The Best of Both Worlds

The Best of Both Worlds

To understand why business process fusion matters, we need to revisit exactly why agility and efficiency are so elusive and yet so important

Business process fusion provides a path to agility and efficiency.

Conventional wisdom dictates that you can't have agility and efficiency at the same time. Conventional wisdom has it that spare capacity is necessary for agility and so agility is the enemy of efficiency. The problem with conventional wisdom is it's often wrong.

There is a new way of viewing the world that seems to offer the best of both efficiency and agility at the same time. And while our research suggests this is not for everyone, the enterprises that are applying this technique with success give us confidence that it is widely applicable to many different sorts of business circumstance. The name of this technique is business process fusion.

To understand why business process fusion matters, we need to revisit exactly why agility and efficiency are so elusive and yet so important. Agility, the ability to change quickly at low cost and risk, is central to enterprise responsiveness to competitive and market changes. In a world beset by unpredictable events and dislocations to markets, long-term strategy, where big long-term bets are made based on guesses of how the future will turn out, look more and more like lunacy. Instead a new strategy is gaining credence: sense and respond - or quite literally feeling your way - towards the future. Sense and respond assumes that you can react swiftly to events as they unfold and so agility is a critical component of a successful sense and respond strategy.

Efficiency on the other hand is much more focused on the nitty-gritty of process outcomes and resource inputs. Anything that is not directly required to produce some carefully defined output or business outcomes valued by customers is something we can't afford.

Agility and efficiency, like oil and water, simply don't mix.

Well this isn't true for everyone. Organizations such as CEMEX and British Airways have improved their efficiency and simultaneously improved their agility. This is where business process fusion comes in.

CEMEX is an industry-leading global cement and construction materials company headquartered in Monterrey, Mexico that enjoys a turnover of US$US7.2 billion and employs 25,000 people. What makes CEMEX all the more remarkable is their ability to create EBITDA margins of 29.3 percent with 9 percent compound annual growth over the past 10 years - all in an industry known for its tough price competition and thin profits.

They've achieved these impressive results partly through acquisition and partly through ruthless focus on operational excellence. To govern the way they improve operating efficiencies and reduce post-merger integration time and costs they created the "CEMEX Way" - business process fusion.

To implement their business process fusion program, CEMEX took existing business processes and applied them enterprisewide rather than designing and implementing process from scratch. In this way operations were standardized and tightly focused organizational responsibilities created. The resulting common business platform also gives CEMEX greater agility by creating a common foundation that supports the rapid rollout new processes and organizational structures.

London-based British Airways (BA), one of the world's largest airlines, is somewhat different. BA used business process fusion to create a single end-to-end process across all channels and customer scenarios, decommissioning more than 30 processes and their supporting information systems and sweeping 40 years of accreted complexity in the process.

Like many organizations, BA had been in business long enough to have evolved into a very complex business. It offered millions of different fares, 26 selling classes, 15 types of passenger and 10 different ways to pay. This complexity reduced customer satisfaction and drove up cost. BA employed the maxims of business process fusion to eliminate much of this complexity. Business process fusion delivered for BA a radical simplification of processes and customer interactions, more customer self-service and consolidation of customer and staff processes and systems. The commonality of process and rigorous standards that it created also provided both efficiency gains and a sound foundation for rapid widespread deployment of new business ideas for BA.

How does business process fusion work?

By establishing common end-to-end processes throughout the enterprise, business process fusion focuses on how organizations work together to deliver customer results. It uses application software to automate business processes and reinforce a single process across the enterprise. And it uses Internet technologies to link customers and trading partners in a value network. All this makes a single end-to-end process and system available to the entire enterprise. But these steps in themselves are not enough to achieve business process fusion.

Business process fusion requires managing the business at an enterprise level. This means concentrating on the overall business performance rather than the performance of individual business units or functions. Standardization supports agility by creating a single common configuration of business processes, application systems and management practices.

How does business process fusion differ from old fashioned centralization? Business process fusion integrates previously autonomous business processes, application software and information to form a new management focus across the entire enterprise. Business process fusion exists when there is one end-to-end process for the same activity across the enterprise. People with the same responsibilities and tasks follow the same process. There are few, if any, handoffs.

It's where there is one configuration of business applications, such as customer relationship management, enterprise resource planning or supply chain management and one "way" to use business processes and applications, regardless of geography, product or business unit.

There needs to be one enterprise architecture and technical infrastructure supporting these business applications and a common definition of data and one set of management information and metrics that guides decisions, quantifies best practices and manages the enterprise as a whole. The enterprise is no longer seen as a collection of business units and functions.

Business process fusion builds on and extends prior practices. Business process fusion is not a return to re-engineering. Nor can it be gained by buying commercial software. Individually, these techniques deliver results, but they only create local efficiencies that have limited impact on the entire enterprise.

Management guru Peter Keen, chairman of Keen Innovations, says of business process fusion: "When you cannot tell the technology from the processes or from the culture, it's fusion and simply 'the way' you do business."

Business process fusion broadens the CIO's business role. Companies fusing business processes have to change more than business processes and technology. They have to change their organization and the basis for measuring corporate performance.

A single business process and application across the enterprise enables managers to monitor performance directly. Unified monitoring and reporting are essential to manage customer-service levels, identify issues and prove the value of best practices. Most financial reports are not in real time, coming out days or even months after the fact.

Managing with real-time information requires understanding in detail the operational processes, service levels and drivers of cost, quality and cycle times. It requires understanding the difference between a performance trend and operational noise - analyzing data through such techniques as statistical process control. And you must appreciate such process improvement disciplines as Six Sigma and Total Quality Management.

Business process fusion rests on the enterprise architecture. Business process fusion requires integrating global business processes, enterprise business applications, information, reporting and management.

These global assets need a robust enterprise architecture focused on managing architecture complexity, information connectivity and application flexibility. The enterprise architecture should cover enterprise business applications (software that supports end-to-end processes) and portal-based applications (software that presents a consistent interface across individual applications to enable rapid adoption of standard processes and process improvements by providing a common point of access to employees, customers and trading partners).

It needs content management software (software that can manage structured and unstructured information) and service-based communication (the ability to link applications and information across applications).

It also needs enterprise application integration technologies in order to provide access to information as business logic changes without having to significantly alter the transaction processing systems and information.

Enterprises need agility to respond to competitive and customer demands. Business process fusion provides a path for CIOs seeking to improve agility and efficiency by integrating business processes and technology.

Andrew Rowsell-Jones is vice president and research director for Gartner's CIO Executive Programs

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