In the spirit of "Bull Durham", "The Natural" and "Field of Dreams", the upcoming movie, "Moneyball", looks to be the next great American baseball film. I am excited yet conflicted. I am a big fan of those movies but I happen to be a bigger fan of Michael Lewis’ book upon which the movie is based. And I am concerned that Hollywood will sift past Lewis’ exhaustive research, dodge his insightful observations and a string together a few pieces of Billy Beane’s life in the hopes of creating a romantic sports movie (a spormance).
I can’t stop Hollywood so I direct my plea to you: My plea isn’t for baseball fans to hurry and read the book before seeing the movie. Rather my plea is to business people because, in my view, this is a very important business book. Don’t believe me? Well, for starters, it’s got the word ‘Money’ in the title. Not bad. Secondly, the lessons Billy Beane learns aren’t about how not to hurt the feelings of young baseball prospects. He isn’t concerned about destroying their hopes and dreams when they fail to live up to their hyped potential.
Rather, Billy Beane’s mission is to build a great team for as little money as possible (better and cheaper). He inherits a business that is failing. It is cash flow-constrained, has a brand image problem and customer satisfaction is at an all-time low. In the clean-up process, he realizes he has a broken supply chain (his farm system) that is made up of a bunch of good ol’ boys.
Any of this sound familiar?
Running the Base Line
With his butt on the line, Beane seeks a better way. He quickly realizes that he’s not getting decision-quality information. In fact, it’s mostly opinion and the few scarce points of data (players' height, weight and batting average) are relatively useless. Desperate, he turns to a math whiz (in real life, Paul dePodesta, and in the movie, the fictitious Peter Brand) for help. Brand determines which data should be gathered, what metrics to monitor and a system that automates it. As a result, Beane is able to accurately predict a player's future performance based on his historical performance.
Armed with this insight, Beane realizes that he is pursuing players that other teams aren’t. He can, therefore, acquire them more cheaply and create performance-based contracts. In essence, he arrives at a sourcing strategy that gives him a competitive advantage – better product, less cost, better cash flow.
I am writing this from the Gartner Outsourcing & Vendor Management Summit 2011 in Orlando. Florida. As I listen to the discussion about IT outsourcing challenges and strategies, I wonder how many of my fellow attendees will see "Moneyball" and simply wonder if Brad Pitt will win the Best Actor Oscar, and how many would bet on a guy like Peter Brand to help them run their company better?
As many tech industry analysts and those in IT management already know, performing structural analysis of application software is one way of gaining this type of insight into building a better sourcing strategy for their companies. It's a good bet that their challenges are similar to Beane’s and they need as much help as possible evaluating, selecting and managing their supply chain - their IT systems. Using measures that matter to business, like structural quality and performance, it is essential that businesses evaluate their application software - whether developed internally or purchased from software vendors - and create "performance- based contracts" for a competitive advantage.