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Digital is a “Way of Doing Business”

I started my technology career as a SAP junior consultant and got SAP certified in FI-CO in 1997. I use SAPPHIRE Orlando to keep up with what’s new. A lot has changed with SAP since I started using it 20 years ago, but it is true with all types of technology– technology never stands still.

During the SAP Sapphire keynote Tuesday morning in Orlando, the company introduced SAP C/4 Hana and Intelligent Enterprise. Digital is the buzz word around many presentations. Many of the conference attendees, the largest Sapphire attendance ever, are here to catch up with what’s new with digital enabling technologies. Here are my key takeaways from Sapphire 2018 so far. (see SAP published Sapphire presentations)

sap

What is digital?

At one point during the key note, SAP presenters discussing Intelligent Suite showed a roadmap that does not resemble a roadmap to which we are accustomed. Then the SAP presenter said, our partners like Deloitte have started building industry digital business blueprints that can be applicable to different industries. I took it as a validation that digital is not the application systems and not even a platform. Digital is not a “thing”, it is not a role, it is not a program– digital is a way of doing business.

For some businesses, digital allows consumers to have a personalized experience by touching, feeling and understanding products and services. This means understanding customer behaviors and being closely attuned to how customer decision journeys are evolving. Digital transformation is not really about technologies. Existing digital technologies are accessible to all companies. The key is using these technologies to find value at the new frontiers of business. (see what is digital for Adidas) Being digital is not being afraid to use emerging technologies to solve business problems. Being digital requires being innovative and pushing the boundaries even on areas where success is not guaranteed the first time. “Learn fast and then just move on and find a different way to solve the same problem”, says Bharti Airtel’s Global CIO Harmeen Mehta, winner of the 2018 MIT Sloan CIO.

What is Me2B or Me to Business?

We are familiar with the buzz word B2B (business to business) or B2C (business to consumers) but what is Me2B  (Me to business)? Digital is no longer just a way to engage customers and consumers for a personalized experience. The advent of digital manufacturing, machine learning, blockchain, Intelligent supply chain, and artificial intelligence (A.I.) allow consumers to personalize design of the products they want based on current trends. As brands in the future will be mainly shaped by consumers, digital as a new way of doing business puts the customer as the point of focus. “Trust is the ultimate human currency”, says Bill McDermott, CEO of SAP as he unveils C/4 Hana (see demo of SAP C/4 Hana), an integrated platform that will allow business to see a single view of its customer. During his keynote, McDermott described how humans and computers will work hand in hand in A.I. scenarios to link consumers on the move with modern supply chains.

What is Intelligent Enterprise?

To go with SAP co-founder Hasso Plattner’s definition, Intelligent Enterprise is not a marketing buzz, but a logical consequence of what is happening today in technology and modern applications. In the middle of this capability is the SAP Cloud Platform, SAP Leonardo (see SAP Leonardo demo) and SAP Data Management Suite surrounded by its core systems such as S/4 Hana, C/4 Hana, SAP SuccessFactor, SAP Ariba, SAP Fieldglass and SAP Concur. Intelligent Enterprise is not a product, it is an ecosystem or integration of these systems, not limited to SAP products, where collaboration can create intelligent enterprise capabilities. (see Hasso Plattner explain Intelligent Enterprise) Talking about intelligent capability, I also arranged for a personal walk-through of IBM Watson while at SAPPHIRE. It is probably the most widely known and used AI capability out there. “When you are starting to use Watson, it’s like training a baby by feeding her tons of information”, says Shaun Mitra an IBM Watson expert. The only difference, Watson can process it faster, 500 gigabytes of data or equivalent to a million books per second. Watson API is available to developers to create applications leveraging its cognitive capabilities. In the demo, I saw how Watson works with the SAP ecosystem and SAP Leonardo, further empowering intelligent enterprise capabilities.

Intelligent Enterprise is not a marketing buzz, but a logical consequence of what is happening today in technology and modern applications. – Hasso Plattner 

How do you develop a digital business model? “By innovating anywhere, from core to edge”, says Darwin Deano, Deloitte’s SAP CTO. Innovation and transformation are the means to achieve a digital business model using existing and emerging technology platforms. Digital is a shared responsibility between business and IT. There must be convergence of business and IT to drive successful and sustainable digital business transformation.

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Changing Business Context, Driving Business – IT Convergence

February 18, 2018 1 comment

There is nothing more powerful than an idea whose time has come.  – Victor Hugo

Vaughan Merlyn started working on the concept of Business Relationship Management (BRM) in 1993. BP engaged Vaughan to develop a training program for their new BRM role with Profs. Michael Earl, London Business School, Chris Edwards, Cranfield University and Neo Boon Siong, Nanyang Business School, Singapore. I was introduced to the concept of the BRM role in 2009 while collaborating with Vaughan through our blogs. The time of the BRM idea, nurtured through the years, has come. Many companies are deploying the capability in recent years largely due to the effort of the BRM Institute co-founded by Vaughan, along with Aaron Barnes and Dr. Aleksandr Zhuk in 2013. The BRM Institute has created the BRM Body of Knowledge (BRMBOK) that has since been used as standard for BRM role certifications worldwide. I had the privilege to work with Vaughan, along with other BRM pioneers globally to publish the first version of the BRMBOK in 2014.

Changing Business Context

I was working with a global building materials company at its operations in the Philippines when I started my career in 1997. We deployed a website in 2002 so that our customers can order Cement online. We faced major hurdles in convincing our customers to go online to order. One day, I drove with one of our sales representatives and accompanied him on sales visits. It was on one of our interactions with a customer in a small business location that one store owner asked: “Why can’t I just text my cement orders, why do I have to go online?”. This was the question that led to a simple mobile selling application that we built and deployed later that became more successful than the website. This solution eventually processed around 70% of customer orders. With this crude B2B solution, we also pushed payment reminders to customers and sent warm birthday greetings. As additional context to this successful deployment, during the early 2000s, SMS or Text Messaging became a phenomenon in the Philippines. Literally everyone was texting. The use of SMS technology became pervasive.

Today, we are doing beyond SMS. Information technologies (IT) such as cloud computing, the Internet of Things (IoT), artificial intelligence (AI), mobile computing, data analytics, 3-D printing, virtual reality, and robotics are transforming industries, economies, and lives around the globe. The number of formerly successful companies being driven to obscurity by agile, tech-savvy competitors and substitute products grows daily. This exponential development of technology also made technology easier to use and more accessible. We have gone from an era where only a few people have access to information and technology, to one where it is virtually in everything we do. In business, this results in IT capabilities becoming more embedded into business capabilities. Organizations seeking competitive advantage need to learn how to harness that potential. Business leaders who want to compete in today’s market, and well into the future, have to lead their companies toward a true business and technology convergence.

Critical Role of the BRM in Business and IT Convergence

From my experience, the BRM role is one of the hardest roles to explain contextually. When I was interviewing for my current job four years ago, one of my interviewers, a senior vice president of the company told me later that he selected me from among candidates because I was the only one that explained the BRM role clearly to him. The most critical role of a BRM is to facilitate the convergence of business and IT. Because of this context, the BRM role performs responsibilities with the business organization and with the IT organization. The BRM diagram attached in this article is the most effective way I have been able to convey the clarity of the BRM role from my personal experience. I realized that the best way to explain it is to provide perspectives of the BRM role from the two converging sides. It is important to note that concepts in this diagram was derived from two of the earliest frameworks we worked on at the BRM Institute: BRM DNATM (Develop, Nurture, Advance) or the BRM Competency Model and the BRM Metaphors.

 

BRM Role Clarity

 

Facilitate Business-IT Convergence (BRM as Navigator) – BRM supports business leaders in the facilitation of business technology strategy and business capabilities road-mapping. In turn, these business / technology strategy and roadmap will guide Enterprise Architecture, Portfolio and Program Management.

Drive Value from Provider Services (BRM as Connector) – BRMs as connectors are responsible for optimizing business value of IT. Value creation is about business performance and results from a dynamic balance between business demand and IT supply. BRM is not limited to IT Demand Management but rather Demand Shaping by raising IT Savvy of the business.

Orchestrate Key Provider Role (BRM as Orchestrator) – With the business organization BRM is the single point of focus in mobilizing programs and business technology roadmaps. This is very different from the old paradigm of single point of contact. From the IT organization, BRM can also play key provider roles. For example, in my current organization, I also play the role of Business Process Management. This provider role may vary based on business need.

Now the question is, how can a BRM perform this role effectively to drive business IT convergence? The answer starts with the BRM Competencies Model. This six BRM competencies describe the knowledge, skills and behavior needed for successful performance of the BRM Role. The following are the key BRM competencies:

  • Masters at Strategic Partnering
  • High Business IQ
  • Excel at Portfolio Management
  • Excellent Knowledge of the Provider Domain and Service Management Discipline
  • Skilled in Organizational Change Management
  • Powerful Communicators

An Invitation

I believe Business Relationship Management is the key lever of strategic speed for Information Technology organizations and the business. BRMs are “the oil to the machine” that reduces organizational friction. Fast is not always about pace. It is about people, shared perspectives, shared risk and rewards.

If you want to know more about the BRM role, there is an upcoming opportunity for us to engage. I am excited that Vaughan Merlyn, BRMI Co-founder, and I are hosting the first of the #IamBRM series this Feb 22, 2018. This will be the first in a series of webinars leading up to BRMConnect 2018. We will talk about two core models, BRM DNA™ and House of BRM™, that underlie the Business Relationship Management role, discipline and capability. I collaborated with Vaughan Merlyn and the BRM Institute years ago when we started developing these models! Please register through this link to join us in this webinar sponsored by the BRM Institute.

Start with Why! Personal and Business Approach to Inspiring Others

“Your Why is your purpose, cause or belief that inspires you to do what you do. When you think, act and communicate starting with Why, you can inspire others.” – Simon Sinek

A couple of weeks ago, our office had a team building event at iFly. Most of us signed up to experience our first indoor skydiving and I did so with hesitation. At iFly, we had a short 30-minute instruction session and then, we put on safety gears. I made my dream of flight a reality! It was so amazing that I thought of bringing my 6-year old twin boys to experience it the following day.

It was Friday so I went to pick up my sons from school. I told them we were going to iFly so they can experience indoor skydiving. They were not interested at all and both said no emphatically. I showed them how iFly does it through a video. They saw kids flying upward the wind tunnel. I said, “Isn’t this fun?” They looked somewhat convinced but a bit frightened. They responded no again with hesitation.

At such a young age, my boys like to read and learn astronomy. They know their solar systems, galaxies and black holes. Very often, I hear them talk to each other about becoming an astronaut. They went to NASA summer camp together last year. I wanted to convince them to do iFly, so I told them that one other way astronauts train with weightlessness besides being under water is indoor skydiving. Their eyes lit up and we jumped into the car. They experienced iFly and went to tell friends about it with their hand upwards as if in flying motion.

Why didn’t I communicate with WHY (to be an astronaut) from the very beginning? Instead, like most people, I started with WHAT (indoor skydiving) and the HOW (video). Simon Sinek’s TED talk How Great Leaders Inspire Action is about the idea that most people communicate by starting with the WHAT. By explaining his Golden Circle, Simon spoke about how transcendent leaders like Martin Luther King and innovative companies like Apple begin instead with WHY.

iFly

At the BRMCONNECT Forum hosted by BRM Institute at the PepsiCo headquarters in Dallas, this was my story. I was asked by Aaron Barnes, CEO and Co-Founder of the institute to tell other BRMs the story of how I formed my team and what we do. I started my storytelling by sharing the Why. The vision and purpose of my team: To Be Strategic Leaders Driving Competitive Advantage. This is a shared vision with the rest of our IT organization. In the beginning, this seemed a lofty goal. To me personally, this Why is the reason why I get up in the morning fulfilled to go to work!

We started with the Why but if we are going to be strategic partners with the business, our next challenge was the HOW. How are we going to put ourselves in the middle of business conversations and drive more strategic engagements? We turn to Business Process Management (BPM) as a means to foster business relationship. We created our Business Process Architecture (BPA) Framework and Process Assessment Methodology (PAM). We equip ourselves with an effective How.

Now when business partners come to us with a seemingly tactical request to deploy a specific application system, we have the means to ask “what business problem are you trying to solve?” and “what strategy are you enabling?” And then the invitation, let’s partner and do a Process Assessment. With three phases of PAM– Align, Discovery and Solution, we end up proposing a business initiative or technology project or both.

According to Simon Sinek every organization has a Why. “Your Why is your purpose, cause or belief that inspires you to do what you do. When you think, act and communicate starting with Why you can inspire others.” I realize there are effective use of this approach or concept in everyday — both in our personal lives and in business. Start with Why!

BRMConnect

Let’s Talk Business Process First! – How to Calibrate Business Relationship Maturity through Business Process Culture

Use of information technology. Is it creating value? Is it improving business processes and capabilities? Or merely creating new wants? Is it important, or only urgent? What is it for? Every Business and IT engagement around business requirements revolves around these questions but managing it isn’t always easy.

First, let’s talk about IT organization’s critical role in the company’s business processes. One of the consequences of Business Process Management is a large majority of these programs are initiated in the IT organization.  There are very good motives for this.  One of the most common: the IT organization is responsible for providing the technology that enables business processes. Take for example, ERP (Enterprise Resource Planning) systems like SAP, Oracle, etc.  This ERP solution is a suite of integrated applications that a company can use for many business processes. Most ERP systems incorporate best practices reflecting the vendor’s interpretation of the most effective way to perform each business process. Systems vary on how conveniently the customer can modify these practices. Talking about best practices, it is advisable not to over-customize because doing so will keep you from taking advantage of the expected improvements and innovations from the purchased ERP package.

How do you characterize the nature of your engagement with your business partners? Is it functional orientated? If it is, there is more tendency for having more solution-based discussion versus process- and value-based. Even worse, it could be possible that your internal customer is engaging you at the tail end of their decision cycle–when they have already determined what they want or need. There is lack of business-IT alignment and strategic partnership.

How do you then improve the level of your business relationship with the business? There are numerous paths towards that elusive business-IT strategic partnership. In this post, I will talk about Business Process Maturity as a path— so I would say – Let’s Talk Process First! This has worked for me in the past. One of the most effective ways to change the orientation and focus of business IT interactions is to start with business process. Calibrate  your organization’s business process maturity and you will take along with it to a great degree IT-business relationship maturity. What you need are experienced business process managers with business relationship management competencies. Below I will walk you through these 3 stages of Business Process and Business Relationship maturity and describe what it means.

Business Process and Business Relationship Maturity

Process Maturity

Level 1: Support

Business Process Maturity = Diverse and Business Relationship Maturity= Adhoc / Order Taker

When your organizational approach to business process is diverse, more often business-IT initiatives are managed with lack of integration. At this stage, most of the organization’s process knowledge is known only to a few individuals. For business process engagement facilitation, there is dependency on external consultancy. There is no standard process management discipline that leads to more functional orientation of IT requirements discussion. Consequently, IT as a provider organization is hardly seen as a strategic partner–at most, a service provider. In terms of business relationship maturity level, most of the time, IT is treated as an order taker. This type of business relationship is characterized by loudest in – first out tendency causing reactive course of actions. My advice is to embark on a business process maturity journey. Establish a discipline of managing business processes as the means for improving business performance outcomes and operational agility.  Leverage use of technology to improve business processes.

Level 2: Improve

Business Process Maturity = Model Integration and IT-Business Relationship Maturity = Service Provider

You want to become an organization that designs processes first and then goes on to implement the technology enablers. Your organization wants to keep pace with technology and maintain a competitive advantage. Companies at this level adapt a consolidated method to design and implement business models using standard processes and tools. Process ownership ultimately improves as management breaks silos and approaches process and technology implementation equally.  The common tendency is for companies to establish process governance and ownership. IT plays a key role in the process evolution of the company and starts to be seen as a service provider and some cases even a strategic partner.

Level 3: Innovate

Business Process Maturity = Process Culture and IT-Business Relationship Maturity = Strategic Partner

The final step to Process Culture Maturity occurs when innovation and change in business practices through process understanding are consistently promoted within the company. As executives passionately embrace process thinking, they are able to promote innovation more confidently when implementing new technologies. In many cases, companies with mature process culture has End-to-End orientation to process management and IT plays a key role as center of process excellence. IT starts to be regarded as trusted and strategic partner. Business–IT relationship is based on cooperation and mutual trust with shared goals to maximize value from business initiatives.

Technology will not automatically implement itself and run your organization’s processes the way you envision. IT has a unique opportunity to spearhead business process improvements in the company. Start by changing the orientation of your business interactions from functional to business process, from solutions to value. Do not shy away from this opportunity. Use business process management to create greater strategic value and by doing so advance business-IT relationship level to new heights.

BRM and Virtuous Cycle of Trust Between Business & IT

Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships. ― Stephen R. Covey

I have been working in the field of Information Technology for 17 years. I remember that a decade ago, when I showed my business partners simple tricks, shortcuts, and cool functionalities in systems or devices – I was able to impress them. Those interactions were engagement starters for me that somehow lead to long-term relationships and multiple joint business-IT ventures. This approach will rarely work in today’s world, where our business partners, like us, are tech savvy users. On many occasions, business users are the ones approaching me about apps they are probing, about cloud-based solutions on trial they are analyzing or new devices and tools they have seen in conferences they just attended.

Technology is developing at a much faster pace. This exponential development makes technology easier to use and more accessible. We have gone from an era where only a few people have access to information and technology, to one where it is virtually in everything we do.

In business, this results in IT capabilities becoming more embedded into business capabilities. Organizations seeking competitive advantage need to learn how to harness that potential. Business leaders who want to compete in today’s market, and well into the future, have to lead their companies toward a true business and technology convergence. IT-business alignment is no longer adequate where business formulates strategies and IT aligns later. In today’s world, this is a reactive process. Business and IT need to work together to bring engagement upstream and convert solution based conversation into value and business based conversation. Business technology convergence is a journey that will take time and after a repetitive positive cycle of engagement between IT and business. The strategic speed of this convergence depends on three drivers: clarity, unity, and value creation. These are the components of the virtuous cycle of trust.

BRM Virtuous Cycle

Clarity

Senior managers in business and IT should spend time improving the clarity of their strategies, purpose, and operating model in order to achieve a shared direction. Clarity means being able to answer the question: “Where are we going and why?” We should be able to answer the following questions:

  • Who does what, when? – Role Clarity
  • How do we drive responsible, value creating behaviors around the use of products services? – Clarity of business outcomes
  • How do we engage each other? – Clarity of rules of engagement
  • How do we develop needed competencies – Clarity of talent development and continuous learning
  • What is our operating model? – Clarity of the level of business integration and standardization

Unity

Strategic success is going be tough to achieve if leaders and work teams won’t cooperate for the greater good. You’re dreaming if you expect this cooperation to happen all by itself; patterns of conflict amongst people and organizations occur naturally but aren’t eliminated naturally. There must be a concerted effort to achieve unity. Unity means that once business and IT are clear on where they are headed, they agree wholeheartedly on the merits of that direction and the need to work together to move ahead. The emphasis should be on openness, alignment, and collaboration. If these are the main drivers of unity, leaders need to foster a culture where internal competition, mistrust and turf wars are discouraged. Organizations can achieve unity of effort through (1) shared common objectives and vision, (2) a coordination effort to ensure coherency and common measures of progress and (3) ability to change course if necessary.

Value Creation

Value creation is about business performance and results from a dynamic balance between business demand and IT supply. To succeed, IT organizations need to cultivate a culture of value management. Start by engaging your business partners in clarifying how you can contribute value. Being a good BRM means that you have an intimate knowledge of how your company creates value. How does you company make money? What does your company value? How does your company compete? The virtuous cycle of trust between business and IT spins faster when value is being realized and intended outcomes are met. The best way to measure value is combination of two metrics “time to value” and “value over time.”

For example, one belief that I try to dispel many times at work is that a comprehensive platform of services is a prerequisite for creating value. I don’t believe it is necessary to “go big” in order to achieve anything of value all the time. Sometimes, depending on the business initiative, it can be smarter to start small and act fast. On the other hand, you also have to look at sustainable value over time and have to balance both. Especially in large investments, value over a long period of time has to be expected.

BRM Levers

In summary, I believe Business Relationship Management is the key lever of strategic speed for Information Technology organizations and the business. Business Relationship Managers are “the oil to the machine” that reduces organizational friction. Fast is not always about pace. It is about people and shared perspectives. When all areas or teams are working harmoniously, because rules and directions are clear, it is amazing how much potential value it can create. In faster and successful IT groups, the emphasis is on strategic partnership, flexibility, openness, innovation and continuous improvement as well as taking the time to reflect and learn. These are functions BRMs are expected to do in both the business and IT sides.

Understanding the Social Enterprise Technology

I am presenting a webinar on BRM and Social Media on June 20, Friday at 11am EDT. To get a chance to discuss this topic with me and learn more, register here.

I am an avid user of social media sites that exist out there, I blog, tweet, and I use Facebook. These social applications have been really useful to me personally. Facebook, for instance, is my way to connect with my family who live in the Philippines. Every time I post a picture of my kids on Facebook, I always have my family in the Philippines in mind. This is how I can share moments of my kids’ life with them. Through Facebook, I also keep track of my nephew and nieces. Early on, I realized the value of social networking to my personal life so I started thinking how such platforms extend to the enterprise. Even before the existence of full-strength Enterprise Network Tools available today, I wondered how such collaborative practices extend beyond personal use and find their way to become an integrated set of functional offerings that delivers business value.

Think about an “enterprise Facebook”. What’s the equivalent of posting a status or photo? If I post about a project I am working on, blog about a business problem I am trying to resolve, or share a screen of a user interface mobile application I designed – what will it take for my peers in the office to be able to access, read and see them? To usher in adoption of the tools seamlessly is a challenge for those who have blazed the trail. If you can’t convince employees that using it will make their job easier or if you can’t convince business leaders that using it will create business value, it is tough to succeed.

According to Forrester Research, organizations will increase their spending on enterprise social collaboration software at a compound annual growth rate of 61% through 2016. With the social software market now looking to be a hefty $6.4 billion part of the industry, every big player from IBM, to Oracle, to SAP are busy developing their offer. If you look at this amount of investment and demand, obviously the companies are seeing competitive advantage and value of social tools in their organization now and in the future.

The Benefits of Social Enterprise Technology

There are essentially three categories of benefits that can be derived from using social enterprise technology. So, broadly, we see that in order for social enterprise technology to create business value, it should not only provide strong content-centric features but also must extend social capabilities in execution of business processes and facilitating innovation through collaboration in the company.

Benefits of Social Enterprise Technology

Benefits of Social Enterprise Technology

Companies who have embarked in the early adoption of social tools in the enterprise have done so to capture one or more of these business benefits. CEMEX, a multi-billion building materials company, initially began in 2009 to develop an internal social network which called Shift. Shift was designed to innovate and help make the company more efficient and agile by empowering employees to implement the new best practices they learn by collaborating globally in their business units. By building a collaboration platform accessible to employees throughout the company and around the world, CEMEX is empowering employees in new and important ways that go beyond traditional titles and roles. From the SAPPHIRENOW event in Orlando this June, I learned about how Kaeser Kompressoren uses SAP’s social enterprise application SAP Jam to streamline their sales and customer service processes and build a bridge from the first client contact through to the offer improving information and communications quality. They are leveraging integration between SAP Jam with seamless integration with SAP CRM module to join social capabilities and traditional work stream.

Implementing a social tool for collaboration is just the first step. To get employees to use it collectively enough to change the way they collaborate is the much bigger challenge. Adoption of social tools in the workplace setting requires more than compliance and a management mandate. It is about culture transformation from within and for all employees, from top to bottom. I think the part of enabling the Social Enterprise application is the easy part of the process, the challenge is adoption. Benefits are realized when:

  1. You successfully change the culture, the way employees in a company collaborate, and you break geographical and political barriers.
  2. You optimize your enterprise work stream by having business processes accessible and executable through social interactions happening in the collaboration space.
  3. You bring innovation by empowering employees to organize around ideas that develop organically during social interaction.

A Complicated Way to Explain the Importance of a BRM Role in an IT Organization

Don’t tell me I did not warn you. The only thing I can promise is that you’ll learn a thing or two from this one, so please read on.

I came across a predictive validity framework called the “Libby boxes”, popularized by Cornell Accounting Professor Robert Libby. This framework is used to examine the distinction between underlying constructs of strategic objectives and their proxy measures to illustrate causal models related to some objectives in an organization.  Another definition of “strategy” is as a hypothesis about the cause and effect of your objectives. Predictive validity allows you to measure and analyze how well the execution of your objective (cause) predicts your desired performance (effect).

Simple Business-IT Strategy

Now, to illustrate the importance of a Business Relationship Management (BRM) function in an Information Technology (IT) organization, let’s start by picking a Business-IT strategy to dissect. Let’s call it “Strategy A”.

Strategy A: “Create business value through better use of technology.”

Let’s start it simple and take an approach to illustrate cause and effect depict Strategy A using the model. We are going to be taking a very logical approach. The strategy here is— you believe that if you use technology better, you create business value. Let’s assume that technology is comprised of infrastructure and applications that enable the business or enterprise.

Simple Business-IT Strategy

Observe that Strategy A is too simple—or maybe exceedingly simple. Can we really say that if IT provides better technology, we create business value, in the form of profits or savings? Yes, no, maybe. How about this – it is because of better use of technology, we improve business processes of the company and therefore we create business value. In this predictive validity framework, the middle action is called, mediating variable. It stands between two variables and it is an effect of one variable and the cause to another. This brings us to iteration to our business-IT strategy. Let’s refer to this improved business-IT strategy as “Strategy B”.

Strategy B:  “Create value by improving business processes through better use of technology”.

Business-IT Strategy

So how do you interpret this strategy? As an IT organization, your goal is to provide the business with the technology, infrastructure and applications to enable efficient business processes. This will result to business value creation through optimized cost, profitability and strategic advantage. Whew! Follow all that so far?

I think this business-IT strategy works. If you run this, you have a good chance of successful outcomes. But your aim is not to be just good. Your aim is to be great. Your goal is to differentiate your IT department and to support your enterprise to be the best performing company in its industry or to be the best performing company (period!).

The Missing Component to be great

So there is a missing component to your strategy, a moderating component—a component that will have a multiplying effect from certain causes and effects coming out from the collective work that you do. In this predictive validity framework, it is called the moderating variable.  The moderating variable is a variable that determines how big an effect you get from a certain cause.

To illustrate, let’s say you want to improve your performance at playing basketball. By practicing basketball, doing drills and shooting, for sure it will improve your performance. This is a very simple causal model. You practice more and that, in effect, will improve your basketball performance. But think about this, is there a certain amount of practice that will allow you to be like Mike (Michael Jordan)? Most likely, no. Talent and perhaps physical capacities are the moderating variables here.  Sure, practice will improve your performance, but if you have a lot of talent, a little bit of practice goes a long way and will make you much better. If you don’t have that much talent, you’ll have to practice a lot to get just a little better. Talent in this case is a moderating variable.

Basketball Strategy

Now that you understand what a moderating variable is, let’s go back to our Business-IT strategy. Think about an organizational capability equivalent to talent that can potentially transition your IT organization from good to great—it is business relationship management (BRM).

Strategy with BRM

BRM in this case is a moderating variable. The BRM capabilities moderate the effect of improvement of business processes and enablement of new business capabilities on performance, making it bigger (due to converged business-IT strategy) or smaller (in cases where it is lacking). Improved business processes and enablement of new business capabilities doesn’t cause BRM capabilities, it just moderates the effect. How? BRMs (1) facilitate Business-Provider convergence, (2) ensure that use of Technology that drives maximize value and (3) facilitate productive and connections and mobilize business-IT projects and programs.

Value of BRM Role

 

For many years, IT organizations responsible for deploying technology systems to enable business capabilities have had one goal in mind – namely, to assure business-IT alignment. Today, however, as IT capabilities become more and more embedded in business capabilities, and given the pace of technological change and the pervasive nature of IT, alignment is no longer sufficient. The goal today, therefore, is “convergence”. This has given momentum to the growing emergence of the Business Relationship Management (BRM) role, which, according to the Business Relationship Management Institute (BRMI), is about “stimulating, surfacing and shaping business demand for a provider’s products and services, ensuring that the potential business value from those products and services is captured, optimized and communicated.”

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