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TECH TALK: Envisioning the Future: Business Process Re-engineering

April 23rd, 2001 · No Comments

The first phase of the Internet revolution involved building out the infrastructure to get millions connected to the Internet, the setting up of websites to provide all kinds of information and services to serve the surfers and experimentation with lots of business models to see what works and what does not. This period of great innovation has laid the foundation for the next phase of the Internet: businesses talking to other businesses, and machines talking to other machines, to simplify and make more efficient processes within organisations.

This “Enterprise Era” will be driven by cheaper costs of communications and transactions, making information available across the value chain, and thus enabling rapid response to events and real-time decisions. This will also entail a radical overhaul of business processes.

An overview from Jon Ekoniak writing in Upside:

The first chapter of the e-commerce revolution — the explorer stage — has closed. The New World has been identified, and the second chapter will focus on conquering the newly identified territoryIn the next 12 months, we will see two very broad themes play out: the optimization of the entire value-chain process and the increased utilization and management of human capital.

Hundreds of millions of dollars have been spent automating individual departments within an organization and then connecting all those information silos together. Nonetheless, the investments stayed within the four walls of the organization. Businesses sought to be as strong and efficient as possible and to improve and manage what was directly under their control. Many businesses do not take into account how their internal processes directly impact the actions and efficiencies of upstream or downstream value-chain participants.

However, the business world is about to be turned upside down. A business will be viewed not as a single entity, but as a cog in a larger wheel known as the value chain. Success will be measured not by the contribution of one, but by the collective output of the whole. Success will be achieved when disparate groups or organizations work together and function as a single unit.

The next phase is about integration: not just of processes, but more importantly, of information about these processes. Being able to get visibility across the enterprise and the chain connected to the enterprise can help faster decision-making and reduce inefficiencies. A view from “e-Business 2.0: Roadmap for Success” by Ravi Kalakota and Marcia Robinson:

Traditionally, most companies separated their business applications, creating specialized functional areas: accounting, finance, manufacturing, distribution, and customer service. It’s a matter of divide and conquer: if a job can be defined specially enough, a specialized application can optimize functions in that particular area. And if all functional links in a company are optimized, the company as a whole will function optimally. In recent years, however, business theorists have challenged this best-of-breed strategy. They recognize that if a chain of processes is to perform at a high-level, the individual business functions and the applications supporting them must be tightly linked with other processes around them.

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