Businesses
are coping with difficult times. The current economic condition of moderating
growth and increasing costs is creating deep structural shifts at both the
macro and the micro levels.
The business
imperatives are gradually transiting
from
an
old combination of high business growth (from
fewer user segments, products and services), organizational slack (positive
difference between resources available and resources needed) and linear
business expansion,
to
a
new combination of business agility (with
lowering growth and that too expected to come from many fleeting opportunities
from many user segments, products and services), risk management (due
to uncertainties of the success of the multiple initiatives, products and
services) and cost control (as funds are not easily available).
The
three business imperatives in the earlier combination fed into each other i.e.
they supported and complemented each other. The three business imperatives of
the new combination, however, will work against each other. E.g. if agility is
enhanced, risk also increases; when risk is managed it impacts both cost
control and business agility; when costs are controlled it impacts business
agility and the ability to spend towards risk management. The play of the new
combination is very challenging and that’s what will drive new relevance for IT.
In
the earlier combination, IT’s role was limited to automating the existing
business processes in order to make them more efficient and
drive productivity The relevance of IT, however, has to be very
different in the emerging business imperatives. Here, IT has to enable a
business to become more agile, manage the risks of agility and enable it do
this in a cost effective manner.
With
this premise of structural shifts, new business imperatives and a new relevance
for IT emerging, many businesses and their leaders are looking at a deeper role
for IT in four areas of customer intimacy, supply
chain digitization, people partnership,
and institutionalized risk alertness. These four areas
may sound similar to the existing practices of CRM, SCM, HCM and RM, but they
are not just applications and technology solutions as represented by the four
acronyms. These four areas are the initiatives of the business and functional
leaders in an organization and can be enabled by many type of technology in
many different ways. Here I am not talking about the specific technologies.
Let’s
understand what exactly these four initiatives are.
Customer
Intimacy
Being
constantly in touch with the customers, knowing their needs and tastes is not
new but doing so in a continuous and almost real time manner is new. The
earlier paradigm of market planning consisted of long cycles of target
definition, product creation, market research, pricing, distribution and after
sales service, which is inadequate in the changing times. The new business imperatives
demand the cycle to be compressed in a cost effective manner and ensuring that
it does not loses its effectiveness of achieving the objectives.
Capturing,
storing, retrieving and using the existing knowledge about the customers in
novel ways is the need of the hour. The challenge is further exacerbated when
the in-house know how has to be complemented by the knowledge existing in the
external domain (mainly internet). Driving customer interaction programs,
collecting vital pieces of information from multiple such programs, keeping
sensors in vital places where customers interact with each other and creating a
small piece of usable knowledge from huge piles of irrelevant information has
to be a practice. Further integrating that with the internal know-how stored in
the IT system helps create the desired intimacy with the customers.
Supply
Chain Digitization
By
supply chain I refer to both supplies to the business
and distribution from the business. Supply chain
integration is both a source of cost control through efficiency drive and
business capability to serve the heterogeneous customer segments with
multiple products and services. Both the procurement and the distribution side
can find relevance of these two sources.
First
let’s talk about the procurement side. Some of the businesses I have interacted
with have been working on the agenda of controlling the cost of procurement
through lowest price discovery and just in time delivery. With input costs
rising and the prices fluctuation remaining uncertain, the need for a better
visibility on the prices is a business requirement. How can IT help an
organization do this is an area of interest for many. The underlying business
processes of procurement is not the focus but how can the information from them
be leveraged to devise new and appropriate processes to respond to the need of
price discovery and fast delivery by the supplier.
The
distribution side of the business needs not only the existing processes to be
more efficient and effective but it also needs newer processes to address
multiple user segments with multiple products and services. My interaction with
businesses brings forth the endeavors they are pursuing and the kind
of newer capabilities they need, e.g. faster turnaround of channel initiatives,
just in time inventory replenishment of multiple variants of the products at
the distributors’ and warehouses’ level, the right ordering and the right
delivery etc.
People
Partnership
The
flux organizations are experiencing today can be handled only by ensuring a
larger participation by people at all levels. No more can people be expected to
merely confirm and adhere to decisions taken by few at the top. Contemporary
market challenges require organizations to distribute power from the centre to
the periphery, especially to the customer facing functions. IT has
traditionally been used as a control tool in the hands of the top management,
who wants to take informed decisions. These decisions affect the organizations
and those who work there.
However,
with the need for higher agility, the same decisions need to be taken on the
ground without spending time in long decisions cycles. The new relevance for IT
is to empower people with information and power to take decisions. Many
organizations in the FMCG and insurance sectors are looking at devising new
ways to empower their front end employees and agents.
The
aspect of people participation is not just restricted to information
availability and more power to take decisions; it also includes the aspects of
learning, development, engagement and motivation. I have found many CEOs talk
about their dream to become an organization of choice for the employees. They
should realize that IT can play a more meaningful role in
their endeavour of creating a great place to work.
Institutionalized Risk
Alertness
Risk
alertness is not just about the big things like the governance frameworks, high
level risk modelling and assessment, scenario planning, security software etc.
It is also about the small things. For example awareness at the broader
organizational level among a larger set of employees about the risk of
product failures, inability to hire the right candidates, inability to capture
or let go of fleeting opportunities in the market, failure to operationally
leverage the acquired abilities etc. When this awareness is met with
empowerment from top, real time information availability to sense the danger
and the structural mechanisms (like monthly meets, quarterly reviews, weekly
huddles etc.) to act, it creates a broader and institutionalized risk
alertness in the organization.
All
these new 4 business initiatives can be enabled by IT and hence they define new
relevance for IT.
(A word of caution- organizations can extend IT’s role to these
areas with varying degree of success depending on the existing maturity of
their IT systems. They should first develop their basic IT systems & its
management to gear up for deeper role of IT for the new business imperatives).
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