Next Generation Enterprise Transformation – Why it is necessary

Initially I had wanted my previous post to cover the What and the Why of Next Generation Enterprises, but I found that the post was getting too heavy and this topic is too rich, so I decided to break it up into two posts. Plus, I’ve found that like powerpoint slides, when reading blogs it is easier to digest and engage on shorter posts focused on a single topic than to read long, albeit detailed, posts covering multiple topics. I’m curious to get feedback on this general blogging point.

I left off on my last post, The Next Generation Enterprise – What is it?” indicating that we’re on the cusp of a major transformational shift in business which will play-out over the course of the next 20+ years and leave many enterprises stranded or out-of-business in its wake. This shift is why enterprises need to begin NGE transformation today. Let’s explore the reasons behind this shift.

The most recent significant change in business models was dubbed Re-Engineering. It encompassed shifting from a siloed functional organization structure to a process-oriented approach. Alongside that shift, was a technology transformation from centralized computing to client/server computing, putting processing power in the hands of knowledge workers on the desktop through PCs. With that shift, we underwent massive re-engineering of business processes, and automated everything “inside the office”, resulting in large operational efficiency improvements. The back-office was automated by ERP, front-office was automated by CRM, supply chain was automated by SCM, and so on. The focus was inside the four walls of the enterprise, and the underlying enabler was automation.

Our point of view is that the NGE transformation is about “getting out of the office”, with extreme collaboration as pervasive underlying enabler. Here are the parallels:

Re-engineering = Inside the Office – Powered by Automation
NGE = Outside the Office – Powered by Extreme Collaboration

What are the megatrends that are driving us in this direction? Here are a few:

  • Talent Crunch: Boomers are aging and starting to head into retirement or second careers at the same time that the Millennials are emerging with new viewpoints and values on work, life, and collaboration, along with massive adoption of social media – how we work is about to change through this shift alone; key skills are also in short supply worldwide.
  • Customer Power Shift: Thanks to the openness of the Web, customers and consumers are now empowered with more information than ever before, more choice, lower switching costs, and a platform to disrupt corporate brands directly from their desktop or mobile phone by connecting to the world virally through the Web. Enterprise value is now highly correlated with customer experience more than ever before.
  • Globalization: Being a multi-national is no longer sufficient. An enterprise’s operations must be global in nature, taking advantage of comparative advantage of local markets and economies across the globe to bring products and services to markets worldwide. Being truly global will be the only way to compete, placing a higher premium on 24/7 cross cultural collaboration. Regional headquarters will now be replaced with capability centers located across the globe where it makes most overall sense.
  • Web 2.0: The nature of applications and application development is changing dramatically with Web 2.0 and Web Services. Now, rich applications can be built in weeks, rather than months or years, and deployed to users without installing software. These new applications can talk with and include other applications or widgets which provide functionality from complimentary applications or marketplaces from across the Web. Within weeks, a new application, comprised of functionality from other applications and marketplaces and services from across the web can be mashed up and deployed, powering a global business process connected with core partners and service providers for an enterprise. Having your current legacy enterprise applications from the past 50 years on a Services Oriented Architecture will be a necessary requirement to best leverage the coming enterprise applications powered by Web 2.0. While wikis and blogs are included, this concept carries far beyond what we’ve seen to-date in Enterprise 2.0.

Any one of the above listed megatrends would constitute a significant disruption in business as we know it today and force a Newtonian response. The combination is powerful and highly disruptive … carrying the Newtonian metaphor forward, the response must be equal or greater in power – thus the need for NGE transformation.

What are your thoughts on the megatrends? Do you see NGE, as defined in the prior post, as the response to these megatrends, and why or why not? Is the response to the megatrends truly contain collaboration and On Demand at its core?

In my next post on the NGE thread, I would like to outline and build upon the fundamental capabilities that need to be part of a truly effective NGE.

^ brian