IT Doesn’t Matter—Business Processes Do

Rumors Of IT’s Demise Are Highly Exaggerated

August 25, 2003

By Howard Smith and Peter Fingar

Fifty years ago last year, the first commercial computer, the Univac II, 
marked the beginnings of what we now call IT or information technology. 
Fifty years on, clever journalists are holding a wake, chanting that IT 
doesn’t matter and painting a picture of the IT industry as America’s 
next Rust Belt. But there’s something wrong with the press stories about 
the demise of IT as a source of competitive advantage, something 
dreadfully wrong that goes all the way back to the beginning, to the 
advent of business computing

.

For the past fifty years computers have been "data machines," providing 
systems-of-record that record the after-the-fact results of business 
activity. The methods, techniques and overall mindset of IT today are 
all about data—the capture, storage and retrieval of data by packages of 
software called applications. This is epitomized by the IT doesn’t 
matter poster child, Nicholas Carr who wrote in the Harvard Business 
Review that the core functions of IT are “data storage, data processing, 
and data transport.”

Early business technologists realized that their data processing systems 
must split data from processes because data can be structured in such a 
way that it is stable, reliable and predictable—key attributes in 
building accurate cost accounting systems which are after-the-fact 
systems-of-record. However, only the most basic, back-office business 
processes are incorporated into today's IT systems. They represent 
support activities.

What about the primary activities, those business processes that are 
needed to interact with suppliers, trading partners and customers? These 
business processes, the dynamic, expanding, contracting, changing 
activities of the business are not as stable or predictable — in fact, 
they are extremely messy. Because they are so dynamic and such an 
overwhelming challenge to computerize, business processes have been 
second-class citizens in the world of IT, limiting those that have been 
automated.

By contrast, and for exactly the same messy reasons, business processes 
of all shapes and sizes are the focus of management attention 
today—management wants to overcome the great “business-IT divide,” gain 
control over business processes and, in turn, gain new sources of 
strategic advantage.

Misinformed companies, as well as misinformed journalists, are stuck in 
this data-centric world of IT where there's an ever-growing disconnect 
between the business and the technology it deploys. The reality is that 
the future of business automation and its relationship to strategic 
advantage is about the challenge of making the business process, not 
data, not the application, the context of IT. In short, "data 
processing" must give way to "business process processing,” and despite 
some journalists missing the events of the past five-to-seven years, it 
has! The transition from what Donald Rumsfield might call “Old IT” and 
the process-centric “New IT” will be staggering when it comes to waging 
battles for strategic advantage for the next fifty years.

While the vision of process management is not new, the existing theories 
and systems of Old IT have not been able to cope with the reality of 
business processes—until now. By placing business processes on center 
stage, corporations can gain the capabilities they need to innovate, 
reenergize performance and deliver the value today’s markets demand. 
This shift in the tectonic plates underlying the business-IT equation 
represents a breakthrough that obliterates the business-IT divide, 
utterly transforming today’s information systems and reducing the lag 
between management intent and execution. Business process management 
systems are the next strategic IT platform, replacing the data-centric 
world of Old IT.

This shift goes all the way down to the theoretical underpinnings of IT, 
the mathematics. Relational algebra underpins database management 
systems and lambda calculus does the same for computer programming. 
Neither provides the required foundation for dealing with the messy 
dynamics of business processes. A new math and a new computer science 
were needed and have indeed been adopted by pioneers in the IT industry. 
The math is pi-calculus and it underpins the computer science of 
distributed mobile processes. Both of these developments are not new. 
They are based on decades of work by people such as Cambridge professor 
Robin Milner, winner of the ACM Turing Award, the Nobel Prize equivalent 
for computer science. Over the past five-to-seven years, this 
established body of computer science has been repurposed from scientific 
uses to commercial business uses and serves as the basis of new 
information systems capable of handling the dynamics of business 
processes. Business process management systems can, for the first time 
in the history of business automation, let companies deal directly with 
manual or automated business processes: their discovery, design, 
deployment, change and optimization.

That is also why we are only at the beginning of any sort of IT 
buildout. We know how to do record-keeping with computers, but are only 
beginning to learn to master business processes, the entity that spans 
applications, systems, departments and companies; and the entity that 
will ultimately replace the data-centric IT we know today. Companies 
know how to do a lot of things that can be understood as processes, such 
as finding new customers, developing new products and opening new 
plants. On the other hand, converting general process descriptions into 
digitized business processes is difficult for many companies because it 
is not something in which they have a lot of experience. Improving 
processes to better serve current customers; using strong processes to 
enter new markets; expanding processes to provide additional services; 
taking a process in which you excel and providing it as a service to 
other companies; adapting processes in which you excel to the creation 
and delivery of other goods or services; creating new processes to 
deliver new goods or services — these are activities in which no one has 
much practical experience. Why? Their cost and complexity were 
prohibitive during the first fifty years of IT. This is why mastering 
the new breakthrough BPM methods and systems changes the calculus for 
gaining strategic advantage, and those who succeed can look forward to 
competing during the next fifty years of business and IT.

If you are a businessperson who understands the business process 
digitization revolution currently underway, you will no doubt hope that 
the IT doesn’t matter viewpoint becomes wildly popular among 
technology-challenged business leaders. Following that advice your 
competitors will, like lemmings, follow the piper and leap off the 
cliff. They will focus their energies on stopping those pesky PC 
upgrades, as a means of spending less; following, not leading; and 
otherwise putting IT spending in the deep freeze, wrongly thinking they 
can save their way to market dominance. You will of course know 
otherwise and invest appropriately and aggressively in 
technology-enabled business process management. For, as research firm 
Gartner concludes, “Business process management wins the ‘triple crown’ 
of saving money, saving time and adding value. It also spans the 
business and technological gap to create synergy, with proven results.”

Business leaders must be very careful before buying into the IT doesn’t 
matter mindset, however appealing the arguments may be during the 
current economic downturn and IT spending backlash. We have crossed the 
threshold to pursuing fresh new IT opportunities described in GE’s 2002 
Key Growth Initiatives: “Digitization represents the greatest growth 
opportunity our company has ever seen.” On today’s battleground for 
economic growth, sustainability and innovation, companies like GE are 
arming themselves with IT-enabled business processes that can be 
manipulated on a scale previously unimaginable.

As the Great One, hockey superstar Wayne Gretzky once said, “I don’t 
skate to where the puck is. I skate to where the puck is going to be.” 
If you are a forward-thinking business leader, you are no doubt beyond 
dwelling on the strategic efficacy of the past fifty years of IT, and 
focusing on where the IT puck is going to be.

About the Authors

Howard Smith is Chief Technology Officer (Europe) of Computer Sciences 
Corporation (CSC) and co-chair of the Business Process Management 
Initiative (BPMI.org). With more than 24 years in the IT industry, he is 
a sought-after speaker and advisor. His work in predicting and shaping 
technology at the intersection with business led him to take an active 
role in the development and application of the third wave. He is 
currently researching the application of business process management to 
corporate sustainability, innovation and growth, for which he has global 
research and development responsibility at CSC.

Peter Fingar is an Executive Partner with the digital strategy firm, the 
Greystone Group. He delivers keynotes worldwide and is author of the 
best-selling books, The Death of "e" and the Birth of the Real New 
Economy and Enterprise E-Commerce (www.mkpress.com 
<http://www.mkpress.com>). Over his 30-year career he has taught 
graduate and undergraduate computing studies and held management, 
technical and consulting positions with GTE Data Services, Saudi Aramco, 
the Technical Resource Connection division of Perot Systems and IBM 
Global Services, as well as serving as CIO for the University of Tampa.

This column is dedicated to those at work every day building the company 
of the future, the process-managed enterprise. We look forward to your 
feedback, questions, suggestions and comments that will shape this 
discussion of the Third Wave. Like the third wave of BPM itself, this 
column will be built not just to last, but also to adapt to your needs 
and interests. Write to us at authors@bpm3.com <mailto:authors@bpm3.com>.

Smith and Fingar are co-authors of IT Doesn’t Matter—Business Processes 
Do, August 2003 
<http://www.amazon.com/exec/obidos/ISBN=0929652355/pfingarA/>