Operating Model - Business/IT Dialogue

Business/IT Dialogue

The MIT Center for Information Systems Research (CISR), a research group at the MIT Sloan School of Management suggests that an operating model is useful to guide IT investment decisions. IT investment must support the operating model.

Ross, Weill and Robertson summarized found that an organization with an operating model reported 31% higher operational efficiency, 33% higher customer satisfaction, and a 34% advantage in new product development. They outline four operating models:

Process standardization

• Coordination – low process standardization but high process integration (Compare with allied strategy – where subsidiaries provide varied products to the same customers)
• Unification – both high standardization and integration (compare with integrated strategy)
• Diversification – businesses requiring low standardization and low integration (compare with holding company strategy)
• Replication – high standardization but low integration (Compare with Franchisees or Replicated Facilities of an Integrated Strategy)

Operating models inform the appropriate level of business process integration and standardization to deliver the organizations promises to stakeholders.

The operating model informs IT leaders about how various technical and business components should be designed and implemented to enable the chosen operating model:

Coordination and unification models benefit more from consolidated views of customer and data across the enterprise than do diversification and replication models.