How most companies’ policies get established

True? True! Laugh IT loud on the Monkey Experiment:

Put eight monkeys in a room. In the middle of the room is a ladder, leading to a bunch of bananas hanging from a hook on the ceiling.

Each time a monkey tries to climb the ladder, all the monkeys are sprayed with ice water, which makes them miserable. Soon enough, whenever a monkey attempts to climb the ladder, all of the other monkeys, not wanting to be sprayed, set upon him and beat him up. Soon, none of the eight monkeys ever attempts to climb the ladder.

One of the original monkeys is then removed, and a new monkey is put in the room. Seeing the bananas and the ladder, he wonders why none of the other monkeys are doing the obvious. But undaunted, he immediately begins to climb the ladder.

All the other monkeys fall upon him and beat him silly. He has no idea why.

However, he no longer attempts to climb the ladder.

A second original monkey is removed and replaced. The newcomer again attempts to climb the ladder, but all the other monkeys hammer the crap out of him.

This includes the previous new monkey, who, grateful that he’s not on the receiving end this time, participates in the beating because all the other monkeys are doing it. However, he has no idea why he’s attacking the new monkey.

One by one, all the original monkeys are replaced. Eight new monkeys are now in the room. None of them have ever been sprayed by ice water. None of them attempt to climb the ladder. All of them will enthusiastically beat up any new monkey who tries, without having any idea why.

And that is how most companies’ policies get established.

It´s an accounting issue (3 + 4)

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Agreement Language

There are several issues that must be considered around agreement language that can impact how the revenue is reported.

• Gross versus Net Revenue reporting: Service provider costs, related party transactions and alliance agreements.
• Pricing structure and embedded leases

Compliance and Controls

Compliance and control is important since it offers assurances to investors and more often than not, it is the law.

Points and Reminders:
• Clients and service providers need their accounting experts to sign off on any accounting treatments.
• Every contract can be different; slight nuances to contract language can alter accounting treatments.
• Recognizing and addressing these issues upfront, in the client’s sourcing strategy, improves their RFP and negotiation position.
• Everyone benefits from a clearly defined strategy.

And one last parting thought, “It’s an Accounting Issue.  No, it’s a Contract Issue.”

Complexity

Recently I came along Johnnie Moore´s post in which he comments on a presentation that Dave Snowden held in Singapore on “Complexity in Government“.

And I agree that in slides and podcast there is serious food for thought.

One quick takeaway:

In nature, stability and resilience are opposed. A stable system lacks resilience and a resilient systems lacks stability. So it’s ok to stabilise things if you’ve got certainty of future; if you’ve got uncertainty you can’t afford stability you’ve actually got to introduce inefficiency.. if you don’t have a degree of inefficiency in the system it loses its evolutionary potential.

It´s an accounting issue (2)

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Start-up & Transition and Asset Ownership

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several issues that need to be considered around start-up & transition and asset ownership including:

• Asset ownership:  Asset valuations, Lease Types
• Start-up, Transition, Transformation and One-Time Charges: Expensed vs Capitalization
• Restructuring costs

Insurance against project failure

for Vendors. Pete Swabey on InformationAdvantage explains:

The number of IT projects that end in failure is staggering. According to a 2007 study by researcher Market Dynamics, 62% of all IT projects miss their deadlines, 49% go over budget and 41% fail to deliver the benefits that were expected. That is worrying enough for IT departments.

But for consultants and software vendors, keenly aware that project failure could well result in litigation, it is a constant concern. It is that concern that specialist insurer Hiscox addresses with its offering to IT vendors, insuring them against being sued by their customers. And it is a genuine danger. Stephen Wares, UK manager of Hiscox’s IT practice, tells of a small software development company with a turnover of £5 million that was sued for £18 million for the alleged failure of a project (the suit was eventually unsuccessful).

And the reasons he tells about are so well-know: bad specifications, overselling in the sales pitch, lax or non-existent change management.

It´s an accounting issue…

John Klee from TPI starts a series of posts on Accounting Considerations in Sourcing Environments. This is going to be interesting:

What accounting issues can impact the Sourcing strategy and/or RFP structure?

• Asset ownership:  asset valuations, embedded leases in service contracts, lease capitalization
• Start-up, transition and one time charges:  expensed vs. capitalization
• Potential alliance agreements:  Related party transactions, gross vs. net revenue recognition
• Regulatory compliance:  Sarbanes-Oxley Act, SAS70, etc
• Pricing structure:  service provider revenue recognition
  • After collecting cash, recognizing the revenue streams related to those collections is often a Service providers management’s greatest concern

Interesting thoughts on Software pricing

Jett Atwood on CodingHorror: Software Pricing: Are We Doing It Wrong?

Worth a reading, and interesting insight. Once you have covered the production cost for software, you just need to cover the distribution cost if you distribute electronically. Then a low pricepoint could lead to significant higher sales in total.

various picks

Paul Graham: Maker´s Schedule, Manager´s Schedule – and why they don´t go well together

Umair Haque: The Nichepaper Manifesto

Journalists didn’t make 20th century newspapers profitable — readers did.

…

Nichepapers, in contrast, do meaningful stuff that matters the most. The great failing of 20th century news is that monopoly power became a substitute for meaningful value creation. At root, that’s the lesson that newspapers are learning the hard way.

Vanity Fair: Palin’s Resignation: The Edited Version – interesting to see what can be made with some editing of a poor speech.

Cory Doctorow in the Guardian: Chris Anderson’s Free adds much to The Long Tail, but falls short – thoughtful critique

myMoleskine – make your own pages: MSK

Web Worker Daily: 10 Useful Thunderbird Add-ons for Almost Everybody – a lot of things I yet did not know about (but so far have not looked for as well)

LifeHacker:  The First 10 Free Apps to Install on a New Windows PC – you could argue about some picks, but there is also a lot of must-haves in the comments

Finally: Business-IT alignment is dead

Joe McKendrick nails it on ZDNet: ‘Business-IT alignment’ is dead… whatever it was

Long the subject of countless articles, blogs, and seminars: Do IT folks “get” the business? How do we achieve “business-IT alignment”?
Perhaps its time to put this tired argument to rest. IT folks not only “get” the business, they are the business.

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But perhaps the time has come to stop talking about “alignment” as if the business and IT were separate organizations. They are one.

Primary Aluminium Production Cost

Metal Miner with two excellent posts:

1. Power Costs in the Production of Primary Aluminum
2. Cost Build Up Model for Primary Aluminum Ingot Production

Now I would like to see this continued. A cost model for remelt Aluminium Ingot would be nice (and should not be too difficult), more towards cost structures in downstream Aluminium manufacturing, whether we talk about Rolling, Extrusion, Casting.

Guys, go on. You rock!