In my last post I talked about Digital Enterprises and why companies must adopt this new approach to remain competitive in today’s world. Let me now talk about methods that organizations can adopt to digitize their operations and do it in a manner that benefits the enterprise.
It is not a question of when to start but how to get going with modernizing of our businesses. Putting the debate aside, it may be prudent to think holistically and work out solutions that are appropriate for the organization. Organizations are often flat footed in adopting new methods and this provides an opportunity for the CIO to take lead in digitizing the enterprise.
Current status in Indian enterprises
Many CEOs are generally aware of this new approach and do enquire and seek to understand. Competitive pressures today force companies to consider and leverage new digital channels like social media and mobile computing to further their business. As digitization rides the hype cycle, companies are often unsure of their approach and therefore hire consultants to advise them on the subject. While some work out clear strategies others tend to get carried away by consultants’ ambitious projections. I have heard from quite a few of my friends about their digital initiatives but I find many of them lacking a concerted and a well-defined approach. Many initiatives fall short of the targets as they simply introduce mobility or get onto social networks or move a part of their applications to a cloud environment, as separate initiatives. This is where they fail to realize the full benefit of digitization.
When companies embark upon their digital journey the first thing they have to do is define the purpose and direction of this exercise. There could be many organization priorities like addressing the issue of growth, enhancing productivity, meeting customer expectations, increasing market share, revamping distribution channels etc. Many a times these business priorities are not clearly articulated and factored in the IT plans. The digital strategy here should address both the short term and long term plans of the organization. The business strategy should clearly indicate the role of IT. Specific roles and responsibilities to support the business and IT strategies should be well defined. The governance structure, processes and practices need to be laid down and practiced. The infrastructure that is needed to support this initiative should also be well thought out and planned and therefore an appropriate enterprise architecture should be drawn out to put in comprehensive plans that would support the organization into the foreseeable future. The trouble is that CIOs often install incremental facility in the form of hardware/virtualization or move a part of the applications to the cloud saying they are preparing for digitization. This belies a lack of vision or absence of strategy. One needs to create a future road map and build up to the final state slowly over time.
Challenges to overcome
Cultural issues are usually impediments to adopting digital initiatives. This requires adequate education and awareness programs to make people aware of the moves and the impact that this may have on them. Readiness is required even at the top so that they provide the right leadership and the right organization structure and policies to make implementation easier. Those at the top have also to manage and resolve all the conflicts and struggles that this may create at various levels of management. Poor understanding of the potential of these initiatives and lack of accountability of personnel involved in the efforts could derail the process and need to be addressed. Another problem often faced is the lack of talented people to drive these initiatives and to handle the changed processes. Re-skilling of the available staff and induction of new talent may be a necessity. It is also essential for the company to have a capable and empowered IT cell which can work alongside the business team to add strength to the efforts.
Digitization should therefore be viewed as a significant and strategic management program which can make a great impact on business and make it ready to face the future. Half-hearted initiatives or those lead by the IT teams may result in minor gains without providing a competitive edge to business.
Much has been written about Digital Enterprises of late and enough buzz has been generated on digitization, which seems to have taken the industry by storm. As happens with most new technologies and new practices, digitization too has gone through the hype cycle generating noise and creating visibility. People have been told this is the future and those who don’t follow this route may find themselves doomed.
I met a few CIOs and broached this subject with them. Though some were clear others displayed an air of understanding though would talk no further. They speak in generalities and say they are at the stage of planning. Some were adventurous enough to claim complete digitization in their organizations, simply meaning that they have automated a lot of stuff. I had the opportunity to teach this subject as an introduction to students of a management institution, however in the ensuing exams, half of the students described digital enterprises as ones who practice extensive automation.
It is perhaps not fair to blame them since the industry has not explained the subject rationally to people but created a buzz around the subject. Vendors would serve better selling the concept rather than their wares and develop partnership with customers. Let me attempt to demystify this topic and explain this in simple terms.
What is a Digital Enterprise (DE) ?
Digital Enterprise is an IT driven business model created in response to the emerging market place and value chains which are going digital. Companies can either take a pro-active stance and create a competitive advantage or quickly react to moves by competitors. The Digital Enterprise is built upon the use of IT to automate the processes (both internal and external) to create a digital boundary enabling all stakeholder interactions. An immense amount of information is created which needs to be consumed and acted upon. In other words ‘DE’ is an organization that uses technology as a competitive advantage in its internal and external operations.
There is an enabling environment which makes this shift feasible. Customers and employees today, particularly those who are digital aware, expect a new style of commerce, content and collaboration. They look for anytime, anywhere access and any-device convenience. They interact with companies through multiple channels and therefore it becomes important for companies to access these channels to understand their behavior. Vast amount of market and customer data need to be analyzed for understanding opportunities and trends. This calls for companies to be agile and to have IT infrastructure that is flexible and scalable.
The way to go
In order to take care of these requirements in this emerging scenario, organizations have to go the ‘SMAC’ way ; SMAC stands for ‘social’, ‘mobility, ‘analytics’ and ‘cloud’. These are the four pillars of a Digital Enterprise. Let me explain these terms briefly :
Social : This covers all interactions on the digital social platforms with individual users and groups which Include tweeting, texting, instant messaging and posts in blogs and on the company’s website. These are important indicators for the company to address.
Mobility : There is a distinct shift towards mobility and therefore important to capture transactions from all portable devices including laptops, smart phones via wireless networks (WLAN, GSM,GPRS etc.). Policies and procedures have to be geared to meet this requirement.
Analytics : A huge amount of data is likely to be collected in the form of structured, semi-structured and unstructured data which would need analysis to draw meaning out of them. Several technologies such as Big Data, Business Intelligence (BI) can help analyze and summarize to draw conclusions and aid decision-making. This can provide huge amount of learning about customers and markets.
Cloud : For meeting all the above requirements we would need an Infrastructure that is flexible and scalable. Rather than building, it could be far more convenient and cost effective to work on infrastructure and applications as acquired services. This is where cloud computing comes in as an essential part.
It is the combination of these four themes that gives it meaning – its a catchword or an acronym but represents a comprehensive view of the solution. It is about viewing the customers through a multitude of channels and working out suitable responses. What we need is a holistic approach to digitization and a choosing an effective way to attain competitive advantage.
We see changes that take place all around us and realize that nothing remains static. The Earth moves around in space and so do all objects in the Universe. Situations change, so does the environment people change and so do businesses. With so much going around can we afford to sit pretty and resist change? Perhaps not.
We also get bombarded with lots of phrases like ‘change is the only constant’, ‘perish or change’, ‘run even if you want to stand at the same place’, ‘embrace change if you wish to survive’ and so on. Management jargons and clichés thrown at the CIO make him run for cover. Facing such intimidation, the poor CIO reluctantly decides to go for a change. He may not be quite clear what he has to change but he knows he has to. This is where the problem takes its shape.
The change program
The CIO sometimes takes this change business a little too seriously. When he joins a new organization he notices that IT has still not achieved the star status that is should have with the previous incumbent. Loaded with the knowledge that ‘change’ does the trick, he tries his hand at making changes all around him. He relooks at the hardware and network architecture, changes IT vendors that the organization has been dealing with, reworks the application priority list and starts fresh dialogue with some users. If he has been in the same place for a while, he tries to reshuffle his team, rework user interface screens and may be try to aggressively introduce new technologies. However when all these measures do not seem to impress the management, the poor CIO looks crestfallen not knowing what more he could do. The same is the experience when I see CIOs executing their role as members of professional associations ; they bring about changes and when they don’t work, they blame the CIO community, the vendors, the industrial environment etc.
I agree that their predicament is genuine. An era where ‘change’ is touted as the most powerful tool of governance, how is it that the changes carried out by him are not accepted by the organization that he works for. While he may not have the answers some others may have.
Untangling the mystery
Now let us look at a some of the reasons why organizations adopt changes ;
- Change in the marketplace – New challenges often crop up in the form of new players, new products, price wars, new methods of distribution etc. to which the organization develops its responses.
- Change in consumer behavior – Customers needs change over time and they may have different demands to which the company has to respond to.
- Internal drive to excel – When companies try to get better, improve its working and want to scale new heights.
- Change in circumstances – Like new laws, political and geographical changes etc.
- Technology developments – Necessitate use of technology to ride a few notches above the competitors.
Now when organizations set on this journey of change and in the right manner, they are aware of the objectives they are trying to meet. They are clear about their purpose and targets they are pursuing.
CIOs can take a cue from this illustration and work out their change program to lend it purpose. A change for the sake of change leads us nowhere. It is important to have an agenda for change. He has to ask a few questions of himself when taking on this task. For example he can look at the unfulfilled business needs from the technology standpoint, he can assess if the technology infrastructure is the bottleneck, he can seek external advice to reorient his IT plans, he can find out delivery failures or inefficiencies etc. and devise programs to tackle these problems. If he finds that no IT Plan or strategy exists he should work to prepare a new document.
In the end a change has to have some end purpose which acts as a beacon to guide their path. The CIO has to define a specific business purpose that he is attempting to tackle and one that is in line with the business objectives and goals. Just making a few technology changes or restructuring his organization without a business purpose in mind does not find purchase from the management. A change is a powerful tool which could either help meet a challenge, scale new peaks or win over competition, only if it is properly targeted.
We witnessed the telecom revolution over the last two decades which altered the way people communicated with each other, a change that impacted the daily lives of people. The information technology boom and the advent of internet did something similar by significantly redefining the way people dealt with tasks on a day-to-day basis and the way businesses functioned. Development on both these fronts initially went along in parallel.
The convergence of telecommunications and computing has been noted and commented on for some time now. However, there is a much richer interrelationship at present than at any time in the past. In fact, one can argue that the very terms “telecommunications” and “computing” are losing their relevance as separate identities, and also that these fields will become virtually indistinguishable in the near future.
Merging of computing, communication and entertainment has changed the landscape. Emergence of the acronym ‘ICE’ really signified this move towards convergence. The boundaries between telecom and computing have really been blurred with significant overlap between the two. The traditional use of a telephone to talk and use of computers to access the net & to do other tasks is giving way to a scene where we increasingly use computers and applications like skype, hangout, yahoo messenger etc. to talk to people on a audio or a video chat and use our handset for accessing our mails, for using the social; networking sites, read news and for general browsing – a role reversal of sorts.
Impact on telecom companies
Telcos have been reporting fall in the ‘average revenue per user’ (ARPU) and this is understandable. There has been an increasing usage of free apps like viber, jumblo, skype to talk to others riding on the web and thereby starving telcos of revenue through voice calls. Widespread use of chat facility on whatsapp, yahoo messenger, hangout etc., for messaging has resulted in revenue loss for telcos for such value-added services. Revenue from long distance calls has also seen significant drop as people use skype, hangout etc., to set up video calls connecting with anyone around the world.
Let me share my experience of communicating and net browsing when travelling abroad recently. I purchased a country specific card from one of the telecom service providers which carried call lower tariffs than international roaming charges for my regular number, and also an internet service pack. At the end of my trip I incurred very little expense over and above the fixed charges. At most places I could find access wi-fi connection like in the hotels that we stayed, most airports, train stations, shopping malls and even in the long distance bus that we were travelled. I could fetch my mails, post entries in facebook, linkedIn and twitter, send messages on whatsapp and speak to people using viber without incurring any extra charges. I am sure telcos would be ruing this revenue loss and may already be revisiting their business models to plug such loss to business.
The future scenario
While describing the current state of convergence and as we speculate what it may mean in the coming years, one can argue that as a result of the horizontal integration of all media (voice, audio, video, animation, data) in a common network and terminal infrastructure, telecommunications and networked-computing applications will no longer be distinguishable.
We are going to see cities with wi-fi connect at public places and chances are that many big cities may sport widespread free wi-fi connects covering a good part of the city. As more people use this facility, tariffs for telephone networks and internet bandwidth may undergo revision to become more realistic. Telecom companies have been charging indecently high rates for international roaming but I am sure this would change soon.
Taking the argument further it is not clear whether we would use our telecom handset for talking to others or we would use a gadget connected to the internet instead. In other words I am not sure if we will be using a phone of a telecom company which also gives access to internet or that we will we use a gadget connected to the internet and do away with the phones altogether.
Vendors form an essential part of our team that strives to excel in our organizations and vendors play a prominent role in the implementation of our IT plans. The vendors include those who supply and install hardware, those who put in our networks, develop software, help implement application systems, consultants, outsourcing vendors, security reviewers, audit partners etc. They work for us and work with us to ensure completion of the tasks that we work on. They do contribute to our success and do so in different measures depending on the role that they have been assigned. It will therefore be in order to acknowledge contributions made by them.
There is no doubt that vendors are bound by the contract and have to perform for the fee that they charge. However the quality of work done by them depends to a large extent on the work environment that we create. When vendors are enthused, they put their heart out and accomplish more than what we would have bargained for.
We are all advised to treat vendors as partners and to work together with them to create new solutions that work for us. Vendors may be many, some who perform critical tasks, some who carry out small and odd jobs and others who perform routine but important operations, but all play a role in our success. They are worthy of being called partners and we should be treated as such. Such an approach goes on to improve relationships and thereby their performance.
It is important to have a formal process to manage vendors so that we get the best out of them. The vendor base should be rationalized and there should be a defined process for vendor evaluation, selection, contract execution and their deployment. Subsequent processes including project management with periodic reviews and mapping results to the agreed deliverables are essential to ensure successful completion of projects.
To keep vendors motivated it is important to acknowledge whatever good work that they do. While we may have punitive measures to make vendors perform, rewarding them for good work is more positive and goes on to ensure their full participation. There are multiple ways to acknowledge them. For example calling some of the critical vendors to a company function gives them a feeling of being a part of the company. Awards, rewards and recognition programs are wonderful ways of acknowledging their work. You could institute an award and choose the best vendor every year, or call over and honor a vendor if he really has been a partner in your progress and has contributed significantly. Some companies treat IT vendors on par with the material and other main suppliers and include them in their vendor conferences.
One other requirement of vendors is that we become their reference clients and speak positively about them to their potential customers. By agreeing to do so we get their appreciation and they stay committed to us. I remember whenever we had become reference points, vendors not only gave us heightened attention, they also charged us lesser so as to ensure out continued support.
Does it work ?
Well, it does. I have heard great stories from others and I have experienced it too. A small recognition goes a long way in keeping the partner enthusiastic and committed to the task. The focus should not be limited to ensuring their performance on the current projects but to keep in mind future relationships. Such vendors come back on their own to help even after they have completed their tasks and are no longer actively engaged. If they have helped us, it is but fair to acknowledge their contribution.
Not so long ago, while we were still grappling with the implementation of Business Intelligence and trying to shape up for Business Analytics, the concept of ‘Big Data’ hit the market like many other technologies do. We know most new introductions come in with a high dose of publicity and shrill marketing which tries to sell but does very little to explain what it means. For example when ‘cloud computing’ arrived with all fanfare it did create a stir but it took quite a while for glamour to fade away and for the reality to hit the user. The constant bombardment of the scene with new terms leaves the users bewildered.
The truth is that I am also confused and trying to make sense of this new concept in town. Let me therefore try to arrive at some understanding to help remove the haze from our vision. I remember the time I had started with Business Intelligence long ago trying to support business with new found knowledge from analyzing business data and making information easily accessible. While I was happy with what we did, we were suddenly stumped with the term ‘business analytics’ which took us on a tizzy till we got back our senses. When we are adjusting to the new definition we were teased again with the new term ‘Big Data’. I am sure many of our friends are also trying to comprehend this new development. I will make an attempt to understand the differentiation between these terms.
BI is not a new concept. Data warehouses, data mining, and database technologies have existed in various forms for years and we have been using them merrily. Big data as a term might be new, but many IT professionals have worked with large amounts of data in various industries for years. Business Intelligence (BI) encompasses a variety of tools and methods that can help organizations make better decisions by analyzing “their” data. Therefore, Data Analytics in my opinion should be a part of BI. Is BI then the mother concept and the other off-shoots of it ?
Business analytics (BA)
BA is comprised of solutions used to build analysis models and simulations to create scenarios, understand realities and predict future states. Business analytics includes data mining, predictive analytics, applied analytics and statistics, and is delivered as an application suitable for a business user. These analytics solutions often come with prebuilt industry content that is targeted at an industry business process (for example, claims, underwriting, financial analysis or a specific regulatory requirement). BA therefore could be a specialized tool that analyses data in depth and makes multiple correlations to unravel stories that not visible from a simple analysis. This perhaps puts BA in a slightly different league and has a leg up when compared with BI.
Big data may not just be about large amounts of data, as the name may suggest. Going beyond the conventional process of analyzing structured data as present in our databases, this approach involves digging and analyzing a lot of semi-structured and unstructured data. Fifteen years ago, we didn’t analyze email messages, PDF files, or videos. The Internet was just a fad; all information there was of a secondary nature there were no social networking sites or other discussion groups that give valuable information and insights into consumer behavior. Similarly, wanting to predict the future isn’t a new concept, but being able to access and store all the data that is created is new.
Various sources claim that 90 percent of the data that exists today is only two years old. And that data is growing fast. If 90 percent of all the data in the world was created in the past two years, what does that say about the data?
Now organizations with huge amounts of data would find it hard and time consuming to analyze and interpret them to generate meaningful information on time. Old technology platforms are slow and inefficient and now we need computer systems and technologies that can handle big data and solve the velocity-volume-variety problem. The new in-memory systems technologies provide a breakthrough solution for big data analytics.
The way ahead
We are therefore in a new era where information processing dons a new dimension and acquires the capability of accepting, storing, processing and huge and a diverse set of data and putting them through any complex analysis to generate meaningful information for business. It requires our skills in making use of this technology to our benefit.
Talent acquisition has always been a challenge and we all struggle to find and get right people on board. We complain but still go about our process, managing to select persons who appear closest to the requirement that we defined at the start. In doing so we miss out getting the right talent and end up in a compromise citing various constraints to justify our stand.
There is a difference between talent acquisition and recruitment. While recruitment is about filling up a position, talent acquisition refers to the selection of the right person in the right position. Many a times we try to fit a square peg in the round hole, resulting in the incumbent’s dissatisfaction, low productivity and slow progress.
I have seen companies going through the process of recruiting CIOs and have also seen CIOs trying to appoint senior members to assist them in their work. They follow the normal process of recruitment and do sometimes manage to get good people but they also falter on many occasions. It may be useful to discuss a few factors or practices which can make talent acquisition more targeted and effective.
Defining the need
The requirement for a person could arise due to several reasons. It may arise when a new project or a new area is being taken up or when a new technology is being introduced. It could be to acquire a talent or expertise which the company does not have or could simply be to replace a person who has left. Whatever be the reason, it is necessary to know clearly the need for the person and his role in the organization. In the case of a replacement there is often a tendency to get a person with similar profile instead of reassessing the position and the need. In many organizations roles are assigned to persons to suit their capabilities but they do not review the role when a new person with a different skill set takes the position. For new positions too, the need should be clearly defined and understood by all.
The organization structure and his fitment
This is an area which requires more attention and a casual handling of this aspects leads to long term problems. The organization structure in some companies is not formally recorded and approved and in other cases it is not reviewed at regular intervals to match the new emerging realities. It is important to know the position, designation and the reporting relationship for the new inductee. This helps in specifying the suggested profile, seniority and skill set for searching and short listing candidates for the position. Some companies often tweak the position depending on the candidate they have chosen which I think is not proper. While some flexibility could be in order but the organization structure and the requirement should not be played around with. I do not sometimes find the requirement to have a direct connect with the organization strategies and goals. For example when I left an organization my position (reporting to the CEO) was filled up with a person who was relatively junior and since he was three levels lower in hierarchy they changed the structure made him report to the finance function. The importance of IT and its value to business seemed unclear in this case.
Job or position description
All such positions should have a formal document describing the role, responsibilities and expectations from the incumbent. Such clarity is important when assessing candidates and in understanding their suitability. It is not uncommon to find non availability of a formal document authorized by the HR. On many occasions I have been handed over a quickly written paper listing down a few tasks that the candidate is expected to perform. For example when a CIO wanted a person to head infrastructure management, the job description said that he should know Unix/Windows, server management, database management and handling of LAN & WAN networks but nothing more.
While we lament unavailability of right candidates, we hear well deserving candidates complain lack of good opportunities. There is obviously a disconnect, which can be addressed to some extent if we are clear, objective and focused in our talent acquisition drive. Getting the right person adds synergy to the environment and serves our objective well.
As we start with the new financial year in April, two of our main obligations come to fore. One is seeking approval for the annual budget already presented and the other one is the year end appraisal of our staff members. While the former is important for working out our plans for the year, the latter I feel is more important as it helps in setting up the morale of the work force and helps enhance their productivity in the period ahead.
I have seen many a drama enacted during the appraisal process when staffs’ performance is assessed and later when the final ratings are announced. The whole exercise leaves a few people happy but many others sad and is a situation which is tough but has to be managed with tact. A lot depends on the process adopted by the organization and the way the manager and the HR deal with this sensitive matter. Some companies have a mature and an equitable system while some others have a process not so well defined and followed more in default than in compliance. Let us examine various elements that can make the assessment process better and enjoyable rather than one that is intimidating and disliked.
We are dealing with a valuable human resource here and therefore there is need for us to be more considerate. The HR department should come out with clear policies which are well communicated. Let us discussing a few good practices below ;
Making the process participatory : Breaking away from the old practice of assessor making unilateral assessment, the process should be made participatory with the appraisee having a say in the assessment. He should be allowed to voice his complaints about factors that hindered his performance or suggestions for improvement.
Assigning of goals : Every employee should be aware of the expectations of him. He need to be assigned clear tasks and told of the desired outcome in the form of deliverables or goals. Only then we can assess his performance vis-à-vis his targets.
Self appraisal and supervisor assessment : It is always a good practice to let the appraisee assess his own performance first and then let the appraiser agree or note down his disagreement. Serious differences could then be resolved by HR.
Appraisal discussions : Oftentimes discussion turn too formal and geared towards on assigning scores for performance. This should change with the discussion focus more on development and helping the candidate get over his failings and build further on his strengths.
Make the process transparent : Employees often wait with a bated breath not knowing how the news will hit them. The assessment is kept secretive and there is an element of suspense. This is undesirable and unfair. The process must be transparent and the appriasee should be aware of the manner of his assessment and the areas that he should have done better. Proper documentation and a process of consultation would make the process much more meaningful. Many companies use an automated work flow with pre-defined rules to enter goals/targets, self assessment, evaluation, remarks etc. thereby making the process transparent.
Avoid rigid adherence to the bell curve : The often talked of ‘Bell Curve’ formula sometimes makes us force fit people into slots of excellent, good and the poor performance. Though this could be a general guideline, a small deviation will be in order at times to make possible a fair assessment.
Periodic assessment : In a traditional set up, the appraisal is carried out at the end of the year which means that the candidate comes to know of his shortcomings, if any, only then when the year has run out. A periodic and a formal assessment, say every quarter, can give him an opportunity to improve upon his performance based on the feedback he gets. Such a step would be positive, supportive and fair on the appraisee.
The award : The final give-away is in the form of salary increment or promotion to the next level. People tend to mix up the intent of these issues thereby causing heart burn. Increments are incentives for good performers, a step by which they encourage sincerity, hard work and delivery. On the other hand people who show promise and capability of handling higher responsibilities, are elevated to the next level. This needs to be understood by assessors.
Performance appraisal should therefore be an exercise that people look forward to rather than being an activity that people dread. If it is an ongoing exercise with an intent to develop people and provide encouragement for performing better, this exercise could be enjoyable and productive.
I often come across companies that start IT projects with all fanfare, complete the initial tasks but cool off later. I first enquire, then nudge them and finally try persuading the folks to continue but they somehow go into a period of hibernation and wake up much later. I have wondered about the reasons for such phenomena and tried to analyze but have yet to come out with proper answers.
This is not a rare state that companies get into but a situation I have observed with regular frequency. Companies have always a lot of explanations to offer and look perfectly justified in their approach. To an external observer however such position doesn’t look so normal and convincing and he is at a loss to understand this period of stagnation. The blame could lay with the CIO for not being pushy enough, the users for their uncooperative attitude or with the management for turning a blind eye to the IT projects. For instance one of the companies that I am advising discussed seriously about restructuring the IT infrastructure which was in a highly decentralized mode but postponed it for two months till the start of the new financial year citing budget constraints but it has been now been several months since. Another company was to start off with their BI project and bought the product as well but couldn’t get its act together to implement for over several months now. If I try to analyze the reasons for such delays, some of the following points emerge :
Lack of budget : This is a reason often cited by the CIO or the management. Budget constraints could be true in certain cases when companies reel under depressed sales or eroded margins but in most cases it is either lack of drive or unwillingness to invest further in terms of company’s resources or funds that stalls these projects.
Not convinced of the project : The management may not be sold out to the idea and hence could hold back their approvals. The CIO may not have been able to work out a proper business justification or that the management themselves not made efforts to understand the proposal and the impact on the company.
Ignorance on IT : While the managements may profess to know, their ignorance of IT is hard to cover up. They still hold the view that the company has survived and prospered without IT so far and hence further such investment would be overkill. They would rather invest these funds in a marketing campaign or for capacity build up.
Unsure of the future plans : Managements may not be ready with their immediate business plans due to market uncertainties or may have business plans but refrain from talking of IT plans. It becomes convenient to put such investments on hold.
Conflict amongst the main stake holders : I have experienced this situation more than once. When talking of Supply Chain Management (SCM), Business Intelligence (BI) or Product Lifecycle Management (PLM), I found the main stakeholders standing their ground and not coming to a consensus, thereby holding up the project. Poor coordination at the top ensures indefinite delay in the execution of such projects.
Plain lethargy : This last point takes the cake. Sluggish companies not seriously affected by market conditions, or the ones that are happy with moderate growth or those who are monopolies, take it easy and do not see the need for hurry. They can wait and take a look at the proposal when they are in a mood to do so.
Such periods of inaction are rather intriguing. Irrespective of the reasons for delay one wonders if this stretch of time benefits anyone. Perhaps none, except the companies who are able to postpone their investments. It was amusing to hear of a senior manger patting himself on his back for holding back decision saying that the delay has really helped because they can now work on the new version of the software, not realizing the fact that they had lost the opportunity in not being to make use of the facility before. Lethargy, indecision and procrastination are qualities or habits that we can do away with and move ahead with a greater sense of purpose.
It was during a seminar a few years ago, organized by a leading software vendor, that I listened to the IT head of a large organization, a customer, about implementation of Business Intelligence (BI) suite in their organization. This lecture was a part of the key note session and it had a large attendance. The speaker spoke at length about the project describing how they had been able to generate multiple reports for decision making. Following the talk, a person from the audience raised a pertinent question. Remarking that he did not hear any reference to Key Performance Indicators (KPIs) or its equivalent, he wanted to know if they had identified critical areas in the organization which they wanted to address with information analysis. The speaker could not adequately answer the question and admitted that they had reserved such an approach for the next stage.
I later discovered that this was nothing new and that many organizations implementing BI use it for generating standard MIS reports that they have been using for a while. Being familiar using such reports they don’t see the need for a change. The advantage they derive is easy processing of reports, greater accuracy and timely reporting. The question is if they just get a little more with this wonderful piece of software, is it really worth investing so much and going through the entire grind of implementing BI.
One of the customers that I am currently advising was going through a similar phase. On my advising them to consider BI, they promptly agreed to evaluate, negotiate and buy a package. The implementation partner they spoke to lead them through the familiar approach of taking out routine reports first. The client also seemed to agree as they as they were in a familiar territory. I had then to intervene and explain to them how BI could help them address specific business challenges rather than using this tool to generate reports they already get out of the old systems. The ROI factor hit the CFO mind and he then supported the need to define KPIs for all functions before starting with BI.
The need to define KPIs
Businesses use IT to help enhance their efficiency and effectiveness in dealing with competition and market forces and information plays a key role here. Information however needs to be targeted and this can be done only if we identify the key performance parameters that we like to be met and work out a way to need to monitor them regularly. Let us first understand what KPIs are.
A key performance indicator (KPI) is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ for every organization, for example business KPIs may be net revenue, customer loyalty metric, customer-wise profitability, sales performance, performance against competition etc.
Before KPIs can be identified, organization should conduct an exercise defining business objectives, working out measures for success, outlining approach for remedying variances etc. KPIs help an organization assess progress toward the declared goals.
To make the information easily accessible to the senior management personnel, organizations go further and create executive dashboards. Dashboards provide a visually intuitive display of data for monitoring enterprise activity and help organizations track performance from a single screen, thus optimizing decision-making. The purpose is to offer an at-a-glance understanding of the organization’s health to executives, managers, and business users. There are frameworks which are in vogue, like creating a business scorecard to improve business performance which define the overall goals and break down those goals into a series of objectives that will enable them to meet the goals. The ‘Balanced Score Card’ framework originated by Dr. Robert Kaplan and Dr. David Norton is the most popular and this approach adds strategic non-financial performance measures to traditional financial metrics to give managers and executives a more ‘balanced’ view of organizational performance.
It is important that organizations implementing Business Intelligence packages make the most of what the software offers. Companies should go beyond conventional reporting and look for strategic use of information to help meet it’s objectives and goals. Identifying KPIs and creating dashboards are some of the ways to achieve the purpose and organizations should take that path for effective use of the opportunity with them.