cisr insurance

Companies that use a Diversification model encourage financial performance in their business units with very few constraints at all.   Some attributes:

One example that Ross uses is the Carlson Companies, a $20B company in the marketing, hospitality, and travel business.  Their portfolio includes Radisson Hotels, T.G.I. Friday's restaurant, Carlson Marketing Group, Carlson Wagonlit travel, Radisson Seven Seas Cruises and the Gold Points rewards network.  These businesses are quite different from one another.

IT in the Diversification Operating model

For those folks new to this series: The operating model is the single largest driver of decisions in your SOA.  The impact of the model starts with the business, extends through business funding of IT, and into the architecture, design, and complexity of the IT ecosystem. 

In a company based on the diversification model, the following situations are typical:

• "Shared Business Function" approach: Different business units may share specific operating functions.  For example, in some cases, the corporation may provide Human Resources, IT, and Financial management as a portfolio of shared operating functions for the different companies.  Each company pays for the right to use these shared operating functions.  Note: these are not SOA services.  We are basically saying that the non-value-chain functions of each company are outsourced to the same firm, a subsidiary of the corporation.   See the example below.
• Customer Data is not shared - Customer data belongs to the business unit.  It is usually not shared with the corporate headquarters.  Roll-up data often is shared, and financial data is nearly always shared, but customer and transactional data is not.  Interestingly enough, in some cases, the information is actually stored in a single enterprise system that is managed for each business. 
• Little or No Process Consistency in the Value Stream - There may be some process consistency in the "outsourced" support processes, but when it comes to the way that these companies make money, they don't bother coordinating across other business units.  What would be the point in creating that dependency?
• Distributed IT decision making - Project funding decisions in the IT organization are usually in the hands of the business units themselves.  The decision making process for shared assets is distributed, and sometimes, rife with politics.  These companies are concerned about the cost of IT, and IT teams often have to compete for work with external consulting companies who claim to be able to deliver the same value for less.

Note that, in the diversification model, variation is normal.  It is common to see a different CIO for each business unit. 

SOA and BPM in the Diversification Model

The Diversification Model presents interesting challenges and opportunities for Enterprise SOA.  For one thing, you don't have a single enterprise.  You have many. 

Let's say, for example, that you have a business (Contoso) that has two divisions.  Division One assembles retail electronics and sells them through a web channel as well as a few retail outlets (IBuySpy).  Division Two provides security monitoring services for homes and businesses (IProtectU).  Both divisions have "outsourced" their supporting functions to a third company: Contoso support services.  Contoso support provides IT functions, HR, and Finance services to both IBuySpy and IProtectU.

There are three companies here.  Therefore, at least three different ways to build out infrastructure.  Each gets to decide, without consulting the other.  Each pays for their own infrastructure. 

In practice, Contoso Support Services (CSS) is not run like a company, with its own P&L.  CSS is, after all, a monopoly.  Since they cannot "make money" except by taking it out as cost from either IBuySpy or IProtectU, budget for CSS is tight.  The IT group will rarely get much money to spend on the Contoso Support Services business. 

I do need to make a clarification here.  Many Coordination businesses look like this model... from a distance.  The real difference between Diversification and Coordination is "who owns the customer."  In a coordination model, the corporation as a whole "owns" the customer relationship.  In a diversification model, each business unit deals with their customers in a distinct manner.  In many cases, a customer who buys from both businesses would have no i