Flying blind in a world of change

By Chris Worsley, VP of Global Marketing, Kalido Ltd

In this corporate scandal-ridden era, Chris Worsley argues that forward lookingCEO’s, CFO’s and CIO’s should seize the opportunity to improve informationintegration not just for regulatory purposes but also to provide necessarycorporate intelligence for better business strategies. Worsley provides insight intohow to start this seemingly gargantuan task by describing the key attributes ofthe Adaptive Enterprise and the steps to take to become one.

The business world is reeling from the effects of major corporate disasters, withevents surrounding companies such as Enron, Xerox, Qwest and WorldCom sendingshock waves throughout. The repercussion from this succession of events is arenewed focus on how information is managed and verified within largecorporations. Investors and regulators are demanding greater transparency of companyperformance and in turn, financial directors are requiring similar transparencythroughout their organization at every level. Moreover they know they need tosecure timely information much faster if they are to spot discrepancies before theyoccur.

If there is one positive result to emerge out of the immense scale of corporatefailure witnessed recently, it will hopefully be a heightened focus on thetransparency of information. Long before the events of 2002, however,corporations have grappled with the challenge of integrating information fromdisparate IT systems to gain a single global view of performance throughoutbusiness change. When organizations are changing strategy, merging and de-merging, andrestructuring on a regular basis it is very hard to access and compare informationfrom disparate sources throughout the organization. In essence, executive boardshave been ‘flying blind’ with no clear picture of true company performance.It is therefore little surprise that problems have arisen in the Telco sector, amongstothers.

The Telco sector has undergone immense expansion and consolidation veryquickly. The result has been the creation of large multi-national decentralizedbusinesses typified by poor visibility and flexibility of information across theenterprise. Senior executives need to react, but are paralyzed by the lack ofmeaningful information across the enterprise. It’s not only the Telco sector that is suffering from this information disconnect. In today’s global competitive environment, executives need fast access to timely, accurate information on any aspect of the business at any level from anyperspective. They need this knowledge no matter how much or how often itchanges.

And they need the ability to maintain this high visibility across the entireorganization through major changes of the internal and external environment.INSEAD Business School1 labels organizations that have achieved this goal as“Adaptive Enterprises.” This label applies to organizations that have attained anincreased state of both visibility and flexibility of information across theirenterprise. ‘Visibility’ in this case means the ability to have multiple views of the business at aglobal level.

The board can therefore explore business performance informationextracted from disparate systems and view it from any perspective and at anylevel of detail – for example, global, regional, local, product and customer.The board can also compare and model different sets of data to gain new insightsinto business performance and strategies, view the impact of past decisions andmodel new ones simultaneously. ‘Flexibility’ on the other hand means being able torespond to changes in an organization both globally and locally.As highlighted by recent events, there are few global companies that can currentlyclaim to be Adaptive Enterprises. And in all fairness there are a number of barriersto achieving true visibility and flexibility in corporate information systems.

Firstly, there has been an accumulation of disparate information systems over theyears, exacerbated by ceaseless mergers and acquisitions and the wholesaleuptake of enterprise information systems. The wide-scale implementations ofEnterprise Resource Planning (ERP), Customer Relationship Management (CRM), andSupply Chain Management (SCM) systems are just some of the trends that haveled to federated, disconnected information systems.1 INSEAD is one of the leading European Business schools. Building the Adaptive Enterprise – INSEAD June2002, by Theodoros Evgeniou, lays out in clear terms the successful behavior for large organizations.Not only is different information represented by different data in different placesacross different business units and functions, but it is also duplicated in manyareas.

In these cases businesses have gained the operational flexibility that theyneed, but they cannot integrate information across the silos. This lack of visibilityprevents a true view of performance as viewed through key business metrics suchas sales, customer satisfaction and profitability.Secondly, the degree (or lack) of flexibility within local operating units can have asignificant effect on the quality of information received by management. Eachoperating unit functions in its own distinct way, and their rigid structure makes itdifficult to respond quickly to internal and external changes. The result is that up to-date relevant information is extremely hard to gather together globally andregionally.Thirdly, the impact of change can hamper an organization’s ability to view keybusiness metrics whatever the chosen IT strategy.

Most systems are developedfor the “steady-state” and assume no change. However, change is a constantand many companies struggle to deliver accurate information speedily when theyare undergoing changes such as re-organizations, new products, consolidationprograms and de-mergers. Ironically, it is during these periods of change thatcompanies most need accurate and timely data. It is this problem that hasundone the attempts of many organizations to standardize on one ERP platform oroperational system organization-wide.On top of all these factors, the advent of the extended enterprise, typified bycross-firm alliances, with chains of suppliers and customers, has made access toquality, up-to-date information even more challenging.

Data now resides not justacross multiple business units but across customers, partners and suppliers aswell. The challenge is to harness and formulate all this information fast and flexiblyenough to make the right decision.Adaptive Enterprises have recognized these needs and put in place processes andtechnologies to address them. They have made a decision that they will integratethe information within the systems. They know that they need global visibility ifthey are to be confident of the transparency of their information, capitalize onopportunities and survive downturns.They also recognize that it is too expensive and in most cases unfeasible tostandardize on any one ERP or CRM platform and migrate the whole organization toit.

Instead they put in place software solutions that enable local operations tocontinue business as usual while being able to analyze information from across allthe business units on a like -for-like basis. For the Adaptive Enterprise, the starting place is to think big, start small and evolve from there. ‘Thinking big’ means envisioning the ultimate aims for integrating information across the entire organization, and defining an over-arching strategic objective with clear long-term return on investment (ROI).The next step is to ‘start small.’ If an organization can find a key strategicproblem with which to start exercising this approach then it can establish aknowledge base and build out its expertise across the whole corporation.

The Adaptive Enterprise will find a business unit with a business critical short -termstrategic issue, undertake a point -of-concept project to define ROI and thendetermine the task, success factors, timescales and measurement.Following the successful implementations, the Adaptive Enterprise ‘evolves smart’with a strategic framework for scaling upward and outward across the organizationusing the expertise acquired during the initial smaller scale project.Information is a corporate asset as important as any other kind. The ability to findand analyze the required quality global management information, even as thebusiness and market changes, quickly and cost-effectively, will be one of thecritical competencies of successful corporations in the 21st century. And in theaftermath of recent corporate scandals, it has moved to the top of the agenda,not just of corporations themselves, but of investors and regulators too.