Beyond re-engineering: The three phases of business transformation

IBM Systems Journal, Volume 32, Issue 1, pp. 65-79 (1993).

Business re-engineering to reduce cost and increase capacity was a popular pursuit in the 1980s and early 1990s. Based on research supported by the IBM Advanced Business Institute, this paper shows that there are three phases to business transformation. In the first phase, information technology increases internal efficiency through automation. In the second phase, the focus shifts from internal operations to enhancing transactions and relations with customers. Here IT provides value-added processes and services. In the third phase, enhanced services may become independent as stand-alone businesses or new lines of business for the company. Information technology can thus completely transform a business to enable flexibility and growth.

Many of the goals of the current IBM services business are to help our clients and customers achieve success in all three phases of business transformation as described in this paper.