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Wait! Do some measurement before you cut

By Anthony DeMarcoMay 18, 2020

While many at Bear Stearns, Lehman Brothers, Merrill Lynch, and AIG are staggering from the Wall Street financial crisis, others on the acquisition side are contemplating the fate of redundant operations created by these consolidations. This reminds me of the rapid consolidation of the global Aerospace and Defense (A&D) during the 90’s after the fall of the Berlin Wall. Granted, this consolidation is happening at a much faster pace, but it would be wise for decision-makers to do a little performance measurement before they slash and burn redundant operations.

During the A&D consolidation, the General Electric Corporation called upon me to help them measure performance of several redundant operations. Why me? Well our activity-based estimating models do a tremendous job of normalizing and measuring the productivity of similar, but somewhat different operations. When you provide costs as an input to our models, you can calculate productivity. Doing this for several projects at different operations gives you a clear picture of which operation is the most productive. Decision-makers can then make unbiased decisions about which one to close. The same method can be employed with our TruePlanning® for IT estimating suite. Centers of excellence and laggards for IT budget planning, IT project management, software development, IT data-center operations can be quickly identified, and the best allowed to survive. So, let’s hope that the decision-makers are doing their due diligence and apply proper corporate governance. A little bit of performance measurement modeling will go a long way.