Hang around with a group of business-technology executives for very long and someone's guaranteed to say something remarkably close to this: "The technology's the easy part. Changing people and processes, that's what's hard."
The importance of changing business processes to get full value out of IT investments is a concept that's been floating around for years, but it's taken on a new and broader urgency in the current economy. The huge investment in Internet technology in recent years, the demand for more real-time information, the tighter collaboration among business partners, and the grinding pressure to cut costs in a down economy all have IT buyers and sellers talking the same language about business processes. The new, interconnected world requires business partners to analyze and understand their companies' core business processes, then look for ways to transform or at least substantially improve them. Once they've accomplished that, they can talk about the appropriate technology to bring about the changes. "You give me good people and a great process, and we'll beat any organization with the best technology but a poor process and undermotivated people," says Doug Patterson, VP and CIO at Standard Register Co., a form-printing company with $1.2 billion in annual sales.
Business process really just describes the way a company gets its work done--how it goes from taking an order to getting paid, or from selling a product to restocking its shelves. What's different about how companies approach business processes today is the way technology is woven into the efforts, creating the opportunity and the means to reorient often long-standing practices.
Before DuPont & Co. picked a technology system to improve how auto-body shops and distributors order paints from the company's coating division, IT and business managers at the division spent weeks meeting with employees, customers, and distributors to identify the business processes that should change to improve customer satisfaction. "We've got a very established industry with industry practices that have been out there for about as long as paint has been on cars," says Catherine Marchand, the division's E-business strategy manager. "We were still doing manual order entry--a primitive business process, if you want to call it that. We realized we'd see a lot of benefits if we changed our process." DuPont now lets body shops and distributors order direct through a Web site.
Technology vendors have caught on to business users' focus and are evolving their sales messages away from just hawking technology to promoting new ways of doing business. That focus is a big reason why IBM bought PricewaterhouseCoopers' business-consulting practice and why top executives at vendors such as PeopleSoft Inc. and Cisco Systems are talking about the need to help customers examine their business processes.
The vendors are responding in part to a general sense among businesses that they want more value out of the enormous investment they've made in technology in recent years. Dave Bent, CIO at Acterna Corp., a $1.1 billion-a-year provider of telecom testing equipment and services, says the software that companies bought in such huge volumes has functioned fairly well. "What has failed, I think, is that companies haven't also forced through the behavioral changes or the business-process changes that will then actually allow that software to make a difference in making the company more successful," Bent says. He hired SAP consultants to help implement the vendor's mySAP enterprise resource planning system, which includes modules to cover entire business processes, because SAP's experts can guide Acterna in the best way to use the system, and not just install it.
All this talk of changing business processes might sound familiar to veterans of the reengineering focus of the early 1990s, when the economy also was battling recession. With sales and profits down and little room for price increases, companies made major layoffs but still needed to cut costs. What's different today is the role technology plays in business. When reengineering was the buzzword a decade ago, changes were enabled not by technology, but by processes changes such as negotiating a better deal with suppliers or cutting the total cost of ownership. "Nobody talked about technology," says Glenn Ramsdell, a partner in the business-technology office at business-management consulting firm McKinsey & Co.