Advances in technology and business paradigms are often accompanied by advances in organizational paradigms. Class-Based Reengineering (CBR) defines a new IS organizational paradigm that is designed to better implement object technology and Business Process Reengineering (BPR). CBR utilizes classes as a means to model the business of the firm, define the organizational structure and ensure that information systems fulfill management objectives. The functional organization, the prevailing model for most IS organizations today, tends to create a closed-model environment. A closed-model environment imposes rigid boundaries around business models, organizational structures and information systems. In contrast, the class-based organization creates an open-model environment, which exhibits a high degree of integration between the firm's business model, its organizational structures, and its information systems. This article identifies major elements of the class-based paradigm, outlines how firms that embrace CBR can create powerful class-based IS organizational structures, and describes how an open-model environment will better position the firm for competitive advantage.
CBR is currently being implemented at a major Fortune 500 company, with highly beneficial results. Many of the concepts that are presented in this article have been validated by practical applications of class-based strategies.
The Emergence Of Class-Based Reengineering
Industry statistics reveal that a large percentage of BPR-enabling information systems fail. In addition, there has been criticism that object technology has not fulfilled its promise to launch information systems in a faster and cheaper manner than procedural systems. The fact of the matter is that the problem does not lie with hidden deficiencies in object-technology or with BPR. Rather, the problem is that traditional management strategies simply work ineffectively with non-traditional technologies and methodologies. As a result of the growing need to pragmatically manage these new innovations, a new organizational strategy, Class-Based Reengineering, has emerged.
The major premise of Class-Based Reengineering is that the IS organization is operating under an obsolete organizational paradigm and must therefore undergo a major structural and philosophical transformation before it can effectively confront the competitive challenges of the future. CBR essentially integrates many of the concepts introduced by object technology and BPR into new management and organizational strategies. CBR is thus able to structurally transform the IS organization so that it can better implement business strategy, object technology and BPR. CBR provides the bridge that transitions the organization from the functional paradigm to the object-oriented paradigm. The product of a Class-Based Reengineering effort is the class-based organization. The class-based organization is composed of class-teams. Each team is responsible for managing a class or a group of classes.
The class-based organization integrates the information management environment From a CBR perspective, there are three primary dimensions or facets of the information management environment: the business model, the IS organization and the information systems it constructs. In an open-model environment, each of these dimensions are synchronized with each other, resulting in a three-way equilibrium. The business model determines the organizational structure and the firm's information systems. Likewise, in the reverse direction, the information systems must reflect the organizational structure, which in turn reflects the business model. This kind of synchronization leads to a powerful, well-functioning information management environment. (Figure 1).
When these dimensions are not synchronized or reflective of each other, as in a closed-model environment, organizational dysfunction results. For example, when the information systems do not reflect the topology of the strategic object model, there is a likely chance that management objectives are not being met. Other symptoms of organizational dysfunction include: lack of communication across organizational units, duplication of functions across systems, absence of reusable components, and growth of multi-level, bloated organizational hierarchies.
Organizational dysfunction is further characterized by fragmentation in policies, standards, goals, ideas and concepts. An incongruity between corporate strategic mission and the individual missions of departments, units, and individuals within these units can wreck havoc upon a firm. For example, the functional organization cannot determine the standardization of an enterprise-wide customer-id or an enterprise-wide transaction-id because each functional unit insists on promoting its own identifiers. As a consequence, information is difficult to integrate or trace across functional units. In contrast, the class-based organization, which uses classes as an organizing principle can determine standards at the class level. A customer class-team can determine the format of an enterprise-wide customer-id. An audit class-team can determine the format of an enterprise-wide transaction-id. By placing an emphasis upon enterprise-wide classes, the class-based organization can better manage and concentrate resources to solve problems and enforce cross-unit policies and standards.
It is a major objective of CBR to re-integrate the fragmented dimensions of the information management environment in order to structurally realign the IS organization with changing corporate strategy and ensure that systems are built to reflect management objectives. The class-based organization makes an open-model environment possible.
Models, organizations and systems are equally divisible by classes CBR extends the object paradigm by applying the concept of 'classification' to each of the major dimensions of information management, (the business model, the organizational structure and the information systems). Essentially business strategy, people and information systems are organized under a common class. The primary strategy of CBR is to construct an object model of the business which can then be utilized as a template to define the structure of the IS organization, as well as a template to define its information systems. This reflects the central theme of CBR, which is that models, organizations and systems are equally divisible by classes.
Classes Serve As A Division Of Labor
In the class-based organization, classes are not only used to model the business and to build object-oriented information systems. Classes also serve as a division of labor, a means to organize human resources, a means to categorize projects and budgets, and a means to manage and develop enterprise-wide reusable software components.
The organizational structure consists of a network of teams that are responsible for particular classes. Thus, in a financial institution there may be a team that represents the customer class, a team that represents account classes, a team that represents loan classes, etc. Each team is responsible for the design, development, maintenance and support of the class components assigned to it. In this manner, reusability is structurally enforced by the class-based organization. By utilizing a class-team approach, there is a single organizational address to direct all inquiries, requirements and specifications pertaining to the class. The class-team is the unit within the organization that is accountable for the business management and the systems implementation of its assigned class. Each class team also inherits policy and standards from its class parents. For example a checking account class-team and a savings account class-team inherit procedures, policies and objectives from account, which is the superclass-team that these units report to.
The Class-Based Organization Is Structurally Aligned With The Business Model
The class-based organization is structurally aligned with the firm's business model. Structural alignment implies that people are organized into workgroups with a distinct profile and a clear mission to fulfill a specific set of business objectives. There is no ambiguity about the class team's identity or purpose for being. The class-based organization chart is clear because it directly reflects the object model of the business thus leaving little room for interpretation. Specifically, the class-based organization chart resembles the class-hierarchy of the firm's strategic object model. The class-team collaboration chart resembles the class-collaboration chart of the strategic object model.(Figure 2).
In contrast, significant confusion may result as a consequence of utilizing the organization charts defined by a functional organization. For example, at a financial institution, one unit was called Electronic Delivery systems, another unit was called Electronic Distribution systems. Employees could not differentiate between the two units nor figure out what each one actually did. This kind of bewilderment is minimized in a class-based organization, since class-team names are synonymous with the classes that the team supports, such as mutual funds, rates, event-notification, loan origination.
Class-Teams Construct Distributed Objects
A major contribution of object technology is the concept of 'classification.' Classes represent real world entities that share common attributes and behaviors, for example, customer, loan, account, rate etc. Object technology stimulates the creation of software components that represent classes. These components respond to client requests to perform sets of operations that have either been defined as behaviors of the class itself, or as inherited behaviors of parent classes. For example, operations directed at a customer class might include setupCustomer, getCustomerInformation, findCustomer and removeCustomer. This is a revolutionary departure from the procedural or functional model of computing that categorized software according to function alone. In the procedural model, the above operations would be represented by obscure transaction ids, and the code would be intertwined with code from other functions.
The emergence of distributed object technology makes CBR a realistic option for organizations. Distributed object technology, following the Common Object Request Broker Architecture (CORBA) standard, separates the object interfaces from the actual processes that implement the object's operations. Distributed objects can reside as location transparent entities anywhere across the enterprise. Distributed objects are essentially objects with a client/server capability. By utilizing distributed object technology, class-teams can construct reusable class components that exist as separate entities from the client code that accesses them. The key point is that the class-team can also exist as a separate organizational entity from the teams that are responsible for building the client code and functionality. It is through this kind of organizational segregation, along class-boundaries, that the class-based organization is highly flexible, and hence polymorphic.
Organizational Paradigms Shape The Information Management Environment
Organizational paradigms not only determine organizational structures, they also influence other factors in the information management environment. These factors include information systems and architectures, organizational policies and procedures, funding models, project tracking models, staffing models as well as cognitive models. The functional organization creates a closed-model environment, while the class-based organization creates an open-model environment.
A closed-model environment is relatively self-sufficient, autonomous, and locally focused. It constructs rigid boundaries around itself which are difficult to penetrate. Business models within a closed-model environment are separated from each other and are difficult to integrate. Organizational units are represented as sets of disconnected hierarchical structures. Information systems are also represented as somewhat disconnected. A closed-model environment is thus more likely to exhibit fragmentation between business models, organizational structures and information systems, leading to symptoms of organizational dysfunction. (Figure 3).
In contrast, the open-model environment encourages the proliferation of class-teams. By focusing on reusable classes, the open-model environment is enterprise-oriented. Class-team members are trained to consider the enterprise-wide impact of their system solutions. Each entity in the open-model environment collaborates with other entities. This stimulates greater cooperation and communication between units. In addition, there is an ongoing policy to realign and resynchronize the firm's business models, with its organizational structures and information systems.
Systems Are Often Built In The Image Of The Organization That Creates Them
Information systems frequently reflect the paradigm and behaviors of the organization that creates them. A functional organization tends to build standalone, monolithic, self-contained autonomous systems. These systems will exhibit knowledge about the internal functions and rules of the organizational unit that is responsible for its funding. However, it will show less knowledge about other functional areas of the enterprise. The functional organization creates closed-model systems.
In contrast, the class-based organization tends to build smaller, interdependent, collaborative systems, that are highly reusable. The class-based organization creates open-model systems.
Closed-Model Systems Are Created By Functional Organizations
A closed-model system is one that internalizes within its system boundaries all of the processes and data entities that are necessary for the system to fulfill its business requirements. Aggregation refers to the bundling and inter-twining of entities and functions, that are otherwise logically unrelated, into an independent standalone system. The boundaries around the closed-model system are difficult to penetrate, since the interfaces to the system may require special encoding and decoding. The functional organization ignores the possibility that similar data entities and processes might redundantly co-exist within other closed-model systems. For example, multiple systems may contain similar customer setup, account processing, transaction history, statement preparation and other data-function combinations. The organization ends up spending incalculable amounts on building redundant system functions.
Object technology deployed in a functional organization simply results in costly, closed-model, object-oriented systems. In one case, an object-oriented application was asked to build a transaction logging object. A second application also found itself building the same kind of object. Both teams constructed workable objects, however the interface definitions were different, their signatures were different, and their implementations were also quite different. It was not until the 'transaction log' objects were reorganized into a common class-team that it was possible to construct a single class-based component with a standard set of operations and signatures that could be reusable by other organizational units.
Many of the attributes associated with the functional organization also appear in closed-model systems. Commonalities include slowness to respond to changing external conditions, slowness to internally reorganize, barriers that obstruct communication, and a localized focus. From a budgetary point of view, the functional application is only funded to support the localized requirements of the business unit that is its benefactor.
Open-Model Systems Are Created By Class-Based Organizations
In contrast to closed-model systems, open-model systems are more flexible and maneuverable. Open-model systems contain networks of class-based software components that collaborate with one another to fulfill business processes and other business requirements. Open-model software components are implemented in the form of distributed objects.
Distributed objects advertise their operations to prospective clients in the enterprise. Data entities and functions are disaggregated into their respective classes rather than being intertwined together as in closed-model systems. Classes are constructed as reusable software components. Distributed objects represent the working gears of the class-based machine.
The object model of the business defines the classes that are to be implemented as distributed objects. Class-teams are responsible for the design, development, implementation and maintenance of these class-based components. Object administration is the unit that is responsible for the design of the strategic object model, and for the development of the blueprints for each of the classes. The class-based organization uses a class-based funding model, where the source of funding might come from multiple clients, and the target of funding is the class and its various implementations.
Open-Model Systems Are Highly Descriptive
Class-based software components and the organizational units that build them can be further segregated into three descriptive categories. The business-process class category describes classes that represent business processes. For example, in a financial institution there would be loan origination, customer service, and money transfer business process classes. The core class category represents classes that are fundamental business entities that service business process classes. Examples include customer, account, loan, rate, employee, department. Utility classes, the third category, describe classes that provide auxiliary functions that are outside of the scope of the business. Examples might include transaction logging, mail, fax, security, encryption, and event notification. IS staff, and when appropriate, business staff form into class-teams. Specialized skills evolve within the team to manage the class from a business and a technical perspective.(Figure 4).
Class-based organizations create open-model systems. Open-model systems like their class-based teams are flexible, maneuverable, responsive to change, provide structural enforcement of business strategy and reusability, provide a specialized focus, are highly collaborative, highly interdependent, highly communicative, utilize a class-based budget and utilize class-based project tracking. In the open-model system the focus is on the business of the class. The focus is narrower, therefore the ramp-up time is quicker, resulting in faster productivity.
BPR Failures Are Often The Result Of Closed-Model Systems
BPR encourages the formation of multi-disciplinary teams of people that concentrate on fulfilling a business process. These 'process teams' extend across traditional organizational boundaries. BPR failures occur when conflicts and integration problems arise when attempting to link together disparate applications that functionally support a common business process. For example, a residential loan origination business process team might have to log on to one system to perform data entry, log on to a second system to perform a credit analysis, and log on yet to a third system to obtain rate information, and so on. This clearly unsatisfactory, time consuming and costly behavior is a consequence of the functional organization's preoccupation with creating 'closed-model' function based systems. These types of systems are difficult to integrate, interface, and reuse; qualities which are pre-requisites for successful BPR-enabling systems.
CBR Optimizes BPR
Reengineered business processes are not static. They are always evolving, changing, and undergoing refinements. Information systems that support and enable business processes must also be flexible, and capable of rapid change. In addition, the organizational units that are responsible for managing and operating business processes must likewise be able to absorb change and still function at the highest levels. Closed-model systems cannot sustain the magnitude of change that will be directed at them by the competitive environment. BPR efforts require tight coordination across organizational units in order to manage and control reengineered business processes. Problems will arise if the organizational unit that is the target of reengineering has other overriding priorities and agendas.
The class-based organization is highly suited to optimize BPR. Class-teams are organizationally positioned to optimize communication. There are also few organizational constraints that would restrict cooperation between units. Because class-teams participate in open-model systems, requirements to build new class operations can be fulfilled more rapidly than is possible with closed-model systems. There are, in fact, class-teams that specialize in the development of business process class components. Modifying a BPR-enabled open-model system is a relatively rapid process. In a class-based environment, there are also fewer political and system constraints that would act as inhibitors of the BPR-enabled system.
Conclusion
A class-based organization promotes enterprise-wide open-model responsive information systems. The class-based organization is highly adaptable to changes in the competitive environment; it is therefore likely to ensure the firm's continued survival. The class-based organization is able to rapidly marshal its key human resources and redirect them to confront competitive assaults on the firm.
A desirable attribute of hardware and software componentry is plug-and-play. Similarly, in a class-based organization, class-teams can be plugged into and out of the organizational circuitry, as business conditions demand. New business processes can be introduced with rapid concept-to-action results, since the organization has already pre-positioned supporting core and utility class components that support a large percentage of the needs of the new business process.
CBR recognizes that organizations that are too rigid will break. Interfaces that are closed will eventually asphyxiate the business functions that they aim to support. CBR attempts to ultimately strengthen the organizational environment by giving it greater flexibility, openness, and responsiveness to management objectives. It is through these qualities that the firm can achieve its competitive potential.
Copyright Technium, Inc. 1996
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