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Thursday, August 09, 2007

Enterprise Software : Complexity & Effectiveness

Just came across this interesting article on the state of the enterprise software industry. The article raises the question, Is enterprise software just too complex to deliver on its promises? After all, enterprise systems were supposed to streamline and simplify business processes. Instead, they have brought high risks, uncertainty and a deeply worrying level of complexity. Rather than agility they have produced rigidity and unexpected barriers to change, a veritable glut of information containing myriad hidden errors, and a cloud of questions regarding their overall benefits
Cynthia Rettig, the author adds, “The way most large organizations actually process information belies that glorious vision and reveals a looking-glass world, where everything is in fact the opposite of what one might expect. Back office systems — including both software applications and the data they process — are a variegated patchwork of systems, containing 50 or more databases and hundreds of separate software programs installed over decades and interconnected by idiosyncratic, Byzantine and poorly documented customized processes. To manage this growing complexity, IT departments have grown substantially: Impressive statistics to support the point: As a percentage of total investment, IT rose from 2.6% to 3.5% between 1970 and 1980. By 1990 IT consumed 9%, and by 1999 a whopping 22% of total investment went to IT. Growth in IT spending has fallen off, but it is nonetheless surprising to hear that today’s IT departments spend 70% to 80% of their budgets just trying to keep existing systems running.
Software’s supposed flexibility and unending ability to manage complexity contributed to the discrepancies between the great expectations and mediocre reality that plagued the first round of implementations of enterprise resource planning systems. The upcoming promise of SOA does not give any substantial relief. SOAs become additional layers of code superimposed on the existing layers. That means it is possible that a process will fail at some point due to some fault in the layers below, and in order to understand and fix that problem, software engineers will need to deal with the layers of enterprise applications below the modular business processes. The advice to CIOs is to get more deeply involved in the business issues and educate executives on what IT is and what it actually does. Corporations see in software’s seductive invisibility and seemingly open-ended flexibility a never-ending frontier of promise, where hope triumphs over reality and the search for the next new thing trumps addressing difficult existing problems”.
All these are not going to stop the increase in IT spending. The advice to business is :
- What do business do now to stay protected for now and to be prepared for the future?
- While context can provide more meaning to answers to such questions, a few guidelines may be in order for the user business.

From a Technology Standpoint:
-There are no more standalone initiatives – look at all initiatives as part of a larger program and assess readiness and commit resources
- Make it a mantra to adopt stronger emerging technologies faster: the likes of mobility solutions, Enterprise 2.0 solutions, BPM etc.
- Business case if non negotiable even for technology assessments
- Security management - at all levels becomes very important
- Technology governance and standards adoption are changing fast – enterprises need to ensure that they follow the progress in adoption.
From a Management Standpoint:
- Rigorous assessment of all investments with strong business case as the anchor.
- Investing in developing and using in industry wide IT value approach is a good practice for enterprises to follow.
- Focus on metrics in value measurement: count the tangibles and intangibles vigorously
- Assess risks for all programs with more rigor – risk mitigation plans, cost benefit analyses all need to be instilled as a discipline for IT investment committees to carefully assess while clearing investments
- An integrated view of costs, risks and benefits need to be made and constantly reviewed – this include, setup and ongoing costs

In reality, misaligned investments and uneven absorption of technology are contributing to the rise of inefficient business and technology architectures. Enterprises need to be focused on service orientation to meet the future needs and ought to focus on innovation around processes in order to stretch IT capabilities to its limits.
Global growth & innovation shall fuel IT spending. As I wrote here, the consumerization of enterprise technology has the potential to open up new powerful combinations. The possibilities of such fusion of different worlds may open up good chances for disruptive innovation - this provides a platform for such an ideal fertile ground that can lead up to a potential business model innovation – so enterprises need to be well prepared to capitalize on such possibilities. What should the CXO’s do in such contexts: Embrace such technologies faster and in innovative ways align them to their business growth plans. Consumer technologies are not a taboo to be shunned - these need to be constantly assessed for their potential for innovative leverage in growing business.

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