Part 1; Why your IT Operation can’t run your Digital Business Operations, and in turn, why your Digital Operations can’t run your IT Operations
Just for a moment lets stop thinking about all the pages, and pages, of well thought through comment on recognizing the market opportunities, the pressures to compete in new ways, the transformation challenges for the enterprise, even the new operating skills, and just focus on the Business Functional Requirements for Operational Technology that all of this requires.
That’s not to say any of this is wrong, but it is in danger of masking some basic functional changes that give rise to new core principles in choosing and operating both existing and new technologies in support of an Enterprise that would describe itself as operating a Digital Business model.
Recognizing this and defining by functionality shows your enterprise and its business activities to be clearly split into two halves. To get best business value out of each half means recognizing this point and understanding some very fundamental differences in the business and technology alignments. That’s doesn’t sound too hard to address, but the real challenge is just how different those two halves are; in every way not just in technically but also in business functionality.
One half corresponds to the Back Office where IT has transformed the cost and operational efficiency of operations internally by using large complex integrated enterprise applications. The automation of processes to flow across the enterprise as a set of ‘book to bill’, processes was as big a competitive game changer in its time as Digital Business is becoming today.
The other half, the new and non IT half, is focused on the Front Office of the enterprise, and is frequently defined as ‘Consumer IT’ for the very good reason that the ‘consumers’ of the technology choose what they want to use by their understanding how the business value they can gain.
In this new ‘half’ the focus has shifted towards using technology externally to win new revenues with new products out in the markets. That’s a very different reason for using very different technologies so not surprisingly it’s very different operationally. Digital Business itself is based on these consumer technologies that allow mass and common use across the Internet, if the technology elements were not simple and open, then there would be no Digital Business.
Perhaps we should describe Digital Business as taking advantage of the new opportunities created by common and freely available consumer based technologies? Frankly it makes more sense to think in this manner when considering how the Front Office use of technology should be operated.
The users working in the enterprise Digital Business Front Office are themselves consumers who understand the capabilities delivered and how to apply beneficially. The provisioning and operational complexity of technology has been hidden and simplified inside the ‘services’ model of external Cloud and App suppliers. For these Digital Business natives the agile, dynamic, sense and response environment based on Operational Attributed cost is far removed from the environment of the Back Office where the IT department is the supplier and operator of big capital investments.
However much as we try to define Front Office Digital Business technology as part of the responsibilities of the IT Department, it simply doesn’t fit with their experiences, methodologies or even operational deployment of new business requirements. But, and it’s a big but, the IT department can rightly see the core important issue of enterprise level integration, and wants to make sure that the enterprises Digital Business is going to work with the existing IT.
The IT department is right; whatever enterprises do to win business through Digital Business externally with new technologies, they still have to operate an efficient internal ‘Book to Bill’ set of IT processes in their Back Office. On this fact Enterprise IT good practice certainly still rules, but IT departments are wrong about their role in operating the technologies of Digital Business!
If we take the right answer from the existing IT point of view, we know that the resulting ‘good practices’ will be so confining to Digital Business initiatives, and operations, as to defeat the requirement for ‘agile’, dynamic, ‘sense’ and ‘respond’ business models. One-size fits all IT methods simply cant be made to work! Wholly new technologies have created wholly new capabilities that in turn have created wholly new business requirements, operated in a wholly different manner!
In the Front Office of a Digital Business everything that makes up the Business model and Technology Operational model is totally different to that of the Back Office and IT. Failing to understand this and ‘muddling’ the two halves together in the business management transformation towards a ‘Digital Business’ model is a serious, but frequent, mistake!
Back Office IT is hugely important for continuing to operate the enterprises internal fulfillment processes at the right cost and level of efficiency. But it’s the Front Office Digital Business that’s going to drive an enterprise’s ability to really identify and win new business externally. It is a wholly different business requirement made possible by the ability to operate in a wholly different manner using wholly different technology.
Most important of all, Digital Business is external, outside the firewall, relies upon integrating with people who aren’t part of your enterprise and are using their own technologies. Digital Business requires the creation of an entirely new technology environment to support an equally entirely new Business model for the Front Office.
The enterprises Front Office Digital Business doesn’t rely on deep technology skills, or the IT department to be the provider, or even operator, instead it is driven by people who know how to make use of these ‘consumer’ capabilities to win business. To these Business savvy users the technology model is simple and uses the capabilities of external service providers.
No wonder there is conflict between the two technology halves of the enterprise as there is so little in common; pretty obvious why there are challenges as to whether CIOs, (using their current role and methods), are the right people to support the enterprise Digital Business. The introduction of Chief Digital Officers, Chief Marketing Officers, and all the other titles, are just moves to address a need for the enterprise to operate a new and different environment in its Front Office Digital Business.
By now those working in the Digital Business Front Office are probably saying ‘you are right let us operate our way to suit an entirely new environment’. And those working in Back Office IT are probably saying ‘its madness as this ignores enterprise level integrity and process integration’.
Clearly Digital Business Front Office activities must connect to, and do require, Back Office IT processes in order to provide the fulfillment of their sales! Designing, building and managing the integration points is a job for IT as an extension of the Back Office good practices. Similarly providing an Enterprise infrastructure for managing Identities, Brokering Services etc. is equally a role for IT with its technology skills. It’s just the Day to Day operations of Digital Business in the Front Office made possible by an entirely new environment of User/Consumer based capabilities that is not the role for IT.
Lets try to make this a little clearer with some diagrams, starting in this case with defining the two halves of the Agile Digital Business Front Office and the Stable Business Fulfillment Back Office. An apology for the complex diagram but it’s a complex subject! Start by just read the boxes in red for the key points!
In a series of following blogs these points will be examined in greater depth, starting next with the splitting out of three primary technology functions in the front office, and four different primary functions in the back office that in turn align with seven different business functionalities. Defining each, with its role, is the first step in understanding what and how to provision and manage to support a business requirement. The true challenge at an enterprise level is to excel in each for its unique element of competitive advantage as well as to seamless operate across the seven different business functions that are enabled by technology. This is the role of the eighth function, the most crucial of all, defining how the Front and Back Office inter-operates and in turn defining the choice of architecture and platform for the Digital Business Front Office.
Transforming to become a Digital Business means moving from ‘good to great’ performance as a fully integrated technology based enterprise, failing to grasp this takes us back to ‘bolt on’ e commerce web sites that took orders online, but relied on internal manual inputs to re enter into the existing order capture system!
