Unlock business performance with automation

Enterprise automation and IT can be a catalyst for business performance

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By  Hemanshu Joshi Published  September 20, 2011

With Standard and Poor's (S&P) downgrading the credit rating of the USA, and looming trouble in Europe, enterprises are skeptical as to which way the financial tornado will turn in the next couple of days and what level of destruction it may cause. Their financial spending is already under the microscope. It won't be surprising to see if this leads to the next set of downsizing of the workforce and then an immediate freeze on any kind of major expense. Usually, if not always, the axe falls first on the IT budget. The reason for this step-motherly behavior is very simple. IT spending is still considered to be an overhead in many enterprises. I hope by the end of this article I can demystify this notion.

There was a time when if your physician suspected diabetes, you would be asked to undergo a blood test. The blood test required a sequence of steps starting from blood collection at a lab by a technician to report approval from a pathologist before it would be interpreted by your physician, taking up to a day.

Then came the self test kit, which greatly reduced if not totally eliminated the need for labs and resources for at least monitoring of blood sugar. Be it doctor or the patient, self test kits sell like hot cakes because the consumers see value for the money spent. This is a fine example of value creation, Return on Investment (ROI), elimination of redundancy and Business Process Optimization.

At enterprise level, automation plays an extremely important role in turning around over-all business performance by reducing costs, eliminating redundancies and effective decision making. Automation is the key for progressive enterprises to beat the competition and achieve growth. When it comes to enterprise automation, enterprises are reluctant to go ahead because of short term value created by available substitutes. Such enterprises fear change, lack strategic focus and rely on short term operational goals. Not surprisingly, such enterprises are out-smarted by progressive enterprises in the long run.

Automation goes hand in hand with Business Process Management. Unless the business processes are streamlined, automation is quite likely to go haywire. This is what happens in most of the cases and this is why enterprises consider automation to be an overhead. For such enterprises it is a tool to replace existing business or manual processes. Although automation cannot substitute business process management, it can however, help optimize existing business processes.

Automation in an enterprise environment can be categorized based on its maturity into three levels.

At the first level, automation is confined to setting up of basic infrastructure. Enterprises claim to be automated by installing desktops, laptops, printers and internet access. In such enterprises, they use Microsoft Word to type their letters and memos,  Excel is used for recording accounting information, with print outs  finally filed in box files.  Some of these establishments have basic accounting software, because these enterprises believe finance is the most important aspect of their business and the rest can be managed manually.

These manual processes are determined by the capacity and capability of individuals performing them, or by tradition set by a wise man, who would have long left the enterprise. Documentation of such processes is the last thing anyone would fathom. There may be no proven logic or reason behind the process in the current business conditions even if these processes are obstructing the normal course of business. The existence of God becomes a reality in these kinds of enterprises, and the  completion of every project or assignment is a miracle. I have seen many IT companies implementing complex solutions for many other enterprises falling into this category.

The second level of automation is relatively more organized. The size of these enterprises is big owing to their organizational capabilities and well coordinated activities with appropriate policies and procedures in place. At this level, automation is achieved by ERP or a custom solution implementation for managing business functions such as accounts, inventory, HR etc. Usually these ERP solutions merely replicate the manual process where servers hold data in a common repository and retrieve data in the form of reports. However, these enterprises fall short of the true characteristic of automation as they don't enable these enterprises to perform better.

The enterprises at these two levels of automation are the first to freeze all the automation activities when the business crisis approaches. They consider automation a necessary evil.

The third level of automation maturity is where automation acts as a catalyst to business performance. These are the most successful enterprises, where automation complements business. Their strategic approach ensures systematic automation towards achieving long term business goals. As a result, an enterprise's strategists can justify ROI for the automation and it is not considered as an overhead. The automation here doesn't replicate the manual process, but the processes are optimized to reduce the redundancies, number of steps, resources or material to achieve the desired output. As a result, the automation brings in efficiency and performance improvement across the enterprise.

A truly automated enterprise reflects the following characteristics -

1. Enterprise hierarchy is clearly defined with a clear definition of roles and responsibilities of each resource (man or machine) being understood at all levels

2. Business processes are well documented, followed and periodically optimized across the enterprise

3. IT based automation is a means of creating data repository, data visibility and data availability across length and breadth of enterprise, where data is readily available in all technology platforms in order to make instant decisions

4. Activities within the enterprise and outside are synchronized together with processes, material and resources optimized to eliminate all kind of redundancies

It has to be remembered that there is no such thing as Perfect Automation considering the speed in which the technology is evolving. Also, there is no single formula to achieve perfect automation nor is there a magic wand to achieve it without the pain of change management. The duration and effort depends entirely on the line of business, size, manpower etc., which has to be followed by a periodic process of evaluation and evolution as new technological enhancements take place. However, the points below will help any enterprise to kick start transformation towards growth:

1. First things first, enterprises interested in a turnaround should start with defining clear enterprise structure. Identify various roles and responsibilities arising out of business needs.  This will help in identifying roles and actions to be performed in order to achieve business goals.

2. This has to be followed by identification of resources (man or machine) currently involved in performing those roles and activities across all departments, sections and lines of business. This would give you As Is status of current business processes.

3. You would then progress to the analysis part of this exercise by asking questions - ‘What should I do to reduce total time taken to perform an action?' ‘How can I reduce number of resources or material that is needed to achieve to perform an action?'

You might arrive at multiple options. You must choose the most optimum of the options which would benefit you to meet your strategic goals in the long run.

This exercise will help you evaluate your automation requirements. Embarking on automation without due diligence can be catastrophic. There has to be chronological order of business process assessment to arrive at your automation needs. You can go for all round automation or progressive automation as per your business need or ROI you see from the automation. It is important not to forget the fact that technology is evolving very fast making current best technology obsolete within the next two to three years.

The business arena was never as competitive as it is today. If you ask for one product you will get multiple similar, substitutes or better products. If you seek a service in the market, you will get service with multitude of value additions. Therefore, one can maintain their competitiveness by leveraging on lower cost, best quality, high availability, collaboration and quick decision making, all together. All these factors can only be achieved when automation enabled optimized business processes support enterprises. This is where ROI for automation lies.

Hemanshu Joshi is an IT professional with 11 years of experience in Organizational Strategy, Presales, Project Management , development and implementation of Information Technology software solutions and consultancy projects. He blogs at http://hemanshujoshi.blogspot.com

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