At first glance, many industries seem stable with respect to their particular business models and IT-based implementations. This stability legitimizes a relatively static interpretation of IT’s role in business development. Achieving greater flexibility (and thus market success) is often not considered high priority. But an industry cannot truly remain stable and nondynamic for the long term.
Utility companies are an excellent example. With stable business models and no real competition, they were previously not driven by the market. Nevertheless, they assumed that IT should be designed based on standards and system neutrality. This sector’s IT may have been highly complex and heterogeneous in the beginning, but it was soon transformed into a uniform, homogenous IT landscape.
Spurred by government deregulation, utility companies have increasingly begun implementing more flexible business models driven by innovation and competition. In addition to pure product innovations, such as green electricity, an increasing number of process innovations, like smart metering, are dotting the radar screen that allow utilities to respond to new regulatory requirements. We see this at the business, organizational and, above all, IT-implementation level.
A number of utility companies do not even produce electricity, operate power grids or run distribution boxes. This type of energy provider would rather concentrate on offering customers individualized product packages that are highly customized per usage patterns. But usage patterns, particularly in commercial settings, have short lifecycles due to their very dynamic nature. Therefore, establishing innovative and flexible processes is key.
Business processes are not just the documentation of transactions in an organization or of activities which are reflected in applications. Modern-day process automation and monitoring methods offer more. They support a transformation strategy that begins by describing processes consistently and comprehensively. Understanding processes and their interplay throughout the entire organization paves the way from process innovation to dynamic IT transformation.
Processes are not categorized by value and importance alone. They are also assessed according to criteria such as flexibility and agility. The important thing here is to keep costs in proportion to benefits. An awareness of the extent of process automation on the part of IT staff and specialist departments is necessary to successfully execute this type of transformation.
When IT is considered an instrument for automating functions, it is difficult to establish an understanding of the relationship between enterprise processes and IT processes. The best way to approach this is by starting off on a small scale. Start with one minor process to illustrate how rapidly IT systems can respond to new process requirements and how this opens up new possibilities. Then, define a new joint strategy that addresses and achieves cost control and flexibility at the same time.
If IT strategies are designed as an afterthought to the needs of the overall corporate strategy, the entire enterprise will suffer. End-to-end business processes are addressing this lack of collaboration and becoming an integral part of successful corporate cultures. Organizations need approaches that address problems and embrace opportunities while they are emerging. The process-oriented organization fully recognizes business and IT potential and leverages them for economic success.
Ivo Totev is a member of Software AG’s Executive Board with responsibility for Global Consulting Services. Totev has been with Software AG since 2005 and was previously a member of the extended Management Board, where he served as chief marketing officer handling global marketing product management, product marketing and corporate marketing.
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