4 Different Operating Models Depending on the Level of Business Process Integration and Business...

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So back to the thread, whether it is explicitly stated or not your Enterprise has an architecture, in my experience it mostly got there by accident rather than design. The MIT Sloan Centre for information research demonstrate 4 different operating models depending on the level of business process integration and business process standardisation. By default most businesses subconsciously fall into the Diversification category, but this should not necessarily be seen as a bad thing, sometimes this is the most effective and cost efficient model for operating in certain markets. Let me give my paraphrasing for each category, both the "formal" and reality of whats happening on the ground: Diversification: Formally - Each business unit has the flexibility to implement its own services and products as it sees fit, there may be some shared services but generally each unit has the

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4 Different Operating Models Depending on the Level of Business Process Integration and Business Process Standardisation

Transcript of 4 Different Operating Models Depending on the Level of Business Process Integration and Business...

So back to the thread, whether it is explicitly stated or not your Enterprise has an architecture, in my experience it mostly got there by accident rather than design. The MIT Sloan Centre for information researchdemonstrate 4 different operating models depending on the level of business process integration and business process standardisation.

By default most businesses subconsciously fall into the Diversification category, but this should not necessarily be seen as a bad thing, sometimes this is the most effective and cost efficient model for operating in certain markets. Let me give my paraphrasing for each category, both the "formal" and reality of whats happening on the ground:

Diversification: Formally - Each business unit has the flexibility to implement its own services and products as it sees fit, there may be some shared services but generally each unit has the flexibility to define, build and run its own services and processes as required. The reality - Its chaos out there. Lots of duplication of systems, different processes for performing the same action, multiple business definitions for the same entity. Rapid pace of uncontrolled change. You will probably also come across business units implementing their own IT systems. Coordination: Formally - A high degree of data integration, prebuilt delivery channels and standardised technology. Each business unit still has a degree flexibility variation of the processes it uses on top of the standard services. The reality - Lots of effort to define and enforce the standards. The body responsible for enforcing the standards often seen as an obstacle to progress leading to a tendency to move back down to the diversification model. Replication: Formally - Pretty much a franchise model, standard branding and processes reused repeatedly. High efficiency from reduced risk of implementing new untried processes. Local data ownership but enterprise wide definitions as part of the process. The reality - replication of data systems and small local variations to standards. No clear view of the customer gives a risk of competing against yourself for business. Continual risk that the processes may be seen a limiting factor and an obstacle to progress leading to a tendency to move back to a diversification model. Unification: Formally - Highly organised cost effective model, highly effective at identifying cross-sell and up-sell opportunities. The reality - "You will be assimilated", but implementing a global enterprise BI system is easier to achieve in this model than any other. Generally to have implemented this model means that the architecture and standards governance in the Enterprise must be top notch.