Even as the enterprise IT landscape evolved over the past decades, markets, economy, and technology forces have affected key considerations that dominate and influence annual IT budgets. The nature and the unique mix of these forces, in any given year, have correspondingly triggered a rather unique set of influencers shaping IT budgets. We saw the wave of ‘seamless’ enterprise thinking; then the idea of an extended enterprise arose. Next was data-intelligence, followed by compliance, and then there was E2.0. The list goes on.
However, despite all of the “hype cycles,” in all these years, few things have been as common as the old problem of ‘silos’ that organizations have attempted to kill. Yet here we are in the second decade of the millennium still seeing the never ending challenge of ‘silos’ dominate budgetary considerations. It is arguably one of the oldest IT problems. A problem IT created for itself.
Siloes first appeared during the MRP era, which, led to the MRP II era. Next came the various flavors of ERP. While the scope of IT within the enterprise widened, applications were forming around specific business functions. Discussions about CRM, SCM took hold only to support a wave of specialized packaged applications seeking to create an IT driven enterprise.
What happened? Silos seemed to disappear from specific key functions – production planning, supply chains, customer management and started appearing at the departmental level. As old silos disappeared, these new silos were rapidly forming and were influenced by the road-maps of packaged applications addressing ERP, CRM and so on.
The packaged application vendors – the ERP and CRM vendors – are not necessarily responsible for the rise of these new silos. They did well to address a problem statement in the context of their times.
However, with the overpowering presence of these packaged applications, another set of silos formed slowly and silently, which have a bigger impact than any hitherto seen in the IT landscape.
What was worse, these silos did not exist in the IT landscape at all. They were forming in our minds.
Yes, business users’ thinking was becoming siloed. Tendencies were developing to compartmentalize business processes addressed by the ERP or CRM as an ERP process or a CRM process. This thinking further exacerbated already existing silos by pigeonholing organizational processes under different packaged applications. Forward thinking business process professionals started to confront the risk of overlooking the many processes that overlap more than one application, different functions, different departments, or even different teams.
For example, take the Order-to-Cash process — a classic cross-functional process that cuts across sales, production, and finance. This could mean that three different — CRM, ERP, and finance — applications handle transactions at various parts of the process. If an organization wants to introduce an online ordering system for customers, it might be logical to use an existing CRM package. If an organization wanted to add a manual quality inspection step it might be part of an existing ERP application. If an additional level of payment approval was needed, it could be configured in the financial application.
While each of these solutions may address the fundamental operational need driving a change, they do little to improve or exercise better control of the overall order-to-cash process itself — various parts of the process are locked in three different applications.
A whole set of unrealized costs, hidden efficiencies, and unsaved time then face the risk of being undiscovered since we see the process as residing in three different applications, Why? We allowed siloes to form in our minds.
The end result today is what we call a ‘broken process.”
Enter BPM; Exit Silo.
One of the most fundamental benefits of business process management (BPM) is the opportunity it presents for rethinking the process and breaking free of the grip of a decades’ old “silo” mind-set.
Another BPM benefit hinges on your ability to break free from this siloed thinking to foster the power of a perspective that de-couples processes from applications, while also exploiting the transactional competencies of applications.
This fundamental change in thinking is crucial to spotting silos and gaps while viewing the latent potential of improving cross-functional, multi-application dependent process efficiencies. BPM is well suited to assist organizations with closing this gap.
While BPM may just be simply be about process, it also holds the promise of helping businesses break free and build a new mind-set to address one of the oldest problems created by IT.
Republished from Business Process and More!, an e-Book published by FMT Systems Inc. You can download the complete e-Book here.
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You’re right that silos should go away. However, I’m not sure if BPM and a process improvement are a limited view. Every process has it’s limitation and improvement should be more customer driven as opposed to just process driven. I’ve written a post about this recently as well. However, the likelihood of changing mindset is even harder than implementing a BPM solution so let’s see. Stranger things have happened…
Here are some interesting discussions on ‘Silos’
“Group-think and the problem of Silos” A truly thought provoking post by Derek Miers on the influences behind the silo-thinking
“Silo Thinking & Why it is bad” , a post entry by Gary made over a couple of years ago.
…or maybe that’s what is making things harder?
And yes, stranger things have happened 🙂