Section 2.5. What kind of innovation should companies pursue, and how will ESA help them?

2.5. What kind of innovation should companies pursue, and how will ESA help them?

It all goes back to speed again and to the beginning of this chapter, actually. Earlier, we mentioned how the time to transparency that encompassed everything from taking a customer's order to passing it up the supply chain to generating a P&L statement had plunged into the subseconds. That was the result of relentless innovation in process execution, a literal race to see who could extract a competitive advantage from the speed of their operations.

However, the final distance between the winner, the runner-up, and the pack wasn't great enough. Light-speed process execution is a best practice well on its way to becoming a commodity. What's next?

The first thought was product innovation; cell phone makers would race to push more models out the door instead of just racing to sell them efficiently. But that didn't happen. For one thing, it wasn't applicable across all industries (it's hard to innovate on something like cement), and in industries with very high rates of product turnover, such as cell phones and consumer electronics, the components are already so commoditized.

So, the last curve left on the graph that appears in Figure 2-1 at the beginning of this chapter is time to change. Can you accelerate and perfect the creation of business process innovations themselves? Call it process innovation . Master practitioners of that art already exist in the world. Dell is the consummate process innovator. Dell doesn't invest much differentiation in its actual products, which are assembled almost entirely from off-the-shelf parts. Dell's core is its vaunted supply chain and its ruthless commitment to perfecting that supply chaina textbook example of process innovation.

The strategic value of ESA lies in its inherent abilities to foster this kind of innovation. The switch from a modeling-based approach to development, the distribution of analytical tools across the enterprise, and the increasing automation of systems to manage by exception combine to create a computing environment in which it is remarkably easy to detect and model patterns of behavior within the business. If a process already mapped to these patterns exists, fine-tune it. If not, then build one.

Examine the big patterns and the tiny ones, and prioritize based on where you can increase revenue and eliminate costs. If a process fails 15 percent of the time and results in a cost of $150 with each failureand this is a process which runs three million times a yearthen the savings to be had from optimizing that process justify the use of ESA already.

Again, that's just thinking tactically. In the long run, ESA's ability to enhance process innovation will have a far-reaching effect on the structure and organization of the business itself. Led by the business analysts, ESA-enabled companies will replace organizational charts with employees organized around processes, and the boundaries between your company and your ecosystem of partners, suppliers, and so on, will eventually become porous, replaced by the automated exchange of data among intelligent systems. The CIO's role will evolve into something more like that of a "CPIO," a chief process innovation officer.

But we're getting ahead of ourselves again. Let's take a step back.