![]() Financial Daily from THE HINDU group of publications Friday, Jun 10, 2005 |
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Opinion
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Enterprise Resource Planning Creating a real-time enterprise S. Sridharan
IN THE ever-changing business scenario, reacting promptly to dynamic business conditions, occurring either internally or in the marketplace, requires insight and agility. To be able to make intelligent and informed decisions, stakeholders (the consumer and the owner of the information) need real time actionable information. More than ever, firms need to leverage their business intelligence systems to fuel this responsiveness and become real time enterprises (RTE). The first step to creating an RTE is to align the Enterprise Architecture (EA), comprising such assets as legacy systems, packaged applications and home grown ERP, to the Business Architecture (BA) and the bundle of business processes. In the New Economy, the BA is being increasingly driven by customer needs and business objectives. Unfortunately, most companies review their BA not-so-frequently. This critically impairs the ability to create an RTE. Imagine this. Your EA currently facilitates complete visibility of stock and activity at a vendor's stocking points. You are able to take informed decisions on how replenishment is to be connected from this vendor to your manufacturing location. You have about 50 such vendors in your supply chain. You have discovered through Business Activity Monitoring (BAM) and Activity Based Costing (ABC) capabilities that the unitisation of loads is not fully optimal and that efficiencies can be derived by using frequent milk-run collections instead of the less frequent discrete deliveries from each of vendor. This calls for a change in the BA and an assessment of how to upgrade the EA to support the change. The EA provided by legacy systems and packaged applications may not fully support the business needs even today; and even if they do, it is seen that they do not stand up to the need for evolution as presented earlier. This need-gap between the EA and the BA is of extreme concern and requires the immediate attention of chief information officers (CIOs) and business leaders across the globe. Before getting to the solutions it is better to understand the problem. The EA does not align to the BA because of five common reasons:
First, a gap in the process and application occurs when processes in an organisation span multiple applications and business entities. Consider the order-to-cash cycle: Part of this process can be manually monitored and controlled, and frequently the cycle transgresses multiple systems and multiple process owners. This leads to the complexities of managing boundaries and interfaces. The problems with such a system are characterised by either a gap in the process or a redundancy in operations, the former being more detrimental to efficiency. Consequently, we encounter situations where one business entity in the process (for instance, the customer, the employee or the service provider) is not aware of what he has to do. Only when the processes are threaded, with no gaps, even if they span multiple applications, will the stakeholders not need to collate and feed information repeatedly. For instance, if the customer has selected a product and placed the order, nowhere in the process of fulfilment should this information be keyed-in again, even if the process spans multiple applications. Second, when organisations have multiple applications, the data tend to get scattered across all applications. Business managers need information in a dashboard, or actionable, form. The problem is further compounded if each application called differently. It is, therefore, essential that we not only address the threading of the process but also the issue of providing information in actionable form to all the stakeholders. Third, there maybe gaps in the application area. In some, the enterprise may have no applications for certain functions in the process and the users resort to a manual system or spreadsheets to overcome the gaps. This could delay the process and/or induce errors. Bridging this gap involves building new applications and re-defining the interfaces. Fourth, anywhere, anytime visibility is an essential element of the fast-paced business environment. People constantly on the move need access to their workplace through multiple touch points or methods involving PDAs, the Internet and mobile phones. It is important to realise that the system should not force the user to come to a fixed point to access, approve and manage exceptions. Fifth, changes in management practices with an increasing number of mergers and acquisitions, wherein businesses have become more dynamic. Better business practices are evolving, therefore the EA needs to have the capability to be `repurposed' or retooled. It is evident that businesses now have a new set of requirements apart from the regular greenfield application development. Just understanding the problem and the technology solution does not solve the issue. We need to assess if multiple tools are needed to provide a complete solution? Would not managing these different tools become a colossal effort by itself? There are sophisticated new generation Business Process Management Frameworks, which solve these problems. The $550-miilion Business Process Management (BPM) technology market is emerging and is the fastest growing in the IT arena. According to Gartner, while the IT market will grow by about 8 per cent, the BPM market will grow at a whopping 45 per cent in 2005-06. As the BPM market continues to expand and new companies come in, the question arises: Is sustainable growth possible? Given the proliferation of vendors in the space, market consolidation is inevitable. A mix of big enterprise players and smaller specialist vendors now works due to the different types of expertise. The real advantage, though, will come from companies that work together to create partnerships and work to educate different sectors on the value of BPM. BPM technology promises to change not only the way we work, but also to fundamentally change the way companies buy and use IT. (The author is Managing Director of Take Solutions (www.takesolutions.com) . He can be reached at: sridharan@takescm.com.)
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