Sourcing Shangri-La

The Root Cause Of IT Failures

Next month's HBR has new evidence on the colossal cost of IT failures. It's the largest global study ever of IT change initiatives. And it's not optimistic:

"It will be no surprise if a large, established company fails in the coming years because of an out-of-control IT project. In fact, the data suggest that one or more will."

The study conclusions seem sensible - smaller projects, better risk assessment - but they don't get anywhere near the root cause.  

For a start, even if IT projects were smaller and risks were better managed, there is the bigger problem of 'projectification' - the challenge of managing multiple projects within organizations that are complex, fast-changing and increasingly virtual. 

The HBR report includes data on 'projectification':

61% of managers reported major conflicts between project and line organizations

34% of companies undertook projects that were not aligned with corporate strategy

32% of companies performed redundant work because of unharmonized projects.

All of which points to the underlying issue, the root cause of most IT failures: communication.  More specifically, the lack of a framework for effective collaboration that ensures joined-up thinking across the enterprise. 

This is absolutely not breaking news - Michael Krigsman and others have been hammering on about this for years. But it's still true.

The answer, as leaders such as Cameron have realized, has to be a collaborative framework, with a robust governance wrapper, that sits at the heart of the business. 

It has to use the universal language of end-to-end business process.  It has to be holistic, not just about what's automated.  It has to be integrated, combining process with analytics, risks and controls, documents, quality and compliance. It has to offer different stakeholder perspectives of one process reality, especially to align IT with the business. And it has to support people doing real work, and engage them in continuous improvement.

Implementing a platform of this kind  is not necessarily easy.  Conceptually it's neat and obvious. And yet implementation often meets resistance beyond the normal inertia.

Maybe that's because it's hard to shift a culture to embrace transparency and new levels of visibility and accountability.  But maybe there's an even deeper reason for clinging on to things as they are and rejecting the wider perspective. Projects - even big ones - are quite comfortable places to be. There's a seductive sense of certainty and control. 

We don't want to lose project control of course, but the future must surely lie in coordinating all projects within the wider enterprise perspective. It's the only way that major IT failures, that can cost $m as well as the end of many jobs, can be averted. And major business transformation failures, and major compliance failures, come to that.  

Why Your IT Project May Be Riskier Than You Think - Harvard Business Review, Sept 2011

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PwC and HfS on Global Business Services Success

Seven out of ten for PwC and HfS on their report: The Evolution of Global Business Services.

Credit where it's due: The report highlights governance as crucial, in a way that's not been done before.  And it's helpful too in setting out models and objectives for global business services. But it's silent on what is rapidly emerging as a fundamental for success.

Governance is a theme running through the report, and it's a mature understanding:

Governance has to be 'ongoing', not project or deal-related. Governance is not about another tool for the vendor management team.

Governance has to be 'well-integrated, consistent and rigorous' and process-oriented, capable of orchestrating change across complex service delivery environments with multiple and diverse stakeholders.

What's missing from the report is the learning that's emerging on how you do this. 

That learning, in a nutshell, is this: the tools which got us this far aren't sufficient to deliver this new world. 

Global business services initiatives are often bogged down, even paralysed, by the tools they are using. The result in many cases: 'a complete mess'.

Everything indicates, as I've noted before, that successful global services organizations will increasingly depend upon an integrated management platform that:

- provides line-of-sight between a target operating model and operational realities

- enables effective collaboration, especially between IT and the business, right across the  complex service delivery and supply chain of the extended exterprise

- embeds governance, compliance and controls within the operational processes

- delivers at the front line and engages the organization in continuous improvement.

This is not about the triumph of the process nerds.  It's about enabling the enterprise to manage effectively in an additional dimension: end-to-end process.   

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Analytics and BI: The Foundation For Success

Dion Hinchcliffe's post yesterday on Big Data mentions a Gartner report that I'd missed.

Between 70% and 80% of corporate business intelligence projects fail, according to Gartner. 

No, I haven't mis-typed that. It's an extraordinary statistic, from a generally reliable source with no obvious ax to grind. It's kind of what we all knew anyway - but hats off to Gartner for doing the research and coming out with it. 

The primary reason for this state of affairs, says Gartner, is 'poor communication between IT and the business':

"They have not sat down and created a common lingua franca for BI. How can you meet expectations when you have one side speaking Latin and the other speaking Greek?"

In the absence of a proper dialog, said Patrick Meehan, President of Gartner's CIO Research Group, IT departments make the mistake of looking at BI as an engineering problem that requires a specific package solution.  ['Never!' I hear you gasp]

It's further evidence that process is the key. Success in Analytics and BI, as in much else, starts with a collaborative framework that can enable a rich dialog between IT and the business.

And the best, the universal language for this dialog? It has to be end-to-end business process, presented simply and visually, and using everyday terms (ie no IT speak or symbology).  It's the antidote to a world that's becoming ridiculously complex.  

With a common language and a shared understanding of the big picture, how it all fits together and where accountability lies - then the KPI metrics almost define themselves. They simply highlight what matters most - and where Big Data might prove most valuable.

It's an ongoing program of course, never a one-off.  So the collaborative framework needs a governance wrapper.  It has to be connected with operational reality too. It must be enterprise SatNav for the users doing real work and driving continuous improvement. So it has to be part of a platform that integrates end-to-end processes with real-time metrics.

In short, it's just another aspect of the rapidly emerging BPM platform that is set to become the beating heart of the enterprise in the very near future.

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Sustainable Improvement In Shared Services Performance: Here's How

My colleague Rob Speck tells a story on his excellent new Process Maximus blog that perfectly illustrates the performance deficit in shared services, and how to address it. 

It's a deficit that has been largely hidden until recently. Shared services is wildly popular, and growing across all industries and regions. In Deloitte's 2010 Global Shared Services Survey, 89% of organizations declared shared services to be 'strategic'.

But scratch the surface and it's not hard to find business cases that have failed to deliver, sometimes spectacularly. According to the Deloitte survey, 78% of organizations reported ‘no significant positive impact’ on process efficiency or quality. 

In practice, promised efficiency gains have proven difficult to deliver, and sustainable improvement has been even more elusive.

Rob's story illustrates the prevailing condition of many shared services organizations.  His client was the shared services division of a Fortune 100 company, providing Finance and HR services. The SSC's processes were 'managed' and 'governed' in Word and Visio and peoples' heads. Process ownership was fragmented and unclear. KPI metrics were disconnected from their business processes.  Onboarding new clients to the SSC was challenging. The confusion and complexity demanded a culture of heroics.  It was, the client said, in a moment of despair: 'A complete mess'. 

OK perhaps this is slightly harsh, but it was, in many ways, a fairly typical SSC. 

Rob's case study shows how that SSC deployed Nimbus Control to significantly up the pace of its journey towards operational excellence.  At the heart of its success is an integrated management platform that provides visibility and enables effective collaboration, across a complex hybrid delivery landscape, on the continuous improvement of its end-to-end processes.

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Why Management 2.0 Will Be Built Upon BPM

 
Hats off to McKinsey and the HBR for creating MIX, an open innovation project to accelerate the search for new management models.

Speaking last week on The MIX Management 2.0 Challenge, Gary Hamel, described by the WSJ as 'the world's most influential business thinker', echoed its call for the reinvention of management:

"We are at an ideological inflection point. For 100 years, we've had the ideology of control.  We need to think of control in new ways."

He called for new management models that draw upon the innovation of the Web: organizational hierarchies that grow from the bottom up; working in small autonomous teams wherever possible; and enabling 'communities of passion' to flourish around ideas and innovation.

He called also for the embrace of experimentation: 'cultivating an environment where people don't need extensive permission to run small-scale, low-risk experiments'.

It's not just theory. He cites an example of a business that has embraced Management 2.0 principles -  a company with $3bn revenue and a 50-year history - with a lattice organization and no hierarchy. Every employee decides what to work on, and their compensation is linked to a ranking by 20 peers based on their value added to the company. 

A brief aside - it seems to me that there's a dimension missing here: the social impact of work. We need to create work cultures that are less competitive and more collaborative; where trustworthiness and responsibility are deeply ingrained; where parenting and work are not in conflict; where creating quality jobs is a measure of success. In the jargon, we need Management 2.0 models that embrace far wider definitions of corporate social responsibility.

OK, I hear you say, so just what is the tenuous connection between all this heady stuff and business process management? 

Well, it seems to me that every aspect of Gary Hamel's vision speaks to the need for an enterprise-wide integrated management platform. 

Outsourcing Buyers vs Sellers: Swords Into Plowshares

It was billed as a debate where senior provider and senior buyer executives would 'lock horns to debate the burning issues of today’s outsourcing business'. 

But when HfS Research rustled up its invited audience (impressively close to 500 people, at the height of the holiday season) for its 'Live and Unfiltered' web debate, what stood out was the consensus around the table on the emerging challenges.  

The Buy Family execs - from Northern Trust, Kimberly Clark, Ascension Health and PNM Resources - pretty much lined up with the Sell Family execs - from Genpact, CSC, Accenture and Cognizant - to endorse highlights from the HfS joint study with the LSE:

Hybrid service delivery is the new normal: outsourcing and shared services are set to  increasingly dominate global services delivery - across all industries and regions.

It's not just back-office transformation any more. Shared services and outsourcing initiatives are growing into the middle office, and even into front office support (eg here).

It's way beyond cost reduction, which is taken for granted. It's a search for innovation and nimbleness in service delivery, the kind of flexibility needed to thrive in volatile and hyper-competitive markets.

The emerging challenge: How do you manage this intelligently?

In a world of hybrid service delivery models, where so much is delivered through a  tapestry of providers that is continually changing, how can buyers protect themselves and ensure compliance while at the same time driving innovation and continuous improvement?

It's way beyond contracts and SLAs in Word documents. It demands a governance framework that is way beyond Excel-over-email.  It's why leaders are zeroing in on a new operating system for the enterprise, written in the universal language: end-to-end business process.

This new OS for business sits on what is emerging as essential new infrastructure - an enterprise process management platform, which:

integrates business process with real-time analytics, risks and controls, systems and documents

provides everyone - process owner, stakeholder or user, whether in business or IT - with a personalized perspective of the one process reality

provides collaborative features within a governance framework that fosters innovation and continuous improvement.

It's interesting how the ability to collaborate effectively - in conditions where change is at an ever increasing pace and frequently turbulent - is emerging as a core capability on both sides of the fence. It's the common challenge for both Families, Buy and Sell.

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BPM: The Invisible Gorilla

Crowds aren't always right. Today's conventional wisdom about business process management is that is tedious, technical and matters only to IT.  I believe that mindset is about to be inverted.

There's a famous experiment where subjects were shown a short video clip of a basketball game. They were asked to count how many times one team took possession of the ball. When asked afterwards, most observers had not noticed that a figure in a gorilla suit walks into the middle of the court, turns to face the camera, beats his chest and dances a jig before strolling out of the picture.

What we pay attention to guides our expectations of what we are going to see. If it doesn't fit the template we are currently working with, then often we won't see it (consciously at least), no matter how bizarre.

So how do we ever learn anything new? That's where the brain's right hemisphere comes into play.  But before I go any further, let me acknowledge my inspiration here: A bo0k that took over my summer holiday, possibly one of the most interesting books that I've read in thirty years: The Master and His Emissary by Iain McGilchrist.