Anatomy of a Technology Selection

Written By: J. Dowling Published On: May 31 2002

Business Management Issue At Dell Computer, the cycle-time from arrival of raw materials to receipt of cash payment after delivery of finished goods is measured in weeks and inventory turns are measured in days. Transaction data must be accessible with Zero-Latency at all management and measurement points. At one of its Platinum Council meetings where Dell executives meet with key customer account CIO's, Kevin Rollins, Dell's Vice Chairman, talked about the critical need for every aspect of the company to be capable of changing its process rapidly. He referred to this as an essential part of what he called velocity, or the continuous speeding up of every business process. At that same meeting, Michael Dell described his business as being a virtually integrated system of processes and products, extending from suppliers through Dell's manufacturing and distribution processes, to end customers and the support of the product on their desktops. He also talked about the company's distributed management style and how continuous process improvement was a way of life throughout the company. When you look beyond the Direct Sales Model to the Operational Model, Dell's success is fueled by its ability to adapt to supplier and customer stimulus. This Sense and Respond operating model is pervasive. Having the ability to incorporate lower cost or higher performance mainboards, hard drives, or video interfaces into the production stream rapidly is of paramount importance. The core competence in Dell's operation is Process Management. There is a wall of patent and supplier recognition plaques in one plant highlighting process innovation and precision execution. Such accomplishment demands measurement and reporting systems that are focused on process metrics not business transactions. As in many companies, Dell's information systems evolved and mutated as the company sustained rapid growth and continually pushed the envelope of customer focus, technology access, and business performance. Over time the complexity of its information technology infrastructure began to impact management's ability to observe, understand and adapt its operational systems. IT Management Issue Analysis of the situation lead to a decision to replace a number of home-built, unconnected, information systems that inhibited information flow across the company. With a focus on ZeroLatency and application replacement, an integrated suite of applications approach was elected and an Enterprise Resource Planning system implementation program was launched.

Considering the business requirements (as stated) this was an obvious architectural choice. However the relationship between design and architecture is not so obvious. Subsequently, after several months of detail work and considerable expense, Dell Computer abandoned this Enterprise Resource Planning program when they realized that it was inappropriate in their environment. The issues were not directly related to the application architecture, but rather to the implications of running a dynamic company with a distributed management philosophy. Velocity of data through the enterprise is essential to Dell's competitive advantage, and an integrated suite of applications does appear to be an appropriate solution. However, when rapid manufacturing process change and continual process performance improvement are paramount, the agility of process automation tools is vital, though they are often overlooked in the selection process. Process agility and integrated application suites are at odds not because they lack the ability to respond, but because of the risk involved. Change control practices dictate several instances of the application. One for design and development, another for test and integration, and a third for productive use. Such practices also dictate rigorous change deployment processes that try to maximize the amount of time that the application is stable. The bottom line is that all of the measures taken by information technology professionals to assure a stable system and consistent data protract business process change efforts. An even more frequently missed selection criteria is Fit to Management Systems. Dell's virtually integrated business model managed in a highly distributed manner does not map well to an automation environment that is best implemented with shared and integrated processes. In summary, the selection of an integrated suite of applications for this set of criteria was a mistake. Business Implications In a post-mortem review of this Enterprise Resource Planning selection, the solution certainly provided zero-latency data availability, and it promised more seamless virtual integration and less complexity. However, other traits of the solution would have limited the ability of the company to optimize processes in a distributed manner; violating the company's management and process improvement style. As shown in Table 1, had the essential business capabilities of Dell been mapped against the operational capabilities of the Enterprise Resource Planning system, two strong cautions would have been raised. This would have taken place even before potential suppliers were engaged and well before any large expenditure had been made. Architectural Impacts Business Org. IT Processes Dynamics Reporting Some Character- Pre-defined Work business architecture systems that companies istics of functions must map infer org. find it ERP prescribe directly to structure from inefficient to

adopt prescribed business Source: function CBA models Architecture Reference Integrated Impact of Data Workers Transactions Zero-latency consistency required to and and Zero highly learn functional Propagation determined by upstream modules Time must workflow and demand be designed configurations. downstream users who into implications are task and processes. of context transaction skilled Shared and Rule Business rule Demands of enforced variations changes will a Crossbusiness for unique propagate Functional rules requirements simultanprocess facilitate a are costly eously & Management high degree and slow to immediately to Orientation. of implement. all processes. coordination / collaboration Systems Good fit or no issue Some negative impact Apparent conflict

organization transaction business structure definitions. function will need adjustment.

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IT Implications Features and functions of technology products almost always make it onto the selection spreadsheets that information technology managers use to choose among competing products and suppliers. Such models are generally focused on data and transaction processing as primary factors with user interface and external application integration as secondary issues. Table 1 is a section from a multi-dimension reference architecture for integrated application systems. It cross-references the characteristics of such systems with anticipated impacts on Business Process, Information Technology, and Organizational Dynamics systems. Such a tool allows a

much more thorough examination of investment risk than the traditional list of features, functions, and capacities. IT Management Response To avoid such architecture omissions, selection processes should have extended the ZeroLatency concept to every aspect of the business architecture not just to manufacturing. If done early on, it would have suggested that the level of business process integration that an Enterprise Resource Planning system imposes might smother distributed process management and thereby negatively impact the company's "Virtual Integration" model. When selecting information technology products, the dynamics of the business must be clearly understood and considered. For example, cycle-time reduction, zero-latency data propagation, distributed management, and business process change facilitation must be established as business capability requirements and carried onto the selection matrices used to select information technology products. To establish such requirements, examine the situation by asking the question: "What are the essential business capabilities for people and process systems." Then, translate those business capabilities into 'must have' capabilities of any technology solution. Such issues vary widely from company to company, but following is a sample of categories in each dimension: Dimension Organizational Dynamics Essential Capability Technology Requirement

Support empowered decision making Online credit authorization. at a point closest to the customer/supplier through information Sales Associate pricing override. and the ability to make financial commitments. Buyer over/undership authorization. Collections agent writeoff authorization. Configurable transaction exception detection criteria and notification mechanism. Frequent adjustment and periodic restructuring of sales accounts, regions, territories, and management. Dynamic configuration of sales reporting hierarchy with automatic 'revisionist history' reporting capability. Configurable transaction execution triggers that tally counts and/or log events. Capability to extract transaction

Business Process

Population of measures to a Balanced Scorecard for process activity-level metrics.

execution triggers and populate the Scorecard database. Manage the financial risk associated with a subset of customers whose markets are highly volatile and subject to seasonal cash flow issues. Automated Credit Limit controls can be set for groups of customers and hierarchies of customer groups with pre-programmed seasonal expansion and contraction.

In summary, information technology deployment success is dependent on many factors that are not directly related to the technology or the ability to install it. Those factors are only apparent after the fact or as a result of considerable forethought and a clear understanding of the Core Competence and Essential Capabilities of the enterprise.