Most problems, before becoming IT problems, are business problems. However, since the early ’70s, many business process and operations problems automatically turned into IT problems. Process simplification, automation, and enablement of better execution of business processes has been the objective for many a CIO, their system integrators, and software vendors aiming at their budgets for many years. The vision of Hasso Plattner, one of SAP’s most illustrious founders, was to create an IT environment where business process and related data could not be messed up, enabling the industrialization of functions notorious for herding cats and calling them a circus (see previous blog – please link to it). That vision translated into multibillion dollars sales worldwide. With the promise of great ROI.
A lot of ink has poured on where that ROI really ended up. For personal edification, you can look up a famously divisive study from Panorama showing that over half of ERP implementations end up substantially over budget and delayed, and that over 40% of organizations fail to realize half or more of the expected ERP benefits and suffer significant operational disruption at go live.
Without denying the important and sometimes transformative impact of ERPs, very few these days take those ROI claims at face value. Even if the problem wasn’t the system itself, its often byzantine implementation killed that ROI. The information asymmetry between business and IT experts often ended up into either technology customized to fit archaic processes that didn’t use technology fully. In other cases technology pushed process changes that didn’t respect the necessary delivery model of those organizations (ever heard complaints from shared service center leaders lamenting that the multiple ERP back ends are undermining their work flows?).
To add to this already complicated situation, ours is a world where data and processes don’t just reside in ERPs. Despite the vision of the founding fathers of enterprise software, no one application platform and database owns everything. Even when ERP’s frenzy gave way to large scale deployment of data warehousing, the variance of process flows and data kept overpowering the significant IT investments. And with all that unstructured data coming up the pipe, as well as the encroaching of SaaS and their ever better interfaces (APIs, really), that ain’t going to change. Add the emerging trend of IT decisions being increasingly influenced by business – not just IT – and you end up in a CIO’s (and a COO’s, and CFO’s) nightmare. Or do you?
For sure, very few decision makers can stomach decade-long ROI for their technology deployments. Because of the volatility of their markets, they don’t want to cement business processes and models too fast. They want to stay nimble, and want process transformation that delivers with 18-24 months at most, and very often with the first results in few weeks – especially in the support of decisions through analytics.
These results can be accomplished by using the right combination of technology, analytics and process redesign. For example, business intelligence should be seen as a business problem first: key business outcomes such as cross-selling or fast provision of management accounting (and nothing else) should drive the technology as well as the process reengineering efforts. If a CFO is looking at profitability by client account to drive appropriate discounting decisions, the answer might not be a radical IT project aimed at creating a better CRM and related data warehouses: it instead might be a surgical intervention aimed at ensuring that the master data for the right data sets is maintained by a shared service organization, and that a specific process flow enables the production of the required reports and interpretation of the data (which can be industrialized in GBS organizations too).
The added beauty of this approach is that it is more agile – it requires typically a much lower initial investment, it tends to “cement” too much, and hence it is more suited to ever-changing business priorities and operating models.
In my view, the technology ecosystem still has in parts the wrong incentives and capabilities built through decades of comparatively stable business environments and limited cloud-based, lightweight alternatives. Like Maslow said, “everything looks like a nail if you only have a hammer”. The tide is likely changing. Many CIOs are increasingly responsible for business operations, and run back and middle office shared services and GBS – and in doing so on ever-shrinking budgets, they do take novel, IT-light, routes. I believe that is a sign of things to come.
Before talking about IT bias, we should really talk about business practice bias – and change it. By doing so, we will create practices that enable a “build to adapt” mentality – badly needed in our volatile times.