A New Model For Global Business: The Runners-UpA New Model For Global Business: The Runners-Up

I think you're on the right track with the Collaborative Business model.

Let's examine how we got here to see where we're going. Most people will agree that we have been a part of an information revolution for a couple of decades.

At the core of collaboration is the sharing of data. The advent of computers, in particular CAD systems, made it easier to create and share information. However, the hard part was finding the information you wished to share. In the case of engineering information, you not only have the document but the version/revision as well. Portability was (and still is) an issue companies are dealing with.

Several document-management companies arose to address these issues. They were working on engineering collaboration in the mid '80s. They worked on "exchange formats"; they talked about doing away with sneaker-net; they created intranets where they would invite company representatives inside their walls to get on a workstation and look at their data; they fought against allowing access to information outside their physical walls.

Since that time, more than 100 document-management companies have been created to manage documents of all kinds, not just engineering information.

All of us creating documents that must be shared have come to realize that the biggest problem we have is managing change control. If you look at all of the processes within a manufacturing company, you will find that the most expensive process is change control. Some of the document-management companies inserted workflow tools into their software so this process could be automated.

Creating an effective change-control process and implementing it is a very difficult task; however, the return on investment is there. This topic deserves its own track.

Still moving toward collaborative business, most of the data available in a company has no context. It's just data. This data is stored in multiple enterprise software packages that cannot talk to each other. A lot of effort is spent turning data into usable information.

Enterprise application integration grew out of the need for information to be exchanged from one enterprise software package to another. You can now create a portal that will display information from multiple sources in a single Web page that makes sense to the user. The idea is to present users with the information they need to do their jobs.

The data warehouse market has been created to place data in a single location that will enable mining and reporting.

In a tight economy like we're facing today, it may not be practical to run a business without business-intelligence software. I can't see how management could have access to the right information to run the company.

The Internet makes it possible to share information outside of your own four walls, and the new security software packages can protect access rights. Web browsers brought us a common language where we can exchange information. We began with HTML, and a lot of subsets have been created, like XML.

Today, we have usable information, we have global access, we have a common language, and we have the ability to build business process. We're finally ready to build the Collaborative Business.

I see the biggest challenges to be: culture change (no one likes change); actually getting everyone at your organization to agree on how CMP functions; getting IT to allow us access to the information in your enterprise software packages; getting access to any real-time information.

That said, I do believe that businesses are definitely headed to the Collaborative Business model as you defined it.

Scott Cleveland

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I'll keep this brief.

Systems, business or otherwise, in which control exceeds the ability to predict produce chaos and failure. Push or pull systems add control far beyond the ability to predict. Exceptions inevitably arise and system feedback produces response with hysteresis. The further the control extends beyond the predictability, horizon the bigger the hysteresis.

It doesn't take a really big extension to produce the equivalent of traffic clumping. You see it on freeways all the time. Traffic doesn't flow smoothly. It comes in bunches. Anytime the road is loaded over 25% or so clumping occurs. The same thing happens in any control system.

Businesses like to have a traffic loading of 100%. Anything else doesn't make sense to the accounting department. That means that with perfect control, 100% loading, and the ability to predict based on good, practical experience, you'll get massive failure. Nicely counterintuitive. Computer-control systems that don't allow local autonomy have massive failure built into them from the get-go. Customer and market desires are a pull system that extend control way, way beyond predictability.

Companies that effectively implement a good Real-Time Business paradigm will find themselves in major trouble and will be unable to figure out why. All fixes within the paradigm will just make the clumping increase. Short-term fixes will produce long-term failures and vice versa.

As control systems becomes more efficient, delays decrease and the entire system starts toppling on the verge. Exceptions must be totally predictable or a major effort goes into putting out brush fires.

The solution is to include the equivalent of pneumatic accumulators. Not increased warehousing or the like, but information accumulators, that is, purposeful delays built into the system that balance out other purposeful delays.

Robert Bromberek

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OK, I'll bite.

"You can call me a knucklehead."

Offer accepted!

Really, this looks like "same stuff, different decade" to me.

1980s: EDI > BPR > LOVE (Processes)

1990s: SCM > ERP > CRM (Products - packaged process)

2000s: GSM > CB > RTB (Services - subscription product)

I don't see you introducing anything new here.

The bottom line is that successful business means understanding the needs of a set of customers and simultaneously working toward and anticipating properly the time when market conditions open up to service those needs.

In many ways, "systems" such as you propose only interfere with this central process because of their very nature. The systems are designed around facts and assumptions about the "known" and are thus incapable of capitalizing on the "unknown" (i.e., opportunity).

The critical fact that none of this high concept takes into account is that there's only one force that drives successful business--individual human motivation and creativity.

Until "systems" people design business software that centers precisely on the individual person, manages and seamlessly integrates the information around him or her, and takes into account that person's role and the policies of the situation, we're just recycling, albeit improving on, the same commercial thesis of supply and demand.

This thesis has been validated against the model of traffic in manufactured commodity goods, but what about the rest of it? A sustainable society is based on a commerce of services and ideas more than strictly traffic in products.

I think the product-centric model has peaked and will break down over time. Witness the decline of the music industry as its artificial "product" model breaks down.

It's inevitable that the volume of commerce in ideas will eventually exceed the volume of commerce in goods, and "systems" based on supply/demand models will then either evolve to transcend traditional economic ideas (witness open source) or will fade into irrelevancy.

It's a "vision thing"!

Tag Carpenter
Plymouth, Mass.

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Very timely. We (a manufacturer of picture frames in Wisconsin) have just recently come to the conclusion that we need to develop an expertise in the area of collaborative business and global-supply management. We have moved within the last year from manufacturing more than 90% of our products to a model that's 50% imported (mostly from China). In addition, the velocity of new-product introduction is ever-increasing, as the retailers duel each other to keep on top of the trends, meaning we need to get more real-time with disseminating and utilizing the information we get from them.

My question is, where do we find the experts, in both process development and systems, to help get us from here to there? We are a $70 million company, so finding people (vendors, conferences, etc.) in our range is proving difficult. Most seem to be focused on much larger companies.

Jeff Foresman
Director of IS
Uniek Inc.
Waunakee, Wis.

Dear Bob,

About three years ago, Hubert Oesterle, the founder of our company (IMG), developed the Business Model of the Information Age, which he described in his book, Business Networking.

The "life cycle" (content, design, sell, produce, support, bill) is replicated on the left side also. The big difference is that your model is application driven, whereas ours is business-process driven. SCM and CRM and ERP are just groups of processes that generally only partially address the collaborative-business environment.

We use this model to assess our customers' business strategy, processes, and systems and to help design the future state and the road map to get there.

A more complete description can be found on our Web site.

Please feel free to call if you have any questions or need clarification.

John O'Neill
Senior VP - Business Unit Manager
CEO
The Information Management Group
IMG Americas Inc.
Kennett Square, Pa.

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Bob,

I'm a senior consultant with CIMdata and have worked with all sizes of industrial organizations throughout North America, Europe, and Asia, helping them better manage their intellectual property. I found your article interesting but missing a very important element of today's and tomorrow's global IT environments, and that is Product Lifecycle Management. At its core, PLM enables technology's support of the collaborative creation, management, dissemination, and use of product definition information, i.e., the enterprise's intellectual property, across the extended enterprise from concept to end of life, integrating people, processes, business systems, and information.

It has been my experience that many companies, especially those that are manufacturing-oriented, must focus on their ability to innovatively create and use their intellectual property. This is because at the core a company is only as good as its intellectual property and its ability to create, capture, and leverage it for competitive advantage.

PLM and its management of an enterprise's product-definition information begins at the earliest point of customer requirements and product concept, and extends until the product is obsolete and field support has ceased. It includes the definition of the complete product, from mechanical and electronic components to software and documentation. Product definition is not just the up-front engineering design. It also includes the entire set of information that defines how the product is designed, manufactured, operated or used, serviced, and then retired and dismantled when it becomes obsolete. This product definition is continually updated throughout the entire life cycle. Product definition is an intellectual property of a business, an intellectual asset that must be created, captured, maintained, and leveraged.

Peter A. Bilello
Senior Consultant
CIMdata Inc.
Ann Arbor, Mich.

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Bob,

This is one of those "Why didn't I think of that?" ideas that, once written down, is quite obvious. I've been dissatisfied with the whole CRM/SCM/ERP scheme for some time, wondering why we continue to look at a very dynamic process from a static perspective.

Your new model adds the idea of dynamic adaptation to the model and allows organizations to plan for change and not be stuck with a single vision for the future. When companies plan for change, they'll be ready for whatever happens, and the company becomes truly customer-driven. If we put the change methodology in place as a constant in the business, then changes and adaptations are automatic and not disruptive. Of course, this requires a whole new way of looking at business processes and a culture change for the business, but what else is new?

Way to go!

Charles Bleak
Director, Institutional Research
Rocky Mountain College of Art & Design
Denver

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You know, I have to speak out regarding my pet peeve with all you business guru's.

What about the employee--what about ERM, employee-resource management? What about a trust environment where employees could be free to speak and question what they need to without fear? What about accelerated learning, which comes about through communicating about various subject matters? What about eliminating the American individual-contributor attitude and bring team in (open communications can cause accelerated learning)? What about the growth of our people within the corporation? Why shouldn't they grow through the environment while producing quality products and services in conjunction with the team? What about open communications where we can short-circuit the stifling of growth? Bring in CRM and BP (business processes) and communicate and cause conversations that can grow great people accidentally through their proximity to where this conversation takes place.

Used to be TGM, ISO, now it CRM. Let's go for employee-resource management.

Another important point is that our employees don't always need to be managed. Instead of management, let's put an emphasis on leadership.

I'd like to see our employees grow and grow. We need great, successful, proud people; excellent corporations; great products; and great leadership, which will result in a great nation.

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Bob:

I eagerly jump to your column when I receive the "This Week" E-mail from information.com. Your writing style is clear and direct, yet entertaining. But, more importantly, the topics are timely and the content is usually insightful. (That was the flattery part of my E-mail.)

Your proposed model is a step in the right direction, but just a baby step. The model is so vague that it's hard to disagree with it. It reads like one of those marketing brochures for a software package that hasn't been designed yet, much less developed. (As a side note, how and when did the software industry transition into this mode of marketing and selling software first and developing later?) You've captured all of the buzzwords: "Real-Time Business," "Collaborative Business," and "Global Supply Management." How can anyone argue with these? To do so would label you as a dinosaur or a pessimist. I certainly don't want to be put into one of those categories, so I like the model. The question is, what do those terms really mean? How do those components interact?

It is a good start, but where's the beef?

Daniel L. Freed
Senior Systems Associate
Enterprise Architecture
Application Engineering Services

Hi, Bob.

I just read your article that appeared in information Between The Lines. Information technology for business has seen many buzzwords over the years, and more appear every day. You may remember that MRP was a generic term for material planning until it was replaced by ERP. Well, now we see more buzzwords like SCM and CRM.

I prefer to think that supply-chain management and customer-relationship management are integral to ERP. After all, most ERP systems contain modules that perform those tasks. Of course, there is software available that does some tasks better than modules of conventional ERP systems. For example, Thru-Put Technologies pioneered the development of TOC-based planning that replaces the MRP, MPS, and CRP modules of conventional ERP systems. Thru-Put Technologies software, as you may know, is now a part of what MAPICS calls its SCM product to differentiate it from its basic software that still uses an MRP module to begin the material planning process.

Your proposed three-part model is interesting, but I think you may be simply adding more buzzwords that we can do without. Global-Supply Management is an interesting term, but many companies are not in global business. As for Real-Time Business, I think that's a given function that will become more and more available.

Let's stick with ERP as a single name for our business model for manufacturers and distributors rather than having a three-part model.

Bob Millard
Bob Millard & Associates

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Hi, Bob.

Due to the complexity of the subject (Gartner describes the enterprise architecture as "a framework of frameworks"), I tried to capture in diagrams not only the model but also the complex interaction between users, processes, components, open standards, and their dynamics ("a picture is worth a thousand words"). I do believe reading the four sections is worth it. I used a methodology based on this white paper in couple of projects for large companies with great results. The model has been developed and refined for a very long period of time and was never published before. What surprises me is the fact that you mentioned a large number of entries in such a short time. I couldn't find a significant number of published articles that addresses this issue.

Two very short notes regarding the material covered:

1) The approach to build an enterprise framework should be from a business-process perspective, not from technology (like ERP, CRM). The main criteria is how difficult is it for IT to enable a process. The result is a six-tier enterprise process model--transactional, business-to-business, functional, cross-functional, adaptive, and knowledge-driven. Each one builds on top of the other. For each tier there are two main components: a foundational technology (for example for the cross-functional we have integration/interoperability; for adaptive we have best practices model-driven) and a foundational process platform (for example, for cross-functional it revolves around content and includes event management, analytics, enterprise content management). (E-business = process + technology).

Another aspect is the maturity of the open standards used in the enterprise. For each tier there is a need to support certain open standards. Because of the tiered model, when a solution is defined, the stage of maturity for the enterprise framework becomes a very important factor. The technology architecture is based on components (interfaces, services).

2) Some interesting short observations regarding two major industry initiatives coming from the model:

• Microsoft is building for the first time a platform to support cross-functional processes in 'Jupiter' (on top of .Net framework). According to the cross-functional platform, there are some missing factors from it's platform:

• IBM's 'On-Demand' initiative fails to capture the complexity of the enterprise processes. It may cover at most with existing technology up to the functional tier. In enterprises where core processes are adaptive (like pharmaceuticals, driven by innovation), the process requires a continuous change to support a business project/program. In this case, the 'on-demand' model requires a different framework than 'autonomic computing' or a similar concept. The solution is to build a layered process-oriented framework.

Also, all outsourced applications require a very clear distinction between a process analyst role (capable of modifying the IT enabled process without the need of understanding the technology) and a system support role.

I hope that these short notes will create a view on how the model can be applied in real-life situations.

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Dear Bob Evans,

I want to respond to your column. Fundamentally I think you are falling for the current fad. Every fad has some value in it, but usually the value is not equally available to all businesses. Collaborative business is the current fad. Today, the new models for businesses are moving away from generic solutions.

Collaborative business, global supply chain, and real-time enterprise may be a useful model today for the retail industry. I'm not sure it would work well in the financial industry, and it isn't the issue in the manufacturing industry. It would be very interesting to be privy to back-office conversations at ERP/CRM software companies and hear how similar or different the various business segments truly are.

In these days of Internet connections, desktop E-mail and networks, new security applications, and tremendous amounts of CPU power and disk storage, I think we're beginning to return to our market segments and the issues that drive each segment. The application of market-independent computer technologies for a generic fad are over (PCs, networks, internet, ERP).

The only issue I can see in common is innovation. And in that realm we will all innovate within our market segment, not across segments. Yes, we will work closer with our vendors, distributors, and customers, so collaboration technologies will have a place, but it cannot be a central place. The central place will be applying computer systems to the specific needs of each industry segment.

The reason that businesses are focusing on what they do best, and the fact that conglomerates did not take over the world, speaks to the current direction of market-segment technologies being the actual future of computing in businesses.

I suspect that future columns will involve these industry-specific issues, from global telecommunications, financial industries, retail companies, and manufacturing industries. I'll look forward to those commentaries.

Tom Pierce
Senior IT Architect/Research Fellow

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First, I'd like to congratulate you for the propose model. I'm working for a fast-growing global organization in the steel industry. We questioned ourselves about how IT could help extract the global leverage created by the group expansion. Our initial investigation on what should be the global model came to a global, centralized ERP implementation. This option was high risk and very difficult to sell to a very decentralized organization. I'm working on a small team whose role is the look into business intelligence and business-performance management for the group.

Collaborative business centric is key for us succeed in our organization, and Real-Time Business makes for staying ahead of the relationship with customers and markets.

Patrice Sarrazin
IT Director
Ispat Sidbec Inc.
Subsidiary of Ispat International N.V.

Just read your Global Business Model article. Sounds like you're proposing moving the customer from the back seat to the front seat if not behind the steering wheel. Sounds good to me, but I don't know enough about the subject to vote one way or the other. I'm wondering something, though.

I can see how Giant Corp. could motivate NotSoBig Corp. to adopt a particular IT toolset to manage their relationship if Giant Corp. is a majority customer of NotSoBig Corp. But does Giant Corp. have much leverage with FairlyBig Corp. if they're only one of a few significant customers of FairlyBig? FairlyBig can't adopt five different process-management tools to satisfy its five biggest customers. Do the tools all interoperate sufficiently that the particular tool becomes less relevant? Sounds rather utopian from my experience. Is Web services going to enable this Shangri La?

Finally, an opinion, please. How's IBM doing on this SCM/ERP/CRM agenda, integrating business processes across and between enterprises and between industries? If not IBM, then who?

Rick Gresham
Portland, Ore.

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Good morning, Bob:

I read with great interest your editorial titled "A New Model For Global Business," which appeared in the Jan. 13 edition of information.

I applaud your call for a scrapping of the traditional cornerstones on which enterprises have constructed their information-technology architectures and infrastructures.

After all, what business segment, from automotive assembly to the production of zinc, has not been affected by the disruptive forces of unanticipated and accelerating change, necessitating real-time adaptation to, and continuous revision of, enterprise strategies, products, services, channels, markets, et al? Such competitive dynamics demand the commensurate technological ability to dynamically identify, connect, disconnect, and reconnect, in ever-changing relationships, both customer and supplier links.

I'm also in agreement that the three key elements that you have proposed as the cornerstones of a new Global Business Model, namely Collaborative Business, Global Supply Management, and Real-Time Business, make good sense.

I would, however, while maintaining these three elements, suggest a slightly different architectural arrangement.

The new model would better serve the global business community if the Collaborative Business component (containing the enterprise's network of technologies and processes) were moved either to the left or right of center and its position replaced by the Real-Time Business element. While one can hardly argue that, increasingly, information technology (as embodied in the Collaborative Business component) both supports and informs business plans and operations, nonetheless, technology investments that are not predicated upon business strategy, business alignment, and business objectives (as encompassed by the Real-Time Business component) fail to deliver technology's ultimate objective, which is not adaptability to change, but rather economic returns in terms of sustained profitability and market-share growth.

One other caveat: In place of a business mentality that creates "business processes and strategies predicated on ensuring that your company moves at the speed of its customers and markets," today's (and tomorrow's) truly competitive global business may have to operate at speeds that are faster than its customers and markets. In the reactive mode, one has to outstrip market or customer speed simply to catch up. In the proactive role, an enterprise must anticipate and lead its customers, markets, etc., by being faster than its associated business ecology.

This acceleration in competitive business speed, coupled with a commensurate demand for enterprise agility, both fully supports and is supported by the New Model for Global Business that you have so adroitly defined.

John Canter
President
AFTAR Consulting

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Bob,

It has recently become very clear that today's highly dynamic, technology-driven information systems leave most of us frustrated and wondering when something will finally take root and give us something more enduring. The alphabet soup of ERP, SCM, CRM, and the vendor-specific variants has created a world of confusion and the hope that there should be a better way. I've worked in the IT world for about 20 years in one capacity or another and have been amazed that the technologists have managed to appear as if they continue to steer the ship. I've studied the evolution of most successful information infrastructure, the television broadcasting system, and see solutions that the IT industry has ignored but should not.

The television industry is very technology dependent, but the home viewer is rather isolated from that technology. Today's IT systems push the technology right in our faces either by forcing us to learn counterintuitive menu structures or use poorly designed user interfaces. The technology requires specialists to provide the care and feeding of the system, and this support is very vendor-dependent. One size does not fit all.

The television broadcasting system management is based on operational metrics, not continuously changing technology. To participate in the business of broadcasting, a broadcaster needs to use technology efficiently to reduce costs, improve programming flexibility, but most importantly, effectively capture a viewer market share that can sustain the broadcaster's existence. The key is to be doing effective things before spending time and effort trying to be efficient. How effective are today's IT systems at achieving the important things that IT systems do or should do? Answering this question requires redefining the framework and defining a more-enduring business framework within which technology can evolve in a more predictable way.

Any enduring business framework-based IT infrastructure requires universal, nonproprietary ways to plug components together, mix and match what's needed for your business, and ways to measure the actual use of the IT system, much like the TV rating systems. Transaction traffic to interface systems, frequency of application use, rate of user activity, and system availability all contribute to the realization of the benefits that someone had to defend to justify the IT project in the first place.

I would rather have a TV show with high viewership (effective) than a TV show produced under budget and on schedule (efficient). I'd rather have an IT system that people use in the course of their daily activities, a system with very telling metrics about the good, bad, and ugly of my IT system. After all, I can't fix what I can't measure. Sometimes we fail to collect the meaningful metrics because we don't want to be responsible for fixing the bad news. Bad metrics give IT managers deniability and nonaccountability. The TV industry knows the metrics lessons well. Good metrics should be painful for someone. The ITers who steer the ship would rather not be accountable for fixing things that are difficult to fix. I'd rather have bottlenecks, interface delays, and applications crashing because of high use than a system that generates few complaints for lack of use. Think about it!

Follow-on articles could ask how could such an enduring business framework be constructed using emerging XML protocols, registries, and layers to isolate the stuff that changes from the stuff that stays more constant.

Joseph J. Rogowski
Former IT Strategic Planner
Barnegat, N..J

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Regarding "A New Model for Global Business":

Having gone from the Fortune 500 world to running my own business and then to a nonprofit, I have come across a lot of alphabet soup. But I confess that I find myself wondering if these acronyms serve any purpose any longer.

The transition time from one domain to the next is shortening. During the Internet bubble, it seemed that new acronyms would come up at lunch and be published in marketing literature by the next day.

But it takes time for industry to grok a new business methodology. If these new systems were implemented willy-nilly it would only contribute to the churn of installations, realizing little business value other than a talking point for shareholder conferences.

This is the IT equivalent of the management fad of the week. It's a drain on resources, all the way from the conceptual to the implementation.

Contributing real value to the business process is much like building a fire. The conditions do not naturally come together to make it happen. Everything needs to be put in place, and then a spark is nurtured and fed appropriate fuel, until it grows into something that is sustainable--creating a benefit for the business.

It's actually a complex process, and no acronym is going to make the critical process of evaluating the options and implementing a system easier.

Rich Snow
Business Network Consulting