Sourcing Shangri-La

Cloud Without Risk: Pie In The Sky

We know that systems failures are surprisingly common, hugely wasteful and can bring a company to its knees. 

Best example last year must be Knight Capital, a market-maker responsible for 10% of US equity trading volumes. In just two hours of trading on the afternoon of 1st August, a 'software glitch' lost the firm $460m. The subsequent rescue package cost the owners 70% of their equity. 

Arguably though there's no such thing as an IT failure. If all work is ultimately process, then ultimately it's always a process failure.

At one level, Knight Capital went down because of a flawed implementation of a software upgrade. But it's probably more true to say that, somewhere along the line (and maybe we'll find out once the legal battles are done), there was a flawed process, or a good enough process that was poorly executed.

Probably both. And almost certainly - because this is the continual theme - the root cause was ineffective collaboration.  Vital stakeholders were missed out from the consultation. People thought that they had a common understanding of an end-to-end process and missed the gaps. There was no governance framework to ensure that people used the latest document. No-one realised that there were two different versions of the same process...    

So McKinsey is right when it warned last week of the new risks in the migration to cloud services, making it clear that this is not simply a technical IT challenge:

"IT organizations must now adopt a business-focused risk-management approach that engages business leaders in making trade-offs between the economic gains that cloud solutions promise and the risks they entail."

In cloud migrations, as in every other business transformation program, it's effective collaboration that underpins innovation and sustainable improvement - and ensures that risks are properly managed. 

It's extraordinary therefore that so many organizations flirt with disaster, blithely assuming that they don't need an enterprise-wide process management platform equipped to enable effective collaboration.  

They may say otherwise but in practice they rely on definitions of their business based on process fragments, in multiple formats and tools, often in arcane technical languages, of unclear provenance, scattered across multiple repositories, only tenuously linked with operational realities, and 'managed' with the flimsiest of governance.

Amazingly, Gartner's dramatic prediction, announced two years ago this month, that: "Between now and year-end 2014, overlooked but easily detectable business process defects will topple 10 Global 2000 companies" still looks a safe bet.

 

© Text Michael Gammage 2013

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Outsourcing's Secret Sauce

Deloitte's report Outsourcing, Today and Tomorrow, just published, attempts to define the secret sauce for outsourcing. The authors are engagingly frank:

"We wish we could wrap up this paper with a pithy summary of the secrets of effective outsourcing, boiled down into a neat list of easy-to-digest bullet points. Unfortunately, if such secrets exist, no one has yet discovered them."

But they go on to suggest 'one possible candidate' for outsourcing's secret sauce:

"The recognition that outsourcing, like other complex business practices, is a discrete business discipline requiring specialized skills that cannot easily be developed on the fly."

Which may be true - let's agree it's one of the essential spices - but it overlooks an essential ingredient, arguably the foundation for outsourcing's secret sauce: a platform for effective collaboration, which surely lies at the heart of successful outsourcing.

This platform provides a common language: end-to-end process, expressed in the language of the business, not IT-speak. It is comprehensive, not just IT-oriented. It provides integrated perspectives, not just a repository of process fragments. It is wrapped within a robust governance framework to enable process stakeholders - across the enterprise and including especially IT - to effectively manage change. And, crucially, it enables deployment to process users in a way that is personalised, intuitive and engaging.

The Deloitte report - which polled 100+ sourcing professionals earlier this year - provides ample evidence that this need for a common language, a framework for more effective collaboration, is real and growing:

Outsourcing is big - a $480bn industry this year - and set to expand. So too is offshoring.  But operational roles and responsibilities are often amazingly unclear. [There is far too much focus simply on contractual negotiations]

Cloud will vastly increase its complexity. [as will Social, Mobile and Big Data] 

Churn is increasing: half of clients have terminated contracts for convenience, sometimes to insource, most often to re-outsource. [Managing complex dynamic multisourced service delivery environments is becoming the norm]

Innovation and sustainable success in continuous improvement can't work without it. [Innovation and continuous improvement is the area where organizations report that they are least effective in working with service providers]. 

 

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Accenture: What's Holding Back Shared Services

Hats off to Accenture for bringing some reality and insights to the debate about what's holding back Shared Services. 

Everybody's doing shared services, everybody thinks it's strategic, yadda yadda yadda. The reality though is often disappointment and missed business cases.  Sustainable success in shared services is still the exception.

The Deloitte Shared Services survey, published in April, highlighted some lessons learned: the importance of governance, a collaborative framework, transparency and change management.   

Governance was also a theme running through the PwC/HfS report on Global Business Services, published in July: it has to be 'ongoing', 'well-integrated, consistent and rigorous' and not just another tool for vendor management.  

Those were useful contributions.  But Accenture's report this week Trends in Shared Services: Unlocking The Full Potential brings a new focus.  It spells out what the leaders are doing, and how they are succeeding. And process excellence is front and center.

Noting how one leader in shared services uses automation and metrics and process improvement specialists, it continues:  

"...while other elements are certainly in place - C-level support, comprehensive change management and a relentless focus on value - it is the organization's continued focus on process excellence that stands out ."

I share the report's enthusiasm that shared services will mature to become ubiquitous. And that we are witnessing the emergence of "a long-envisioned" model of integrated business services.  I agree too that 'managing multisourcing consistently' is a huge challenge for most organizations. And I'm delighted that Accenture highlights the vital need for a service management framework.   

But I have one quibble. Because even Accenture hasn't quite joined up the dots.

What is it, ultimately, that enables process excellence, that provides the collaborative framework for change management, that ensures transparency and IT alignment, that supports Lean and other continuous improvement programs, that provides the governance framework for the effective management of outsourcers, and that allows cloud and social media to be most effectively leveraged?  It's a business process management platform. 

It's not a panacea. It can seem a bit boring. It's an unspectacular answer when your SSC is 'in a complete mess'. But everything points to the business process management platform as the foundation for success in shared services.  It underpins process excellence. It's what enables the service management framework.  And it's the only way to optimize the management of process variants, which, the report notes, is the real problem in process standardization. 

What is the business process management platform that can do all this? I've defined it elsewhere as a platform that uses the universal language of end-to-end business process to enable four capabilities.  The only way I'd improve on that definition now, especially in the light of the Shared Services workshop in London last week, would be to re-iterate the importance of adoption.  If our brilliant process management models don't engage process stakeholders, and help real people to get real work done and to contribute to improving things , then we're missing the biggest trick of all.    

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The Social Enterprise: Don't All Speak At Once

Larry Dignan at ZDNet nails it in describing the looming 'social sprawl' in A Few Caveats Ahead of Utopia, his take on Dreamforce 2011:

"Every software vendor has some social hook. Let’s say every IT buyer goes whole hog with the social stuff. Well guess what? Now you have HR social features. CRM social. Business execution social. It’s a social fest. Meanwhile, employees are still using Twitter and Facebook. If social sprawl isn’t an issue today, it will be tomorrow. This emerging issue can go two ways for Salesforce. IT buyers can see Salesforce as the great social enterprise consolidator. Or they can close their ears. At this point, it may just be a jump ball."

He's right about the emerging issue of social sprawl. But I think it has a different resolution. It's not a jump ball between Salesforce Chatter and an alternative of a cacophany of voices. There's a rapidly emerging alternative - a process-based paradigm. And the best example may be the convergence of Tibbr with Nimbus Control, which analysts seem to have underplayed in commentary on Tibco's acquisition of Nimbus Partners.

Diversity in our interactions online is natural, just like in the everyday physical world: as Tom Cortese has argued, focussed and niche social networks will always have a place. But the collaboration and dialog that is at at the core of the social enterprise needs structure if it is going to be purposeful.  Especially because, while we may kid ourselves otherwise, the evidence is that actually we're not very good at multi-tasking. 

So what's the context and framework most likely to encourage effective collaboration in the social enterprise? It has to be the processes of the business.  What else is the social enterprise seeking to continually improve and optimize?  Ergo a business process management platform sits at the heart of social enterprise.

After seeing his social baptism ceremony last week, I'm coming over all funny. So, to channel the extraordinary Marc Benioff for a moment: Beware The False BPM Platform!

Is there a single integrated process architecture for the enterprise, with clear line of sight between strategy and operations?  Is there visibility of end-to-end processes, not just what's automated, and across outsourced activities too - and all in the language of the business, not IT-speak? 

No? Then it's a false BPM platform!

Are real-time performance metrics, business controls, compliance and quality, integrated with the end-to-end processes to create the operating system for the enterprise? Does it ensure that Lean and Six Sigma projects are delivering sustainable benefits?  

No? Then it's a false BPM platform!

Does it help people get real work done? Is it deployed to every desktop and mobile device as a personalised intelligent operations manual? Is it easy for every person and process stakeholder - including especially the IT community - to collaborate every day on operational excellence?  

No - then it's a false BPM platform!

Here endeth the diatribe. ;-) 

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Service Integration And Process: In Six Minutes

Why exactly does process management matter in shared services and outsourcing? And what does good process management look like?  How do you recognise it? Explain to me - in six minutes.

That was the challenge that we took on at a speed-dating session at SSOW in Amsterdam last week.  We pitched to six groups of shared services and outsourcing professionals, the bell going promptly every six minutes for the change-round. 

This video shows how we did it. Great fun! And in one of the groups, a member of the audience announced at the end that he was from Nestlé - and used Nimbus Control. Couldn't have scripted it better.

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ERP-CRM: Signs of Sanity. But Will It Last?

Encouraging signs of joined-up thinking at Microsoft Convergence 2011 which opened in Atlanta GA over the weekend. But can it last?

A pre-conference survey shows that most organizations expect to ugrade their ERP and CRM within the next 18 months, and cloud solutions are looking more attractive than ever.

But their new focus, according to Software Insider's Ray Wang, is on improving business process:

"Customers and users have an opportunity to avoid the failures in past deployments of CRM and ERP.  Instead of focusing just on technology implementation this time, they plan to begin with the end in mind. To focus on the key business metrics.  Align outcomes to business processes.  Assign responsibility to roles.   Then, figure out what technologies will support this objective - and allocate budget for change management."

Business-led systems implementation. It seems blindingly obvious but it is, as Hamlet observed in another context, 'a custom more honor'd in the breach than the observance'.

It's certainly possible.  So why do most organizations find something so obviously valuable so difficult in practice? 

Mostly because they under-estimate the value of a process management platform. Any business transformation works better where there is a collaborative framework, using the universal business language of end-to-end process, that:

(1) enables the business to define and express its requirements  

(2) provides shared visibility and understanding, not just between IT and the business but right across the enterprise

(3) meets the different needs of all the stakeholders in the design and management of change

(4) connects with and supports people doing real work, delivering a user experience that is a personalized 'intelligent operations manual'.

We all know what happens without this.  The business finds it hard, or impossible, to articulate its requirements so there is an unhappy and ineffective dialog with IT.  In the end, IT goes its own way, typically on the basis of a Word document with some process 'diagrams' that the business has 'signed off' without enthusiasm or understanding.   And operational teams are left to create their own user support materials (while trying to figure out how to get the business back on track following the 'successful' systems implementation).

It doesn't have to be like this. Let's give process management, the real enabler of effective collaboration and continuous improvement, the attention it deserves.

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Now That's What I Call BPM!

Beat this for exec engagement in using process as the language of business transformation. Even better, it's a turn-around where BPM has been the pivot.

This was an $80m SAP project heading for a derailment. The client's SI had configured 'vanilla' SAP without much reference to the business requirements (which had been 'captured' in a Word document).  

So when the SI presented the business with a preview of what its new SAP world would look like, there was panic: the business didn't recognize any of it.

One month later, the client and its SI are using Nimbus Control - delivered as a Cloud service - to describe the end-to-end processes, with Storyboards showing role-based views of typical user activities.  Everyone now speaks the same language.

Now there is shared visibility and understanding: across the client organization, especially between IT and the business, and between the client and its SI. Requirements are rapidly becoming precise. Process improvements are being identified. And the user experience is being transformed so that processes will be integrated with Storyboards, documents, metrics, risks and controls to create a personalized 'intelligent operations manual'. 

The next step is Visualization Workshops to fine tune the design and the SAP configuration requirements.  Then the same Storyboards created for the Visualization Workshops will be used for UAT, training and user support - so there will be no gaps and no overlapping teams re-creating the same thing slightly differently.

But what's really interesting is that both the CEO and and CIO now carry iPads - and not as bling. They use them to pull up the latest versions of the processes and Storyboards in their discussions with the various program stakeholders as they move around the office. 

Nimbus clients such as Carphone Warehouse adopted the iPad early on to support their Lean process excellence people walking the floor.  But hats off to this client: this is the first time that I've come across a CEO and CIO rolling up their sleeves and getting so involved with process in this hands-on way.  

The bottom line is that this client has, in one month, turned an IT-led systems implementation that was heading for disaster into a business-led transformation program that will be enabled by SAP - and with every chance of success. 

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When 'Social' BPM Gets Over-Familiar

'Social' BPM drives collaboration. So it's always good, and more is better - right?

That's the core idea that underlies the rush for 'Social BPM': that maximising communication is what matters. 

Best results will come, it is assumed, when process owners, end users and other stakeholders are communicating all the time, and in whatever format suits them.

But real life is more complex.  'Social' BPM that will drive effective collaboration needs a degree of subtlety.   

'Social' BPM took off with the BlueWorks Live launch in November, incorporating for the first time Facebook-like features and a Twitter feed in a process mapping tool. Others are scrambling to catch up. Metastorm and Tibco just made Social BPM announcements. There's many more in the pipeline.

At the risk of sounding like the old guy in the rocking chair in a Jack Daniels whiskey commercial: at Nimbus we're taking things a little bit more slowly.  Deliberately. We want to get it right.

We've had collaborative features in Nimbus Control for more than a decade. Features to encourage user feedback, to organize change, to analyse impact, to communicate.  Not Facebook or Twitter it's true, but proven and valued collaborative features. So we are not starting from scratch. Our challenge is to understand the ways that will best extend these features [and avoid what will undermine their value]. 

Recent McKinsey research on the impact of information overload on productivity and wellbeing, together with Tom Davenport's call for a radical new approach to meeting the needs of knowledge workers, reinforce the idea that Social BPM needs to be about much more than just maximising communication.

What every enterprise needs is a framework for effective collaboration. As Professor Davenport argues, that calls for structure, and some governance as well.  The optimum communications mix, he notes, will depend upon the degree of interdependence of those involved, and the level of complexity of the work.  So free-for-all or cookie cutter approaches aren't going to find traction, or last for long. 

So Social BPM is much more than Facebook or Twitter-inspired features that allow everyone to see, follow and comment on everything. It's about leveraging the innovations in social media to nurture more effective collaboration.

These are some of the thoughts that have been informing our own product development - and one of the reasons why we were keen to deploy Chatter internally, to learn first hand.

A topical reminder if you know anyone who needs reminding that effective collaboration really matters...

Stephen Elop, the new CEO of Nokia, in a memo to all staff, sets out the enormous challenges facing Nokia as its stands on a burning platform, with flames coming from all sides:

"We fell behind, we missed big trends, we lost time. We thought we were making the right decisions... we now find ourselves years behind. The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable."

He concludes his call to action with these words:

"We haven't been delivering innovation fast enough. We're not collaborating internally."

 

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Cloud-ed Thinking in Outsourcing

My historian son was talking over breakfast about Tulip mania in seventeenth century Holland.  The Dutch were amazingly sophisticated: they had spot markets and futures trading.  They even had an Edict in 1610 banning short selling.  But, at the height of the mania, it was a mad time - people took leave of their commercial senses. In February 1637, just before prices collapsed, a single tulip bulb sold for ten times the annual income of a skilled craftsman.

It seems to fit with the current Cloud mania.  There's a similar sense of mass delusion, and nowhere more than in the world of outsourcing. A.T. Kearney's Arjun Sethi created a stir last year with The End of Outsourcing As We Know It, arguing that Cloud services will replace existing IT outsourcing within five years. HfS published Cloud Will Transform Business As We Know It, quoting results from its research collaboration with the LSE on Cloud in outsourcing.   

The hype about Cloud is obscuring some truths that won't go away. Many of these clouds are going to precipitate as tears before long.

At Nimbus, we've seen a lot of systems implementation failures. Often we're the first process paramedics on the scene. The consultation with the distraught exec usually ends: "So let me get this right - you set about this ERP implementation without a clear understanding of your end-to-end processes, or of how automation would impact them, or a means of effective collaboration for the stakeholders, or a means to publish the new processes in a way that would make it easy for the end users who would execute them, or a governance framework?".  

The truth is, of course, that whether it's a Cloud service or on-premise, a successful implementation requires exactly the same rigor.

So it's no surprise that we are getting involved as paramedics in an increasing number of Cloud failures.  Some of them are very large organizations which have made strategic commitments to a Cloud services, then spent millions on implementations that have failed. Not just 'under-performed' but totally failed in a 'switched it off and don't use it at all' sort of way.

And it's for exactly the same reasons that old-school software implementations have failed. The client bought the vision of how easy Cloud is, and took leave of their senses.  They ignored process and collaboration and governance and all that boring stuff; they thought they could just switch it on.

The good news is that it is all very do-able.  Cloud has great potential -  Nimbus has itself been a cloud services vendor for years, and we were a very early adopter of Salesforce - but gravity still applies.  Embrace Cloud services without the right perspective and tools and you're heading for a fall.

One theory, by the way, is that the Dutch went a bit mad because there was a resurgence at that time of bubonic plague. If you're quite possibly going to die next week, you may get a bit care-free about risk.  Thankfully, we don't have that excuse.  But that just makes us that bit more culpable.

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