Three Critical Operating Imperatives to Mitigate Increasing Volatility

This summer, Patrick Burnson, the Executive Editor of the Supply Chain Management Review, published a great piece on Operating Imperatives to Mitigate an Increasingly Volatile 2012 that summarized the findings of a recent Hackett Group piece on Six Imperatives to Respond to Increasing Economic Uncertainty.

In brief, the six imperatives were:

  • Pursue World-Class Cost Levels
    Typical companies can realize average savings of 27 percent on the delivery of their main business services functions by achieving world-class performance levels.
  • Reduce Complexity
    In finance, for example, reducing application architecture and data complexity can enable process cost reductions of nearly 50 percent.
  • Redesign Process, Governance, and Organization Models
    Adopt business process reengineering focused on an end-to-end approach for both transactional and knowledge-centric process.
  • Move from Functional Centralization to Global Business Services (GBS)
    Oranizations that migrate to a GBS model typically go through three stages of complexity, and most are still moving from stage 1 to stage 2, which is the basis for our last post where we asked how advanced your shared services really are.
  • Build a Common Integrated Technology and Information Architecture
    Hackett Group’s research confirms that the IT strategy of technology architecture rationalization is a top priority.
  • Upgrade Talent to Support Today’s New Realities

    • Talent is the most critical competitive differentiator today.

But as far as SI is concerned, if you really want to mitigate volatility, the three you need to focus on, in order, are:

  1. Upgrade Talent
  2. Reduce Complexity
  3. Implement Better Technology

Because if you do this, the other three factors will fall into place. Talent realizes the best way to get results is to work efficiently and effectively and will start by trying to reduce unnecessary process complexity. If you let them do this, they will be able to redesign process, governance, and organization models to better fit your organization. This will allow them to not only impelemtn better technology, but do so in an integrated fashion. Then they will be able to get consolidate views of data that will translate into decision support information that will allow them pursue world-class cost levels. In this effort, they will determine if the best results will be obtained by keeping the function in-house or moving to a GBS model. And then the new realities will be supported.

It’s ultimately all about talent, technology, and transition — and talent has to come first.