The major theme driving much of the investments into IT infrastructure is business process integration. So far, businesses were well organized around clusters. The back-office took care of the internal enterprise functions, while the front-office handled (separately) customers and suppliers. The new realization now is that for organizations to be effective and efficient in its dealings with customers, suppliers and employees there needs to be an integration of the front- and back-office applications. This is what the shift to e-business is all about: hierarchy implies inefficiency, the process becomes the corporation, and the management of information becomes the successful corporation’s core competency. IT is no longer at the periphery, it becomes the core around which business and its processes are architected.
Forrester’s report on “The Death of IT” outlines this dynamic integration between internal and external business processes:
- e-Businesses will operate at the process level: Vertical pillars dissolve into horizontal core competencies, “Internet Speed” makes vertical companies too slow to react to changing market requirements
- External Partners will be primary owners of technology: Do one thing, do it really well
- Hardware and Software Channels gradually consolidate: The emphasis is on Solutions
- Processes reconfigure dynamically: This enable businesses to respond to changing market conditions and seize new market opportunities
Ravi Kalalota and Marcia Robinson put the change being wrought about by e-business in perspective in their book “e-Business: Roadmap for Success”:
The forces of e-business are creating a structural upheaval in business processes, a social shift that rearranges customers’ lives more than mere hardware and software can…Creating an e-business strategy means more than simply acting faster or creating a differentiated market offer. Companies must ensure that various parts of their operations – marketing, sales, manufacturing, product development, and finance – are tightly integrated so that when decisions are made, the parts come together quickly to form a cohesive whole that meets customer expectations in real time.
The new priority, therefore, for organizations is to rethink organizational structure and redesign core business processes with a focus on integrating internal processes, leveraging technology and the Internet, and focused strongly on customers. “Internet Speed” only gets faster! A recent Merrill Lynch report on the Enterprise Software market summarises this shift:
As with any fundamental software shift, users are experiencing an entirely new set of IT challenges. The focus of application software has shifted to e-commerce. More specifically, rather than cutting costs by automating back-office functionality which drove the ERP boom, companies are now looking to drive revenue growth as well…Beyond the cost savings associated with leveraging an existing software infrastructure, the ability to communicate electronically with trading partners accomplishes the holy grail of computing: top-line growth and bottom-line savings. This pervasive adoption of new technology compounded by growth of application software into ever-broader markets is moving the corporate work towards a singular, networked computing environment.