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1、IT Strategy,February 24, 2000,Case Study of a Recent Client Experience,Rob Trollinger, Principal, DallasChris Wisler, Manager, AlexandriaKimberly Brown, Associate, Alexandria,. . .,IT StrategyFebruary 24, 2000Ca,Todays discussion,Background of CompanyCompany IT OverviewCause for ActionIT Strategy Ap
2、proachApplication ArchitectureTechnical ArchitectureEstablish the IT Program OfficeOrganizational Effectiveness and IT AlignmentSummary,. . .,Todays discussion Background,Background of company,. . .,Background of company .,Began in 1909 as a partnership between an innovative chemist and a businessma
3、nPioneering work in leather tanning Best known for expertise in acrylic chemistry Essential component to detergents, diapers, cell phones, industrial coatings, and more 50 manufacturing, research, and technical facilities worldwide Sales in 100 countries, totaling $4 billion annually,Company A,Compa
4、ny B,Company A announced their intended merger with Company B in 1999,1848, founding Largest and most recognized business for a particular consumer productMajor supplier of basic inorganic chemicals derived from saltEssential ingredients in CDs, newspapers, magnetic tapes, sports equipment, and more
5、36 mining and processing facilities, 68 chemical manufacturing, research, and technical facilities worldwideSales total $2.5 billion annually,. . .,Began in 1909 as a partnership,Drive the short-term valueExceed the markets expectations,Integrate the Organizations as Seamlessly as Possible,Develop a
6、nd communicate a shared strategic agenda Define organization structures, key business processes and technology platform/architectureSelect leaders and staff positionsDevelop metrics and budgetsIntegrate the business,Integrate day-to-day operations Position for the future growth,Achieve Business Valu
7、e Goals as Quickly as Possible,Achieve $200 million of savings within 12-18 months (running rate by 2001)Ensure customer retentionCorporate Center rationalizationAdministrative overhead reductionSourcing/Procurement savings Product line and operations rationalizationManufacturing productivity and su
8、pply chain improvementsReduction in technology costs,The focus of the integration was to quickly achieve operational synergies while combining the organizations to support top line revenue growth,A.T. Kearney was asked to structure, drive and manage the entire integration process for what would beco
9、me one of the largest specialty chemical companies,. . .,Drive the short-term valueInte,Latin America and Asia-Pacific Region Operations:10% of sales20 manufacturing facilities10 distribution sites,North American Region Operations60% of sales60 manufacturing facilities230 distribution sites(1),While
10、 the potential source of the synergies were somewhat clear, smooth and timely integration of the two companies was less assured,Challenges,Some manufacturing processes and technologies were incompatible between the two companiesCombining two companies with both direct product overlap Acquiring compa
11、ny was more of a “intermediates producer” and the acquired company was more of a “formulator” Significant facilities consolidation opportunitiesDistribution consolidation and improvement required changing the business model and the mindsetStandard lead timesStandard service levelsSignificant custome
12、r overlapSignificant EH&S issues needed to be addressed, competing away scarce capital resources,European Region Operations:30% of sales40 manufacturing facilities60 distribution sites,. . .,Latin America and Asia-Pacific,After an accelerated integration program, the merger was deemed a success by t
13、he CEO as well as the analyst community,“By the end of 3Q, the new company had achieved cost reductions of $100MM on an annualized basis, three months ahead of schedule.” Morgan Stanley Dean Witter“Already, the company has achieved a $100MM annual run rate in cost savings ahead of schedule” Janney M
14、ontgomery Scott“The integration process is running smoothly and in fact better than expected achieving a $100 MM lower run rate” J.P. Morgan Securities“The integration efforts continue to track ahead of plan” Deutsche Banc Alex Brown“Considering the steep increase in raw material costs, the new comp
15、any was able to meet expectations with its rapid integration of the acquired companys operations” Brown Brothers Harriman,. . .,After an accelerated integrati,Perspective,External Focus,Internal Focus,Incremental,Transforming,Value Creation (P/E Ratio),New Business ModelNew SegmentsNew TechnologiesA
16、cquisitions,Share GainTechnology ImprovementGeographic ExpansionPortfolio Management,Work RedesignSupply ChainOperating Excellence,2-3% Sales Growth,4-5% Sales Growth,6-8% Sales Growth,Following the integration, the CEOs Agenda is to double the rate of growth while maintaining high levels of profita
17、bility,Cost improvement, customer service and retention and e-business have been identified as key areas of focus,. . .,PerspectiveExternal FocusInter,Rapid assimilation of acquisitions with limited additional financial staffGlobal shared servicesIT provides a strategic advantage in support of growt
18、h initiatives,Target Capabilities,Global processes and metricsInterim information on sales, profitability and cost of operationAutomation of routine processes and transactionsFinancial staff is aligned with the business,Continuous launch of service offerings that cannot be easily matched by competit
19、orsQuality built into an automated processes Humans manage the relationship not transactions,Integrated supply chain network (S&OP process) across multiple enterprisesInventory commitment using production, sales and balancesAbility to reach customers globally without a local presence,Growth / Agilit
20、y,Strategic Imperative,Cost Improvement,Customer Service & Retention,e-Business,NewCos business strategy will place additional demands on the entire organization,. . .,Rapid assimilation of acquisit,Company IT Overview,. . .,Company IT Overview .,Finance/ Back Office,Demand Planning,Supply Chain & C
21、ustomer Service,Human Resources,Client/Server(Windows NT or Unix),High-level Processes,Integrator,SAPIS,General Ledger,Order History (Focus DB),Transportation Management,Railmax,Manufacturing,Planning,Transport Safety,Ordering,Teserac (HR),InfiniumHR,Financial Reporting,Other HR/Payroll Systems,Manu
22、facturing,Quality Systems,Current transactional systems are complex, reside on multiple platforms and are integrated through a network of interfaces,AS/400,Mainframe,. . .,Finance/ Back OfficeDemand Pla,Intrinsic manual processes result in a high cost effort that cannot support the speed of todays e
23、-business environment,Growth / Agility,Strategic Imperative,Lack of automation prohibits additional workforce leverageSystems are running out of physical capacityIncremental improvement mindset limits strategic development,Observed Key Theme,Cost Improvement,Customer Service and Retention,e-Business
24、,Focus is on reconciling balances and correcting errors and not root cause error preventionProcesses (especially billing) are manually intensiveGlobal processes are desirable but difficult to implement consistently Transaction systems are becoming increasingly difficult to maintain,Special customer
25、requirements and services (e.g.SOMI) are implemented but at a relatively high cost Inspection of errors protects/ masks the customer from errors inherent in the system,Manual intervention presents a barrierBusiness information is not easily assimilatedQuality of global customer information is suspec
26、t,. . .,Intrinsic manual processes res,Roughly 72% of the IT budget is spent on maintaining current service levels and infrastructure,To maximize business value, we need to shift the spending from maintenance to business development and long term IT support and infrastructure,Percent of IT Spending
27、by Category,IT Support & Infrastructure2%,Maintenance72%,Business Development19%,Non-discretionary7%,. . .,Roughly 72% of the IT budget i,Functions,Current,Limited Point Source Solutions,Point Source Best of Breed SuiteorLegacy Systems,Proposed,A future vision of the enterprise architecture must sea
28、mlessly and efficiently integrate core business processes in an e-business environment,Evolving Strategy:AIM, Microsoft,IBM,AS/400, NT, ?,Compaq,Compaq,Digital, IP, Exchange,SAP,JDE,PeopleSoft,Standardized, Low Cost,Mixed after merger,Oracle,Processes of Strategic Value and Competitive Advantage,Ope
29、rations and Transaction Processes (Low Cost),Infrastructure,Data, Middleware,Planning,ISM,Optimization,CRM,HR / Payroll,Mainframe,Mid-range,Client/Server,Desktops,Laptops,Voice/Data, Networks, Email,App. Interface,Data Mgmt,Customer Facing e-Business Solutions,PRISM / Supply Chain Systems,Procuremen
30、t Logistics,Manufacturing Operations,OrderBillingA/R,A/PG/LReporting,Middleware,. . .,FunctionsCurrentLimited Point,Cause for Action,. . .,Cause for Action .,Information Technology Strategy,Exploitation of current product & customer base through geographic expansion, new services & cross sellingExte
31、nsion of the traditional supply chain beyond current customer and supplier baseFormation of partnerships and alliancesAdoption of new value chain models exploiting todays technologyGlobal management and measurement processesContinuous cost improvement,Possible Business Unit Response,Acquisitions,Sha
32、red Services,Globalization,e-Business,Continued industry consolidation,Supply Chain Value Nets,Business Model Revolution,Pace of Technology Change,Key Business Change Drivers,Information technology must reinvent itself to develop capabilities that deliver substantial business value at the pace of to
33、days business environment,Align and Support,An updated IT strategy is necessary to align the organization and its service offerings to business unit requirements and operating models,. . .,Information Technology Strat,Corporate Agenda,IT Strategy Alignment,68% Revenue Growth,11% Return on Net Assets
34、,Assume leadership role in design & implementation of customer enabled processes to promote scalabilityLeverage e-business technologiesDevelop data mining techniques to leverage customer information leading to increased sales Institute a program management approach,Profitable & Sustainable Growth,Op
35、erational Excellence,Post-Merger Integration,Continuous design of new processes and service offerings to promote customer intimacy and service excellenceImplement low cost high availability infrastructureSimplify company and customer compliance with regulations,Continue migration to Company As appli
36、cationsRapid deployment of new processes and technologies to enable cost initiatives Rapid application development and deployment,E-business strategy,Corporate Objectives,Linking the strategy to the CEO agenda reinforces ITs commitment to be a high value service partner,. . .,Corporate AgendaIT Stra
37、tegy Al,Business Strategy,IT Strategy,Business Mission,Scope,Competencies,Governance,IT Mission,Architecture,Competencies,Governance,Alignment,Align the IT organization to meet business unit requirements of the new CompanyDevelop and communicate the application and technical architecture directionRe
38、place the current technical “roadmap” with a comprehensive and specific deployment flight plan depicting timing for replacing applications and technologies and implementing process/ service changes Implement a program management process to determine IT investment priorities & set IT direction,The IT
39、 strategy aligns with business strategies to define matching priorities, complementary capabilities, and compatible organization dynamics,IT Strategy Outcomes,. . .,Business StrategyIT StrategyBu,IT Strategy Approach,. . .,IT Strategy Approach .,The IT Strategy is comprised of an IT vision, strategy
40、 and deployment plan that will enable rapid delivery of cost effective IT products and services,Gap to Close,Compe-tencies,Archi-tecture,Gover-nance,IT - Future State,Compe-tencies,Archi-tecture,Gover-nance,Deployment Plan,Compe-tencies,Archi-tecture,Gover-nance,Business Strategy,Strategy Developmen
41、t Process,IT Strategy Deliverable,Syntheses,IT Strategy,IT Vision,Core Competencies,Application & Tech. Architecture Direction,Self Funding Investment Plan,Governance Processes,Deployment Strategy and Timing,Filter/Prioritize,Corporate StrategyBusiness Unit StrategiesBoundaries from Executive Counci
42、l,A new CIO was brought in to champion the effort while becoming the IT Change Agent,IT - Current State,. . .,The IT Strategy is comprised o,A set of guiding principles will allow us to “rethink” the current way of doing business as we progress our strategy development process,The applications and t
43、echnical infrastructure must be aligned with business strategies and create substantial shareholder valueIT will focus its energy on competencies that are results driven and add significant business valueOur goal should be to deliver project results in half the time and half the cost (time to market
44、 is essential)IT budget will be owned and driven by the business for discretionary projectsThe organization will adopt a virtual and collaborative approach to address business problemsThe future state will drive our strategy design; how we do things today may influence our future but there are no sa
45、cred cowsWe must provide significant growth opportunities for our people to attract and retain a highly skilled and motivated staffWe will share clear, unified communications at every level led by IT Leadership Team,. . .,A set of guiding principles wi,Four parallel workstreams will contribute to de
46、velopment of the IT vision, strategy and deployment plan,Organizational Effectiveness and IT Alignment,Establish the IT Program Office,Application Architecture,Technical Architecture,How should the organization be aligned to the businesses?What competencies should be developed to meet the challenges
47、 of todays business climate?,What specific application suite will best meet transaction processing requirements?,What platform(s) is most effective for the chosen application suite?How should we support the companys e-business requirements?,What process is required to prioritize and manage the IT po
48、rtfolio?How should IT best involve senior management and the broader organization in the IT process?,IT Strategy Project,. . .,Four parallel workstreams will,Application Architecture,. . .,Application Architecture .,The applications architecture will result in an ERP “backbone” vendor selection and
49、provide guidance and direction for all other applications,All Applications,Customers,Suppliers,Package selected,Impact assessment,Direction / value proposition,Define Needs,Overall guiding principles / rules apply,Technical,DecisionSupport,Customer Relationship Management,Enterprise Resource Plannin
50、g (ERP),Supply Chain,CollaborativeComputing,. . .,The applications architecture,Application OptionsVendor 1Vendor 2Vendor 3Vendor 4Vendor 5Vendor 6Technical OptionsDatabase x,y,zOp SystemComputer,Consensus with teamPublish application architecture solution setPublish impact analysis,Alternatives,Dec
