Wednesday, June 24, 2020

Operation Model Quadrant

When you are dealing with a wide variety of businesses and a wide variety of standardization and integration efforts, the demonstration of the benefits also varies.

Today’s organizations are over-complex and interdependent, standardization and integration are common practices to improve organizational maturity. Ideally, standardization should provide benefits through reuse that accelerates business solution implementation and reduces expenses and risks. Integration glues important stuff together to improve organizational maturity, brings connectivity requirements via flexibility, and achieves dynamics of integration via scalability.

 Like anything else you do in business, there should be some justification for standardization or integration. both of them do not stay still, they do evolve and grow.

Low Standardization, Low Integration (Diversification): In the Industrial Age, businesses are operated in silo and value specialization so much, they don’t set up systems or practices to facilitate cross-discipline activities such as standardization or integration. Many organizations get stuck at a lower level of maturity, not spending enough time on common design issues and suffer from symptoms such as functional disconnect, process redundancy, system fragility, or business stagnation.

More specifically, the symptoms of poor design include disjointed strategies, outdated & silos of data or technical knowledge, lack of reusability or resilience in design, etc. Low standardization or low integration causes complications and increases the overall operation cost. Point by point, without design practice, you build application connections one at a time in silos. Project owners gain tactical expediency in the short term, but eventually, the integration hairballs grow so complex that it begins hurting business performance, decelerate speed, and consuming IT budget with exorbitant maintenance costs. Thus, it’s crucial to put some thoughts on resiliency or reuse in the design of things to avoid reinventing wheels.

High Standardization and Low Integration (Replication): To scale up and gain in cost efficiency, organizations need standardization to improve profitability through volume and efficiency. There are all sorts of standardization, such as industry standards, language standards, engineering standards, or performance standards, etc. Companies can leverage industry best practices for having better control, identifying or implementing processes specific to enforce standardization, which will increase organizational efficiency, competitiveness, and profitability.

In some organizations, although high standardization brings control, efficiency, and speed to a certain degree, there is still replicated functionality or processes caused by low integration. Oftentimes, integration can be very difficult, costly, and hard to justify the ROI. Each "integration" effort can spin off into a chain reaction that may not be recognized until the budget is gone. But, integrating the right systems for the right business reasons via the right methodology and practice can be extremely valuable from the long term perspectives.

Low Standardization and High Integration (Coordination): Silo thinking or lack of cross-functional collaboration leads to low standardization. To try and standardize just for the sake of standardizing, or where doing so requires compromising on the functional or performance needs of one or more groups involved, then obviously it is not a good idea. The traditional overly rigid hierarchical setting makes the standardization process and practice challenging because it discourages cross-functional interaction and communication, and prevents management and staff from overseeing functions and processes holistically.

Integration becomes the key step in building solid and differentiated business competency. The successful integration will depend on the underlying business relationships between all of the crucial points and how they influence each other. For either integration or standardization practices, open up cross-disciplined dialogs and optimize the whole process in ways that perhaps were not possible before. The underlying enterprise architecture and other useful integration tools can facilitate communications and enforce integration by providing application decoupling, broad connectivity support, shared data catalog, real-time and scheduled processing, advanced transformations and format translations, quality control, full tracking, and monitoring,

High standardization and High integration (Unification): Organizational strategies can take into account making profit through standardization (volume). Standardization enables the organization to improve productivity, quality, efficiency, or speed. Standardization should be done at the solution level and should only occur when the functional requirements for the different groups are the same or where there is a core set of functional requirements that all groups need and additional requirements are easily added for optimizing design and cost.

Integration is the key to ensure that the application ecosystem offers real value and also is necessary for future agility. Through quality integrations, business capabilities, and assets inside the enterprise are easily combined with assets and capabilities outside the enterprise to build core competency. However, "integration" is not always cost-effective, especially with highly disparate systems. Flexible integration is required in order to meet the variety of business cases that exist, align the modular capabilities exposed in a platform to create new experiences. High standardization and high integration lead to unification and accelerates business performance.

When you are dealing with a wide variety of businesses and a wide variety of standardization and integration efforts, the demonstration of the benefits also varies. You need to make a methodology and practice out of thinking process to decide: On which quadrant your current operating model is; where you would like to be; and how to improve business outcome. Business management should understand both concepts comprehensively and set principles and practices to improve overall organization maturity.


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