Copyright © 2016 Tata Consultancy Services Limited

A Cure for ComplexityAnantha P. Sekar, Global Head – Integrated Offerings, Global Consulting Practice

Nidhi Srivastava, Global Head – IT Consulting, Global Consulting Practice

February 2016

PERSPECTIVESVolume 7 | Chapter 7

Simplify for a changing business world

Companies burdened by complexity must simplify to survive and grow in a rapidly changing business world.

Rapid growth of venture capital-funded businesses such as Snapchat and Spotify

Emergence of China as the second largest investor in R&D after the US

Increasing use of digital channels for marketing

Offer too many products and services to several customer segments

Avoid complexity to compete effectively

Operate globally with specific infrastructure for each market

Complexity is a challenge for companies that:

Offer multichannel access to customers

Invest substantially in legacy technologies without growth

Transact with several business partners

Highly vulnerable to asset-light competitors, such as internet media and online lenders

Heavily invested in an operating model that needs major improvements or transformation, such as print media and landline services

Identify the need for simplification

Companies need to simplify their businesses if they are:

Companies that trim operations can effectively channel resources against more agile competitors.

Procter & Gamble sold 43 beauty product brands to focus on brands that best leveraged core competencies

HSBC cut annual costs and reduced its workforce in an overhaul of its global business to focus on Asia

Focus on core businesses

Uber and Airbnb, that trade on existing resources to connect consumers with services

Netflix, that mines data on viewer habits to predict which shows will succeed

Transform through technological advances

Most CEOs consider technological advances to be the biggest driver of transformation. This is based on the growth of digital companies such as:

Prune the products and services portfolio

Restructure the operating model by streamlining processes and systems

Redesign the partner ecosystem to outsource more non-differentiating business processes

Adopt four elements of business simplification

Boost people productivity with training, and better data and tools for decision-making

Reduce the number of offerings in a manner that supports future growth in the remaining portfolio. For example:

Build flexibility in supporting processes and technologies so that they are not specific to a particular product or business model

1. Prune the product portfolio

Design and build products differently to leverage common platforms and reusable components

Use insights from customer experiences to create unified processes across brands

Digitize transactions and streamline common practices

Put key systems on common platforms to improve productivity and cut costs

2. Restructure the operating model

Optimize IT by consolidating data centers, shifting applications to the cloud, and offshoring some IT functions

Standardize business processes and train people to master them

3. Boost human capital performance

Identify work that can be automated to improve efficiency and price-competitiveness

Provide employees with the right software tools and quick access to better data for decision-making

External partners can perform operations that do not make a competitive difference.

4. Redesign the partner ecosystem

Finding the right business partner is critical for asset-and people-intensive processes that support fast diminishing physical products.

These include back-office functions such as human resources and accounts payable.

Companies prefer to use fewer but bigger business partners or a prime contractor to manage other partners.

Adopt a measured approach to manage organizational change through internal communication and employee training

Overcome key challenges

Focus on a finite number of target outcomes, using facts to justify the need for simplification

Manage cultural resistance through strong leadership and deliver quick wins early in the simplification process

IT Services

Business Solutions

Consulting

A Cure for Complexity

Contact a ConsultantRead More