Business Trend: Mutating Business Processes

To understand the challenges of extracting value from IT investments in a changing milieu, it is critical to understand the growing problem of business process mutation.

It wasn't too long ago that Internet technology and enterprise applications seemed to have conquered inefficiencies in business processes such as customer interaction or procurement automation. Process re-engineering and automation, promoters proclaimed, would cure what ails organizations. Not exactly. The traditional scale and scope of business problems are evolving. Process bottlenecks are shifting, and are ready to pounce on the companies least ready.

The analogy to what is taking place between technology and companies is very similar to what is taking place between antibiotics and bacteria. Over the last couple of decades, the drug-resistant enemy benefited from doctors overprescribing antibiotics and by the rampant presence of antibiotics in the food we eat.

The statistics are staggering. In 1954, 2 million pounds of antibiotics had been produced in the United States. By the end of the century, the figure had risen to more than 50 million pounds. Yet researchers judged that a full third of the 150 million outpatient prescriptions for antibiotics written each year in the United States were unnecessary: Either the infection turned out to be viral or the wrong drug was prescribed.

Overuse and misuse of antibiotics became widespread. Often, antibiotics were given to placate demanding patients. The proliferation of antibiotics - penicillin, tetracycline, and streptomycin - killed many strains of bacteria but gave the resilient few the opportunity to develop intricate mechanisms of resistance. Some bacteria, for instance, succeeded in making their cell walls impermeable to antibiotics. Over time, the antibiotics, instead of killing the bacteria, acted like a catalyst, with the surviving bacteria stronger and more resistant than ever. The results have been horrific (thousands die each year from antibiotic-resistant bacteria), and there are few new antibiotics in the drug industry pipeline. The medical industry is perplexed by this growing problem.

Technology is the business world's equivalent to antibiotics. The overuse and misuse of technology in companies is creating interesting side effects. In some cases, the answer to one problem leads to the creation of the next problem. Consider supply chains. With the rise of automation and integration technologies, the supply chains of many companies are so finely tuned that demand volatility or supply perturbations can cause significant damage to the bottom line. This means that managers have to be extra careful that they are addressing the new problems.

Mega Business Trend: Value Capture via Services

Another interesting automation side effect is that companies across the globe are being inundated with terabytes of useful data that they are not equipped to deal with. The bottleneck has moved in a short time from transaction automation to decision analytics, or the ability to use data to make real-time decisions. This shift is causing a tremendous demand for companies offering solutions to manage, analyze, and monitor events, an area called business analytics.

As we apply technology to the digitization of business processes, they are mutating into new forms. For instance, customer relationship management (CRM) applications coupled with the Web have changed customer service processes from telephone call centers into multi-channel contact centers. The technology-enabled processes that were effective and efficient in the brick-and-mortar environment were less effective in the brick-and-click world. Clearly, the scope of digitized business processes is changing.

High-bandwidth networking is having a dramatic impact on business processes. This is evident in business process outsourcing (e.g., Motorola selling manufacturing plants to Flextronics) and business process offshoring (e.g., GE establishing call centers in India). With the increasing adoption of business process offshoring, companies like British Airways and American Express have lead the charge in morphing their multi-channel contact centers further into a hybrid of in-house and outsourced process models. The complexity of customer service process design has changed considerably in scale and scope since the early 1990s.

The Bottom Line: The state of the art in technology-enabled process digitization is evolving. Process innovation is beginning to accelerate as the e-business technology innovation cycle matures. How are you adjusting and upgrading your business processes?

1. For a detailed description of antibiotic resistance see: Stuart B. Levy, The Antibiotic Paradox (New York: Plenum Press, 1992).

2. For more insight on the emerging roles of biotechnology in dealing with antibiotic research see: http://www.molbio.princeton.edu/courses/
mb427/2001/projects/02/resistance.htm