Capitalizing on IT Automation

Even today, in many organizations installing desktops, laptops, printers and internet is termed as IT automation. In such organizations, they use Ms Word to type their letter and Memos. Ms Excel is used for recording accounting information.

This scenario is not confined to small organizations alone. Though it will be difficult to digest, believe me, this subsidiary of a prestigious government organization didn't have any IT solution to perform even basic functions as late as year 2010. 

It is not that government had been short of funds to automate one of its small departments. I believe, the leadership has been apprehensive about IT automation. The leadership felt some kind of personal satisfaction in signing a pile of documents every day. May be it gave them a feeling of power, which would otherwise be lost in the mesh of LAN cables. As a result, this organization used Ms Word for typing and distributing letters and memos. I must say they had a very efficient mechanism to manage these memos. For every small or big task or process with in any department they would prepare a memo and every memo had to be signed by originator, department head and finally the director of the organization. As a result, they have created a room full of papers. As I write this article their accounts are still maintained in Ms Excel.

Upon the insistence of the parent organization, ERP implementation started in this organization in the year 2010 and by the early 2011 ERP was implemented. However, did it really automate the organization or was it just change of tools that is from Ms Office to PeopleSoft?

Whenever an organization undertakes an IT automation project it must target to achieve following objectives. 

1.     Reduce number of steps by merging them or eliminating them to complete a process

2.     Reduce time taken to process information

3.     Reduce number of resources requirement to perform one task

4.     Capture complete information in a systematic manner

5.     Provide information in various formats for the decision makers to make knowledgeable decision

6.     Reduce number of hard copy documents in every step

In our subject organization, the system didn’t make any difference. All the processes are still same as before. The only difference is instead of Ms Office information is fed into PeoplSoft. At the end it is failure of the virtue of IT automation.

It is high time for the organizations to undermine the benefits of IT automation. IT automation is a tool for business process improvement and it should be leveraged for the growth of organzation.

Organizational metamorphosis

In the times when all the economies are struggling to come out of recession, Arab world is seeing unprecedented revolts and inflation is ever rising, enterprises of all kinds and from all the sectors are trying to seek whatever foot space, wherever they can.  The competition is fierce and the markets are over flooded with competitive and complementary products and services. This phenomenon is not confined to one sector. All the sectors posing similar challenges and opportunities to all the players in market. Anyone is trying to woo their potentials consumers by all means. Making overall market scenario very aggressive and ruthless. Everyone is equipped to beat the competition. 

On the contrary, consumers in all kinds businesses environments, be it B2B, B2C or B2G, enjoy the power of selection and gratification. If consumer do not see the value in a service or product, they can easily switch to another supplier or producer, without any barrier. In this market scenario, there is no space for complacency. 

This is the time for organizational metamorphosis. 

Am I talking about an unheard phenomenon? No, across the world, many organizations are following these norms already making them successful, at a time when  many enterprises succumb to macro economic factor.This is an unheard phenomenon in Middle-East, which boasts its oil wealth and distributor's monopoly. Here businesses overlook the measures that are often used in competitive markets to get an edge over competition. However, the recent economic crisis and the economic melt down has clearly shown that no one is fool proof. Therefore, sooner or later, in a hard way or proactively, all the enterprises will have to adopt these changes to sustain in the market. So what are the changes?  

1. Cost Efficiency - Hundreds of workers were asked to leave the organizations at the time of recession. Markets were over flowing with job seekers. When a crisis strikes, this is the first thing that happens in an organization - severance of jobs. The top management focuses on cutting the cost as the first measure. The need of such drastic measures occur because managements do not proactively focus on cost reduction measures. Cost reduction makes organizations lean. A lean organization which is always finding ways to reduce its cost will never come to a situation when it has to take extreme measures of cutting its cost. They are agile to counter and adapt to market scenarios. It is time for enterprise managements to bring their balance sheet under the lens and ask themselves - where is the extra bulge in the organization and how they can reduce it? There are three pronged benefit to this approach. Firstly, the organization will reduce its costs. The balance sheet will be healthy all the time allowing it to spend the surplus on organizational growth strategy (which is anyway lagging behind in Middle East). Secondly, this will allow the enterprise to pass this cost benefit to its customers thereby having competitive edge over other market players. Usually this point is ignored by most organization when they are formulating their goals of cost reduction. The benefit must be passed to customer. Finally, this will protect the organizations from the rainy days. They will not have to take drastic measures when market is shaky.
2. Value Creation - The lean organizations with reduced costs and simplified work process are better adapt to create value for customers who are already overwhelmed with choices market has to offer. There has to be a differentiating factor when customer has multitude of choices in terms of products and prices. These differentiating factors can be quality and experience. As an example, we choose to go to one restaurant where we find the quality of food and the service offered by the staff is good, while there is always a choice of many restaurants. If there are two restaurants with quality of food at par, we choose to go to the one which has better customer service and ambiance. Same goes for all the other industries. As for the IT industry, many enterprises can provide an ERP or a CRM. There are whole lot of vendors and the products to meet all he requirements of customer segments in all scales and verticals. However, the differentiating factor can be the quality of service offered along with the product. 
3. Collective Participation - Usually the goals of cost efficiency and value creation are management goals and remain to be management goals. Employees are not part of this goal seeking process because such decisions are made in closed board rooms and never come out to the employees. When employees are unaware of the cause itself they cannot appreciate the importance of the goals that are set for them. So where does the buck stop? With the management. If management wants a programme to be successful they need to communicate the goals, the reason why management seeking to achieve the goal and the modus operandi to all the employees in a transparent manner.
4. Perseverance - Identifying the goals and the call for participation as described in earlier points are only the initial steps toward the success. Success is hard earned. Ultimate challenge is to continuously persevere till the goals are achieved. In the business environments there are many digressions, which derail internal projects. Priorities keep shifting. It is important for the management to keep the momentum going till Cost Efficiency, Value Creation and Collective Participation are absorbed in organization's culture because these are the backbone of organization. The recommended approach is to make these goals internal projects with specific timelines and seek new goals upon successful accomplishment.

The market fundamentals remain same. The customer is seeking value for money. Those who provide high value for competitive price will survive.

With every passing day, new players come in the market, newer and better technologies make foray, making the  market more competitive. If the enterprise today is not agile it cannot withstand the fierce competition for too long. 

It is the survival of the fittest. Fit is lean.

When mid management is mired by cognitive bias

Two months back I visited a very big automobile distribution company which we were considering as an important prospect for our RFID solution. This company is part of a family run group of companies. In normal business scenario, this would mean family will have bigger participation in board and rest would be independent members. However, in this case, board members, top management and middle management came from the same family. Though they are distributors of top international automobile brands, I was shocked to see their primitive inventory control system where they do not even have bar codes to track the inventory. I could see a big dent smartly camouflaged with glossy sheet.

In UAE and other countries of Middle East, family run businesses and SMEs form major part of the economic structure. It would not be wrong to say that in the world's economic structure, Middle Eastern countries plays a pivotal role in the trade between Asia, Europe and Africa. As a result, role played by these businesses become pivotal too and this gives them huge opportunity to thrive in a very fertile economic ground..

In my 8 years of experience of living in Dubai, I have seen these businesses stagnate over a period of time, working with old school methods and limiting their own growth. To me it is because the top management thought process in these businesses is over shadowed by cognitive bias. I witness this influence of cognitive bias in many occasions when I visit my customers from public or private sector during my business interactions or during my interactions in social gatherings. It disappoints me to see that despite high potential and opportunities these entrepreneurs have narrowed down their vision and therefore growth.

While confining my observation to family run businesses and SMEs,  business management professionals are not welcomed with an open heart in Middle East. I can manage it by myself, psych of the entrepreneurs prevents absorption of business management professionals in the business. I am not challenging the business acumen of these entrepreneurs in managing their business. However, let us accept the fact that, every human being has limitations. If professional team combines with natural business acumen of these entrepreneurs, I believe it will do wonders.

As always the most common example or reference of cognitive bias is given with regard to management skills of technical experts. It is not always necessary if an individual is a technical expert, he will turn out to be a  good manager as well. At least, this is what everyone thinks about their own manager and many a times it is true when the manager is a geek. He might be a technical expert but might not be able to look beyond technical domain and understand business sense. I believe whenever a technical expert is brought to a management position he should undergo a crash course on various aspects of business management , if not full fledged MBA. However, this doesn't happen. Technical experts are rewarded with promotions to management positions. Rather than it giving a boost to business it becomes a hurdle. Training before promotion for these geeks, at least by the organizations, is out questions as in Middle Eastern enterprises do not encourage on the job training for the employees.

I have seen organizations which are wholly run by family, relatives and friends at the middle management.  This is Vasta Culture of Middle East. If you know the top boss or someone in the highest management, you may not have any qualification but you will have a good job with good salary for sure. Many a times this remains confined to taking their salary and staying off from day to day business. But problem occurs when each of these wise people (at least they think, they are) meddle in day to day activities and try to achieve their own objectives, at the end making the business run like a circus. It is possible that business might survive or linger for sometime but eventually this circus like environment cannot last for too long.

It doesn't mean all the family run businesses and SMEs are plagued by same poor management techniques. Some of these organizations have taken measures. They have segregated family from day to day running of business. May be, the most important decisions are taken by the key family stakeholders but they are taken on the advise from experienced professionals.

In the modern fast moving business world decisions cannot be taken in isolation. Every human being has a limitation and there is no harm in accepting this fact. Therefore, it will be wise for these family run businesses and SMEs to come out of traditional mindset of running business and adopt modern business practices. To start with, my recommendation to these family run businesses and SMEs are - 

1. Separate day to day management of business operations from family interferences 
2. Appoint executive committees to make day to day operational and strategic decisions
3. Appoint qualified business professionals in the middle management 

I am sure to start with these simple three measures will give upward thrust to the growth of organization. Once these measures are in place, rest will fall in place gradually.