Managing in the 21st Century
The next evolution for effectively managing in the 21st century lies in the development of an information-based system that can predict and identify potential risk areas for the day-to-day decisions that, if made incorrectly, could negatively impact the company. The key to success will be monitoring key enterprise processes and identify potential risk areas. CAI, a professional services firm, is developing a suite of SaaS solutions named Advanced Management Insight (AMI) that according their CEO, Tony Salvaggio, does this. Salvaggio, a former IBM sales executive, founded CAI in the early 1980s and has always believed that “process excellence is the road to success”. Over its 30 plus years in business, CAI has developed methodologies, processes, and solutions around their intellectual capital that focuses on improving IT processes.5
One of the newer initiatives at CAI is the development of an early warning system to proactively identify potential risk areas in all areas of the business, not just IT. Their AMI suite is comparable to an airline cockpit where the on-board governance system constantly monitor aircraft processes and alerts the pilots of any impending threat with mitigating data and voice instructions, via the cockpit dashboard, to avert a potential problem. The airplane is a very complex set of processes composed of hydraulic systems, fuel systems, navigation systems, take-off and landing systems, wing and stabilizer controls, etc. All have to work in harmony for the aircraft to fly safely to its destination.
CAI uses the cockpit as an example of management cell where employees perform activities to support a business process. Jim Phillips, The CAI Executive, leading the AMI initiative for Salvaggio believes, “Every functional manager, team leader to CEO, needs a concise and accurate display of real-time information encompassing current position, environmental conditions, predictive threats, and embedded checklists (best practices) during the decision making process.” 6 When it comes down to the nuts and bolts of the solution, Dave Smith, AMI Product Manager, sees this solution, “as a means to take the concepts of managing in the 21st century and bring them to life via an automated system. It virtually accomplishes that which is difficult or impractical to do without AMI as a way to proactively mitigate potential risks during the decision making process and should be included as a standard toolkit for every employee to use” 7
CAI efforts are right on track. Today’s business enterprise is composed of a very complex set of processes, just like airplane systems. These processes have to work in harmony to develop, sell, and deliver products and services for customers. I am sure your company focuses much effort on optimizing these processes. However, you may not be focusing enough energy on the need for a governance system that monitors these processes to avert risks that occur due to incorrect decisions made each and every day throughout the company, and perhaps a major one that could even impact the very survival of your company.
An extension of the cockpit example is to look at the United States Federal Aviation Authority National Airspace System (FAA-NAAS). This organization is responsible for providing the safest most efficient aerospace system in the world. At any given time of day, approximately 5,000 aircraft fly in the skies above the United States. In addition, on any single day, the FAA monitors approximately 85,000 flights.8 Through an extensive network of systems, highly trained air traffic controllers stationed at airports and FAA facilities across the United States monitor all flights “to ensure that all traffic moves as smoothly as possible” and handle “constraints in the system, such as weather and runway closures. 9 The Air Traffic Controllers reroute aircraft based on early warning indicators; if planes are too close to each other, adverse weather conditions are forecasted, or if an aircraft needs to be rerouted due to an onboard medical emergency. Although each aircraft has their own on-board systems to monitor the plane’s systems, the FAA’s governance process ensures that all aircraft flying in the skies above the United States move safely through their filed flight patterns.
I would like to explore this analogy. Think of the airplane cockpit as one of your company’s process cells where personnel from different parts of the organization perform a variety of process activities. Think about logistics, product development, projects, and vendor management as examples of processes that contain high degrees of risk. Major issues can occur if incorrect decisions are made or information about the process is not available to personnel performing process activities. Inadvertently routing of logistics carriers; vehicles, planes, trucks, or rail, without knowledge of impending weather, traffic, or mechanical issues, can impact sales, cause product spoilage, and create havoc across the entire network for many companies because of the lack of an early warning system. Projects reflecting a “green” status may in fact be “yellow” or “red” due to team members being unaware of warning signals, resulting in project overruns, inefficient resource allocation, out of scope efforts, etc.
A product development team makes a decision not realizing that the same decision previously implemented by another product development team resulted in untimely delays. One of your major strategic vendors, while providing similar services for another company, made decisions that negatively impact revenue and cash collection. These events happen every day at many companies. Yet management has yet to figure out a way to proactively mitigate these negative outcomes. During my interviews for this book, many CIOs shared their experiences of being surprised at decisions made by personnel throughout the enterprise due to lack of an adequate governance process.
Managers at companies around the globe spend billions of dollars improving the effectiveness of business processes but not nearly enough to provide a governance “early warning system” to ensure that potential risk areas are identified, communicated, and proactive actions taken to prevent negative outcomes.
My message to all CEOs, CIOs, and C-Suite executives based upon the Executive Challenge is:
Ensure the integrity of all enterprise data and eliminate disparate islands of information
Continue initiatives to capture and mine customer data to learn about customer needs, wants, and desires, behaviors that impact buying decision, and competitive intelligence.
Continue to optimize business processes to improve efficiencies and improve desired business outcomes.
Identify key processes and begin a program to capture key information about potential risk areas, key predictors, past negative outcomes, focusing on specific activities and decisions that resulted in risk as well as how you can identify the “predictors” of risk.
Investigate “early warning” applications available in the market that can analyze this data to predict potential risk areas and communicate alerts to include suggested mitigating actions.
There is much more research and development required to explore this subject in more detail, perhaps the subject of my next book.
Bloomburg News: http://www.bloomberg.com/news/2013-09-19/jpmorgan-chase-agrees-to-pay-920-million-for-london-whale-loss.html.; September 20, 2013
Welch, J., “Managing in the 90s,” GE Report to Shareholders, 1988
Applegate, L. M.”Time for the Big Small Company.” Mastering Information Management Series. Financial Times (March 1, 1999).
The Strategic CIO-Changing the Dynamics of the Business Enterprise; Phil Weinzimer, Taylor and Francis; 2014;
Tony Salvaggio, CEO-CAI / Phil Weinzimer interview December 18, 2013 / CAI website: http://www.compaid.com/
Jim Phillips, Principal Consultant-CAI / Phil Weinzimer interview January 26, 2014
Dave Smith, AMI Product Manager – CAI / Phil Weinzimer interview January 30, 2014
FAA Website: http://www.faa.gov/nextgen/snapshots/nas/
Phil Weinzimer is president of Strategere Consulting and works with clients to develop business and IT strategies that focus on achieving business outcomes. Mr. Weinzimer was previously the Managing Principal-Professional Services for IT Business Management at BMC Software. He also held Managing Principal positions in the Professional Services organizations for ITM Software, CAI, Sapient, and Unisys.
Mr. Weinzimer’s new book, The Strategic CIO: Changing the Dynamics of the Business Enterprise, to be published in June 2014 by Francis & Taylor, focuses on how CIOs strategically transform IT organizations by leveraging information and technology to create new customer value, increase corporate revenue, and enrich shareholder value. His previous book, Getting it Right: Creating Customer Value for Market Leadership, published by John Wiley, focuses on transforming an organization using a 3P strategy: Prepare personnel to work together as a team, Perceive customer needs, and Provide new products and services that create sustainable and profitable value.
Mr. Weinzimer writes an ongoing column for AITS focusing on The Strategic CIO, written articles for CIO magazine on the subject of strategic CIOs, and co-authored a case study for Harvard Business School (HBS).