Senior executives may have a need for speed when it comes to obtaining and analyzing critical financial and operational information. But CIOs who are being pushed by top brass to deliver near real-time data so companies can quickly react to changing business conditions will have to work closely with business unit leaders to drive heroic cultural and business process changes to make it all happen.
That was the message from Gartner Inc. analysts and attendees at the research firm’s Symposium/ITxpo conference held in San Diego this week.
“Organizations don’t pay enough attention to change management, and this will be critical in driving the real-time enterprise,” said Carl Schulz, a service manager at Delta Corporate Services Inc., a Parsippany, N.J.-based IT consultant.
Indeed, companies have “spent a lot of money on technology but we never really changed the underlying fabric of the organization,” said Gartner analyst Steve Prentice. And building a real-time organization “is about (enacting) real change,” he said.
That’s easier said than done, especially for mature companies whose cultures have been doing business the same way for years. “If you’ve got a 30-year-old company with thousands of employees and multiple people who claim ownership of a given business process, it’s going to take a long time to drive those changes,” said Matti Salminen, a consultant at Hitachi Data Systems Corp. in Santa Clara, Calif.
For many companies, becoming a real-time enterprise will require business leaders to cede control of customer data and other information from their stovepiped business units and share it with other managers and executives.
And while collaborative technologies, Web services and enterprise portals can help companies pull operational information together quickly, the technologies themselves aren’t useful unless organizations make significant changes to their underlying business processes.
Technology represents “just 10 per cent of the iceberg,” said Professor Erik Brynjolfsson, director of the Center for eBusiness at MIT in Cambridge, Mass. Business processes, staffers and culture make up the other 90 per cent, and managers “need to think about this and invest in it.”
One way to drive cultural changes needed to support the real-time enterprise is by setting clear goals for elapsed time-reduction targets in business processes, and factoring that into bonus incentives for managers, said Gartner analyst Mark Raskino.
Stephen Smith used just that approach when he was head of advertising and marketing at Stop & Shop Supermarkets Cos. in New England before he joined Gartner 18 months ago. In his role, Smith wanted Stop & Shop’s advertising circulars to be printed out faster than they had been.
Smith and his team eventually got the circulars printed and distributed more quickly, “but we didn’t get any traction on that until we put time parameters around the process,” he said.
Another change companies will have to make is getting real-time operational information to lower-level managers who have to react quickly to business and market conditions, said Michael Schwartz, vice-president of corporate sales and marketing at Information Builders Inc., a New York-based software vendor.
Wal-Mart Stores Inc. has done an exceptional job at delivering real-time sales and inventory information to both senior executives and regional managers, said Smith.
But while senior executives might be gung-ho about getting their hands on fresh operational information, companies will have to tread cautiously in striking a balance between funding these efforts and strained resources.
Merrill Lynch & Co.’s IT group, for example, is now working on projects aimed at delivering information on risk management and debt-level information to senior management more quickly, said Stephen Norman, first vice-president and chief technology officer. But the biggest challenge is pulling off real-time projects while continuing to invest in other business initiatives, even as the New York-based firm is being hit by IT budget cuts of 30 per cent, said Norman.
At Merrill Lynch, those other projects include a plan to roll out 23,500 desktops to its private client group under an integrated wealth management project being developed with the help of Siebel Systems Inc. and Thomson Corp.
Said Norman, “Trying to strike a balance between all of these things is very difficult.”
Real-time data demands will also require changes to the way IT departments approach application development and integration and the types of workers needed to support these efforts. “You must change people, processes and technologies to deliver information faster, cheaper and on time,” said Gartner analyst Matt Hotle.
As such, there’ll be an increased need for IT architects, project managers and application “assemblers” who work in rapid application development mode to get real-time applications and interfaces built quickly, Hotle said.
To execute these projects quickly and effectively, IT organizations will have to better utilize reusable application components, an area where many companies previously “have fallen flat on their faces,” said Hotle. That’s largely because historical reuse efforts have often relied on a bulletin-board approach, where a component is developed and added to a repository of other components. Problem is, there’s typically been little, if any, governance over this approach, and programmers weren’t pushed to follow the reuse model, said Hotle.
“Programmers like to build; they don’t like to reuse,” he said.
To make the real-time enterprise succeed, said Hotle, IT managers will have to become stricter about enforcing the reuse model. “Programmers will have to follow this or be disciplined, beaten or fired.”