We’ve learned how to avoid project risks in terms of resources, time and cost. We’ve also learned how to avoid quality risks. Question is: Have we learned how to avoid business risks? Well, industry analyst firms frequently point to C-suite concerns about business risks. And to know why business risks exist, we only need to look at software practice, which is implementation-focused rather than business-focused.
So let’s recognize three business risks and talk a little about them. Whether the technology being considered is “digital” or traditional, we want to avoid these risks.
Business risk 1: Wrong tech
The software we decide to invest in could be the wrong one if:
- The broader business processes that use it do not have strategic potential.
- There exist business processes other than those in the software that are strategically important or need urgent attention.
We know that poor software requirements cause a lot of trouble. Now imagine defining requirements for the wrong software. Worse, imagine not knowing it’s the wrong software and therefore continuing to spend on it.
Business risk 2: Recurrence
One or more business problems or business improvement opportunities remain even after the organization spends on tech. There is no business innovation — just technology injection. A simple example: The accounting process at a restaurant chain remains the same-old, same-old after spending money developing an accounting software; the existing accounting process is simply embedded in the new software and so any old problems remain.
Recurrence may be due to:
- Not making changes to the broader business process that uses the tech.
- Simply “automating” a business process that already had problems.
- Upgrading existing software but making no improvements to the user interface due to the myth that the old must be preserved because users are familiar with it.
Whether it is automating yesterday’s process or re-automating yesterday’s automation, recurrence is a concern. A great opportunity to improve the organization was available, but it was squandered.
Business risk 3: Degradation
While deploying tech, changes may be required to adjacent business processes so everything could work together as one. Such changes are often not foreseen and implemented. Result: One or more existing business processes in, or adjacent to, the software may actually get worse in performance.
The injection of a silo application or a point solution is often the reason for degradation. In the book Enterprise Architecture as Strategy, authors Ross, Weill and Robertson describe the silo problem: “Individually, the applications work fine. Together, they hinder companies’ efforts to coordinate customer, supplier and employee processes.”
Here are a few symptoms of degradation: Different employees give different answers to the same question; different business processes complete the same work, but with a different software; decisions by different departments are not coordinated; data is everywhere in the organization, yet information required to make key decisions is not easily available.
Consequences, and avoiding them
Wrong tech, recurrence and degradation deny organizations the business improvements they need to generate strategic outcomes. Worse, sooner or later they require the organization to start spending again — on cleanup work, such as a business process re-engineering project.
To stop these things from happening, we must engage in upfront efforts focused on coming up with a business-centric architecture. A discovery-and-design method can help ensure that the architecture has the right blend of business innovation and technology.