The Great Business Divide

Michael Vizard

Much is made over the historic divide between IT and the business, but the great divide that nobody ever seems to want to acknowledge is the divisions within the business that conspire to make a holistic IT approach to the business almost impossible.

Everybody in the business is quick to patronize IT for not understanding the needs of the business, but one thing that senior IT people know is that the various elements of the business are not always on the same page. For example, the sales leadership insists on keeping its own books, which more often than not are not showing the same numbers that the finance department sees in its systems. And just to make matters interesting, the manufacturing division is usually working with information that is completely different from what either sales or finance has. Unfortunately, this doesn't seem to stop anybody from making critical business decisions based on incomplete information.

Some companies have made a lot of progress by forcing their organizations toward adopting a "single truth" about any given process. But the vast majority of companies are still warring fiefdoms where, because information is power, there's not a whole lot of maturity concerning the creation of a holistic approach to managing the business. No amount of IT is ever going to cure a company that is fundamentally broken in terms of its core processes.

But as IT departments increasingly start to focus on developing business process management (BPM) systems that track and automate a process from end-to-end, these fault lines in the business are going to be, first, increasingly exposed and then, second, erased. Instead of being mere providers of applications that support a specific activity, the IT organization is going to evolve into the foundation for operations. In that context, there is a lot of debate about whether the CIO and the IT department should report to the chief financial officer, or whether the function should become a greater part of the chief operating officer's (COO) domain. There are even those that say the modern CIO is going to become the COO.

Mostly in response to the recession, business executives are bringing a lot of pressure to bear on the IT department in the way of more demand for real-time systems, greater analytics and BPM. But if IT departments get rolling down this path, a lot of business executives are going to discover that their fiefdoms really are just a small part of someone else's much larger kingdom.

None of this is lost on IBM, which just rolled out an enhanced BPM platform, or any other major IT vendor, ranging from tool vendors such as Microsoft, to application vendors such as SAP and Oracle, and just about everybody else in between. They all know that whoever controls BPM for the customer effectively controls not only the entire IT process, but the entire business as well. Also, IT services companies such as CSC are partnering to bring BPM to the cloud in competition with IBM..

As the senior leadership of the company comes to understand the power of BPM, they will start to see IT as a tool for bringing unruly subordinates into line, mostly in the name of better business governance. There is a Chinese proverb about the power of local regents compared to the central government that reminds people that "the mountains are high and the emperor is very far away." As IT continues to evolve toward BPM, the mountains are not nearly as high as they once were, and the emperor is much closer than you think.

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Oct 8, 2010 5:10 AM Kenneth Hansen Kenneth Hansen  says:

Beautiful analogy but Sales and Manufacturing do not have the independent revenues enjoyed by fiefdoms and are subject to the same CFO. But Fiefdoms is a good analogy for conglomerates and organisations with fragmented budgets. The central CIO and board level CFO certainly need to hammer out an agreement on how much time and resource will be spent on each division or business unit. Otherwise IT will be thought to fail everyone.


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