Get Ready: The Rules Are Changing

Computerworld - When business processes become commodities, all the rules change in ways that can revolutionize business, says Thomas Davenport. In this month's Harvard Business Review, Davenport, academic director of the Process Management Research Center at Babson College in Wellesley, Mass., lays out his reasons for believing that those changes are beginning to happen. He told Computerworld's Kathleen Melymuka what he thinks business process commoditization will mean to business and IT.

Thomas Davenport, academic director of the Process Management Research Center at Babson College

What's the value of standard business processes to business and IT? For virtually anybody, a standard process can be a starting point—a point of departure from which to design a new process. When people are designing organizational charts, they often look at other organizational charts.

It also simplifies the commodity stuff that people do. There are so many processes in an organization that don't confer any competitive advantage, and doing them in an innovative way wouldn't make much difference to revenues or profits. So you might as well do them in a standard way. And application packages all assume some sort of process by which they're used.

What sorts of revolutionary changes do you foresee if standard processes are adopted in a big way? Over the years, I've seen this whole idea of business process outsourcing become popular, [but] there is really no basis for choosing to contract with external suppliers. You can turn accounts payable over to an outsourcer, but you have no indication that the outsourcer can do better—no objective measure except how shiny the consultant's shoes were. So it often comes down to cost.

If you could decide with some confidence that someone could do better than you could, that would be a big impetus for the whole idea that we are going to do only those things we think are distinctive and let others do the rest. Disaggregating the company into commodity and distinctive activities could be greatly accelerated if process standards took off.

And you see this beginning to happen? There are these really cheap resources available in places like India, and we have a process standard in CMM [the Capability Maturity Model] that says, "People can do this as well over there—if not better—than people here." CMM isn't a perfect standard, but it's certainly decent. That gave people a lot more trust that they could hire someone they may have never seen to do work, so that's starting to happen, but it's not as far along in some other business process areas.