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The Best Payback in Technology History... Think you know what it is???

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Hmmm.... How about a giant ERP system?  :-)  Nope.   Internet Explorer?  Windows Mobile?  Getting closer, but those are only "honorable mention" in my book.  

If you're a company with a large investments in ERP and Line of Business (LOB) applications, my vote for the best technology payback the computing world has ever seen is the new Microsoft Office.  Really.  Thanks to a bunch of complementary technologies coming out about now -- Microsoft Office Sharepoint Server, .Net 3.0, and Office 2007 -- Office can create value for organizations struggling with large legacy business systems at an incredible pace.  

How?  Well, first let me be clear: I'm talking about economic value.  I'm talking about discounted cashflows and opportunity cost.  Also, remember there's no such thing as standing still.  Every decision is a decision to do or not to do, and each carries it's own risks.  Doing nothing is not a neutral, risk free course of action -- there's at least an opportunity cost to that, and usually more, though it may be hidden.   Ok, now that that's out of the way, let's talk about how, exactly, Office can create so much economic value for companies with large LOB systems.   Everyone knows Office is a great suite of integrated productivity applications, but it's been around since the early 1990's -- we don't usually hear it described as the most profitable IT investment in history.  What gives? 

The secret is partly in Office 2007, partly in .Net 3.0, and partly in the large Line of Business Systems themselves.  You see, large LOB and ERP systems can cost, literally, billions of dollars (yes, that's with a 'B').  Some of the largest are over a billion dollars each year.  And they take many years -- like up to 5-10 -- just to implement.  These kinds of giant numbers are often not the numbers that get approved and budgeted when a decision to go forward is made.  Nonetheless, these are are sometimes the numbers that are paid out. 

And what do companies get for their investments?  In general, they get a scaleable, capable platform that is very flexible within the vendors pre-defined set of hard constraints.  That is, if you want to configure an ERP to do something it has a pre-built capability for -- then you can (maybe).  If you want to configure an ERP system to do something the vendor didn't think of or hasn't gotten around to providing for you, then you're free to write your own (and most likely write it again when you upgrade!).   

In many cases, you also get a system that is very complex, very hard to use, and is very poorly adopted.  Perhaps the worst case is when people at a company adopt a "feed the machine" attitude toward the ERP system.  In this case, they use it not to help them make or even execute decisions, but only as a "matter of record" in what amounts to a "fake set of books" about business operations, while other, more functional, flexible, and from a corporate perspective, invisible channels are actually used to accomplish the real work. 

This is dysfunctional for many reasons. 

  • It blinds executives to how the business actually runs and breaks their ability to improve the business in many circumstances.  Problems don't naturally surface, because the system is only loosely "operational". 
  • It wastes much of the work of IT, and turns much of the supposed value in the LOB or ERP system into a sham -- the value exists only in the parallel universe inhabited by people who cannot see or cannot admit that large chunks of the system go unused in any meaningful sense.
  • It destroys employee moral, because they hate using the system and they hate more that the feel compelled to "feed it".  The extra hours required to feed the machine grind people down steal time they could be using to improve the business.
  • It stifles innovation.  Beyond stealing employee's time, there's another dimension: Aka, "Sure, it would be great, but we can't implement that new capability because we're going to get that in our ERP system next year so it would be wasted effort".  The new, desired capabilty is unlikely to show up when promised and often doesn't fulfill users needs because it's not an environment that is truly operational.  Rarely is the opportunity cost of delay and waiting factored in.  The waste of time is one of the most insidious and damaging kinds of waste -- and as the pace of change accelerates, it continues to become more a damaging. 
  • It fosters "Shadow IT" -- that is, business users going out and creating their own technology solutions, and at the same time creating security, operational, and regulatory compliance and governance issues.  Somehow, clever people will find a way to get their job done -- even if they have to build their own solutions -- but they usually don't perform the genuinely valuable planning, governance, security analyses that IT would do. 
  • IT loses credibility with the other units of the business -- after all, they can't deliver.  "Those nice fellows from the ERP vendor said it would be done years ago, and those folks in IT screwed it up again".  Once IT loses the ear of the business, they start to go around IT, and IT becomes more out of touch with the business with each passing day.   

So how does Office, Microsoft Office Sharepoint Server (MOSS), Visual Studio, .Net 3.0, and other technologies help?  By letting companies create Office Business Applications (OBAs).  And how do OBAs help?   Well, an OBA is essentially an application that can facilitate structured and unstructured business processes, while letting people access and use LOB or ERP functionality through the familiar Office tools they already know.  Moving down one level of detail:

  • .Net 3.0 provides Windows Workflow Foundation -- a common workflow engine that can be used across all of Microsoft's platforms.  .Net 3.0 also includes Windows Communication Foundation to help people easily create industry standard (WS-*) web services.
  • Microsoft Office Sharepoint Server (MOSS) provides a host of capabilities, including the Business Data Catalogue that companies can use to search for, expose, and consume enterprise data that would otherwise remain trapped in legacy LOB and ERP systems, as well as the ability to create, manage, and respond to workflow activities.  And of course, the ability to create and host web parts to ease the display and analysis of data from the ERP and proprietary LOB systems. 
  • Microsoft Office 2007 uses OpenXML file formats to ease the sharing, writing, and consumption of data between Office and other environments. 
  • Visual Studio 2005 offers Visual Studio Tools for Office (VSTO) to help create new capabilities that leverage the rich capabilites of Office and help add loose structure and manageability to previously unstructured tasks. 
  • Biztalk Sever 2006 provides the ability to host complex workflows, and also to monitor them with the Business Activity Monitor -- a very powerful tool for understanding how your business is actually running. 

These technology capabilities add up to fairly simple set of value propositions for OBA:

  • Help the LOB and ERP systems fulfill the promises they were sold on, by increasing adoption, easing the training burden, and empowering users by giving them access to business data and functions in ways that leverage the powerful Office tools they already know.  There are at least two parts to this:
    • First, make the LOB or ERP data more valuable by bringing data creation and update into the operational workstream. 
    • And then, make the LOB or ERP system more valuable by unlocking the data and services hidden away behind the screens no one will actually use.   
  • Help IT to say “yes” to the business more often so they can mitigate pressures for “shadow IT” and still maintain appropriate control of enterprise data and systems.
  • Make organizations more agile by enabling/automating workflows and creating new capabilities without customizing ERP or other LOB code
  • Build trust and confidence in IT, and increase business alignment, by deploying the capability for end-users of ERP and LOB systems to monitor and improve their own business -- in some cases without IT.  The IT group then becomes an enabler instead of just a roadblock. 

One last point: it's interesting that OBAs are basically SOA and Composite Applications that leverage Office and Sharepoint collaboration platforms (among other things).  The same very practical approach that can help companies get value out of OBA -- i.e., focusing on creating tangible, valuable business capabilities -- can help other SOA efforts work, too! 

So -- OBAs are good.  But at the end of the day, do they really make Office the most valuable technology ever?  I think so, because OBAs can make the difference between an ERP or large LOB system that loses billions and strangles the business on one hand, or on the other hand creates value and enables the business to be nimble in our globalizing and frantically evolving world. 

Your thoughts?  Would you pick a different technology as most valuable ever?  If so, why?

Comments

  • Anonymous
    February 15, 2007
    I would pick a different technology from Microsoft which is designed and developed for the exact purpose and reasons you have stated: Microsoft Customer Care Framework (http://www.microsoft.com/ccf). A lot of the marketing material is around call centres but in reality it makes the perfect framework for any area of a business which has to deal with multiple LOB's and provides a realistic platform to launch a SOA initiative.

  • Anonymous
    February 16, 2007
    The comment has been removed

  • Anonymous
    January 14, 2008
    Saw this today. Mark Greiner, who runs Steelcase's "Workspace Futures" team spoke at a Transformation,

  • Anonymous
    January 14, 2008
    Saw this today. Mark Greiner, who runs Steelcase's "Workspace Futures" team spoke at a