What’s the most important role of IT in an organization?
Is it “keeping the lights on” or sparking innovation?
Apparently, it’s a tossup. According to CIO.com’s 2017 State of the CIO survey, 72 percent of IT executives say balancing innovation and operational excellence is a constant challenge — the classic bimodal dilemma.
The reality is business innovation can’t succeed unless you optimize your operations, said Jeff Weber, managing director in the IT consulting practice at global consulting firm Protiviti.
“The CIO has to be able to build an innovative culture and a culture of rapid transformation,” he said.
“Accuracy and speed of innovation is going to be vital, and the need for real-time will be more of an imperative than it’s already been.”
Here are some things IT executives should consider when thinking about how to optimize their operations using real-time analytics.
3 Essentials for Operational Excellence
1. Understand Your Business Processes
Although this might seem obvious, one of the most important steps you can take when considering optimizing your operations is to understand the processes you already have in place, said Carl Lehmann, principal analyst for enterprise architecture, integration and process management at New York City-based 451 Research.
“If you’re trying to enable any kind of real-time decision making, you need to have a thorough understanding of all your processes,” he said.
To do this, you should take an inventory and document those processes, answering questions like:
- What is the process?
- Who owns it?
- How many people use it?
- How fast does it operate?
He adds that this doesn’t mean documenting a workflow.
“Inventory your processes, evaluate them for quality of execution, efficiency and impact on KPIs, and identify what goes wrong in those processes,” he recommended.
2. Align With the Business
Weber noted that most companies have three kinds of operations:
- IT operations: How IT services are delivered to the business (developing and deploying software, managing assets and events)
- Back-office operations: Deployed by IT (supply chains, ERP)
- Customer-facing operations: How a company interacts with its customers
Even though IT is involved in all of these, customer-facing operations will be the most critical in aligning IT with the business and providing the most value, says Weber. However, in order for customer-facing operations to succeed, supporting operations need to perform at their highest level.
“In the process of transforming how to interact with a customer by providing a benefit platform, for example, we’re also envisioning optimization of operations — all of the backend processes that have to go with it,” he said. “If you can’t account for the transaction at the same speed as you serve your customers, then there is a problem.”
He added that CIOs will also need to find ways to ensure that legacy systems don’t hamper progress.
“CIOs have to transform functional IT to support business transformation,” said Weber. “Those who don’t figure out how to limit the impact of legacy and time won’t be around for very long.”
3. Define Real Time
When it comes to KPIs that need to be measured in real time, defining what real time means is essential — not only so that an organization can properly track against metrics, but also to determine whether or not the decisions should be automated, said Lehmann.
“Real-time needs to be defined,” he said. “Is it millisecond, sub-second, 5 seconds, 5 minutes? If real-time means sub-second, then the decision must be automated.”
Automation means having a set of control processes in place, says Lehmann: one set that responds to known events and takes a prescribed action, and another set to respond to unknown events.
Lehmann noted that unknown events should kick off a series of alerts triggering empowered stakeholders to act. This requires collaborative technology that enables people to interpret, negotiate a response and execute. Finally, the results should go into a feedback loop to help improve upon speed and quality of response.
Weber echoed the importance of continuous improvement, adding that businesses need to make sure they don’t sacrifice performance for speed.
“Changing to make a process look faster and failing is a problem, but failing fast and continuously improving on operations — that is where the onus is.”