The proliferation of the Internet, the pressure of a global economy, and the need to remain competitive have transformed businesses all of sizes into extended enterprises. As a result, many companies have a complex network of matrix relationships with permanent employees, with contract staff, with customers, with partners, and with suppliers. Because customers and suppliers might need to have access to information, such as sales forecasts and inventory projections, companies also need to extend enterprise applications to these constituents, thus creating an interconnected network of information.
John Baschab, the president of TechniSource, says that the key to managing an extended enterprise is good collaboration. Baschab's company provides outsourced IT talent, ranging from CIOs to CISCO networking specialists, to privately held companies with revenues between $50 million and $600 million. Baschab, who also teaches part time at Southern Methodist University, and Jonathan Piot, his TechniSource partner, have written two editions of the 600-page book, The Executive Guide's to Information Technology.
Enterpriseleadership.org recently sat down with Baschab to discuss what companies must do to better manage their extended enterprises and what role collaboration plays in this process. Here is what he had to say:
EL: What types of investments are you seeing in collaboration to extend the enterprise?
JB: We're seeing much IT investment going into extending the enterprise through collaboration. When it comes to internal collaboration, we're seeing improvements in the various ways people interact with each other. External collaboration looks at ways to leverage technology to bring suppliers and or customers closer together. The big difference here is who are your customers? If you're customers are consumers, then you can deploy social networking to drive more collaboration. On the other hand, if have business customers, then you have to look at how you can create a platform to bring each other's systems together to drive better collaboration?
EL: Why are we starting to see so much emphasis on IT investing in collaboration?
JB: To understand what appears to be the sudden interest in collaboration, you need to take a historical look at things in IT. In the late 1990s and early 2000s, many companies experienced a wave of system adoption especially with the rapid use of the Internet. This system adoption became a pre-requisite for any type of collaboration. Why? You need to have all of your information, such as transactions, in one place before you can even begin to communicate either externally or internally. Unfortunately, the market took a downturn in 2003 and many companies cut their IT spending. To this end, companies weren't willing to invest in collaboration tools.
Since 2004, we've seen a lot of IT capital spending going into infrastructure build out or audit-related initiatives, such as Sarbanes Oxley. We're finally cycling back around to developing some of the collaboration tools that would've been a natural progression in 2003 if the economy hadn't gone down and companies didn't need to focus on compliance issues.
EL: Besides collaboration, what are companies doing to extend their enterprise to meet the global economy?
JB: Companies have started to do the things the trade press talked about seven years ago. These things include exchanging forecasts and tracking inventory items. For example, some companies are using RFID to track their inventory. Meanwhile, some companies have started using something as simple as XML to have a common language for people to use to exchange information. Many companies have eliminated internal inefficiencies or improved external efficiencies that hampered working with their customers and suppliers.
EL: Can you give examples of how companies are taking advantage of the global distributed pool or knowledge resources and technology resources?
JB: It's easier than ever before to take advantage of global resources in both areas. If' you're a small business owner and you need some specific and discrete technology task done, then you can turn to elance.com or craigslist.com or a host of other sites to find the talent resources you need. The continued decline in the cost of computers and bandwidth and the proliferation of educated people into IT makes it easy for companies to find well-versed talent in every aspect of technology. We've seen a good example of this trend with large companies taking well-defined discrete IT tasks offshore or outsourcing a good chunk of the IT infrastructure.
The largest pool of technology resources is still in the open source movement. Look at all of the open source projects on a site such as Sourceforge.net. It has an amazing pool of thinkers and interesting technologies that people are doing through collaboration across the world.
EL: Is there any downside to using some of these global talent resources?
JB: Open source collaborators might not be able to tell when it's the best time to launch a new product. Even elance.com professionals won't be a good source of advice for this. No one can do that thinking for you because it isn't discrete enough. That's why you need in-house technologies and in-house thinkers who can figure out your big issues. In other words, you need someone on your payroll, either an employee or a consultant who understands your business very well, and who can drive collaboration.
EL: What adjustments do organizations need to make to structure and to streamline decision-making in a matrix or an extended enterprise?
JB: The answer is collaboration. You see more and more companies going by design and by intent to a matrix decision-making structure, and you see them going through an extended environment by force. The most difficult thing about a matrix environment is how rapidly can you make decisions and what does it take for them to stick.
Any global company, even if it's a small or midsize company, must deal with people who are work across all time zones and all geographies. This's true for even national companies. If companies use collaboration tools the right way, they can improve the flow of information in a matrix environment. The information people need, however, has to be easily accessible and always available. It can't be in peoples' heads or on their laptops. The free flow of information can help to facilitate decision-making.
EL: As an IT outsourcer, what have you done to extend your enterprise to your on-site employees?
JB: Many of the people in my group never come into our office because their full-time assignment is to work on-site for a specific client. To improve communications with our on-site employees, we created a collaboration portal to make them more aware of what's going on in the company, and to get them involved in decisions that affect the company.
The portal comprises Microsoft SharePoint for file sharing, a wiki, a blog, and a bulletin board. We experimented with a mix of both Open Source, as well as proprietary technologies to get this done. Some of these features worked, while some of them didn't. We thought the blog would be the portal's centerpiece. We also considered the blog as the carrot we'd use to draw employees to the portal and to get them to stop using email and voice mail. We asked members of the management team to provide daily blog entries about business-related issues, such as how we solved a customer problem.
I spent much time worrying whether or not employees would read the blog. They came in droves everyday to read all of the blog entries. Eventually, the management blog writers stopped providing daily content. They didn't have the time to devote to the task. To this end, I ran into a content problem, not an interest problem.
Because we didn't get the response we wanted the first time with our collaboration portal, we continued to work on making the tool more compelling and easier to use. If you don't do this, then people will go back to what they've always been using. While we gave them a carrot, we also gave them a stick. We told them to stop emailing people large files. If they wanted to trade files, they had to put them on SharePoint. That's was a tall order for people to handle. Eventually, people saw the benefits of using the portal.
EL: What steps can organizations take to make better informed decisions about outsourcing?
JB: Regardless of how effectively you apply technology, you always fall back to the need to have a good personal relationship with the customer and to make sure the customer trusts you. During our initial negotiations with customers, we can usually convince them that we have great talent, that we have better access to information, and that we can provide good economies of scale. The real test of our customer relationship comes down to this: Can the customer depend on us to do the right thing when something goes wrong? To this end, we provide customers with much transparency into how we operate. We've carved off a portion of our collaboration portal to give customers some visibility into what we're doing. For example, we put up their metrics about how we're operating their help desk or how we're meeting their service level agreements.
Informed decisions about outsourcing depend on how well you understand which pieces of IT are good to outsource. The more measurable they are, the easier they are to outsource. A problem management area, such as the help desk, has become the most widely IT piece to outsource. It's easy to quantify because you're constantly getting feedback on how it is doing.
We advise customers to look at their IT organization in discrete components. How easily they can measure each component can determine the degree of outsourcing expertise they'll need. Also, looking across the spectrum of IT components will help them to answer questions about measuring the results. Managing the results should naturally consist of the outsourcer providing quantifiable metrics, such as service level agreements. The outsourcer should also have the burden of doing due diligence to report on how they are doing.
EL: Do you clients include you in their governance process?
JB: We typically run the governance process for them, especially for making strategic IT decisions. We usually establish an IT steering committee that consists of one of our people who is functioning as the CIO and then their senior management team.
EL: What types of processes need to be in place to better manage an extended enterprise both for IT and for the business?
JB: If you're going to be exchanging inventory forecasts between a supplier and yourself, for example, your systems needs to have specific characteristics, such as reliability, robust processes, and the proper middleware for handshaking between systems. If people can't get into the system, their productivity will go down and so will their incentive to use the system. You need to have all sorts of processes built into the system so if something breaks and the red flag goes up, someone can jump on the problem.
EL: To what degree should you extend the enterprise to say suppliers?
JB: If you have a good, trusting relationship with your suppliers, then I'm in favor of giving them access to more information than less information. Sharing corporate information about the most common things, such as usually sales forecasts, and inventory positions, can help your suppliers and you make better decisions.
Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
