Flogging business outcomes - new words, old ideas, better result?

Profile picture for user gonzodaddy By Den Howlett February 12, 2014
Summary:
The trend towards the digital enterprise is fraught with risk. Forgetting integration could be a disaster.

third platform
As analysts rally behind established buzzwords like social, mobile, cloud and big data in what IDC describes as the 'Third Platform' which Joe McKendrick described as 'big/hairy,' I wonder whether we're simply seeing the latest in not-so subtle marketing of old ideas, repackaged for the 21st century CIO terrified of being rendered irrelevant. Today, the mantra is one of 'business outcomes.' Sound familiar?  It should.

Way back in the early 1990s, I well remember business process re-engineering - BPR - being held out as the big driver for success. The idea was simple and attractive: invest in technology and you will be more efficient. Scrape off the gloss and business was being sold productivity. That's polite business speak for reducing headcount, mostly by eliminating manual business processes and the jobs that go with it. As a consultant with an accounting background, the idea held tremendous appeal. We bean counter types like nothing better than to hammer cost. It's a good business outcome.

And so - to butcher an old saying - a thousand ERP implementations were launched upon an unsuspecting world.

Looking back, we were all naive, not realising that the promises ran way ahead of the realité. Even now and some 20 years later, we regularly witness project failures and/or find that the cost of running those ERP systems is little short of an embarrassment.

Having found a glimmer of hope in making accounting look good, we then proceeded to automate sales force management under the equally alluring moniker - CRM - or customer relationship management. As executed, CRM was never anything to do with customers or managing relationships. It was about managing internal sales processes and that somewhat rebellious lot aka 'sales.' Again, an attractive proposition - at least from a management standpoint. That didn't go so well either with systems that were at best clunky and at worst unusable.

In parallel, we took a tilt at HR, conveniently forgetting that most companies struggle to know headcount except perhaps once a year. The problem was compounded by the fact chunks of HR and especially payroll frequently fell under the purview of CFOs. Hands up all those who know an HRM group that's an adjunct/subservient department wrapped around finance rather than a strategic function?

While some companies set out 'one stop shop' strategies that meant an SAP, IBM or Microsoft became preferred suppliers for major functionality, no company on the planet ever went wall-to-wall with one supplier. Tens but often hundreds of applications were taken on board, either knowingly or not.

Along the way, some IT departments realised that extracting value from all this 'stuff' meant finding common data that could be usefully pulled together. Data about sales productivity for example would likely need to come from at least three or more systems. That opened the door to a burgeoning business in data and process integration.

Fast forward to more or less now and we have IDC promoting the concept of the 'Third Platform' outlined above. Sure, there are plenty of businesses that are moving beyond cost reduction and internal productivity gains to looking at technology as a revenue driver and/or way of reaching the extended business ecosystem of partners. But in doing so, I wonder whether they are forgetting that at some point, it all has to come together. As one executive put it to me - are we thinking about data integration or processes or both?

The analyst rhetoric swerves towards data because that fits into several of the Third Platform buckets and specifically today's buzz phrase de jour: 'Big Data' admixed with a dose of 'social.' It's a relatively simple concept to grasp that has been enthusiastically received with data visualisation companies showing how a modern interface that takes cues from mobile users can provide a compelling solution that is well received. Given past experience, it is no surprise that buyers are willing to buy into these solutions pushing vendors like Tableau into record earnings.

Where things get tricky comes in figuring out what happens next. In IDC's scenario, the world is characterised as one where everyone has an appetite for applications available pretty much anywhere and on any device. The idea has a certain allure but right now we seem to be in something of a hiatus.

The established vendors, including the growing cloud companies, continue to evolve existing offerings while dabbling in the 'new.' Much of the real action is happening inside companies willing to develop their own technologies. It's not a case of 'ERP is dead, long live ERP,' more a case that industry and business specific expertise does not exist inside the large vendors to the extent needed.

digital enterprise
Homing in on this landscape, Karl-Heinz Streibich, CEO Software AG persuaded Vinnie Mirchandani to turn this trend for disparate technology development into a book - The Digital Enterprise. In one review, Sadagopan gets excited with the prospect:

It must be noted that a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. Any company large or small, old or new can use this digital technology to create a winning edge for its business and perhaps, its industry.

While the book is packed with eye popping examples of where companies are putting their R&D investments the integration hook has the effect of turning the book into an interesting marketing exercise. From Joe McKendrick's excellent review:

To get to this realm, Streibich and Mirchandani urge enterprises to first look at the developing a digital platform, built on top of existing IT application environments. A digital platform should include an "integration bus as a backbone, business process management platform visualization/analytics, and the big data management layer," the[y] explain. Focus on rolling out digital capabilities on a department-by-department basis.

I'm not sure this is right. While departmental rollout is a relatively easy approach and a model reflected in some of the examples, the integration elephant in the room would suggest that the future requires a much more granular mixing of both the old and new in both data and process. There are plenty of signs this is on the minds if not lips of CIOs.

In a recent consulting engagement, we discovered that despite rhetoric to the contrary, integration between cloud services, even when they exist on the same platform, is far from easy. If anything, the rats nest of technologies is getting more complex. In my consulting case, we went as far as to speculate whether a wholesale refactoring might not represent a better long term outcome.

My concern is that we run the risk of repeating the mistakes of the past by concentrating on what end up as short term point solutions and fixes rather than thinking through the full impact of technology driven digitization. Streibich never takes us on that journey although I wish he had.

Quite how this works out is far from certain. It might for instance mean that CIOs concentrate on exposing essential data and processes from back end systems as a staging point for expansion into new services. After all, everything ends up in a financial transaction. Right? On the other hand, perhaps we should consider Sig Rinde's world of Barely Repeatable Processes.

Whatever route CIOs choose, I would argue they have never been more relevant. They, after all, will be the ones who have to clear up the mess that LOB leaves behind. They will be the ones who have to make the 'big/hairy' decisions that turn current advantage into sustainable, technology driven growth.