Organizations that require high levels of data integration across business units, but low levels of business process standardization, are in the upper left quadrant. They share data because their business units share customers, products, suppliers, or partners, or some combination thereof. Data integration improves efficiencies, as well as the overall customer experience at each organizational touch point. No matter where customers tap into the organization, local representatives know who they are, what they buy, and many other defining characteristics – because they’ve got the data!

Process standardization is low because it would wash out the uniqueness of each service operation and commoditize the customer experience…not to mention that standardization may be impossible because different products may require different processes! Low cost, which is one of the benefits of standardized processes, is usually not a primary driver of strategy for these organizations.

As highlighted in Enterprise Architecture as Strategy, large financial services institutions such as Merrill Lynch (Global Private Client) and MetLife benefit from “Coordination” because they can integrate multitudes of products and processes without forcing standardization. They have an integrated view of customers and can interact with them via processes that fit for each product, service and business unit.

Stay tuned for the next entry, which covers the Replication Model.

So, you’ve drawn the MIT framework (see previous post) and are now ready to start thinking about the levels of “integration” and “standardization” that are right for your organization. Let’s take a deeper look at Quadrant 1.

The “Diversification” model in the lower left quadrant is probably the simplest place to start. If your business units have few common customers, suppliers or ways of doing business, you have a diversified organization. Hence, you have minimal need for either data integration or standardization of processes across business units. But, fear not! You can still create major efficiencies with technology. Even in these situations, there are processes that tend to be similar across business units, such as Human Resources and Finance, and shared services are a powerful way to achieve economies of scale.

The many-to-one vs. one-to-many principle comes into play here. Many-to-one means that every business unit is staffed up and “technologied” up to execute the same processes. That’s redundant. Major cost savings can be gained when the processes are consolidated into a one-to-many shared services unit. That’s smart business.

Carlson Companies is exemplified in the book. They own Radisson Hotels, T.G.I. Friday’s restaurant, Carlson Marketing Group, Carlson Wagonlit Travel, Radisson Seven Seas Cruises, and the Gold Points Reward Network. Though the companies are run autonomously, Carlson has captured cost savings and synergies with a world-class, award winning shared services capability.

Stay tuned for the next entry, which covers the Coordination Model.

The first step in answering this question is to take pen to paper and draw MIT’s very straightforward, four-quadrant matrix for linking data integration and process standardization with your operating model.

1. First, draw a box and split it into four even quadrants.
2. Next, write Business Process Standardization along the bottom (horizontal axis) and Business Process Integration along the left side (vertical axis).
3. In the lower left box, write “Diversification Model” and in the upper left box, write “Coordination Model”
4. Then, going over to the right side, in the lower right box, write “Replication Model” and in the upper right box, write “Unification Model”

Voila! You’ve drawn the MIT framework for assessing the levels of data integration and process standardization required for success in different types of public and private sector organizations. It is a simple but powerful tool that enables you to start with the right focus…on the operating model that will best serve your business.

Stay tuned for parts 3 through 6 of this series to find out where you fit in. Every organization should be a able to position themselves in one of the four boxes MIT framework boxes.