Understanding the 10 Fundamentals of Any Business - Page 3

Oct 25, 2007

Eric Feldman

Operations Management

This science is an outgrowth of improved manufacturing techniques. The primary concern is the improvement of process efficiency and effectiveness. You are probably familiar with terms such as “business process reengineering,” “supply chain management,” and “lean manufacturing.” All of these concepts are related to operations management. The quality control mantra of “plan, do, check, act”—popularly known as the Deming Circle after W. Edwards Deming—is also a common operations management concept.

IT organizations depend as much on process as they do raw technology. Unfortunately, these processes often develop on an ad-hoc or unstructured way, and therefore are not nearly as efficient or reliable as they could be.

Consider, for example, an IT request process with six levels of approval, each of which requires that a confirmation be sent back to the requesting user. One obvious way to make this process more efficient would be to reduce the number of approval levels. This may result, however, in reduced effectiveness since it might allow someone to request a non-standard deliverable that could potentially increase support costs. An alternative approach might be to simply reduce the number of confirmations. This would increase the efficiency of the process with little or no affect on its effectiveness.

Organizational Behavior

Organizational behavior is the study of human dynamics in an organization. This is particularly important to understand as technology is designed, built, and used throughout the world. A key concept to know is cross-cultural diversity, the study of how people from different cultures interact.

IT practitioners bring not only diverse skills and experience, but different cultural, religious, and social norms. Many IT organizations are global and we must welcome a diverse group of team members.


Statistics is an area of applied mathematics that interprets quantitative data and uses probability theory to estimate outcomes. Statistics can be a particularly powerful tool for IT practitioners. That’s because IT organizations constantly use and generate quantitative data metrics to understand the effectiveness of processes and systems.

For example, service desk teams use measurements such as response times, first call resolution rates, and abandoned call rates to measure the effectiveness of their services and to establish service level agreements with business customers.

IT organizations can deliver additional value by calculating the probability that a call will be answered within a certain amount of time or that a call might be abandoned at different times of the day. This information could help managers better project appropriate staffing levels—enabling them to achieve higher customer satisfaction during peak times and avoid over-staffing during slow times. Such projections also can be used to define appropriate service level agreements.

It is worthwhile to note that these ten functional business descriptions are often interconnected or dependent upon one another. Finance and accounting are obviously related, as are statistics and management science. Other associations may not be as intuitively obvious. For example, marketing and organization behavior are related functions, especially if cultural issues are considered when deciding how to develop a new customer base.

The IT practitioner’s role is similarly interconnected and dependent on these various business areas. By better understanding them—and conscientiously applying them to the business of IT—IT practitioners can both elevate the performance of the IT organization and have substantial affect on the bottom-line performance of the business as a whole.

Eric Feldman is a senior architect in the Global Business Services Optimization Practice at CA.

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