In the brave new world of the networked business, work never needs to stop. Rather, it can be passed from one location to another, following the sun across the world. By using one internet-based system, companies can do much more to harmonise their technology links to customers, virtual workers, partners and their own internal systems. The creation of common network standards has made this possible, but most businesses have only just begun to see the potential to create new, more effective networks on the back of this.
With the growth of internet telephony (where voice and data share the same internet connection), employees are already able to work from home or an airport lounge just as easily as if they were sitting in the office. The technology enables more flexibility and some companies have even used it to create virtual call centres, staffed by home-based workers. BT, for example, has adopted this model for its directory enquiry services. This type of flexibility can help companies with their business continuity planning too.
At the same time, the IT world has adopted a new way of delivering computer applications that takes advantage of the network. Called Service Oriented Architecture (SOA), it promises to make IT more responsive to business needs. Companies are able to modify an existing piece of software to solve a new business problem rather than starting from scratch every time they need to change something.
They do this by breaking down a process into its various parts, from processing a customer's request for a loan, for instance, to the delivery of the cash at the other end. By identifying each part of the process, the appropriate applications can be matched to each element and stitched back together again.
So how do companies get started on this journey? A global managed service, offered by the likes of BT and AT&T, based on a single technology, is usually the answer for big multinationals. It saves them having to deal with the complexity and support of the equipment, and avoids having to deal with the quirks of local telecommunications authorities.
But this won't be enough. Managers will also have to ensure that they understand the potential of the technology. New or modified applications will have to be configured across the network every time a new IT solution is required. The need for managers and IT people to learn to talk to each other is not a new one, but it has become more critical. A shift is taking place with a new more tech-savvy generation emerging. But until Generation Y (those who graduated in 2000 and beyond) rise to the top, it will be up to older managers to direct the change.
Global telecommunication is a story of convergence - of voice and data; fixed lines and mobiles; private network and public internet - into one single mesh of connections. In this new converged world, the company network is no longer a sealed ecosystem.
It has to connect with the outside world, giving access to customers and business partners, and allowing staff to move outside the office walls without losing contact with the business. It has to communicate with wireless devices and carry a broad array of data types. The network is no longer just a glorified internal mail system connecting departments, but a window on the world, with tentacles that reach out way beyond the corporate boundaries.
Any networking strategy needs to look at the whole spectrum, including the internet and wireless, as well as traditional office networks. And since the network will increasingly need to underpin all other business activity, from e-commerce to supply chain management and much more, the strategy has to be more tightly tied into the business than historically has been the case.
But many companies are still lumbered with a patchwork of incompatible legacy systems, based on proprietary technology, often the result of uncontrolled local spending, or of mergers and acquisitions. In order to achieve the right levels of interoperability, they need to adopt networks based on internet protocol, the new lingua franca of transporting digitised media.
But having a network is just the start - it is what you do with it that matters. Neil Rickard, a senior analyst with Gartner, identifies three main drivers for network usage: cutting costs through consolidation, regulatory compliance and smarter working through greater collaboration. "One big global network allows you to run one SAP system and a single email system across the world, for example," he says.
Settling on a single set of basic software applications should cut licensing and support costs, and make it easier to manage. It also means that IT datacentres can be reduced in number, which is more cost-effective and easier to secure. The data centre can be located where staff are easier to find or less costly to employ. Having data in fewer places also helps regulatory compliance, because it is much easier to back up, secure and retrieve than if distributed around multiple datacentres.
A further advantage is the way the network can support much greater collaboration between people in different departments, or even different continents. "Networks are enabling much more cross-border working," says Rickard. "With realistic videoconferencing systems, geographically dispersed teams can collaborate. Follow-the-sun design teams can work round the clock by passing the data to each other."
It is even possible to run a 'virtual' call centre. That kind of flexibility is worth bearing in mind for business continuity planning too. In the event of the offices being out of bounds, the network can offer a means to carry on from new premises or even from employees' homes.
"Companies are exploiting the internet as a connecting tool to supplement their existing internal communications network," says Una du Noyer, an analyst with CapGemini. "Where people have their own managed network, they can use the internet as a mechanism to connect offices together, especially when planning new locations or where mobile workers need to communicate."
Greater consolidation and centralisation require a sensitive balancing act, says Rickard. "Companies need to walk a delicate line between centralising everything in the infrastructure and giving local operations the freedom to manage their own affairs. You can end up having a backlash or revolt among the local units, because the centralised environment stifles innovation and the ability to respond to local needs. Some local units set up their own IT if they have to get too many people to approve things."
Don DePalma, chief resource officer for Massachusetts-based consultancy Common Sense Advisory, agrees: "The economics of data storage, application management and operational functions will indeed encourage centralisation. The challenge for global CIOs is a classic one in any centralised management initiative - how can they provide responsive, flexible solutions that meet the needs of diverse groups?"
He advocates a close consultation with local business units and a steady move to some standard applications - such as enterprise resource management, customer relationship management and content management - while other systems are tailored for local needs. "At its core, the CIO's centralisation work will solidify the infrastructure, while corporate developers leverage open interfaces to make those systems work with local business units and their staff," he says.
The key to success is greater communication between business and IT, especially as the network plays an increasing role in the business. But that requires a major change of attitudes on both sides. "We need a more sophisticated dialogue between IT and the business," says Mary Johnston Turner of Boston-based consultancy Ovum Summit. "IT can run an efficient environment, but it still needs to take the lead from the business, what it wants to do and where it wants to go."
IT service levels have focused mainly on the bits that it can measure, such as percentage downtime or server usage, but targets now need to be measured in terms of what the business needs. "We need to be able to define what we mean by a service and a service level, and then have feedback loops in place to tell us, regardless of whether we built it ourselves, bought it in or outsourced it, if it is delivering what we expected to the business," says Johnston Turner.
Of course, calls for better communication between IT and the business are nothing new. IT's love of techno-babble and TLAs (three-letter acronyms) has driven a wedge between it and the rest of the organisation. However, hope may be in sight in the shape of the latest TLA. SOA creates new applications by making use of existing components and linking them together over the network. These components could be any bit of software - an existing legacy application running on a mainframe, a software package installed on a company server, or software modules accessed via the internet.
Although still in its early stages, SOA could have a radical effect on the way applications are delivered. A report on the subject by the Butler Group says the adoption of SOA "has significant potential to improve the value organisations derive from their IT investments, in terms of increased flexibility, improved use of assets, alignment with business objectives, and reduced integration costs". But we need "a substantial cultural change before real progress is made in bridging the divide between the organisation and IT".
Cultural change will occur by establishing common ground and shared points of reference between the two sides, and the Butler Group suggests that business process management could provide the necessary catalyst to bring them together.
"Typically, people do this by breaking down their business processes into individual steps and then stitching every part together again with the application processes that exist," says Rob Hailstone, an analyst with Butler. By working together, they can ensure that IT reflects what is needed - and, more importantly, is agile enough to alter when processes change.
It also makes for faster development. "The 80/20 rule applies," says Hailstone. "If you are creating a composite application [collection of processes combined to deliver a single service] or automating a process, you'll probably find that 80% of what you do is already satisfied by the existing application. All you need to do is modify the application to make it more connectable."
For example, in the case of an online finance company handling customer loan requests, the newly created application could take the request through a number of different steps such as credit checks, through all the decision-making stages to preparing quotes and actually putting the cash in the customer's account.
The process will appear seamless to the customer even though technology may be accessing different systems behind the scenes. In the public sector, a composite application could allow one person to manage all the stages and aspects of a planning application. And in the mobile telecoms sector, companies are already using the technology to create 'mash-ups' - rapidly created services that allow the user, for instance, to find and book the nearest Indian restaurant.
"The biggest reason for IT and business coming together over SOA is the ability to respond faster to business change," says Hailstone. "It gives you a high measure of control over processes - which are also easier to change if you need - and it provides an audit trail and log of each stage you go through, so you can go back afterwards and prove what you have done."
So, thanks to the emergence of the standardised converged network, fast-moving, agile systems are within our grasp. But will business make the leap? Clive Holtham from the Cass Business School in London has his doubts. "Businesses have all their departments connected up, but they do not share knowledge. The most important challenge in this area is how to get people to collaborate more effectively. It takes humans and organisations a long time to adapt to new technologies."
Generation Y, which uses Web 2.0 tools such as YouTube, MySpace, instant messaging and blogs, finds older systems somewhat unresponsive. It wants to use fast, immediate and informal forms of social networking technologies at work too. Holtham's solution is radical. "Companies that stick their head in the sand will not retain staff," he says. "They need to consider throwing out perfectly good technology if it does not provide the working environment that young people expect."
Johnston Turner sees the same trend, but views it as an opportunity. "Business decision-makers who were raised on the internet are used to immediate information exchange," she says. "They will think more radically about business processes and what it means to communicate both internally and externally. On the business side, innovators will push more and more to adapt these social networking technologies, to create new kinds of business." Cisco found, for instance, that graduates preferred to give feedback on the training programme on a social networking site (see box).
Holtham says that many CIOs are hoping Web 2.0 will go away: "But Generation Y, and its needs, will force CIOs and others to rethink their information architecture, the way we conceive of systems and implement them."
But demands for freedom and creativity may not sit comfortably with the need to comply with regulations, such as Sarbanes-Oxley, points out Gartner's Rickard. "On the one side, we have to be hip and let everybody do wonderful things, but on the other side we want to bolt everything down and not let anybody into the building until they're frisked," he says.
Squaring the circle will be hard, but it is clear that senior management can no longer stand back from technology and leave it to IT. Are the managers in charge of global businesses today capable, assuming they are willing, of embracing technology in this way and making it an integral part of the way they think and do business? The answer to that question may be a key factor in whether companies succeed or fail.
HOW GENERATION Y DOES BUSINESS
The arrival of the MySpace generation will have a major impact on the way businesses use IT. This generation is used to experimenting with technology and favours a collaborative social networking approach to all things. Companies will find that basic mission-critical systems will stay the same (such as the Stock Exchange trading system, or a warehouse management system), says Clive Holtham of the Cass Business School in London.
But the Web 2.0 generation will put speed of implementation above perfection. "A huge premium will be put on doing things quickly and with a zero learning curve," says Holtham. "If it doesn't do everything you want - then tough, something will come along in six months anyway."
He cites the recent example of consultancy work he did for a US company, where it needed to set up a networked project management system. The client said it would take nine months to get company approval for a fully functional collaboration and project management system. That kind of delay was out of the question.
Instead of waiting, they used Basecamp, a low-cost collaboration tool that is charged on a monthly subscription, and had a basic collaboration website up and running in 10 minutes. "It does only a tenth of more sophisticated systems, but it is good enough," says Holtham.
At network equipment supplier Cisco Systems, managers found that few of the intake on the graduate recruitment programme completed the feedback form at the end of their training. Chris Dedicoat, a European president at Cisco, says this was initially puzzling: "The response was poor. Then we discovered that the online chat room we had created was the place they used to air their views."
Now, Cisco sees blogging as a valuable medium. "It is a great tool for getting feedback," says Dedicoat. "It also affects how we are viewed by Generation Y as an employer."
BETTER NETWORKS LET YOU...
Consolidate datacentres and software, and so cut costs
Reduce carbon footprint - videoconferencing, home working
Plan for disasters - people can work from home if the central office is
Collaborate more effectively
Reduce costs by offshoring suppliers
Automate supply chain and logistics
Create tighter links with suppliers and business partners
Extend reach, go into new markets
Innovate, create new products faster