Uniform processes for the business administration domain supported by a ‘fit for future’ IT landscape is an indispensable link in the agility of an organization
‘First organise, then automate’ is the common saying. In practice, these are intertwined, resulting in standardising and thus adjusting processes in combination with – and often in parallel to – setting up your IT landscape based on ‘best practices’. In other words, ‘stick to the standard’ when configuring your IT systems. The supporting business activities, such as finance, procurement and HR or, in short, the business domain, are ideally suited to properly and uniformly set up the automated support based on standard ‘ways of working’. Organizing systems according to unambiguous working methods, which are often inherent to processes within these functional domains. For IT systems, this generally leads to a relatively quick implementation and a lower management burden, and thus to a better TCO. In terms of attention – and therefore capacity and budgets – the focus can be placed on supporting the primary activities, often aimed at the customer or end user. In the context of multimodality, Anderson MacGyver refers to this as ‘commoditizing’.
Uniform processes go hand in hand with a ‘best practice’ configuration of the IT landscape
Commoditizing, especially in the business domain, is part of Anderson MacGyver’s MultiModality analysis, and helps to realize the aforementioned ‘fit for future’ configured technology. As mentioned, commoditizing primarily concerns supporting business activities such as Finance, HR and Procurement. In this new dynamic, a ‘fit for future’ design of the IT landscape is crucial: a stable basis that is also flexible enough to be able to innovate in a customer-oriented way.
The available technology to support these uniformly arranged processes are generally called business solutions. In other words, integrated platforms such as ERP systems or best-of-breed solutions for, for example, debtor management, invoice scanning and matching or advanced procurement solutions. In principle these business solutions offer in the standard perfectly suitable functionality. Processes should be adapted to the standard in the business solution instead of customizing the systems to those processes.
In short, unlike what is often thought, the technology is not the starting point for such a transition. On the contrary, you can only think about appropriate IT from the perspective of coherence when business activities, operations and organization have been assessed. Ultimately, commoditizing comes down to making conscious choices aimed at uniforming processes, and thereby optimally organizing the IT landscape based on the ‘stick to the standard’ principle. In that sense, commoditizing supporting activities is an important step towards being future proof.
Three practical examples: commoditizing in the installation industry, the logistics and the education sector
Three examples from our consultancy practice illustrate what value commoditizing can bring to an organisation. Based on assignments for clients from three different sectors that have started or have carried out a landscape renewal based on the principle: uniforming back-office processes, and thereby staying close to the standard in terms of designing and configuring the IT systems.
- The installation industry is characterised by growth, some of which through mergers and acquisitions. This often leads to new forms of service provision. For the sake of efficiency (operational excellence), these dynamics require centralization of the supporting activities in particular. This also requires a certain degree of standardization in the primary processes in the form of standard work packages, and the selection and design of ‘fit for purpose’ IT solutions that can optimally support these processes without much customization. The large concerns that arise from these merger and acquisitions create economies of scale by centrally organizing and arranging processes for procurement, HR and finance, such as financial administration, debtors and creditors, and then support these functional domains in the solutions in an unambiguous way.
- Logistics services face a shift in primary activities due to increasing online shopping and the associated home delivery. Various value chains are served here: BtB, BtC and BtBtC. With a focus on customer intimacy, this results in separate business units per customer group, which must be efficiently supported from centrally, uniformly designed processes and systems for domains such as HR, finance and procurement.
- In the education sector, new parties can offer modern, competitive educational concepts much faster through digital platforms. The answer of the often strongly decentralized universities and colleges is to unambiguously adjust processes and systems for administrative business operations in order to be both distinctive and efficient. Commoditizing based on uniform solutions and processes where possible, and customization aimed at the education market where necessary.
How to get started on commoditizing your business administration processes?
IT systems are not the starting point for a commoditizing transition. On the contrary, you can only consider appropriate IT from a cohesive perspective when business activities, operations and organization have been thoroughly assessed.
Differentiation is particularly important when standardizing the business administration domain. By assuming that all activities are generic (‘green’) and at the same time paying attention to activities that must be specific to the market standard (‘orange’), you gain benefits where possible and at the same time stay as close as possible in terms of technology the standard.
Optimally supporting activities with IT requires a fit for future IT landscape. Such a landscape is crucial in this new dynamic. Not every business activity requires a similar solution. The IT that supports the primary processes is generally not the same IT that is used for the secondary processes, such as HR, financial administration and procurement. Anderson MacGyver helps to make choices aimed at commoditizing business operations and thus the supporting IT systems: from specific stand-alone solutions to uniformity.
If you want to go for ‘commoditizing’, proceed as follows
- Map your activities, the Operating Model Canvas is an excellent tool for this
- Distinguish where IT makes the difference and where IT can be organized efficiently and in accordance with the standard
- Ensure that the IT specificity in the activities is sufficiently supported where necessary, but not ruthlessly!
- Involve the user organization and make agreements about ‘green’, primarily about uniformity in processes and therefore also about the underlying IT to be set up
- Take as a starting point when setting up the IT that processes are adapted and standardized based on how the solution supports this in the standard, adapting the technology to the way of working is a last resort
Multimodality and ‘commoditizing’
MultiModality is Anderson MacGyver’s basis for organizing data and technology from a value perspective and provides direction for the decisions to be made for this purpose. Classifying business activities according to their dynamics and differentiation provides frameworks for determining how these activities can be organized optimally: how should processes run, how should governance be set up, what are the sourcing options, and what technology fits best. The classification leads to a classification in four categories indicated by colors: purple, blue, orange and green. An activity with low dynamics and little differentiation (generic) is given the classification green. Commoditizing in the methodology of Anderson MacGyver is organizing and supporting with technology the business activity towards its low dynamics and differentiation.