Business Process and IT Systems

For the last 25 years, IT systems - be it COTS (Commercial Off the shelf) or custom built - are started with trying to understand how they can accomplish a business process.

However, it ends up with business stake-holders having to make compromises to the business process to use an IT system.

For some time now, the focus has shifted on the users - finding their pain points and trying to design with the users in mind. This change has done a lot of good. However, that is not enough

Business Process - Evolution and standardization

Business processes have evolve over a period of time, with managers being more open and organizations being more flexible. Further, globalization has forced a lot of businesses to handle problems at different scaled and of different nature.

This has made business processes more varied and more volatile. There is no longer a possibility of standardization of business process into rules. Neither are business processes set in stone. The frequency of change has been increasing in the coming years.

Mapping Business Process to Business Strategy

 It is very important for the business leadership to clearly articulate the business strategy in terms of operations. Having the operational strategy convert to the right set of business processes is the bulk of the work.

There are a lot of organizations that fail to complete this transition. This is very critical for moving from an abstract to a more visible form of organizational action.

If it is a big enterprise, we would also have additional complexities of conflicting business processes - some times redundant processes - across various business units. Having a clear mapping and being able to clearly communicate intent is very important

Mapping Business process to IT Systems

Business processes generally translate to very discrete IT systems - often siloed. The challenge of converting business processes to It systems is to be able to preserve the intent of the process. 

It may not always translate to the end user action. There are some intentions of business processes that the end users might not be aware of. Some times, It might even be conflicting. 

Having IT systems that understand not just the business process, but also the flow of data, impact of user actions and business value delivered is also important

Enterprise level challenges

Large enterprises have a lot of challenges in mapping business strategies to business process and then to IT systems. It is not just the way their business works. It is also because of the following reasons:

Cost of previous decisions

Any large enterprise has previous decisions that would make any future decisions also expensive. The amount of time and money spent to understand if it makes sense to continue with the previous set of decisions themselves are huge. 

If we do decide to change, then the cost is even higher and is an entire subject on its own.

Culture and Cost of change

Large enterprises have the culture factor built in as well. Business process changes are not easy. The culture is an important sub-component of organizational structure - one that is both formal and informal. 

Cost of change is pretty high when we have built in culture that might have conflicting priorities to the change being effected.

Sunk relationship / reputation cost

Large enterprises also have existing relationships with stake holders and a reputation in the market. Some of the business process changes also has to take into account these costs.

This is one of the most invisible costs amongst all and very tough to understand and calculate.

Solutions

Large enterprises have come up with a list of solutions that has always worked to varying degrees of success.

Skunkworks

Skunkworks is now a very widely used solution. It is also known as Isolated Research and development centers.

This solution has been used effectively for a long time by a lot of players. This helps counter all the challenges highlighted above. However, it might not do the organization a lot of good if this solution is abused. 

It is important to also get in the culture of innovation in the main organization as well.

Acquisitions

When the organization does not have a specific solution, they resort to acquiring another organization that does really well and might have solved the challenges - though in a smaller scale or in a different market.

This solution does not work that well. However, this is a favorite of the financial whiz kids since  benefit of synergy is always better on the paper than in reality.

Re-organization

This is the most famous management strategy that has been used. It has failed more times than it has worked. 

The reason is pretty obvious - This kills the intent of change and completely plays down to the culture challenge. There is no way re-organization can root out the challenge of culture. If anything, it amplifies it because of the way this activity is carried out in most organizations.

Conclusion

Business processes play a very important part in the operations part of an organization or Business. It is also important for IT systems to understand business processes and their intent.

This blog post is inspired from this HBR article: Firms Need a Blueprint for Building Their IT Systems