Research FindingsBy CIOinsight | Posted 07-16-2003
The Real-Time Enterprise 2003: Can You Keep Up With Business Change?
- 74% of CIOs say speed to market is critical in their industry
- 69% of CIOs say they can respond to changing conditions faster than competitors
- 69% say improving response time has led to reduced costs
- 55% say their budgeting procedures help rapidly change IT investment priorities
- 35% say they failed to respond fast enough to a business opportunity in the past year
The results of the July survey on the real-time enterprise are decidedly mixed. Most of the almost 600 top IT executives we surveyed seem keenly aware of the need for speed in order to succeed in business these days, and say that responding rapidly is an explicit strategy of their companies. But almost 70 percent say their companies are capable of responding faster than competitorssomewhat wishful thinking, it would seem, given its mathematical impossibility. Yet the payoffs of developing a responsive organization are real, with reduced costs and increased productivity topping the list. Among the IT practices that best promote rapid response: Good communication with business units, strong project management, and a clearly defined IT architecture. The most helpful technologies? E-mail and collaboration software, relational databases and network storage. The most promising new technologies? Broadband for remote workers, real-time analytics and rules engines. The single biggest drag on speedy response: budgeting practices.
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The Real-Time Enterprise
How Do You Build
a Culture That Supports Rapid Change?">
How Do You Build a Culture That Supports Rapid Change?
In January 2003, the American Companies, a privately held, 104-year-old shipping and customs brokerage firm, took a step toward becoming a real-time enterprise when it launched AmeriTrack, a system that provides customers with current information about the location and customs status of everything they are shipping. Robert Miller, CIO of the Englewood Cliffs, N.J.-based company, expects the system will help his company compete against larger shippers and lock in customer loyalty.
However, Miller found the company's clerical staff didn't understand that information about the cargo was now just as important to the customer as the cargo, or that sloppy, inaccurate or incomplete data was now visible. In one case, a clerk forgot to note in the system that a ship would arrive three weeks late, figuring he could wait until the ship neared port before typing it in. But while the clerk didn't think the delay was important, the customera retailer that was depending on the goods in that shipment for an advertised saledid. If he had to do it over again, Miller says, "I would have had meetings with all these people to let them be involved. If they don't have ownership, they're just a guestthey think it's someone else's problem."
Miller's experience underscores the saying, it's not the technology, it's the people. When companies move to real-time systems or seek to rapidly change business processes, it's critical that employees understand the need for these changes, how the new system or process works, and how it will affect them, according to Barton Goldenberg, founder and president of ISM Inc., a CRM and real-time enterprise consultancy in Bethesda, Md. Few do this well, he says, and the results of our latest survey bear him out: 45 percent of IT executives say their company has done either a somewhat or very poor job creating a corporate culture that helps them make rapid changes in business processes.
We asked a dozen CIOs, project leaders and experts what's required to create that kind of culture, and not surprisingly we heard a great deal about leaders, champions, vision, innovation, compensation and communicating to employees how change will benefit them. Some companies have found inventive ways to involve employees in changes in process. Executives at Vision Service Plan of Rancho Cordova, Calif., a provider of employee eye care benefit plans, startled employees with a fake announcement about changes to the company's casual dress code, and used it to launch a discussion about how people react to change and to reassure their staff that it was committed to helping them adjust to a new client-management system, according to Jennifer Smith, a project leader.
Supporting rapid changes to business processes, however, requires a culture that can repeatedly foster change. One corporation that is seeking to build that kind of culture is DTE Energy, the Detroit-based generator and distributor of electricity and other forms of energy. Among other values, Lynne Ellyn, senior vice president and CIO, says her company stresses organizational learning because "hardiness and adaptability depend on learning and growing." DTE has borrowed the U.S. military's practice of holding "after-action reviews" (AARs) after implementing new systems, processes and projectseven corporate mergers. In an AAR, managers and employees systematically study what went well, what didn't and why, in order to share and apply these lessons in the future. AARs not only help DTE's IT staff learn how to change processes more quickly, but to be less afraid to take some risks. "People are encouraged to embrace a little uncertainty and take on a project they haven't done before, because if it doesn't go as well as hoped, the consequence is learning, not punishment."
At Penn National Insurance, a property and casualty insurer based in Harrisburg, Pa., a renewed emphasis on accountability and execution has driven cultural change, according to Jane Koppenheffer, CIO and vice president of information technology. In the past, she says, the company was conservative and indecisive; problems lingered without anyone taking clear responsibility for resolving them. Koppenheffer credits CEO Dennis Rowe for insisting on accountability, more rapid decision-making and greater openness to change. The company started holding monthly meetings of executives and key middle managers to review business results, industry trends and issues. If there's a concern, an executive is made accountable for investigating, coming up with an action plan and presenting it at the next month's meeting. The company, says Koppenheffer, has also applied speed and accountability to its Internet projects, putting them under the auspices of a separate Internet strategy committee that approves and reviews projects every six weeks. The results have been impressive: Net income for 2002 was $32 million, a twenty-fold increase over $1.6 million in 1998, the year Rowe became CEO.
If there's something these prescriptions have in common, it's clarity. As DTE Energy's Ellyn puts it, "Agility is a byproduct of clarity around the mission, clarity around decision-making, and knowledge up and down the organization about how we respond." Make that clear, and even a shipping clerk can think like a customer.