Sunday, January 16, 2011

Future Enterprise- The Future of Work

Director of the Future Enterprise Research Centre-David Hunter Tow, forecasts that within the next two decades, the future architecture guiding the enterprise will dramatically alter traditional work patterns.

By 2020 the traditional notion of an individual's job and work-related role will be recognised as outdated, increasingly mismatched with the fluid requirements of the 21st century. Future productivity outputs will be measured in terms of flexible value-added criteria and contribution to the goals of the organisation linked to social utility, rather than in terms of hours worked on a specific project.

The traditional office will also become redundant as the wireless web expands, allowing information workers- fifty percent of the workforce, to operate from home or local social hubs such as coffee bars, as already occurring- (Ref Future Cities). All such centres will be linked seamlessly via the Internet's multimedia Wireless Grid/Mesh Utility supporting Web and Cloud Infrastructure. This will also enable enormous time and energy savings for workers and the planet in general, having a beneficial impact on the quality of life for millions.

Most tasks, even in the traditional labour-intensive sectors of health, construction, manufacturing and transport will be largely automated or robot-assisted. Projects will be managed and resourced on a real-time basis within the Web's global knowledge network- (Ref Future Web).

Boundaries will then blur between traditional full-time, part-time, contract and volunteering modes of employment as well as between worker and management roles. Most workers will share time between their own creative projects and enterprise applications as already happening, with creativity and innovation recognised as critical work competitive inputs.

Tomorrow's enterprise will be most effectively represented as a decision network model with decisions as nodes and information flows linking the relationships between them. This model offers an extremely powerful mechanism for understanding and optimising the enterprise of the 21st century- extending far beyond current non-adaptive process models.

The enterprise ecosystem’s organisational boundaries and work practices will therefore become increasingly fluid and porous, in synch with the new adaptive network flow architectures. Individuals will move freely between projects, career paths and virtual organisations within the ecosystem; adding value to each enterprise and in turn continuously acquiring new skills, linked to ongoing advanced learning programs. Work patterns will therefore gradually adapt to a model of seamless knowledge flows, generated both by human and web-based algorithms.

The semantic distinctions between workers and management will also disappear with robots performing a large proportion of operational roles without human supervision. The role of unions in the workplace will then have morphed to providing largely advisory, research and cooperative support services.

Concurrently with the above scenarios will be a recognition that the philosophy and architecture of the enterprise of the future will require a major focus on surviving in an increasingly complex environment; requiring the capacity to optimise operations and strategies in shorter and shorter timeframes within a fast changing global cultural, economic, physical and technological environment.

To achieve this goal, artificial and human intelligence will need to merge at both the strategic and operational levels, driven by a need to implement decision-making autonomously with minimal human intervention, as is already occurring in advanced communication and control systems. The genesis of this trend is also becoming apparent in current service-oriented applications including- procurement and supply, resource and financial management and health and lifestyle services, where capitalising on short-term windows of opportunity is paramount.


By 2040, work will relate primarily to the generation of new knowledge and services, by combining human, robot and web intelligence to maximum potential. Most processes will be fully automated both at the operational and strategic level within the context of the Intelligent enterprise. New products and services will be generated from concept to design to production within months, days or hours. Individual creativity and skills will remain in high demand but will increasingly be amplified and modulated within the context of the Web's cooperative decision-making and intelligence capacity.

The survival and success of the enterprise will therefore be contingent on its embedding within the broader cultural environment and norms of the larger community. Business will become an integral component of community culture, with its governance reflecting ethical and sustainable global standards. There will also emerge much greater cooperation rather than competition between enterprises, as globalisation and global warming become the dominant socio-economic drivers.
The days of separating commercial decisions from their social impact will be over.

By 2050, the larger enterprise will evolve as a semi self-organising entity within a larger ecosystem, operating in largely autonomous mode. New knowledge will constantly add value to its evolution, generated through organisational decision processes and knowledge network flows.

The Future Enterprise ecosystem will therefore morph, merge and dissemble in a seamless and endless cycle, generating new processes, knowledge and services to support the global community.

Welcome to a brave new world.

Future Enterprise- The Smart Business case

The Director of the Future Enterprise Research Centre- David Hunter Tow, argues the case for a complete reappraisal of the role of the Business Case and the validity of its current methodology.

There is an endemic structural weakness in today’s business case methodology, which is particularly problematic for Information Technology projects. It arises primarily because of the inability of most enterprises to adequately quantify the benefits relating to investment in new services and technologies.

Since the seventies, business and IT management have been stuck in a mindset which hasn’t changed from the time it became obvious that computer hardware and software was continuing to soak up large amounts of an organization’s capital expenditure budget.

And because of the increasing investment required to computerize the operations of a an organization, it occurred to management that it would be a good idea to offer a business case to justify its introduction. From that point to the present day, the mythology relating to measuring the indirect benefits of this expenditure has grown.
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At the beginning most justification was comparatively easy. The case for computerizing the early banking, insurance, manufacturing and retail industries could be easily made, by comparing FTE cost savings from redundant staff with the cost of the computer hardware and software and the much smaller number of operations personnel required.

But then came the next generation of computers- client/server distributed systems, networked technologies, real-time operating environments and software that hid the real cost of regular maintenance, customization and upgrades. So it got harder to justify such systems on a cost savings basis alone, once the original legacy back-office savings had been made.

But everyone knew there were major additional benefits associated with up-to-date information and reporting, faster turnaround of accounts, better customer service and improved management decision-making. And from a government perspective, there would be public benefits as well as the quality of service delivery improved.

But how to translate these other ‘soft’, ‘indirect’, ‘intangible’ benefits, which were obvious to everyone, but apparently fiendishly difficult to pin down, into hard cold cash; that could realistically be factored into the ROI.

And then there emerged a rationalization to solve the problem- a dichotomy. The direct ‘tangible benefits’- those offering obvious direct cost savings, like reducing staff or inventory, were the ones that traditional bookkeepers could quantify and management felt comfortable with.
The indirect ‘intangible benefits’- the fuzzy ones, which of course by now were much bigger than the ‘direct benefits’ and could actually justify a major investment, would remain as best estimates. No-one in their right mind would actually attempt to calculate the value derived from improvements in strategic decision-making or customer satisfaction- and then put their signature to it- would they?..

So gradually the mythology of the intangible, incalculable benefit became embedded in the enterprise psyche.

Managers loved it because they could promote their favorite projects without having to seriously justify them. CIOs loved it because any problems relating to the failure of an application to deliver its promised benefits couldn’t be sheeted home to them. Suppliers loved it because that could maximize their sales of the next big thing; sometimes even writing the business case. And if anyone was silly enough to question their integrity, they could check with the other industry lemmings who had invested in the same magic bullet based on a watertight business case and who would never admit to a competitor they had made a monumental investment error.

And lastly, the high priced guru consultancy firms loved it because it was easy to charge an astronomical fee for a complex business case without actually proving the real payoff; and they couldn’t be blamed if the investment turned out to be a dud, because everyone including the CEO had signed off on it. And everyone knew it was impossible to quantify intangibles anyway.

And so the myth of intangible benefits grew. And as more and more technological advances emerged- the internet, software as a service, content integration, virtualization etc, the percentage of hard tangible benefits that could be offset against costs shrank to 20%, then 10%, then 5%, then zero and then wandered off into negative territory.
And not only that, the business case now had to include sustainability and green benefits, many of which also were ‘intangible’.

So lots of sophisticated ‘guestimates’ and fudging with a nod and a wink became the norm and everyone jumped on the bandwagon, from senior management with MBA credentials to junior accountants; all began to succumb to the glib rhetoric, the blind leading the blind.

And this is in an era when the other sciences were going gang-busters- sending orbiters to Mars, decoding the genome, using stem cells to replace organs and AI to smarten the planet’s infrastructure. But of course it was still far too hard and inconvenient to nail the simple science behind quantifying indirect IT benefits.

So to bolster the myth further, the IT business case template was born- a very authoritative document. Just fill in the blanks and let the creative accountants do the rest.
‘What’s you’re best estimate of the benefits realizable from a Business Intelligence, Supply Chain, Marketing or HR system as well as all the other stuff needed to support it; like a new service-oriented architecture, broadband communications network, data warehouses, security software, cloud technology etc.

Well- just pick a number.

But by mid 2000s the fragile house of cards was starting to wobble. The effect of all this ultra-sloppy, lazy accounting was starting to ripple through the enterprise, ending up in the bottom line. Project prioritization, long term planning, essential infrastructure upgrades, all were being distorted- skewed towards projects with short term easy-to-compute benefits, but little else. But now the big-ticket projects, essential to cope with a new world of realtime transaction processing, online sales and automated supply and distribution wouldn’t wait.

Rigorous, realistic intangible benefits analysis is essential to confirm the payoff from these systems- process reengineering to re-energize the organization, improved customer service and pricing to maximize economic value, optimised decision support to leverage knowledge assets and smart infrastructure upgrades to minimize unforeseen disasters.

But on the other side of the universe the environmental and health industries had grasped the nettle thirty years previously and basically solved the problem.

What is the value of a new heart drug? It’s the percentage of lives saved or extended when compared with the old ‘legacy’ or non-existent heart drug. A 10% improvement in lives saved or extended can easily be translated into a tangible increase in productive working hours as well as reduced health care costs. So the reduction in the risk of heart patients dying early becomes the quantifiable benefit and any side effects becomes a cost.

Same with the environment. What are the benefits from the genetic engineering of crops or saving a wetland. If the new genes reduce the potential for disease, then the reduction of risk of crop losses becomes a calculable benefit. If they cause the spread of resistant weeds or insects or can’t handle droughts- then that’s a cost.
If remediating fish spawning wetlands reduces the risk of fish extinction then that’s quantifiable benefit. If it reduces the ability of developers to build more flood prone houses then that’s a public benefit too.

Now back to IT. You say that’s fine for industries like Healthcare and the Environment, where the risks and benefits are obvious. But you can’t translate that approach to trickier stuff like the impact of IT on customer service or management decision-making.

Yes you can!!

The smarter corporate strategists and operations research groups including this Centre have been developing and applying techniques for over twenty years that successfully challenge the ‘intangible benefits’ myth.

They have combined risk theory with decision theory, tweaked it with some additional AI and come up with better enterprise planning, value modeling, system prioritization, evaluation and audit, and service optimization on a continuous basis. The results- a much healthier, profitable and more resilient enterprise.

And this is only the beginning for the future of the dynamic smart business case.

In the 21st century it will be integrated with a host of other new and more science-based planning techniques- risk analysis, forecasting, Bayesian probability networks and AI-based process optimisation algorithms; as the enterprise of the future positions itself to be a largely autonomous entity able to better react, seek new opportunities and re-create itself in a fast-changing and uncertain world.

The smart business case of the future therefore should not be seen as a standalone tool, but as a dynamic and integral part of enterprise planning and modelling. Unless it is applied rigorously, it can distort the whole fabric of the organisation.

Projects and services and products don’t end abruptly. They get absorbed into the fabric of the enterprise as they interweave with other processes, often emerging as part of a new technology or service. The smart business case should therefore be an evolving process also, constantly adjusting to the evolving nature of the enterprise.

It’s therefore high time that the whole crumbling edifice of the mythology of intangible benefits was put to rest and the business case became a lot smarter.

After all- you can’t have a smart enterprise or a smart planet without support from a smart business case.

And it is the 21st century.





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