How and When to Determine Change?

November 8, 2010

The goal here is to examine some considerations on the Changing Environment of Industry. This can be IT businesses, Industrial businesses or event small Mom and Pop businesses. Over many years I have been involved in the Power Production Industry and observed many changes in Technology. The components and systems that drive the power production arenas have changed from discrete I/O systems with large mainframe computers which used machine language programming to Digital Control Systems (DCS) utilizing large scale integrated devices and firmware components all package into small online removable packages with redundancy capabilities. The DCS systems are utilizing Windows operating systems within a local domain network with strict security concerns. The complexity of these type systems required the change from old technologies with the technical expertise of their time to the newer technologies and a more skilled, muliti-functional expertise., as well as subject matter experts (SME’s) for troubleshooting and system administrations.

What Changed?

The military has weapon systems that go to product inception, design, implementation testing, and finally fielding. O&M manufacturers for these systems may require years in the design phase before the system is field. Components for these systems where previously expected to continue to be manufactured and supplied by the O&M supplier of the Weapon systems. The question and consideration of an article, “Reducing the Impact of Obsolescence in Military Systems”, suggest that preparation for change required considering on how to deal with obsolescence

.

“Component obsolescence is a continuing issue for the Department of Defense (DoD) in supporting their weapon systems, and this issue affects both military and commercial systems. DoD programs can no longer rely on receiving funding sufficient to solve obsolescence problems through the engineering change proposal process. Today, program managers must find other approaches. Some of the obsolescence problem stems from short life cycles. For example, active devices, such as diodes, microcircuits, semiconductors, and transistors, are becoming obsolete at the rate of eight per hour in a

given eight-hour workday. Program life-extension programs—such as that for the B-52, which has been flown for at least three generations—also lead to many obsolescence problems.” (1)

In 1955 Dr. William Perry initiated a change of policy that allowed the military to integrate COTS (commercial off-the-shelf) into their weapon systems. This policy meant fewer unique inventory product items to be maintained and fewer labor requirements for depot-supported items. In this article they discussed the relationship of obsolescence and program life cycle. Teams were form across project groups to monitor part obsolescence, update a database to communicate with each project group of findings and recommended solutions during the design life cycle of the military system. Note that, “DoD DMSMS Teaming Group has recorded over $16 million saved as the result of collaborative efforts to mitigate obsolescence issues facing military programs.” (2)

In this situation the military had to deal with ”How & When to Changed”. Technology in its maturity from the early transistors to today’s LSI respond through process to inform project teams of Change Management needs to deal with obsolescence.

Ref: DMSMS – Diminishing Manu-facturing Sources and Material Shortages

DoD – Department of Defense

Obsolescence and Cost Considerations

Another article considered how we estimate asset values in corporations. It also discussed obsolescence as a factor. Consider corporations moving through the technological change of our society. Media has moved from communicating tools of the VHS recorders to Tele-conferencing. The equipment requirements have change and so has their evaluation. Companies are taxes on inventories and asset that they own; change requires them to access how long equipment, inventory, or property remains a useful asset

“Ten years ago a modern digital telephone switching system was expected to have a economic life very close to its physical life expectancy, 15 to 18-years. Today, a modern

digital switch has an economic life expectancy of only about 6 to 7-years; far less than its physical life.” (3)

“A fair appraisal of the value of tangible personal property must reflect the realities of the marketplace. Today, major technological, regulatory, and market changes are reshaping many industries. The reality of these changes is a profound impact on the economic lives and value of tangible personal property. (4)

………. a Cost-based approach to valuation, which objectively quantifies both Physical Depreciation and Functional Obsolescence, and provides a process to include any additional factors influencing the value of the property. The net impact of the various causes of Functional Obsolescence are separately determined and combined with that of Physical Depreciation and any other forms of economic loss. The resulting assessment of the economic lives and value reflects the realities of the marketplace and all of the factors influencing it.” (5)

How do we address this Change:

As we consider change in our businesses, whether it is due to obsolescence, cost factors or a company changing its business model, the process involved in change must have roles and goals to achieve a successful outcome. From an article in A BPTrend Column April 2009 the following information was provided on business change.

“ The key aim of business change is always the same:

To ensure that work meets stakeholder needs – for which you need to identify stakeholders, both internal and external, and communicate with them effectively;

• To deliver results into a business-as-usual environment – the key purpose of a dedicated business change role;

• To maximize benefits from outcomes – i.e., work out in advance what your benefits will be, and then ensure that the consequent work realizes these benefits;

• To minimize the costs associated with delivery – which means managing dependencies and risks.” (6)

“Roles ….are necessary. Even if some people play more than one Role, you must start with an understanding of Roles and associated responsibilities or important activities will slip through the net – and your work will not deliver the desired results.” (7)

Examples of some roles are:

• Stakeholder Management

• Business Change Management

• Benefits Management

• Risk And Dependency Management

• Marketing And Communications (8)

Footnotes:

(1), (2) John T. McDermott, Principal Engineer, ARINC Incorporated

70 Westview Street; Lexington, Massachusetts02173

http://smaplab.ri.uah.edu/smap-center/conferences/dmsms02/papers/mcdermott.pdf

(3), (4), (5) Stephen L. Barreca, PE, CDP; President, BCRI Inc.

August 1999, Copyright© BCRI Inc.

http://www.bcri.com/Downloads/Technology%20Obsolescence.pdf

(6), (7), (8) Human Process; A BPTrend Column April 2009

Copyright © 2009 Keith Harrison-Broninski. All Rights Reserved, http://www.bptrends.com

http://bptrends.com/publicationfiles/ONE_04-09-COL-HumanProcesses-Harrison-Broninski-20090323-final1.pdf

“By: Frank Brown”

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