Most multinationals are almost ridiculously complex. It's a barrier to innovation, compliance and sustainable improvement - and increasingly a C-Level issue. Simplification has been one of three strategic priorities at GSK, for instance, since 2008.
So Deloitte's report on reducing complexity in global shared services organizations is well-timed. Unfortunately though it misses the point.
Deloitte sets out survey results which illustrate the prize. Tackling complexity effectively, says Deloitte, can reduce the costs of delivering Finance, HR and IT by up to 20%, even in already 'rationalised' global shared services organizations. And yet only 30% of CFOs believe that their efforts in tackling complexity are successful.
The low-hanging fruit of labour arbitrage and automation were harvested long ago. 'Getting a grip on complexity is', in Deloitte's words, 'the next frontier in reducing costs [of Finance, HR, IT and other non-core support activities]'.
Which is great. But, alas, Deloitte's report on how to get a grip on complexity is - frankly - very complicated. It could do with a complexity reduction program of the sort that it proposes. It presents interesting ideas but doesn't join the dots. Its definitions of an operating model and a business model don't quite work. Its attempt to define four different types of complexity - portfolio, organizational, process and information infrastructure - don't hang together well. It's light on governance and controls. It recognises the significance of master data management but doesn't link it with process management. To its credit, the report clearly advises a focus on end-to-end process. But it dismisses 'process flow diagrams' in favour of an exotic visual value stream approach, the benefits of which would be incidental at best.
More fundamentally, it overlooks what must be the 72pt headline to the complexity-slayer story: the power of process visualisation.
End-to-end perspectives, expressed in the language of the business, with design principles that make it intuitive and easy on the eye. All managed within a methodology that blends compliance rigour with support for people doing real work, and ensures IT alignment. This is what drives engagement in sustainable improvement and therefore, ultimately, in business simplification.
And it's not just effective in untangling process spaghetti, or bringing coherence to process fragments. I've seen it to be equally effective in enabling organisations to escape the deadweight of enormous SOP document libraries and migrate to a far more agile world where end-to-end process provides the overarching narrative, supported where necessary by far fewer, and far slimmer, SOP documents.
A picture being worth a thousand words etc, we shouldn't be surprised that once people can see what's going on, they are far better equipped to identify unnecessary complexity and collaborate to safely 'make things as simple as possible but not simpler' (to paraphrase Einstein, who never wrote on shared services, as far as I know, but knew a bit about complexity..).
28 Nov 2011 Cracking Complexity in Novartis
30 Sep 2011 Optimize 15,000 Business Controls? No Problem.
26 Apr 2011 Process As Science And Art