Difference between revisions of "Successful Business Transformation within a Russian Information Technology Company"
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For addition information, refer to the closely related topics of [[Enterprises and Businesses]], http://www.sebokwiki.org/wiki/Enabling_Systems_Engineering#Enterprises_and_Businesses, [[Enabling Businesses and Enterprises]], http://www.sebokwiki.org/wiki/Enabling_Businesses_and_Enterprises, and [[Enterprise Systems Engineering]], http://www.sebokwiki.org/wiki/Enterprise_Systems_Engineering. | For addition information, refer to the closely related topics of [[Enterprises and Businesses]], http://www.sebokwiki.org/wiki/Enabling_Systems_Engineering#Enterprises_and_Businesses, [[Enabling Businesses and Enterprises]], http://www.sebokwiki.org/wiki/Enabling_Businesses_and_Enterprises, and [[Enterprise Systems Engineering]], http://www.sebokwiki.org/wiki/Enterprise_Systems_Engineering. | ||
| − | == | + | ==Business Transformation== |
| − | + | Successful Business Transformation Within a | |
| + | Russian Information Technology Company | ||
| − | + | Mikhail Belov | |
| − | + | IBS - Moscow, Russia | |
| + | mbelov@ibs.ru | ||
| − | === | + | |
| − | + | ===I. Background=== | |
| + | In 2001 the top management of the IBS company based in Moscow initiated a fundamental transformation to change the company’s strategy and business model. The company was one of the biggest Russian information technology (IT) systems integrators at that time, with about 900 employees. Annual revenues of about $80M were mainly generated by IT infrastructure projects (complex computing systems, multi-service networks, etc.) and hardware and software distribution. The transformation of the company to form new capabilities in IT services and the associated consulting area is the main topic in the case study. | ||
| + | During the transformation period (from 2001 to the present) IBS was represented as a set of autonomous business units (BUs), called constituent systems, which are virtual, independent businesses with the following characteristics. | ||
| + | • Profit and loss reporting was required for each BU according to management accounting procedures | ||
| + | • BU management established and independently conducted human resources, technology, and product policy | ||
| + | • A centralized back-office was organized to provide supporting functions for each BU. Thus, BUs do not have back-offices; they rely on and “pay” a corporate governing center (CGC) for these services. | ||
| + | A thorough [[enterprise system]] (ES) transformation was executed as a set of activities: mission analysis and capabilities decomposition, business architecting, planning of the project program, and implementation of the new business model. | ||
| + | Before and after transformation IBS was an exemplar directed [[system of systems]] (SoS): the constituent BUs are autonomous but their operations are supervised by CGC. At the same time IBS also has significant features of an acknowledged SoS: the constituent BUs retain their independent development and sustainment approaches, and changes in the company are based on collaboration between the CGC and each constituent; even operations of BUs are not controlled but only supervised/governed by the CGC through “soft” recommendations and coordination. | ||
| + | IBS was a quite mature ES before the transformation, and it was thoroughly upgraded to form new capabilities of the whole system as well as of the constituents. | ||
| + | |||
| + | |||
| + | ===II. Purpose=== | ||
| + | In 2000-2001 IBS management forecasted considerable growth of the Russian IT services and consulting market based on the fast growing Russian economy, which was rapidly recovering from the national financial crisis of 1998. The largest corporations started overseas expansion and borrowed from international markets to finance this growth. IBS predicted corresponding growth in the complexity of business processes and their associated software and hardware systems all of which should require more consulting and IT services. | ||
| + | Based on this forecast, management established a strategy goal to double the share of IT services and consulting from 25% to 50% over one year; further growth in this business was planned as a long term trend. | ||
| + | The consulting and IT services business is very complex technologically and organizationally and dramatically differs from IBS’s former infrastructure focus. Thus, a fundamental transformation was required, and it was executed during 2002. | ||
| + | Initially detected problems appeared as expenditures exceeding resources, slow delivery of the projects and reworking. Later, as it was expected, new problems appeared, for example, disinterest of BUs’ managers in developing new technologies or raising qualified employees’ motivation. All those problems were solved during transformation and during further development. | ||
| + | The first step of the transformation included strategic analysis and mission-to-capabilities decomposition. Five major capability groups to be focused on were defined. The groups and exemplar capabilities for each group are represented at Figure 1. | ||
| + | |||
| + | |||
| + | |||
| + | Figure 1. Mission and capabilities desired. | ||
#sample number level 1 | #sample number level 1 | ||
Revision as of 19:47, 2 May 2014
This article describes a successful business transformation of an information technology enterprise. The topic may be of particular interest, especially because this transformation was accomplished by a Russian company during the republic’s fast growing economic recovery. For addition information, refer to the closely related topics of Enterprises and Businesses, http://www.sebokwiki.org/wiki/Enabling_Systems_Engineering#Enterprises_and_Businesses, Enabling Businesses and Enterprises, http://www.sebokwiki.org/wiki/Enabling_Businesses_and_Enterprises, and Enterprise Systems Engineering, http://www.sebokwiki.org/wiki/Enterprise_Systems_Engineering.
Business Transformation
Successful Business Transformation Within a Russian Information Technology Company
Mikhail Belov IBS - Moscow, Russia mbelov@ibs.ru
I. Background
In 2001 the top management of the IBS company based in Moscow initiated a fundamental transformation to change the company’s strategy and business model. The company was one of the biggest Russian information technology (IT) systems integrators at that time, with about 900 employees. Annual revenues of about $80M were mainly generated by IT infrastructure projects (complex computing systems, multi-service networks, etc.) and hardware and software distribution. The transformation of the company to form new capabilities in IT services and the associated consulting area is the main topic in the case study. During the transformation period (from 2001 to the present) IBS was represented as a set of autonomous business units (BUs), called constituent systems, which are virtual, independent businesses with the following characteristics. • Profit and loss reporting was required for each BU according to management accounting procedures • BU management established and independently conducted human resources, technology, and product policy • A centralized back-office was organized to provide supporting functions for each BU. Thus, BUs do not have back-offices; they rely on and “pay” a corporate governing center (CGC) for these services. A thorough enterprise system (ES) transformation was executed as a set of activities: mission analysis and capabilities decomposition, business architecting, planning of the project program, and implementation of the new business model. Before and after transformation IBS was an exemplar directed system of systems (SoS): the constituent BUs are autonomous but their operations are supervised by CGC. At the same time IBS also has significant features of an acknowledged SoS: the constituent BUs retain their independent development and sustainment approaches, and changes in the company are based on collaboration between the CGC and each constituent; even operations of BUs are not controlled but only supervised/governed by the CGC through “soft” recommendations and coordination. IBS was a quite mature ES before the transformation, and it was thoroughly upgraded to form new capabilities of the whole system as well as of the constituents.
II. Purpose
In 2000-2001 IBS management forecasted considerable growth of the Russian IT services and consulting market based on the fast growing Russian economy, which was rapidly recovering from the national financial crisis of 1998. The largest corporations started overseas expansion and borrowed from international markets to finance this growth. IBS predicted corresponding growth in the complexity of business processes and their associated software and hardware systems all of which should require more consulting and IT services. Based on this forecast, management established a strategy goal to double the share of IT services and consulting from 25% to 50% over one year; further growth in this business was planned as a long term trend. The consulting and IT services business is very complex technologically and organizationally and dramatically differs from IBS’s former infrastructure focus. Thus, a fundamental transformation was required, and it was executed during 2002. Initially detected problems appeared as expenditures exceeding resources, slow delivery of the projects and reworking. Later, as it was expected, new problems appeared, for example, disinterest of BUs’ managers in developing new technologies or raising qualified employees’ motivation. All those problems were solved during transformation and during further development. The first step of the transformation included strategic analysis and mission-to-capabilities decomposition. Five major capability groups to be focused on were defined. The groups and exemplar capabilities for each group are represented at Figure 1.
Figure 1. Mission and capabilities desired.
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References
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