these reports is a good first step.

To really understand how these reports work, understand how operations is paid and how it spends within the organization.

How is operations funded?

Where does operation's base funding originate?

  • Is Operations billable or do they have constant funding from year-to-year?
  • Does someone need to request this money or is it always there?
  • How are pay increases funded?
  • Is there only one source of money or are there multiple income streams?

Does everything come out of one cost center or are there multiple cost centers?

  • If multiple, are they broken down by project, type of expenditure (labor, contractors, services, supplies)?

Is any of the money special?

  • Does it expire?
  • Does it come with strings/hooks to specific projects or billables?

How does operations spend?

  • How are employee salaries computed to include benefits and overhead?
  • How are contractors paid?
  • Are there special rules for obligations? In some organizations, some kinds of money must be allocated up front and cannot be reclaimed even if not spent until after the contract or service has completed or the fiscal year has ended.
  • How do operational purchases work within the organization (parts, services, software, training, travel, supplies)? Who pays for these purchases? Who tracks these expenses?
  • Does the organization have a CapEx process and where does that money originate? Does depreciation impact the budget?
  • Are there any hidden costs?
    • Service fees from internal organizations?

Answering these questions and looking at reports from within should provide most of the answers. Operations may have to implement tracking to get some answers if they aren't easily identified in the reports.

Why would any sane operations person want to go through all of this to assemble a budget?

  • Operations is understaffed and wants to ask senior management to hire more people
  • There has been staff turnover and operations needs to fill those positions. How much is available and what opportunities exist to do something different?
  • Senior management is asking hard questions about the operations budget (e.g. why do we spend so much on operations, where does the money go?).
  • Operations is considering a student hire or contractor to help with some short-term work but operations cannot move forward until demonstrating that they are spending wisely.

Budgeting for impact

Just putting numbers in a spreadsheet isn't budgeting. What do the numbers show? Is operations spending too much on senior people? Equipment? Vendor maintenance? Where is the majority of spending (commonly it is labor)? An easy to present budget can also help to understand if operations is well managed.

Take that same view of the budget that gave visibility into operations and use it to support a request or a claim to senior management.

As an example: consider a senior person leaving the organization. Operations needs to fill that slot with a new person to avoid getting overwhelmed.

  • Does this vacant position present an opportunity?
  • Does operations need to hire someone with specialized experience in a new area?
  • Could operations benefit from hiring two junior level people using the same salary slot as the former senior person? Does that work mathematically within the organization's hiring rules?
  • Could operatoins reduce the overall cost of operations to help the organization by hiring one junior person and growing that person?
  • Could operations hire a junior person and use the remaining money to refresh hardware or invest in a new technology to help the organization?

See how to make some of these arguments mathematically in a spreadsheet. The part that is missing is the "why" and that's where the impact comes in. Senior management may believe that operations needs to reduce overall costs. This is when operations needs non-numerical supporting evidence to persuade management that operations does need to hire a specialist or make the case for an apprentice that would achieve a cost savings but would reduce capabilities until the person came up to speed within the operations team. Budget decisions have consequences: make sure those impacts are clearly illustrated within the numbers but also be prepared to explain the non-monetary impacts. This includes risks to the organization such as reduction in capabilities.

When preparing for a big budget presentation where operations is asking for a decision that will impact operations, consider the following supporting strategies:

  • Enlist customer support. Customers are asking for improved capabilities, better response, new technology. How can they provide input to management that operations needs more or different resources to serve them better?
  • Find out if there are any new initiatives within the organization that would rely on specific expertise or additional operations resources. This demonstrates a tangible need (e.g. Project X will require 50% of someone from operations to implement their technical plan).

Using these additional supports requires knowing the organization and having a good relationship with the customers. Ideally, customers come to operations in the planning stages of new projects in order to get feedback on potential technology issues before they begin work. That makes this step a bit easier. If not, then begin reconnaissance by talking to project leaders or middle management within the organization.

When researching organizational needs, start with some basic questions:

  • Planning anything new in the next year?
  • What projects is the group starting?
  • What technologies are not in use that would make the unit more productive?
  • Does operations provide the right level of support to the division?

Exercise:

Choose a budget scenario from above or make up your own.

  • How would you build a basic budget to persuade senior management on your issue?
  • What would be important to highlight?
  • What non-monetary supporting information would help your cause?

The cost-benefit analysis

The cost-benefit analysis, or CBA, provides senior management with concise proof that operations has done its homework when proposing a solution.

The first step in the CBA process is to know the audience. The higher up the organizational chain, the less detail required. Before presenting a CBA to management, prove that the solution is the best one.

Before detailing the cost of a solution, operations needs to know existing expenditures without it. What is the cost of not doing anything? This is where the benefits of performing a solution would need to outweigh the status quo.

Building a case

Everything in a CBA should be represented in the same units, the most common being money. Consider benefits to the solution in terms of savings, efficiency, increased income to the organization.

Cost should include anything that explicitly adds to the total cost of the solution:

  • Employee labor
  • Contractor costs
  • Maintenance fees
  • Up-front costs and licensing
  • Hardware
  • Depreciation
  • Facilities costs (outfitting a space)
  • Provisioning or migration costs
  • Networking

Benefits should include anything that is an outcome of the solution:

  • Increased productivity
  • Increased organization efficiency
  • Increased income to the organization
  • Increased capabilities that enhance the organization in another way

Putting it all together

.. TODO:: Might give an example here. Need to write more explaining how to assemble the pieces.

Exercise

Put together a CBA for a recent project or task you worked on or encountered:

  • How would you estimate costs that are not known?
  • How do you monetize benefits that are not explicitly monetary?
  • What does the result tell you?
  • How could you sell this idea to non-technical people using the CBA?

Navigating the capital expenditure process

The Capital expenditure (CapEx) process is used by organizations to purchase assets that have value across multiple tax years. In operations CapEx usually means new equipment or equipment that extends the useful life of existing equipment beyond the existing tax year.

CapEx allows an organization to depreciate an asset over the estimated useful lifespan of that asset. How is this valuable? On the organization's balance sheet, only part of the total expense is counted for a specific tax year. The amount of the expense depends on the type of depreciation used.

Straight Line Depreciation

With straight line depreciation, assets are depreciated at an equal amount each year. A piece of equipment with an estimated useful lifespan of 4 years would be depreciated 25% per year on the organization's expense sheet.

Accelerated Depreciation

Accelerated depreciation usually frontloads the depreciation costs. This method may more accurately reflect the value of equipment because there is a greater depreciation at the beginning of the cycle. An example of accelerated deprecation might require a piece of equipment to be depreciated over 4 years at a rate of 40 percent per year. There would be a greater expense in the first year, calculating 40% of the total value of the asset as depreciation. In the second year, compute 40% of the remaining value, and so on until the fourth year at $0.

An analogy to help explain Accelerated depreciation might be the purchase of a new car. The car depreciates the moment it leaves the lot. Even if the owner were to sell the car soon after purchasing it, the car has already significantly decreased in value.

Building a business case

.. TODO:: write this section.

Distilling information for impact

This skill goes hand-in-hand with budget but it is also an excellent standalone skill. Operations deals with complex implementation of technology. To the non-technical person, the architectural diagram on the whiteboard looks like a Rube Goldberg machine.

The further up the management chain, the more distilled information should get. Senior leaders do not usually need or want deep technical detail. When presenting a complex solution, it is fine to have one diagram that is completely unintelligible to them as long as it is only used to to demonstrate that operations did more than throw a blade in a rack and spin it up to achieve the solution. The most important part of the presentation is the part where operations answers the questions in the heads of senior leaders even before they ask them.

What are their questions?

  • What are we trying to accomplish?
  • What do we do today and how is this better?
  • How do we know this is the best solution?
  • Do we have the right people to make it happen?
  • How much will it cost?
  • How long will it take?
  • What is the benefit if we do it?
  • What is the risk if we don't do it?
  • How do we know if it worked?

Exercise

Take an idea you have and use the questions above to try to build a case for senior management to fund this idea.

Specific Examples

Below are some specific examples to demonstrate the importance of soft skills in operations. In each example, soft skills closed the deal because they enabled the operations person to see the situation from other perspectives and communicate the needs of operations in terms of the organization as a whole.

Selling system changes and new proposals

Negotiating budgetary constraints vs. need/want requirements

Evaluating a product offering