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The Next Fifty Years

The Next Fifty Years

For the past fifty years, computers have been seen as "data machines". But the demands of the new business process management are taking IT in another direction.

Excerpted from Business Process Management - The Third Wave

Back in the 1950s there was the myth of the great thinking machine. Later, the myth of MIS, the management information system, rose up to replace it. The reality, however, is that to this day, computers are record-keeping machines, not management machines.

They can take in, chew up and spit out trillions of bytes of data, but where is the management insight, the actionable information needed in context, in real time at all levels of automated and human decision-making? The methods, techniques and mindset of IT today remain fixated on data - on its capture, storage and retrieval.

However, business processes of all shapes and sizes are the focus of management attention today - management wants to overcome the great "business-IT divide" and gain control over business processes.

Numerous strategies and technologies have been proposed over the years for bringing the two worlds together, none successful. Instead of proffering yet another fix that merely extends the existing IT paradigm, we take a radical approach to closing the divide. We say: "Place the emphasis where it belongs: give ownership of business process management back to business people".

Under the data-centric IT paradigm, business people cannot take control. They have no way to obtain the information systems they need in order to compete, not only on cost, but also on quality, speed and service. These competitive variables require not mere data, but actionable information and knowledge that resides both inside and outside the firm.

Furthermore, the business is no longer a self-contained entity. Producer-controlled markets, in which costs were tallied and margins added, have given way to customer-driven value chains in which activity-based costing must consider numerous players to make the total cost of producing value for the customer visible and understood.

Companies can no longer only manage their own internal processes; they must venture outside and manage their relationship with the entire value chain. However, no IT vendor and no IT department can provide a "killer app" for this.

Companies that want to increase their effectiveness in this new way of competing must bite the bullet and take on the challenge of making process, not data, not the application, the basic unit of computer-based automation and support. They must shift their focus from systems of record to systems of process. In short, "data processing" must give way to "process processing".

This means that employees, customers, suppliers and trading partners must share not just a "data base" but an actionable "process base" that is always on and always up to date, reflecting dynamic events in the entire business ecosystem. Businesses need dynamic systems of process, not the after-the-fact "systems of record" of typical back-office applications. Systems of process are not only what's happening now - they are also what's happened in the past and a description of the path for future action. We are not speaking about only the past, present and future values of mere data structures. We are talking about the past, present and future of business process structures, for business processes are the business.

During the celebrations heralding the arrival of the 21st century, many companies were concerned that their industries might get "Amazoned", that a dotcom just might turn their industry upside down. But with the dotcom clutter cleared away, companies in all industries better be worried about getting "General Electrified". Jack Welch responded to the dotcom era with a destroy-your-company-dotcom initiative. GE's new CEO, Jeff Immelt, has taken the baton and expanded the company's original vision with the Digitisation Initiative, which aims to digitise as many business processes as possible, especially those outward-facing processes used to actually conduct business with customers and trading partners.

GE's automated business processes are now required to provide their own analytics so that business leaders can have the personalised digital cockpit instruments they need to navigate their organisations through turbulent times, in real time. GE is intent on making course corrections daily or weekly, rather than monthly or quarterly, saving time and money and better serving its customers. As the prevailing economic winds led brick-and-mortar companies to decimate technology budgets, GE increased IT spending in 2001 by 12 per cent, to $US3 billion. GE understands the new process-based battlefront of business.

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