Companies must use the return of confidence in IT spending and advances in software to transform their businesses, Gartner argues
Cannes, France November 10, 2003 Having used information technology investments primarily to make operational cost savings over the last two years, businesses must now embrace emerging opportunities and make strategic decisions about technology that will transform their business processes and give them competitive advantage, the technology consultancy Gartner argued at its recent ITxpo show here.
The coming year must see a return to strategy for information technology investments, Gartner advised the audience of 3,000 chief information officers and other executives at the annual show.
Gartner warned that a focus on short-term local automation initiatives is leaving IT with diminishing returns to the business. The challenge for IT is to provide the means to extend business capabilities, the consultancy argued, suggesting that a return in focus on business processes, enabled by the emergence of new software platforms and architectures, can achieve this. Gartner termed this "business process fusion" and said that the transformation of business processes is a major step towards building a so-called "real-time enterprise."
CIO Confidence in Budgets Returns
Gartner also revealed early findings from a worldwide CIO survey, showing a return of confidence in IT budgets, with CIOs expecting modest growth of 3.4 percent in 2004.
Perhaps more important, the survey showed that only 12 percent of CIOs believe their most important role in 2004 will be cost cutting and restructuring, while 43 percent believe the biggest change in the role of their department will be to enable better business processes. Gartner said the growing focus on business processes and the maturing of key technologies will make business process fusion a key driver for IT investments in a majority of Global 2000 companies by 2007.
"The future will not be about automating existing processes using IT, or trying to achieve more with less, it's about transforming the processes of your business," said Simon Hayward, a research fellow at Gartner.
Hayward suggested that while investments to further automate operational processes are beneficial, they produce diminishing returns. "There is little point in doing more of the same," the research said. "By using technology to link previously autonomous management and operational processes, companies can speed up their decision-making, respond faster to changes and make more effective use of their assets. IT now offers the means to extend your business capabilities, but this is not being exploited."
Business Process Fusion Why Now?
Gartner believes that business process fusion builds on the maturing capabilities of systems integration and systems access technology to support the creation of new processes that increase the speed and flow of corporate information. It enables planning, optimization, simulation and other performance management activities to take place on a broader scale than previously, according to the consultancy.
This type of fusion is achievable now, Gartner said, because companies have already invested in operational systems that are pervasively connected and able to capture core transactional data. In addition, the capability of enterprise software has improved dramatically in the last two years, and software platforms and architectures that span the traditional application silos and processing styles have emerged.
"The single most important way that technology can transform a business is by linking business operations more directly into management and leadership activities in order to speed up decision-making," said Hayward. He added: "Business process fusion will profoundly change the way application software supports business activities. It is the next logical step in the maturing of systems integration and portal technology. It exploits Web services, service-oriented architectures and process management. It enables new compound processes that provide coherent control of activities that have previously been loosely linked."
Improvements in Software Bring New Possibilities
According to Gartner, the technology drivers and enablers for business process fusion now ready to use are:
Achieving Business Process Fusion Requires New Skills
Implementing business process fusion will require specialists within the IT organization to work more closely with their business managers, Gartner said, adding that while this is a "power opportunity" for the information services organization, most are not well equipped to manage process change today.
The consultancy suggested that companies must invest in their internal IS team to recruit and train managers who are able to work with management to fuse the various disciplines within the business into a flexible management structure.
The CIO and information technology executives have to make or participate in decisions about their firm's core competencies and about commitments that are already in place, Gartner asserted. These commitments vary from IT spending decisions to human resources questions and to how the enterprise will respond to faults, rifts and movements in the larger global economy.
"We need CIOs to talk the language of business, and business managers to talk the language of IT, and they both need to listen!" Hayward said.
Obstacles on the path to achieving business process fusion will include:
To overcome these obstacles, Gartner recommended that businesses must:
Gartner believes the rewards for businesses that successfully fuse their business processes could be substantial. Costs will decline and profitability will increase because of greater efficiencies, visibility and control, according to the consultancy. Moreover, what makes business process fusion necessary is the risk, and in some cases, the pressing reality of a competitor successfully transforming its core processes first, Gartner argued.
Concluded Hayward: "Fusion will combine activities that formerly required independent systems. It will provide visibility and control of these combined functions at the operational level and for management purposes. And it will allow for modification of business processes without disruption of the supporting IT systems."
Cannes, France November 10, 2003 Having used information technology investments primarily to make operational cost savings over the last two years, businesses must now embrace emerging opportunities and make strategic decisions about technology that will transform their business processes and give them competitive advantage, the technology consultancy Gartner argued at its recent ITxpo show here.
The coming year must see a return to strategy for information technology investments, Gartner advised the audience of 3,000 chief information officers and other executives at the annual show.
Gartner warned that a focus on short-term local automation initiatives is leaving IT with diminishing returns to the business. The challenge for IT is to provide the means to extend business capabilities, the consultancy argued, suggesting that a return in focus on business processes, enabled by the emergence of new software platforms and architectures, can achieve this. Gartner termed this "business process fusion" and said that the transformation of business processes is a major step towards building a so-called "real-time enterprise."
CIO Confidence in Budgets Returns
Gartner also revealed early findings from a worldwide CIO survey, showing a return of confidence in IT budgets, with CIOs expecting modest growth of 3.4 percent in 2004.
Perhaps more important, the survey showed that only 12 percent of CIOs believe their most important role in 2004 will be cost cutting and restructuring, while 43 percent believe the biggest change in the role of their department will be to enable better business processes. Gartner said the growing focus on business processes and the maturing of key technologies will make business process fusion a key driver for IT investments in a majority of Global 2000 companies by 2007.
"The future will not be about automating existing processes using IT, or trying to achieve more with less, it's about transforming the processes of your business," said Simon Hayward, a research fellow at Gartner.
Hayward suggested that while investments to further automate operational processes are beneficial, they produce diminishing returns. "There is little point in doing more of the same," the research said. "By using technology to link previously autonomous management and operational processes, companies can speed up their decision-making, respond faster to changes and make more effective use of their assets. IT now offers the means to extend your business capabilities, but this is not being exploited."
Business Process Fusion Why Now?
Gartner believes that business process fusion builds on the maturing capabilities of systems integration and systems access technology to support the creation of new processes that increase the speed and flow of corporate information. It enables planning, optimization, simulation and other performance management activities to take place on a broader scale than previously, according to the consultancy.
This type of fusion is achievable now, Gartner said, because companies have already invested in operational systems that are pervasively connected and able to capture core transactional data. In addition, the capability of enterprise software has improved dramatically in the last two years, and software platforms and architectures that span the traditional application silos and processing styles have emerged.
"The single most important way that technology can transform a business is by linking business operations more directly into management and leadership activities in order to speed up decision-making," said Hayward. He added: "Business process fusion will profoundly change the way application software supports business activities. It is the next logical step in the maturing of systems integration and portal technology. It exploits Web services, service-oriented architectures and process management. It enables new compound processes that provide coherent control of activities that have previously been loosely linked."
Improvements in Software Bring New Possibilities
According to Gartner, the technology drivers and enablers for business process fusion now ready to use are:
- Explicit process representation in integration brokers and portal frameworks
- Service-oriented architecture and composite application technology that are delivered by integrated service environments and integration brokers for "wrapping" legacy systems
- Metadata management and application-independent XML data definitions that are incorporated in integrated service environments and data synchronization tools
- The development of common definitions for the main data items that are used in various industry sectors
- Advanced portal-based integration that supports roles and personalization
- Unified information stores and access methods
Achieving Business Process Fusion Requires New Skills
Implementing business process fusion will require specialists within the IT organization to work more closely with their business managers, Gartner said, adding that while this is a "power opportunity" for the information services organization, most are not well equipped to manage process change today.
The consultancy suggested that companies must invest in their internal IS team to recruit and train managers who are able to work with management to fuse the various disciplines within the business into a flexible management structure.
The CIO and information technology executives have to make or participate in decisions about their firm's core competencies and about commitments that are already in place, Gartner asserted. These commitments vary from IT spending decisions to human resources questions and to how the enterprise will respond to faults, rifts and movements in the larger global economy.
"We need CIOs to talk the language of business, and business managers to talk the language of IT, and they both need to listen!" Hayward said.
Obstacles on the path to achieving business process fusion will include:
- Departments work independently in most companies
- Architectures are not flexible and planners are not mandated to build in flexibility
- Modifying applications can be complex and expensive
- Technologies for use of web services and application composition are immature
- Seldom enough buy in from C-level executives to make business process fusion a strategic imperative
To overcome these obstacles, Gartner recommended that businesses must:
- Organize for top-down driven, process change to extract the business value of IT
- Invest to acquire process change competencies in IS team
- Identify key end-to-end process change business opportunities
- Set enterprise architecture policy to add only service-oriented architecture-based application software packages and components from 2004 onward
- Enforce use of self-describing data standards and methods in all new systems and major enhancements
- Require extensible metadata models for new applications
- Treat hardware, network and systems software as a black box - focus management time and attention on the value creating business process change opportunity of IT
Gartner believes the rewards for businesses that successfully fuse their business processes could be substantial. Costs will decline and profitability will increase because of greater efficiencies, visibility and control, according to the consultancy. Moreover, what makes business process fusion necessary is the risk, and in some cases, the pressing reality of a competitor successfully transforming its core processes first, Gartner argued.
Concluded Hayward: "Fusion will combine activities that formerly required independent systems. It will provide visibility and control of these combined functions at the operational level and for management purposes. And it will allow for modification of business processes without disruption of the supporting IT systems."
