We’ve heard it before, change is the only constant. Change comes in waves and in many forms – big, small, congenial and risky – causing you to evaluate your current state and wonder if the decisions you make will bring you to a safe harbor of continuity and growth or into a rocky reef of maintenance-laden, disparate application interfaces.

The Oracle Solutions Fair took place on January 29. As we were headlong into what was projected to be a very long-term recession, the question in both the customer’s and vendor‘s mind was: Why should I spend money or resources on Oracle products?

Mark Stevens, Vice President of Industry Strategy & Insight from Oracle, gave an excellent opening presentation, Building the Business Case for the New Technology Stack, arguing on that very subject. Several well-documented studies have made compelling arguments about the importance of making the right investment decisions during a recession (e.g., cash investments vs. cash hoarding and IT budget cuts vs.other departmental cuts).

Stevens indicated that the longer a recession lasts, the greater the post-recession growth prospects – and companies that invest during the recession are far better positioned to take advantage of that growth…a ray of hope during these dark financial times. Stevens cited Wal-Mart, Abbott Laboratories, Walgreens and Arrow Electronics as companies that are continuing to invest and execute growth strategies as we move deeper into recession, which should serve them very well when we come out on the other side.

Synch-Solutions reps attending the event looked at the following Oracle solutions:
Identity Management – a security manager to control all application security
Business Intelligence – the collected information from a data warehouse that enables informed decision-making
SOA (Service Oriented Architecture) – Web-enabled connections creating a kind of 21st-century EDI (Electronic Data Interchange)
Beehive – a collaborative software similar to the Facebook model

Any organization considering these products must answer to the question: How can these products help our business? In order to answer this question properly, the organization must first answer another question: How do we want to achieve our business goals?

In general, the application of technology as a speculative investment, rather than a strategic investment as part of a unified overall plan, produces the same results as a bad stock pick. Case in point: there are no mass-produced 5-wheeled cars out there, or GPS wedding rings!

But an investment in technology that improves a task, fulfills a goal or rolls up to a mission statement is a wise choice in any economic climate.

“Unified” organizations bring it all together.  Their needs for integration of data across business units and standardization of processes are both high.  Dow Chemical is an example used by the Enterprise Architecture as Strategy authors.  Dow cross-sells products within regions, so it needs excellent data integration, and it sells the same products, via standardized processes, in more than 175 countries around the world.  Sixty percent of Dow’s work processes are standardized and five of its eight global processes are housed in a shared-services organization.  Dow has achieved enormous bottom-line efficiencies by focusing on both data integration and process standardization…as well as shared services!

Of course there are hybrid situations as well.  Some companies employ one model for certain functions and another for others.  Once you’ve established where you fit in, or where you should fit in from the standpoint of your operating model, defining process and IT strategies becomes much easier. 

We would like to hear your thoughts and ideas.  It could be interesting to discuss some more examples of where public and private sector organizations fit in, and why.  Where does your organization fit into the MIT framework?  What about companies like Wal-Mart and Dell?  And what about public sector organizations?  How about universities?  Or utility companies?

The “Replication” model on the lower right is for organizations whose success depends on efficient and repeatable processes, but not on shared customer relationships. McDonald’s and other franchise operations are clear examples of this type of organization. Repeat the process meticulously and make sure that the experience is consistent at each company outlet and you’ve got a winning formula for success!

TD Bankworth, also described in the Enterprise Architecture as Strategy book, represents a financial services organization that found a Replication framework to best support its growth strategy. The organization transitioned from a Diversification to a Replication model because the latter enabled it to make efficient and effective acquisitions, and to get new branches up and running quickly.

Stay tuned for the next post, and last in this series, which covers the Unification Model.

Organizations that require high levels of data integration across business units, but low levels of business process standardization, are in the upper left quadrant. They share data because their business units share customers, products, suppliers, or partners, or some combination thereof. Data integration improves efficiencies, as well as the overall customer experience at each organizational touch point. No matter where customers tap into the organization, local representatives know who they are, what they buy, and many other defining characteristics – because they’ve got the data!

Process standardization is low because it would wash out the uniqueness of each service operation and commoditize the customer experience…not to mention that standardization may be impossible because different products may require different processes! Low cost, which is one of the benefits of standardized processes, is usually not a primary driver of strategy for these organizations.

As highlighted in Enterprise Architecture as Strategy, large financial services institutions such as Merrill Lynch (Global Private Client) and MetLife benefit from “Coordination” because they can integrate multitudes of products and processes without forcing standardization. They have an integrated view of customers and can interact with them via processes that fit for each product, service and business unit.

Stay tuned for the next entry, which covers the Replication Model.

So, you’ve drawn the MIT framework (see previous post) and are now ready to start thinking about the levels of “integration” and “standardization” that are right for your organization. Let’s take a deeper look at Quadrant 1.

The “Diversification” model in the lower left quadrant is probably the simplest place to start. If your business units have few common customers, suppliers or ways of doing business, you have a diversified organization. Hence, you have minimal need for either data integration or standardization of processes across business units. But, fear not! You can still create major efficiencies with technology. Even in these situations, there are processes that tend to be similar across business units, such as Human Resources and Finance, and shared services are a powerful way to achieve economies of scale.

The many-to-one vs. one-to-many principle comes into play here. Many-to-one means that every business unit is staffed up and “technologied” up to execute the same processes. That’s redundant. Major cost savings can be gained when the processes are consolidated into a one-to-many shared services unit. That’s smart business.

Carlson Companies is exemplified in the book. They own Radisson Hotels, T.G.I. Friday’s restaurant, Carlson Marketing Group, Carlson Wagonlit Travel, Radisson Seven Seas Cruises, and the Gold Points Reward Network. Though the companies are run autonomously, Carlson has captured cost savings and synergies with a world-class, award winning shared services capability.

Stay tuned for the next entry, which covers the Coordination Model.