March, 2008

  Business Process Management: Is it Driving
        Supply Chain Transformation?
In January 2008, Aberdeen p...
Business Process Management: Is it Driving Supply Chain Transformation?
Page 2




Compared to 2007, SOA and composite app...
Business Process Management: Is it Driving Supply Chain Transformation?
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Figure 3: Infrastructure Areas of Prior...
Business Process Management: Is it Driving Supply Chain Transformation?
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        Webmethods (recently acquired b...
Business Process Management: Is it Driving Supply Chain Transformation?
Page 5




Case in Point - Consumer Electronics BP...
Business Process Management: Is it Driving Supply Chain Transformation?
Page 6




Key Insights
Given the increased global...
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  1. 1. March, 2008 Business Process Management: Is it Driving Supply Chain Transformation? In January 2008, Aberdeen published the intentions of over 800 supply chain Research Brief executives who identified that more than 80% of companies are involved in Aberdeen’s Research Briefs domestic and international supply chain transformation initiatives in The provide a synopsis of the Supply Chain Executive's Strategic Agenda 2008: Managing Global Supply Chain principal findings derived from Transformation benchmark report. Business Process Management (BPM) was primary research, including key identified as the top infrastructure technology (by 48% of respondents) vis- performance indicators, Best- à-vis other areas such as event management, Master Data Management in-Class insight, and vendor (MDM), and Service Oriented Architecture (SOA). This research brief insight explores the various players in the BPM market within supply chain and their role in driving supply chain transformation. Supply Chain Enterprise Infrastructure Areas Figure 1 shows the enterprise infrastructure areas that companies believe are most important for their SCM technology roadmap. Even though SOA is an important enabler for several infrastructure areas like Supply Chain Event Management (SCEM), MDM, and BPM, it does not rank high in the priorities of corporate users. Instead, companies are focused on leveraging the following capabilities in their supply chain technology roadmaps: BPM, SCEM (and alerting platforms), and MDM (internal). Figure 1: Supply Chain Infrastructure Technology Priorities Business process management or workflow 47% Supply chain event management and alerting 44% platform Master data management (internal) 41% Data warehouse or business intelligence "We are utilizing an innovative 27% platform SOA-based solution to bridge the gaps in our APS Enterprise application integration 22% replenishment management and warehouse management Service-oriented architecture and composite packaged products." 21% application support ~ Dan Grosz, VP of IT, 0% 10% 20% 30% 40% 50% VIP Auto Inc. % of Respondents Source: Aberdeen Group, March 2008 © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897
  2. 2. Business Process Management: Is it Driving Supply Chain Transformation? Page 2 Compared to 2007, SOA and composite applications are seeing enhanced interest in the marketplace. The general market is becoming more aware of the underlying technology used by BPM and SCEM solutions. There are proof-of-concept implementations underway in the IT organizations of Fortune 500 companies with oversight by the supply chain line of business organizations. Partners for Enabling SCM Technology Roadmap Figure 2 shows the key partners that are responsible for enabling the SCM technology roadmap of the survey respondents. "Internal IT teams and custom development" is still identified as the top partner by line of business executives (survey respondents that have identified themselves as coming from a line of business role instead of an IT role). Among the IT related survey respondents the percentage of those who indicate that "internal IT teams and custom development" are the primary partners shoots up to 55%. Figure 2: Primary Partner for Enabling SCM Technology Roadmap Consulting company, 15% Internal IT teams/custom Best-of-breed development, SCM vendor, 15% 44% ERP vendor, 25% Source: Aberdeen Group, December 2007 Figure 3 shows the infrastructure areas of those who indicate that their primary partners are internal IT teams compared with those who indicate that their primary partners are ERP vendors or best-of-breed solution providers. The key question that has to be asked by enterprises is: how can they gain the benefits and flexibility of internal development along with the total cost of ownership reductions and upgradeability of packaged applications? The theoretical answer to this question for the last two years has been the promise of SOA. Figure 3 illustrates that irrespective of the partners being ERP or best-of-breed solution providers, the primary mechanism for improving their supply chain infrastructure is BPM. © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897
  3. 3. Business Process Management: Is it Driving Supply Chain Transformation? Page 3 Figure 3: Infrastructure Areas of Priority versus Primary Partners for Enabling SCM Roadmap 48% Business process management or workflow 49% 46% 49% Supply chain event management and alerting platform 42% 40% 44% Master data management (internal) 49% 35% 16% Data warehouse or business intelligence platform 31% 26% Service-oriented architecture and composite application 25% 17% support 22% 25% Enterprise application integration 27% 20% 0% 10% 20% 30% 40% 50% 60% Internal IT ERP vendors Best of Breed Vendors Source: Aberdeen Group, December 2007 Business Process Management: Who Can Help You? Figure 3 reveals that the percentage of enterprises that have highlighted BPM as the top area of priority in 2008 is almost the same regardless of their selection of partner: internal IT, ERP, or best-of-breed solution providers. BPM can help supply chain organizations integrate their disparate supply chain organizations and processes and enable transformation. Adoption of this technology will grow in 2008 as exemplified by the relatively higher percentage of interest among companies as compared to other focus areas. But the key question is: who should you partner with? There are three types of BPM solution providers: stand-alone, ERP companies that package a BPM platform, and SCM best-of-breed companies that package a BPM solution. • Stand alone BPM solution providers. The purpose of using stand-alone BPM platforms is to allow the IT organizations to build business processes from scratch without the software being packaged as part of a larger suite. Evidence shows that companies have not made up their mind between any specific stand-alone BPM solution provider. Based on conversations with end users, in general they are hesitant to go towards specialist vendors like Appian, Lombardi, Pegasystems, Singularity, Skyway Software, Tibco, and © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897
  4. 4. Business Process Management: Is it Driving Supply Chain Transformation? Page 4 Webmethods (recently acquired by Software AG) for enabling deep supply chain domain applications unless they have the in-house talent to manage these custom business processes. There is an exception to the rule: BPM platform providers with a well- entrenched supply chain consulting practice. For example, IBM provides a strong supply chain consulting practice to augment the internal resources of enterprises who select IBM's BPM suite. • ERP packages. The strategy that the ERP providers are adopting is that when companies upgrade their software they will automatically get an embedded BPM solution; for example, SAP Netweaver. SAP has now built a comprehensive BPM solution with BPMN, BPEL, and native Java capabilities. Oracle has been struggling with its fusion middleware solution, but with the recent BEA acquisition it is on track for delivering an embedded BPM solution. Infor provides an open SOA platform tailored towards managing the diverse range of ERP products gained through acquisitions. Enterprises should look to upgrade to the versions of these ERP systems that support BPM and should focus their efforts on making minor tweaks and additions rather than large scale enhancements. This will help companies to get educated on how to gain value through BPM. A note of caution with the ERP solutions is that all applications within the suite may not support extending business processes. • Best-of-breed packages. There are four primary best-of-breed solution providers that provide an embedded BPM platform: · i2 technologies. I2's approach is its Agile Business Process "One of the key benefits that Platform (ABPP) which is integrated with non-i2 and other we gained with a multi- ERP systems. ABPP is a supply chain centric tool with an enterprise process platform is existing library of workflows called Business Content Library the reduction of cycle time (BCL). required to flow information smoothly throughout the · Manhattan Associates. Manhattan provides a Logistics supply base. That cycle time Event Management Architecture (LEMA) that enables reduction results in increased integration with other execution systems (legacy or ERP). supplier responsiveness, · E2open. E2open provides a collaboration hub and solutions because it enables Hitachi GST built on an SOA framework. E2open uses standard Web to present suppliers with more up-to-date demand and supply services configurations to connect companies to its hub, information in a more timely which operates on a publish-and-subscribe model. fashion." · OneNetwork. OneNetwork provides an innovative multi- ~ Ranga Jayaraman, CIO of enterprise platform for creating a tunable process that spans Hitachi Global, Storage multiple ERP systems and best-of-breed solutions, as well as functional modules natively provided by OneNetwork. Leading edge enterprises should look to these solution providers to help cut their teeth in creating innovative supply chain applications. © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897
  5. 5. Business Process Management: Is it Driving Supply Chain Transformation? Page 5 Case in Point - Consumer Electronics BPM To facilitate their transition from a traditional push-based supply chain to a demand driven supply chain, a Consumer Electronics Company retained IBM Global Business Services to develop their transformation strategy to become a demand driven company. The key business issues that necessitated such a transformation were: • High inventory levels in the channels • High price protection to channels • Stock outs at the store level • Long replenishment lead times • Informal collaboration processes • Lack of established metrics Key challenges in making this transformation a reality were lack of process, organization skills, and integrated systems. IBM developed an approach using their BPM services framework which would provide quicker value, while planning and executing long-term transformation. As part of the BPM services delivered to the company, IBM implemented and is now operating the CPFR forecasting and planning processes on an outsourced basis using key resources from IBM GBS Supply Chain Strategy and Planning practices. IBM consultants work alongside this Electronics Company’s employees and its channel partners, such as Best Buy, to create consensus channel sales forecasts and replenishment plans each week. As a result of this BPM work, IBM GBS allowed the client to realize the following benefits: • Increase in forecasting accuracy. The forecast accuracy is higher than it was prior to the project and is also more accurate than the manufacturer's retail partner's own forecast. Typical forecast accuracy achieved by the solution is around 79%, four weeks out, at the level of channel partner / SKU / distribution center. • Reduced inventory levels. Based on the improved forecast accuracy, this Consumer Electronics Company is now using these forecasts and the associated replenishment plans to target reduced inventory levels in the channel without compromising service levels. The typical weeks of supply has been reduced from10 weeks on many products down to six weeks, with a long term goal of cutting weeks of supply in the channel to as low as three weeks. The solution uses BPM methodologies and utilizes a global resource pool, allowing for a round the clock process execution. Best Buy won an award from VICS for the best CPFR process implementation for the collaboration process with this Consumer Electronics Company. Best Buy has used this process as a benchmark to expand the collaboration with other Electronics suppliers. © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897
  6. 6. Business Process Management: Is it Driving Supply Chain Transformation? Page 6 Key Insights Given the increased globalization and growth in supply chain transformation initiatives, business processes are constantly in flux and there is a need to be able to manage these business processes more effectively. Partners for BPM and the underlying SOA architecture need to be chosen carefully because these implementations could add additional complexity and risk increasing the Total Cost of Ownership if done incorrectly. • Choose specialized BPM providers only if there are adequate supply chain domain experts in the organization and also if there is a need for enabling composite applications on top of existing ERP / best-of- breed solutions. • Choose ERP providers if there is an easy upgrade path available to the version that supports a BPM platform and if there are applications available in the platform that support extending business processes. • Choose best-of-breed suite providers if you are a leading edge company that wants to create innovative workflows and business processes using a supply chain centric BPM platform. The argument over whether BPM provides value or not will be converted into a discussion over how to go about customization and extension of processes. For more information on this or other research topics, please visit www.aberdeen.com. Related Research The Supply Chain Executive's Strategic Supply Chain Innovators Technology Agenda 2008: Managing Global Supply Footprint 2007 Chain Transformation Author: Nari Viswanathan, Research Director, Supply Chain and Logistics, Aberdeen Group (nari.viswanathan@aberdeen.com) Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte- Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. 010908a © 2008 Aberdeen Group. Telephone: 617 723 7890 www.aberdeen.com Fax: 617 723 7897

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