Most of Us Don’t Make Money

Boeing forgot they made airplanes and switched to making money, and that’s where their problems began.

It is reported[1] that Boeing outsources seventy percent (70%) of its manufacturing to fifty (50) strategic partners. This outsourcing created challenges for Boeing’s vendor management, and based on unofficial results, it looks like they failed. Perhaps the greatest lesson that should be learned is that while Boeing’s outsourcers may have introduced failures, the public and the shareholders will hold Boeing responsible.

Lesson: Only the government makes money. The rest of us create products or services for which we get paid in currency.

Lesson: You can outsource work, but you can never outsource risk.

Déjà vu (All Over Again)

Organizations moving to the cloud should learn from Boeing’s mistakes. The primary lesson is to manage your outsourcers, although I seriously doubt that many are. This observation is based on what I see from industry, where the focus is on spending and little else. And why not? It’s so easy to see some of the total costs of outsourcing. And yes, the cloud is outsourcing. It’s a straightforward message for consultants and service providers to sell to a potential customer because the customer sees the spend, and solutions like FinOps wrap up the problem and the solution neatly with a bow on top. But I’m pretty sure Boeing had a handle on spending despite initial cost overruns, which had more to do with design and less with rogue spending.

IT and ITAM Must Learn from Other Industries

First, IT must accept that a good part of what we do is manufacturing. We manufacture software and information, and there is a supply chain of software and information. We take software and information from various sources, some inside our organization and some outside, and create products for internal or external consumption. The cloud has exasperated the manufacturing concept and our need for vendor management.

ITAM and Vendor Management

Vendor management has long been a part of ITAM; however, few have practiced it unless your responsibility is hardware disposal. Hardware disposal demands vendor management because electronic waste laws demand shared liability. However, there have always been significant opportunities for vendor management for other types of assets throughout the entire asset lifecycle. However, for multiple reasons, vendor management has not been practiced. Furthermore, IT vendors are different and cannot be managed to the lowest common denominator of how all other vendors are managed. For example, the lowest common denominator for vendor invoices is the charges are correct and billed to the appropriate purchase order. This criteria is insufficient for SAM.

Cloud and Vendor Management

Cloud asset management, like hardware disposal, demands vendor management throughout the asset’s lifecycle. This is why the new ITAM discipline Cloud Asset Manager (CAM) is required.

What’s Past is Prologue

Using the cloud is part of our software and information assembly line, increasing our dependency on third parties. Boeing has allowed us to see our future. The question is, what will ITAM do about it?

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[1] Tang, C. S. (2024, February 8). Boeing’s organizational problems date back two decades. IndustryWeek. https://www.industryweek.com/supply-chain/supplier-relationships/article/21282352/boeings-organizational-problems-date-back-two-decades