What price does your organization pay for internal politics?

The price of internal politics erodes profit margin

Recessions increase the impetus for organizations to focus on decreasing costs.  Does your organization spend too much on corporate politics?  On many occasions improved efficiency and the ability to change is sacrificed by individuals not able or willing to risk their professional capital to navigate the political battlefield that they must enter to expose waste and trim cost.  Therefore, the organization continues its current path spending more than necessary on a given process.  The expense is typically absorbed in overhead adversely impacting profits.  Is your organization willing to pay this price? Is bottom line profitability margin worth risking because of political maneuvering or personal agendas?

Since 2009 and as experts project, the competitiveness of the market will continue to increase.  In this economic landscape, successful businesses will learn to do more with less.  Innovative ideas for change and cost reduction should be encouraged and considered from all levels within an organization.  Forward thinking managers will assess their areas for issues and opportunities to change for the better; but change may be met with opposition by others who feel exposed or threatened.  The key is building a case for your initiative.  If the organization yields change efforts to this type of opposition, the issue will continue to occur and be absorbed in operations. Operations will continue as is, while cost goes unchanged and margins suffer.

For the organizations that embrace process optimization, issue identification is swift and predictive justification analysis (such as Internal Rate of Return) has been performed.  The processes are clearly defined, redundancy and inefficiency have been removed, and performance metrics are produced.  For these organizations, the ability to respond and develop a resolution is easy.  With clarity and transparency of processes, politically manipulative managers are not able to muddle and excuse the root cause of an issue.  Executive management can clearly see what is and what is not performing up to expectations and contributing to corporate goals and objectives. They are armed with facts to make business decisions that expedite risk mitigation, promote innovation, and protect profitability.

Best Practices Can Hurt An Organization

For years executives have heard that if they reorganize their business and processes according to “best practices” they will have the magic formula for streamlining, eliminating waste, and resolving issues.  Is this true?  What is a “best practice”?  There are common ways that many companies operate and produce favorable results; these practices have been labeled “best practices”.  But, are these practices a “one solution fits all”?  Implementing “best practices” without regard to the fundamental drivers of value within a process can lead to extreme unintended consequences.  For example, a company made a labor cost saving decision based on a “best practice” of consolidating departments and implementing quantity performance metrics.  The change eliminated collaboration among work groups and encouraged behaviors from their transactional employees that produced a higher number of completed transactions, but significantly reduced the quality of the output.  The result had direct financial impacts as well as indirect in rework and effort redundancy. 

Adopting a common practice from one organization to another and realizing similar benefits requires translation and adjustment. When considering how to positively impact business performance executives should consider a “best fit-for-purpose” practice.  Capture the unique components of your business and incorporate them into a solution by utilizing best practices as a guideline rather than a rule.  Design, model and implement improvements that achieve corporate goals, meet end user exceptions and incorporates elements of best practices.  Translate your organization’s strengths and weaknesses to elements that can be leveraged and those that need elimination. If a step in the process does not contribute to speed, efficiency and profit, it will be perceived as a non-value, necessary evil and compliance will wane.

Creating processes that fit the goals and objectives, personality, and ability of your organization creates a path forward that is feasible for your systems and employees to adhere, understand, and accept.  The outputs from your new practices can be reviewed with performance metrics.  You can validate that the investment in change is benefitting your bottom line.

Successful Leaders Know the Time for Change

Business leaders are constantly wondering and asking questions about business performance. What business performance indicators are most influential to successfully respond and compete in current business and economic conditions?  Leaders must have indicators that they can connect what is happening currently to decisions that affect the future.  The metrics they choose to track, follow, and rely on have four components that accomplish one thing: answer whether or not to continue with the current state or initiate a change.  The four components required are: (1) a measurement of output, (2) a measurement of input to the desired output, (3) ease of understanding and sharing, and (4) a link to corporate goals or objectives. 

Most successful leaders have excellent instinct and confidence in their judgment; however, possession of quantifiable, measured, and correlated metrics corroborates that intuition and provides a very tactical tool for choosing to “stay the course” or needing to garner support for change.  Prolific leaders know that diversification among business acumen, meaningful business metrics, and advisory resources yields business decisions that are pertinent and effective for the given market and economic conditions.

Customizations run amuck…

Technology development moves at an astonishing rate.  The capabilities of systems and programmers continue to surprise and excite those early adopters who hunger for the newest, latest, and greatest abilities of software.  A Business Line Manager may pose this question during a meeting, “Can our procurement system not only let the requestor know the price of the items, but also suggest an optimal quantity to purchase?”  The answer to the first part of the question is most likely “yes”.  The second part of the question could be answered “Yes,” with a caveat.  Asking a technical team “can we do this” should always be followup by “should we do this?”

Incorporating new functionality into the system may not be highly complex or difficult for a seasoned administrator/developer with intimate knowledge of the system.  The question, however, is whether or not this change is delivered functionality to be made available to the users or requires custom development.  If custom development, how is the organization going to support the system going forward?  Can they afford to maintain a customized system?  So often Business Lines request and receive custom functionality without the appreciation for the long-term cost of ownership.  Costs accumulate as major and minor customizations are incorporated into the system.  Customized systems required standards of development, clear documentation, and highly qualified resources to administer.  Upgrade costs increase.  Without executive scrutiny and in the spirit of satisfying internal customers, many organizations have customized their systems to such an extent that the maintenance agreement with the software vendor is worthless. 

There is a balance to strike: maintaining change control of systems to keep cost of ownership within acceptable parameters while providing Business Lines’ users the ability to perform optimal business processes.  Attaining symmetry requires the comparison of the complexity of the process to the value gained from a technology investment.  An organization must first understand the business requirements of processes, determine optimal performance, and then align the process to system offerings.  If the system does not offer the optimal performance solution, a cost/value evaluation is performed to determine how to bridge the gap.  The answer is not always make the system behave, the analysis may prove that conforming a process and modifying steps delivers the most benefit.

SaaS: How do I integrate into my business?

The list of SaaS offerings continues to achieve exceptional growth. The question that nags most executives is “which is the right application for our needs?” Answer the question by establishing a business requirements-driven approach to gathering IT specifications.  Establish the key metrics needed for business decisions and map those metrics to the business processes that produce the results. Understand the reality of how business functions and performs.   Capture the one-off exceptions and determine the root cause of the issue producing the exception.  Modularized your processes by breaking business processes into repeatable and transferable steps throughout the business flow.  This will provide you with the detail needed to communicate your true needs to your vendors.

As vendors respond to inquiries, make certain they are responding to your requirements and specifications of a system. Establish a decision-making grid with a method for scoring each vendor based on your business requirements. Select your top two vendors for final analysis and targeted demonstrations.  It is important to understand the challenges behind incorporating the new tool into any process.  Changing business applications is not an answer to solving failure points that exist in your business process.  Develop issue resolution plans prior to implementation of a new system. Do not incorporate new technology into dysfunctional processes, as you will only speed up the dysfunction.  

 “Stand Up” Your Project Team

Critical to any project’s success is standing up your internal project team.  Based on an assessment of internal expertise you will need to understand what skills are required to make the project successful.  Keep in mind that there is a difference in “project” skills and “maintenance” skills; both valuable, but required at very different times to support any platform or application change. 

“Project” skills are those experts that have experience in implementations, understand critical path, possess a sense of urgency, understand the importance of requirements, and know how to work a plan.  They develop risk mitigation and to course correction strategies in a fluid project environment.  They are dedicated to the success of the change effort. 

“Maintenance” skills are most effective following the rush, madness, and completion of an implementation/change effort.  These professionals have a deep understanding of the requirements needed to keep a system performing at optimum levels and are dedicated to the maintenance and support of an application or platform. They are fastidious in ensuring that proper fixes and upgrades are researched and applied correctly to safeguard system stability

You will risk your initiatives’ success and political capital by not standing up your project team with the right “project” resource.  Stand up your internal team by providing targeted functional subject matter experts, project management, and technical skills to make initiatives successful. 

BPM & SOA: The path to establishing an IT and Business Partnership

There is a tremendous amount of complex talk surrounding BPM and SOA.  Your business is complex but your clients love when you make business easy for them.  With that background, lets simplify the path to partnership between IT and Business through a BPM and SOA approach and structure. 

When we refer to BPM and SOA, we are really talking about supporting the needs of the business with flexible infrastructure that is easily serviced and can adapt to the changing needs of the business.  That is it.  But simple is not always easy…  One of the many challenges we see is a client becoming overwhelmed with deploying BPM and SOA across the entire organization at once.  Do not attempt to take on more change than your organization can digest and accept.   

So how do you proceed down the path of an IT/Business Partnership?  Build the partnership on promises kept:  identify an opportunity for positive results, forecast the production, and meet expectations.  Start with a process that if optimized will achieve a strong ROI.  This will make gaining support - financial and political, easier to obtain.  Next you will have to understand what the business needs from the process.  Does business always move in perfectly aligned linear steps?  Maybe on a rare occasion, but your complex business processes require flexibility.  

You will need to build a process to support how work transacts throughout the business line.  Study and gather the process steps into predictable and repeatable steps.  Presto - you have just modularized part of your business process.   This study will deliver a process solution to the business that is repeatable and reliable yet prepared for flexibility and change.  Not surprising, a flexible process requires a flexible IT service to support the needs of the business.  Your SOA platform now has targets (the modules) that it needs to develop or implement in order to automate the process.  Of course it gets more complicated than this simple example. Understanding the basic concept and executing SOA and BPM concurrently, however, are keys to successful business aligned processes and IT services.