Sunday, March 16, 2008

Organization Transformation - Does IT & Process Transformation need to be coupled?

posted by ShyK at 23:05

In there attempts to be competitive, organizations continue to re-invent themselves. This transformation involves organizational changes as well as IT changes to support the organization change. The million dollar question is as to whether these two need to happen together or if they can be (and should be) decoupled.

While coupling the IT initiative with an initiative to change the Organization could be an issue, more often than not the issue is the difference in priorities that the IT (CIOs) and Business has (COO). Having said that, it may not always be possible to de-couple the IT Initiatives from Organizational changes.

A typical organization transformation project would involve process rationalization & process standardization. While it is possible to take baby steps towards rationalization & standardization without significant changes to the technology environment - it is easier to roll-out improvements / re-engineered processes if the various units / geographies are on a rationalized application system environment. The challenge in decoupling system rationalization from process rationalization and doing them sequentially is the length of time such a project might take. By the time you finish such a project - either the technology is obsolete or the business process no longer offers any unique advantage over competition.

I am not advising a Big Bang transformation though. That typically ends up being more than one can chew - and a classic disaster. I do recommend dividing projects in phases based on functional / geographical areas rather than separating the business and IT changes. To ensure that the business users do not reject change - its important that they be involved through-out the life-cycle of the project. There are various means & methodologies to do so -- either use the 'agile techniques' or something like the Conference Room Pilots that the traditional ERP implementations had.

The challenges are

  • Define and finalize a scope that ensures short cycle time. Avoid scope creep.
  • Ensure that all geographical / business unit are represented and deviations are accounted for -- else this becomes a never ending cycle
  • Ensure representation from all levels of the organization. There could be a difference of opinion in the business operations team & the management team

Most of these things are off course easier said than done. But if one addresses these issues - it is possible to undertake a successful transformation without feeling the need to decouple IT & Business Process change. The challenge is slightly different for an Organization that has standardized / rationalized its core applications and core processes. In such situations, the business typically seeks incremental improvements to help make better decisions. There are two types of challenges one sees in this environment

  • The IT focuses only on "Keeping the lights on" and has no man-power / budget allocation to undertake the business initiatives
  • The IT insists on 'standard' application set with its sweet implementation cycle instead of the quick & dirty utilities that the business demands. The business might be happy working on incremental VBA utilities but the IT wants its ESB & SOA and may-be a standardized ETL connecting to a data-mart in the central data-warehouse.

It is in scenarios such as this - that the business demands should be decoupled from IT strategy. It might help to let the business have their quick & dirty utilities - thus allowing them to respond to the market sittuations in an agile fashion, so long as there is a defined plan to roll back these utilities into the standard environment.

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