Next Generation Business Management

Advances in BPM, SOA and business modeling will spawn a next generation of business management. As former line of business silos become integrated through shared services, top management can no longer delegate as much responsibility and authority to each line of business. Top management must take responsibility for optimizing from an enterprise perspective and ensuring proper governance of shared capabilities independent of the demands of individual line-of-business interests.

In this section we will examine the organizational implications of the next generation of BPM, SOA and business modeling, discuss the potential for enterprise optimization, explore the opportunities for enterprise agility and consider the advent of the collaborative enterprise.

Matrix Organization

Traditionally, the design of enterprises has been an art guided by experience, iterative improvements, and survival of the fittest. Conventional organization structures are a product of this evolution. Each line of business is typically developed as a separate organization, and business processes are optimized for each line of business. Optimization will depend on the current state of the ecosystem and technology, so the optimum changes over time. The entanglement of business processes and organizations delays needed changes as expensive and disruptive undertakings and results in suboptimal operations. Change is further encumbered by the embedding of business processes in computer applications. In today's rapidly changing world, an enterprise must be able to continuously adapt and optimize its operations.

When a service is shared by multiple lines of business, the lines of business may have competing interests in the nature of the services and will likely, from time to time, be competing for resources of the shared service. If a shared service is created from an existing capability in one line of business and that line of business retains management of the shared capability, then clearly there will be conflicts of interest with regard to the quality and responsiveness of the service for other lines of business. Consequently, it is necessary to remove the shared service from the management of the lines of business to ensure unbiased delivery of services.

Of course, there is a trade-off. Each of the lines of business has less control over the shared service units. Each service unit potentially has multiple consumers to

Fig. 6 The matrix organization

satisfy. The organization that owns a service unit must take responsibility for meeting the needs of all of its consumers. At the same time, economies of scale should enable the shared service unit to achieve better results than capabilities dedicated to each line of business. Each line of business incorporates the services it needs to deliver value to its customers.

As the enterprise becomes more service-oriented, more and more capabilities will be implemented as sharable services. Eventually, much of the work of the enterprise will be done by shared services and each line of business will have a relatively high-level collaboration to engage and orchestrate its use of shared services and delivery its end product. A line of business should only manage directly those capabilities that are clearly unique to its needs.

The result of this evolution is a matrix organization, depicted in Fig. 6. Lines of business manage product development, marketing and delivery, using shared services. Shared services organizations manage the shared services, typically organized around resources, disciplines or business functions.

SOA changes the structure and dynamics of the business processes and organi-

zation. A business process can no longer be designed to define a single stream of activities by different organizations as they contribute value toward an end product. In a SOA, organizations may contribute to many different lines of business at different points in the value creation process. A process for a line of business must engage a variety of services that are shared with other lines of business, and those services may engage other services to support their efforts. Business process improvement must comprehend the various ways services are engaged to produce customer value for all lines of business.

Management of the business will require more collaboration where problems or changes affect multiple lines of business or multiple service units, and it will require corporate leadership to balance the competing interests.

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