Gartner: Rethink organisation structure to boost business
Businesses must radically rethink how they organise staff and collaborate if they want to make big improvements, according to analyst Gartner
Companies must radically rethink the way they organise staff and collaborate if they want to improve business.
Organisation leaders believe business process management (BPM) can drive business improvement, but there are several barriers to overcome, according to Gartner.
In a 2010 survey, 56% of business leaders said BPM was essential to their growth. For instance, the New York state department taxation and finance department realised a 60% reduction in cycle time and a $100m increase in tax revenue through BPM, according to Gartner.
In the UK, Gartner said Carphone Warehouse saw a 120% increase in customer sales thanks to BPM. Moreover, Gartner said that CIOs in organisations that have implemented BPM spend 10% less on operational IT, compared to those who have not run a BPM programme.
Addressing delegates at the Gartner Business Process Management Summit in London, John Dixon, research director, said: “BPM delivers, and makes a difference to the businesses we operate in, but it is challenging and encompasses a broad scope of activity.”
The big barriers include organisational politics, lack of experience and lack of resources to do BPM projects.”Your ability to sell your message is the biggest barrier to BPM,” he added
Janelle Hill, distinguished analyst at Gartner, said part of the problem is that BPM concerns process improvement, but if the baseline process is not good or subject to external disruption, continuous process improvement will not work.
She said organisational structure limits BPM's effectiveness: “Most companies are organised on a functional, geographical or product basis. But these organisational structures create problems where there are boundaries between different organisational units where information cannot flow smoothly.”
The hierarchical structure of businesses and reporting build layers of management, where people have to adhere to established protocols that are difficult to cross. “Each of us works in an operational island. We have no visibility. We lose the big picture,” said Hill.
She said this creates a barrier that prevents the business process from being optimised. She said: “There is no individual focused on end-to-end delivery. For instance, the customer gets want they want, not what they necessarily ordered, such as when someone accidentally orders 11 bottles of bleach, rather than one.”
For instance in a typical business process, such as the order-to-cash process, it is possible to have a process owner. However, Hill said that, while such a person may be accountable, they would have no authority or tools to analyse the end-to-end business process from order to cash.
Changing the culture
Daryl Plummer, Gartner fellow said: “In business, things don't go as planned and it is good to adapt. This is what has been missing from BPM projects up until now. You will only get marginal improvements using BPM. You need to embrace a step change. Stop focusing on process and structure, and look at how people interact with one another and with customers."
Gartner has coined the term "extreme collaboration" to describe the step change in collaboration that businesses must make. It involves taking advantage of emerging technology trends like cloud computing, mobile computing, social computing and big data.
“To change culture and people you have to think how the way they work will change, this will help break down the barriers that stop BPM from evolving in the company. Smartphones can breakthrough organisational communications,” said Plummer.
Plummer said mobile video should be deployed in the business. “You can bring a range of people into a meeting without them coming to the meeting room. You don't need to build a video conference facility when everyone has video conferencing in their pockets [through a smartphone or tablet].”
Plummer also believes e-mail is redundant, given that people are using Facebook alerts and notifications, Twitter and instant messaging can help others in the business find out what people are doing. This helps to break down the barriers put in place through organisational structure.
Measuring people's performance is another barrier. Using a bell curve or a stack ranking tends to reward "heroic behaviour", said Plummer.
But he said this is not a sustainable culture that will improve business results.
