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.
11 Dec 2012 Process Management and Google Maps
19 Nov 2012 No Other Corporate Asset Is Wasted So Spectacularly
© Text Michael Gammage 2013