Cloud Without Risk: Pie In The Sky

We know that systems failures are surprisingly common, hugely wasteful and can bring a company to its knees.

Best example last year must be Knight Capital, a market-maker responsible for 10% of US equity trading volumes. In two hours of trading on the afternoon of 1st August, a ‘software glitch’ lost the firm $460m. The subsequent rescue package cost the owners 70% of their equity.

Arguably though there’s no such thing as an IT failure. If all work is ultimately process, then ultimately it’s always a process failure.

At one level, Knight Capital went down because of a flawed implementation of a software upgrade. But it’s probably more true to say that, somewhere along the line (and maybe we’ll find out once the legal battles are done), there was a flawed process, or a good enough process that was poorly executed.

Probably both. And almost certainly – because this is the continual theme – the root cause was ineffective collaboration.  Vital stakeholders were missed out from the consultation. People thought that they had a common understanding of an end-to-end process and missed the gaps. There was no governance framework to ensure that people used the latest document. No-one realised that there were two different versions of the same process…

So McKinsey is right when it warned last week of the new risks in the migration to cloud services, making it clear that this is not simply a technical IT challenge:

“IT organizations must now adopt a business-focused risk-management approach that engages business leaders in making trade-offs between the economic gains that cloud solutions promise and the risks they entail.”

In cloud migrations, as in every other business transformation program, it’s effective collaboration that underpins innovation and sustainable improvement – and ensures that risks are properly managed.

It’s extraordinary therefore that so many organizations flirt with disaster, blithely assuming that they don’t need an enterprise-wide process management platform equipped to enable effective collaboration.

They may say otherwise but in practice they rely on definitions of their business based on process fragments, in multiple formats and tools, often in arcane technical languages, of unclear provenance, scattered across multiple repositories, only tenuously linked with operational realities, and ‘managed’ with the flimsiest of governance.

Amazingly, Gartner’s dramatic prediction, announced two years ago this month, that: “Between now and year-end 2014, overlooked but easily detectable business process defects will topple 10 Global 2000 companies” still looks a safe bet.

Related Posts

11 Dec 2012    Process Management and Google Maps

19 Nov 2012    No Other Corporate Asset Is Wasted So Spectacularly

© Text Michael Gammage 2013

Outsourcing’s Secret Sauce

Deloitte - Outsourcing Today and Tomorrow - Nov 2012Deloitte’s report Outsourcing, Today and Tomorrow, just published, attempts to define the secret sauce for outsourcing. The authors are engagingly frank:

“We wish we could wrap up this paper with a pithy summary of the secrets of effective outsourcing, boiled down into a neat list of easy-to-digest bullet points. Unfortunately, if such secrets exist, no one has yet discovered them.”

But they go on to suggest ‘one possible candidate’ for outsourcing’s secret sauce:

“The recognition that outsourcing, like other complex business practices, is a discrete business discipline requiring specialized skills that cannot easily be developed on the fly.”

Which may be true – let’s agree it’s one of the essential spices – but it overlooks an essential ingredient, arguably the foundation for outsourcing’s secret sauce: a platform for effective collaboration, which surely lies at the heart of successful outsourcing.

This platform provides a common language: end-to-end process, expressed in the language of the business, not IT-speak. It is comprehensive, not just IT-oriented. It provides integrated perspectives, not just a repository of process fragments. It is wrapped within a robust governance framework to enable process stakeholders – across the enterprise and including especially IT – to effectively manage change. And, crucially, it enables deployment to process users in a way that is personalised, intuitive and engaging.

The Deloitte report – which polled 100+ sourcing professionals earlier this year – provides ample evidence that this need for a common language, a framework for more effective collaboration, is real and growing:

Outsourcing is big – a $480bn industry this year – and set to expand. So too is offshoring.  But operational roles and responsibilities are often amazingly unclear. [There is far too much focus simply on contractual negotiations]

Cloud will vastly increase its complexity. [as will Social, Mobile and Big Data]

Churn is increasing: half of clients have terminated contracts for convenience, sometimes to insource, most often to re-outsource. [Managing complex dynamic multisourced service delivery environments is becoming the norm]

Innovation and sustainable success in continuous improvement can’t work without it. [Innovation and continuous improvement is the area where organizations report that they are least effective in working with service providers].

Related Posts

21 Aug 2012    How To Simplify Global Shared Services

20 Jun 2012    Process: The Emerging Global Business Language

© Text Michael Gammage 2012