Evaluate A Companys Foundation for Execution - Assignment Example

?Evaluate A Company’s Foundation for Execution Table of Contents Introduction 3 Operating Model 3 Operating Model of IBM 4 Components of Operating Model of IBM 9 Core Diagram 10 Enterprise Architecture Maturity of IBM 14 Level of Enterprise Architecture Maturity of IBM 15 Conclusion 17 References 18 Introduction In today’s increasingly complex business environment, operating model has become a critical constituent for accomplishing organisational success. Operating model defines the relationship between different operating units, decisions and movements of diverse processes. It also describes how organisations perform across both business and technological areas (Berman & et. al., 2010). Operating model focuses on the design of an organisation to create value. In present days changing business environment, operating model acts as a key success differentiator for organisations. The operating model can determine the ability of business organisations to shift their direction and to introduce innovation. Moreover, operating model also has a strong relationship with the progress of operating margin. Unmistakably, operating model of an organisation can determine the ability to exploit the business opportunities and to enhance the profitability (Teece, 2010). Focusing on this aspect, the assignment discusses the operating model and core diagram of IBM, one of the leading technology based companies in the world. Operating Model Operating model of an organisation can define how the business model would be applied, where the organisation will operate, what types of products or services the organisation will provide, which target customers the organisation will concentrate on, what kind of business procedures will be outsourced and managed internally, which kind of business associations will be critical, on what basis business decisions would be made and how the performance will be measured. There are differences between operating model and comprehensive design of tactical abilities such as business procedures and organisational structures. For instance, operating model can postulate which business procedures are required and whether those procedures would be centralised or will be managed by different business units, rather than defining the details of the procedures to be performed. Thus, operating model comprises elements of business model and tactical abilities of an organisation (Deloitte Development LLC, 2011). Operating Model of IBM IBM is an international leader in information and technology segment. IBM performs in a stable business market, having a large number of competitors such as HP and Dell among others. A successful operating model depends on several external factors such as economic environment, market context and industry conditions along with internal factors (IBM, n.d.). IBM has identified three abilities which are also termed as Three A’s that can enhance the execution of operating model namely aligned, analytical and adaptable as demonstrated in figure 1. Fig 1: The Three A’s of Operating Model Source: (Giesen & et. al., 2009) Aligned Aligned operating model leverages core competences of an organisation and implements consistency across every dimension of business (such as external and internal facets). Traditionally, the core competencies of IBM were its exclusive hardware and software solutions along with strong after sales services. However, the low price strategy of leading competitors has significantly contributed towards fading away the core competencies of IBM. In order to revitalise itself, IBM has changed its core competencies by diversifying the business to certain other segments such as insurance, financial services, retail and transportation in order to provide better information technology (IT) solutions. Furthermore, instead of competing with other rivals, IBM has moved towards the establishment of a strong network, facilitating to strengthen its core competencies with regard to better customer services (Harreld & et. al., 2006). Strategic Alignment of IBM: In operating model, the alignment between business strategy with respect to products and services is critical for accomplishing better performance and effectiveness. Internally, IBM focuses on customer value proposition while providing technological solutions to the clients. It has aligned every dimension of operations with business strategies comprising the way of revenue generation. From external viewpoint, IBM has coordinated a strong network of customers, business associates and suppliers by alliance and partnership models. IBM has also leveraged the existing assets and abilities in innovative ways (Henderson & Venkatraman, 1999). Analytical In analytical operating model, IBM uses information in a strategic manner for establishing foresight and prioritising upon different activities. For instance, IBM has developed Global Technology Outlook (GTO) which recognises troublesome societal, technical and financial tendencies which might influence the client base. GTO is used for driving technical initiatives (IBM, 2013). Furthermore, IBM has established IBM Academy of Technology as well comprising business leaders of every business unit. The objective of this academy is to enhance the knowledge on key emerging technological fields. This academy helps IBM to systematise and synthesise innovation across different business areas and key technological themes (IBM, n.d.). Strategic Foresight: Strategic foresight is a vital facet for organisations to understand the opportunities and possible impacts of new technologies. Thus, strategic foresight is built in the operating model of IBM. The strategic foresight of IBM concentrates on four interrelated disciplines which are: Strategic Intent: Strategic intent is the overall direction along with objectives of an organisation. In this context, it can be stated that IBM intends to become an ‘on-demand company’ which has led to the creation of service oriented architecture (SOA). SOA helps IBM to make more adaptable software along with rendering competent consulting services to focus more on the elements of business modelling in order to assist clients towards better use of IBM services. Services can be termed as agreements through which certain organisational abilities are realised. The service models contain a number of services itemised in the form of directory such as name, description, interface features and dependencies, as demonstrated (IBM Corporation, 2009). The following figure shows service model process of IBM. Fig 2: Service Model Process of IBM Market Vision: Market vision includes the concentration of an organisation on understanding customer requirements, competitors’ strategies, technology improvements and economic changes. Market vision is an information gathering investigative effort of IBM, which emphasises entailing details regarding market conditions and their implications on IBM’s business. Innovation Orientation: Innovation orientation in IBM challenges the leaders and the managers to dynamically research and evaluate the thinking in the design and application of new approach, comprising taking thoughts from a range of sources and organising tests to shape the industry. Innovation in IBM is stimulated not only through the introduction of new products and services, but also through the revolution of operational and business model (IBM Corporation, 2005). Business Plan: The business plan of IBM is based on the above three components, namely strategic intent, market vision and innovation, which stipulate how the business will drive through the emerging challenges in the market. It also involves five key aspects such as customer selection, value proposition, revenue generation, scope of operation and sustainability (Change Logic LLC, 1991). Adaptable In adaptable operating model, IBM links innovative leadership with the capability to affect changes. The leadership of IBM concentrates on the role of general manager and the inter-reliance between the organisational approach and the strategic implementation. Furthermore, the organisational strategy of IBM is encouraged by the disapproval of leaders and the awareness of any gap between existing and desired performances. Components of Operating Model of IBM The components can be termed as the core aspects of operating model of IBM. They are bundled with the objectives Key Performance Indicators (KPIs), business functions, abilities and resources in different business fields. Figure 3 demonstrates the simplified visualisation of IBM’s operating model. Fig 3: Operating Model of IBM Source: (IBM Corporation, 2010) Figure 3 demonstrates that there are three levels in the operating model (namely direct, control and execute) of IBM and a number of activities are related with them. These activities depend on the specific industry sector and the degree of granularity being exhibited. Every business component of IBM is fortified with detailed descriptions of strategy, operations and information technology (IT) (IBM Corporation, 2010). Core Diagram IBM positions the business at the intersection of three disciplines namely strategy, business process management ad IT. The following figure will show the core diagram of operating model for IBM. Fig 4: Core Diagram of IBM’s Operating Model Strategy Model: IBM describes its strategy model as a blend of vision, mission, objectives, policies and obligations which are usually categorised under business purpose and motivation. In addition, the business strategy represents the manner in which different stakeholders interfere in the overall course of the organisation, such as customers, employees, dealers and associates. Finally, the strategy model of IBM comprises value propositions from the organisation to the society, the revenue model and pricing approach (IBM Corporation, 2010). BPM: The BPM of IBM comprises abilities and competencies of primary business functions that are closely connected to the organisation. It also includes resources and skills which help to generate competitive advantages in support of the business strategy. Organisational outcome is generally influenced by the business process. This view of operating model brings forward a set of collaboration, coordination, learning and transformation procedures that rise above the functional and organisational limitations. BPM also describes which people, resources, regulations and controls are involved in the business operations of IBM (IBM Corporation, 2010). The other critical aspect of BPM is business performance which is usually related with other components of the organisation and can be measured through KPIs. IBM measures the performance of its core business processes against KPIs which has a direct impact on the way the organisation reaches its financial aims and planned objectives (IBM Corporation, 2010). IBM typically observes the operating model from the viewpoint of its business process. The elements of business process simplify the analysis of different operations, comprising the way of establishing tangible results. BPM supports in designing dependencies across the organisation and in between the business and different networks (IBM Corporation, 2010). IT: IT is closely related to the other operating model dimensions. The universal advantage of IT within every aspect of business and its operations makes it an important part of operating model of IBM. IT systems help to automate different operational procedures. Furthermore, the essentials of business activities and capabilities are realised and delivered through IT systems. With the growing adoption of service orientation of IBM in the business level, establishing service based IT models and operations has become a more predominant approach (Luftman & et. al., 1993). An IT model represents a major business entity as depicted in figure 5 of the industry and related business rules which are used in different operations. Fig 5: IT Model of IBM Source: (IBM Corporation, 2010) The operating model at its core has components and links to certify that strategic intention of the business is effectively implemented. At the operation level, the business processes of IBM are supported and enabled by several IT based systems. Enterprise Architecture Maturity of IBM Architecture maturity comprises different characteristics which are essential for assisting IT infrastructure of an organisation. The infrastructure exists for helping different operations of an organisation. Adaptive and active enterprise architecture allows organisations to change and manage business process complexities inherent in large organisations such as IBM. As architecture matures, likelihood, process control and efficiency also increase. The enterprise architecture model of IBM comprises organised industry leading functions, industry standards, industry rules, and established solution building blocks. It influences the widespread business domain understanding, along with leveraging fruitful industry skills, technical know-how and thought leadership that IBM possesses and utilises for value creation. The enterprise architecture establishes the components according to particular business scopes and their interrelationships. The enterprise architecture of IBM has been demonstrated in the following figure. Fig 6: Enterprise Architecture of IBM Source: (IBM Corporation, 2010) Level of Enterprise Architecture Maturity of IBM The base of enterprise architecture framework of IBM has gone through three levels. Level 1: Business Vision: The first level comprises business vision of the organisation. In this level, IBM has recognised and evaluated its business strategies, developed the other business models and identified critical constituents and other model features. Level 2: Service Identification: The service identification activities of IBM include goal service moulding, domain disintegration, analysis of assets and resources and service reinforcement and justification. Level 3: Operations Design: Operations design activities of IBM comprise the analysis of different operations and optimisation of strategic operations. Level 4: Business Investment: Finally, the business investment activities of IBM are based on understanding business opportunities and arranging a roadmap for exploiting them. The level of enterprise architecture of IBM has been demonstrated in figure 7. Fig 7: Level of Enterprise Architecture of IBM As observed from figure 7, there are four levels of enterprise business architecture in IBM. Each level contains different sets of functions, yielding recyclable objects which provide the foundation of business planning for IBM. Conclusion The operating model of IBM helps to deliver a set of reliable and positive business outcomes with proper association amid different components. The operating model of IBM typically contains artefacts demonstrating strategic transformations, business procedures and service based architecture. The operating model demonstrates details about different core dimensions of the business which help to differentiate the organisation from other competitors. It is believed that IBM should constantly innovate and refurbish the operating model in order to seize the ever-present business opportunities. References Berman, S. & et. al., 2010. Three Keys to a Business Model That Can Change With the Times. Forbes. [Online] Available at: http://www.forbes.com/2010/02/11/business-model-change-leadership-managing-ibm.html [Accessed September 25, 2013]. Change Logic LLC, 1991. Driving Strategy into Action at IBM. Research. [Online] Available at: http://www.change-logic.com/cms_content/images/upload/research/Driving_strategy_into_action_at_IBM.pdf [Accessed September 25, 2013]. Deloitte Development LLC, 2011. A Tale of Two Operating Models Different Situations Require Different Approaches to Restructuring. Assets. [Online] Available at: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_consulting_ataleoftwooperatingmodels_021111.pdf [Accessed September 25, 2013]. Giesen, E. & et. al., 2009. IBM Institute for Business Value. IBM Global Business Services. [Online] Available at: http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03260usen/GBE03260USEN.PDF [Accessed September 25, 2013]. Harreld, J. B. & et. al., 2006. Dynamic Capabilities at IBM: Driving Strategy into Action. Stanford University. [Online] Available at: http://www.exed.hbs.edu/assets/Documents/dynamic-capabilities.pdf [Accessed September 25, 2013]. Henderson, J. C. & Venkatraman, N., 1999. Strategic Alignment: Leveraging Information Technology for Transforming Organisations. IBM Systems Journal, Vol. 38, No. 2&3, pp. 472-484. IBM Corporation, 2005. Component Business Models: Making Specialisation Real. IBM Business Consulting Services. [Online] Available at: http://www-935.ibm.com/services/us/imc/pdf/g510-6163-component-business-models.pdf [Accessed September 25, 2013]. IBM Corporation, 2009. IBM Institute for Business Value. IBM Global Business Services. [Online] Available at: http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03162usen/GBE03162USEN.PDF [Accessed September 25, 2013]. IBM Corporation, 2010. Actionable Business Architecture: IBM’s Approach. IBM Global Business Services. [Online] Available at: http://public.dhe.ibm.com/common/ssi/ecm/en/gbw03125usen/GBW03125USEN.PDF [Accessed September 25, 2013]. IBM, No Date. When to Make a Change: Keys to Innovating Your Business Model. Seizing the Advantage. [Online] Available at: http://www-935.ibm.com/services/us/gbs/bus/html/ibv-business-model-innovation.html [Accessed September 25, 2013]. IBM, No Date. Activities. IBM Academy of Technology. [Online] Available at: http://www-03.ibm.com/ibm/academy/activities/activities.shtml [Accessed September 25, 2013]. IBM, 2013. Global Technology Outlook. IBM Research. [Online] Available at: http://www.zurich.ibm.com/pdf/isl/infoportal/Global_Technology_Outlook_2013.pdf [Accessed September 25, 2013]. Luftman, J. N. & et. al., 1993. Transforming the Enterprise: The Alignment of Business and Information Technology Strategies. IBM Systems Journal, Vol. 32, No. 1, pp. 198-221. Teece, D. J., 2010. Business Models, Business Strategy and Innovation. Long Range Planning, Vol. 43, pp. 172-194. Read More