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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 Approach
2、Application 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 businessmanPioneering work in
3、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,Company B,Company A annou
4、nced 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 more36 mining and proces
5、sing 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 and communicate a shared st
6、rategic 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 Value Goals as Quickly as Poss
7、ible,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 supply chain improvementsRed
8、uction 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 become one of the largest spec
9、ialty 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 the potential source of the syn
10、ergies 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 company was more of a “intermediates
11、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 customer overlapSignificant EH&S issues
12、 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 the CEO as well as the analyst communit
13、y,“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 Montgomery Scott“The integration proces
14、s 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 company was able to meet expectations with
15、 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 TechnologiesAcquisitions,Share GainTechnology Improvement
16、Geographic 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 profitability,Cost improvement, customer service an
17、d 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 growth initiatives,Target Capabilities,Global processes
18、 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 competitorsQuality built into an automated processes Human
19、s 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 / Agility,Strategic Imperative,Cost Improvement,Customer S
20、ervice & 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 & Customer Service,Human Resources,Client/Server(Windows NT or Unix
21、),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,Manufacturing,Quality Systems,Current transactional systems are comp
22、lex, 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-business environment,Growth / Agility,Strategic Imperative,Lack of au
23、tomation 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,Focus is on reconciling balances and correcting errors and not root c
24、ause 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 requirements and services (e.g.SOMI) are implemented but at a relative
25、ly 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 suspect,Intrinsic manual processes res,Roughly 72% of the IT budget is spent
26、 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 by Category,IT Support & Infrastructure2%,Maintenance72%,Business Developmen
27、t19%,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 seamlessly and efficiently integrate core business processes in an e-business environ
28、ment,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,Operations and Transaction Processes (Low Cost),Infrastructure,Data, Middleware,Plann
29、ing,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,Procurement Logistics,Manufacturing Operations,OrderBillingA/R,A/PG/LReporting,Middleware,Fu
30、nctionsCurrentLimited Point,Cause for Action,Cause for Action,Information Technology Strategy,Exploitation of current product & customer base through geographic expansion, new services & cross sellingExtension of the traditional supply chain beyond current customer and supplier baseFormation of part
31、nerships and alliancesAdoption of new value chain models exploiting todays technologyGlobal management and measurement processesContinuous cost improvement,Possible Business Unit Response,Acquisitions,Shared Services,Globalization,e-Business,Continued industry consolidation,Supply Chain Value Nets,B
32、usiness 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 todays business environment,Align and Support,An updated IT strategy is necessary to align the org
33、anization 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,Assume leadership role in design & implementation of customer enabled processes to promote scalabilit
34、yLeverage e-business technologiesDevelop data mining techniques to leverage customer information leading to increased sales Institute a program management approach,Profitable & Sustainable Growth,Operational Excellence,Post-Merger Integration,Continuous design of new processes and service offerings
35、to promote customer intimacy and service excellenceImplement low cost high availability infrastructureSimplify company and customer compliance with regulations,Continue migration to Company As applicationsRapid deployment of new processes and technologies to enable cost initiatives Rapid application
36、 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 Strategy Al,Business Strategy,IT Strategy,Business Mission,Scope,Competencies,Governance,IT Mission,Architecture
37、,Competencies,Governance,Alignment,Align the IT organization to meet business unit requirements of the new CompanyDevelop and communicate the application and technical architecture directionReplace the current technical “roadmap” with a comprehensive and specific deployment flight plan depicting tim
38、ing 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 strategy aligns with business strategies to define matching priorities, complementary capabilities, and com
39、patible organization dynamics,IT Strategy Outcomes,Business StrategyIT StrategyBu,IT Strategy Approach,IT Strategy Approach,The IT Strategy is comprised of an IT vision, strategy and deployment plan that will enable rapid delivery of cost effective IT products and services,Gap to Close,Compe-tencies
40、,Archi-tecture,Gover-nance,IT - Future State,Compe-tencies,Archi-tecture,Gover-nance,Deployment Plan,Compe-tencies,Archi-tecture,Gover-nance,Business Strategy,Strategy Development Process,IT Strategy Deliverable,Syntheses,IT Strategy,IT Vision,Core Competencies,Application & Tech. Architecture Direc
41、tion,Self Funding Investment Plan,Governance Processes,Deployment Strategy and Timing,Filter/Prioritize,Corporate StrategyBusiness Unit StrategiesBoundaries from Executive Council,A new CIO was brought in to champion the effort while becoming the IT Change Agent,IT - Current State,The IT Strategy is
42、 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 technical infrastructure must be aligned with business strategies and create substantial shareholder valueIT will focus its energ
43、y 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 is essential)IT budget will be owned and driven by the business for discretionary projectsThe organization will adopt a virtual
44、 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 sacred cowsWe must provide significant growth opportunities for our people to attract and retain a highly skilled and motivated st
45、affWe 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 development of the IT vision, strategy and deployment plan,Organizational Effectiveness and IT Alignment,Establish the IT Program Office
46、,Application Architecture,Technical Architecture,How should the organization be aligned to the businesses?What competencies should be developed to meet the challenges of todays business climate?,What specific application suite will best meet transaction processing requirements?,What platform(s) is m
47、ost 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 portfolio?How should IT best involve senior management and the broader organization in the IT process?,IT Strategy Project,Four parallel
48、 workstreams will,Application Architecture,Application Architecture,The applications architecture will result in an ERP “backbone” vendor selection and provide guidance and direction for all other applications,All Applications,Customers,Suppliers,Package selected,Impact assessment,Direction / value
49、proposition,Define Needs,Overall guiding principles / rules apply,Technical,DecisionSupport,Customer Relationship Management,Enterprise Resource Planning (ERP),Supply Chain,CollaborativeComputing,The applications architecture,Application OptionsVendor 1Vendor 2Vendor 3Vendor 4Vendor 5Vendor 6Technic
50、al OptionsDatabase x,y,zOp SystemComputer,Consensus with teamPublish application architecture solution setPublish impact analysis,Alternatives,Decision/ Result,The application architecture team is following a structured analysis process that test vendor solutions against our decision criteria,Evalua
