Virtualisation has so far focussed on hardware, and software. Shared central resources providing computing power as needed, are sure to be more economical than local machines which carry wasteful overheads. This utility model can also apply to software. MSP, SaaS, Cloud – take your pick. All are aimed at making software available at the point of need, in immediately scalable quantity. All are managed automatically, with resources being selected to suit the requested task at any given point in time.

Let’s think about your back office for a moment, though. How many people work there – hundreds? Thousands? What do they all do? I would place at least a $1 bet that more than half are doing simple rules based processes. Couldn’t we apply the same principles of virtualisation to people? It’s like the opposite of the Mechanical Turk principle.

So far, efforts to reduce back office costs fall into three categories:

• Large scale IT automation programs
• Process Improvement – Lean/Six Sigma etc
• Reducing input costs – work people harder, or offshore to cheaper labour rates.

But despite all these efforts, back offices are still hideously inefficient. Just ask any process expert who has worked in manufacturing and moved into the clerical world.

What if we could create a centralised pool of virtual FTEs*, using robotic automation techniques. Then delegate business processes to that pool to be executed at the most appropriate time to suit the business. These virtual FTEs can perform rules based processes interacting with other applications to achieve the process outcome.

It’s not just about cost savings, accuracy and the other benefits that go with any type of automation. It also provides process visibility and perhaps most importantly, scalability. Under-estimated your business volumes for that new product by a factor of 10? No problem in the virtualised world. In the “real people” world, how would you multiply the size of your workforce overnight?

Blue Prism’s experience is that the economics are very interesting indeed. The cost of setting up and managing a virtual back office is about 1/3rd of an offshore centre. So you can imagine the savings if you haven’t offshored yet.

* FTE – Full Time Equivalent Staff

The economics of operational self-service are too compelling to ignore, according to Forrester Research.

Core processes automated long ago like billing, statements, payment decisions, customer letters etc have pretty much given the enterprise IT industry its meat and gravy for the last 50 years. More recently, because many of the solutions implemented were centred on accounts, or customers, or staff, or products, there was a realisation that the one dimension that had been forgotten was process. And so was born workflow and subsequently BPMS. Process-centric platforms that finally acknowledged that the efficiency of your back office could be used to differentiate yourself from your competitors, despite the common use of industry standard back end systems such as ERP (and the ubiquity of SAP for example).

But even BPMS has limits. The speed of business these days is driven by the Twitter generation. Customers demand instantaneous responses; competitors launch new products on a sixpence; even regulators expect customer refunds to be done urgently. Consider three common scenarios where processes typically do NOT get automated:

1. Temporary or one-off processes. Correcting processing errors, billing recalcs, customer compensation etc. These are often processes where an automated solution is needed in days, not months.
2. Business as usual (BAU) processes where there is no economic case to automate because there is only a small handful of people doing the process now.
3. Processes where there is a core IT solution coming but it is, say, 18 months away. Business Ops may need a “pontoon bridge” to get some portion of the benefits right now to manage the business until the core solution is delivered.

The truth is that in every large organisation there is a “long tail” of automation represented by a 500 item (or more) change list. BPMS and traditional core IT automation never has the resources, the priority, or the budget to address all these requirements so they simply remain unfulfilled. This results in Business Ops having to resort to inefficient ways of getting stuff done – outsourcing, off-shoring and “Rogue IT” to name but three.

Forrester has recently started talking about Empowered Business Technology as a “mega-trend”.  Other commentators are observing that IT needs to become a trusted advisor rather than a provider of hardware and software which is ever more available to buy (and be managed from) outside the organisation.  Google around by all means but for a concise and insightful piece read Todd Biske in a post I have referenced previously (thereby warranting its quality). This trend is happening and it is not just Cloud, SaaS and Social Media that is driving it. There are tools around that can deliver real business value to your Operations teams, without being held within the usual cost and time constraints of a core IT program.

So how do we adapt to the faster business environment, and address the long tail? In short, the answer is self-service. From petrol pumps, through supermarkets and ATMs, to online shopping and banking, today’s consumer expects to be able to do it for themselves. And they can….except, to their frustration, when they come to work.

The rise of Business Ops is unstoppable. Smart IT functions are already empowering their business users with innovative ideas and products. It is the only economic way of addressing the long tail of automation.

The lack of integration in banking has been caused by a combination of build and buy, the need to address regulatory changes, the launch of new products (yes, I remember the launch of credit cards, never mind ISAs).  But you might assume that, because banks have been around since IT was invented, and have been perpetual early adopters, that it is only old industries that suffer this problem.

It got me thinking about newer industries, take Telecoms and Media for example.  Why didn’t they have the opportunity to greenfield their IT?  My take is that it is the opposite of the banking scenario.  That is, the industry exploded so fast the ability to keep up with the pace of change meant that systems had to be cobbled together on the fly.  To grow a company from almost nothing to £80Bn in a few years must put enormous pressure on the CIO.

So despite the provocative headline of this post, the mess is entirely understandable and it is difficult to envisage any other result than the one we have.  We now must learn how to live with it, both in the short term and the long term using a combination of strategic and tactical initiatives targeted at the nirvana offered to new entrants.  However, if Metro Bank experiences the sudden growth it expects, I wonder how long before it suffers the same integration problems as everyone else?

It is an interesting conundrum that we spent a lot of time thinking about at Blue Prism.  The reason business users run off and do their own integration, is because IT takes too long to deliver in the context of the speed of business today. So the business gets its solution quickly, but this type of end user computing carries a high risk of failure in the medium term due to lack of documentation, security, maintenance and support.

We realised that end-user integration and process automation, whilst technically possible, needs controlling.  The trick is to find the balance between IT discipline and user freedom and flexibility.

We found that this works best if IT sets out a corridor of governance within which the business users can operate.  Some of the components of this approach need to be built into the integration/automation technology.  Some need to come from a new “light touch” governance methodology that both IT and the business subscribe to.

The business gets an agile response to rapidly changing business requirements, but IT knows about the computing initiatives and helps the business to deliver them within a supported environment.

Not easy to resolve, but worth the effort for the competitive advantage that comes from agile operations.

But Operations still needs to operate right?  Taxes and NI still must be collected.  So are the systems merely going to be allowed to decay?  How can Operations adapt to challenging new requirements?

Public sector operations will need a new response and I think Business Led Computing may be coming of age.  Technologies that enable business operations to self serve some of their IT and process automation requirements, can release 20-30% of operational cost savings, with minimal impact on the IT cost base.

Otherwise the only solution is to increase staff, and that increases costs.  Hmmm….

“By 2012, 20% of businesses will own no IT assets”.  This is a stunner.  On closer inspection Gartner means hardware assets, not software, but even so, can we really believe this?

I will be happy to stand corrected.  I think that, supported by a very compelling business case, most enterprises are likely to head towards delegating responsibility for application development and support, and hardware procurement, configuration and management to external organisations.  But haven’t we seen all this hype before?  Consolidation of end user computing resources within the enterprise never really took off, did it?  Enterprises have so much invested in existing hardware and systems that I can’t see any, large ones at least, making so much headway in such a short space of time.

I expect the vast majority of larger enterprises, even the ones trying to aggressively adopt Cloud et al, to be living with legacy on-premise systems for at least another 10 years.  Am I a Luddite?

Well, Citi have contributed to the debate by offering a sticking plaster solution, both virtually and literally.  A sliver that adheres to the back of your mobile phone and enables contactless payments of up to $50 at Master Card PayPass readers.  This is a proper workaround but hopefully it is proving the need for something more strategic.

Hopefully within my lifetime, we will all have a unique identity held (securely) within our mobile phone.  Every time we buy a new device like a laptop or car, every time we are permitted access to a new office, club or country, every time we want to make a small or large payment, the infrastructure around us will adapt to us.

At the moment the supplier of the service or product grants us a single unique interface (for example a key).  The future will be citizen-centric.

Here is my take.  If IT departments started listening more to what their businesses need to succeed in their own competitive environment, and less to vendor promoted architectural trends, then people would stop talking about whether SOA/Cloud/SaaS/Private Cloud/WTF is successful and move on to the much more important issue of whether businesses thrive irrespective of their choice of architecture.

In those days, if your organisation was lucky enough to have a website, you were starting to gain competitive advantage.  Especially if you could keep it up to date more quickly than your competitors.

However, that depended on your IT dept and an army of HTML programmers, who wanted a specification, a design document, a test environment, methodology, design authority, sign off procedures etc etc.

Then someone invented Content Management Systems.  The purpose of a CMS was to enable the business to make their own website changes in real time but, and this is a crucial but, within a corridor of governance enabled by the IT dept.  So it was possible to change the text, but not corrupt customer data.  It was possible to change pictures, but not corporate design rules.  It was possible to change the database contents, but not the database itself.  So business users can do a whole load of useful stuff without the risk of bringing down the site.

Of course, other governance is required.  Someone still needs to take responsibility for the content that, in an instant, is representing your organisation around the globe.  But without this level of flexibility how can your company compete with the speed of business today?

This type of flexibility (I prefer to think of it as agility) is now finding its way into the operational world.  Giving business ops a way of doing their own process integration, orchestration and execution for example is freeing the business to react to the daily challenges of the changing world.  At Blue Prism we call it Business Led Computing.  It is a growing movement.  People are used to being able to do their own computing at home.  The next big thing in corporate computing might just be self serve.