Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

The Return of Enterprise Solutions:


Published on

  • Be the first to comment

  • Be the first to like this

The Return of Enterprise Solutions:

  1. 1. The Return of Enterprise Solutions: The Director's Cut Thomas H. Davenport, Jeanne G. Harris and Susan Cantrell
  2. 2. The Director's Cut Explained How do movie directors create new value with their previously released films? They issue a “director's cut”— a revised, updated version of a previously released movie over which the director has complete artistic control. In issuing an original film, directors battle against deadlines, budgets, resource constraints and movie studio executives who sometimes demand a different product than the director's original vision. But with the advent of new technologies, new marketing opportunities and newly available funds and resources, a director has the opportunity to revisit his original idea and deliver a new and stronger film. As the director of the 1982 film Das Boot said about his 1997 director's cut of the same film, “I always thought that even though the film version I delivered worked well it would be wonderful to one day go back and cut my own ideal version—to ask what is the best way for me to tell the story of Das Boot based purely on creative rather than commercial considerations.” In this report, we present images intended to tell the story of a number of notable director’s cuts. We hope you enjoy the show! Source:
  3. 3. Das Boot When Das Boot originally was filmed back in the 1980s, director Wolfgang Petersen shot footage not only for the motion picture but also for a six-hour epic for German television. Although the theatre edition of the film went on to win international acclaim, Petersen always felt that the film could be even stronger. In creating his director's cut, he used the available extra footage to heighten the film's tension and create a film based on creative, rather than commercial, considerations. Source:
  4. 4. Achieving the vision
  5. 5. What are enterprise solutions? Enterprise solutions are software applications that connect and manage information flows across complex organizations, allowing managers to make decisions based on information that truly reflects the current state of their business. These systems also automate complex transaction processes and thus save costs. Enterprise solutions started out as enterprise resource planning (or "ERP") packages, or "back-office" systems capable of integrating and automating transaction-intensive processes across functions like human resources and finance. Today, the notion of enterprise solutions has greatly expanded to include a wide variety of additional functionality such as performance management, planning and analysis, supply chain management, customer relationship management, product development and advanced analytic applications. By integrating additional functionality with already integrated core back office systems, organizations stand to reap even greater benefits from seamless information flows within and across organizations. and the value In the mid—to late—1990s, most large corporations undertook one of the most ambitious information systems projects in their histories: the implementation of packaged enterprise solutions (for a definition of enterprise solutions, see above). Millions of dollars—not to mention years of organizational attention—were spent to achieve a seamless flow of information and transaction processes across diverse business functions, business units and geographic boundaries. Big business benefits were promised to follow, including headcount reduction, more accurate business planning and the ability to serve customers better, cheaper and faster. Yet few organizations have achieved the Like a film director returning to rework a To help organizations determine just how benefits they expected. A clear majority movie so that it reflects his original to leverage one of their most underutilized of organizations Accenture recently creative vision—often called a "director's assets, Accenture conducted a quantitative surveyed have achieved half or less of cut" (see page 2)—these organizations analysis of information obtained from the benefits they had targeted. It should are once again turning their attention to surveys of 163 people at 163 be no surprise, then, that many leading enterprise solutions to ensure that they organizations with enterprise solutions organizations are revisiting the original achieve the vision—and the value—of already in place. In addition, we studied promise of enterprise solutions, and taking what these systems were meant to be. the experience of 28 organizations actions now to realize the value they considered to be leading adopters of need from the systems they implemented. enterprise solutions (see page 7). 5
  6. 6. Results of the research show that to own and directs them to meet its unique organizations “informate” when they use achieve benefits from enterprise solutions, business vision. For organizations information to transform work.1 In the executives must start acting more like seeking to capture the original promise of context of enterprise solutions, movie directors and less like movie enterprise solutions, this means they must: organizations informate by transforming producers. Many organizations initially enterprise solutions data into context- approached their enterprise solutions Integrate - unify and harmonize rich information and knowledge that initiative as a mammoth “deal” or one- enterprise solutions, data and processes supports the unique business analysis time project to be accomplished. with an organization's unique existing and decision-making needs of multiple Executives in these companies viewed environment, and use the systems to work forces. their role as bringing together and better connect organizational units and overseeing the necessary resources processes, as well as customers and Accenture's research has found these (time, money, technology, skilled people) suppliers. three actions to be absolutely essential needed to build a new capability. to maximize the value of enterprise However, these investments, while a Optimize - standardize most processes solutions. A profound payoff awaits prerequisite, are a long way from the using best practices embodied in companies that integrate, optimize and finished product. Simply assembling the enterprise solutions software, mold and informate (see Figure 1 below). The 42 raw components of a vision—the actors, shape processes to fit the unique or percent of the organizations in our study script and locations for a film, or the strategic needs of the business, and that went on to significantly integrate, technology for an enterprise solution— ensure that processes flow and fit with optimize and/or informate their enterprise can only yield a limited amount of value. the systems themselves. solutions after establishing the necessary Rather, our research reveals that technical infrastructure realized the substantial benefits are realized only Informate - to employ a term coined by majority or all of the benefits they had when an organization creatively takes Shoshana Zuboff in her path breaking targeted. the raw components, claims them as its book In the Age of the Smart Machine, Figure 1: Achieving value from enterprise solutions Improved management Faster, more accurate decision making transactions Improved customer service Headcount reduction and retention Fewer physical resources Improved financial and improved logistics management Components Improved inventory and Cycle time reduction asset management of Value Ease of expansion/growth Increased revenue and increased flexibility Integrate Optimize Drivers of Value Informate Invest resources Build experience Foundations of Value Implement extensively 6
  7. 7. Our research methodology We conducted our research in two parts over 12 months. First, firm NOP World to gather quantitative survey data from 163 to understand what leading organizations were doing to achieve organizations that had implemented at least two major enterprise value from their enterprise solutions, we interviewed more than solutions modules.2 We then applied statistical methods, a dozen industry analysts and experts, as well as studied 28 including multivariate regression techniques, to the data to organizations in a wide range of industries that had realized produce the insights and conclusions highlighted in this report. exceptional value from their enterprise solutions. The type of industries and geographies represented are shown Second, to statistically determine which actions led to value below in Figures A and B. The mean number of employees in the realization of enterprise solutions, we engaged market research organizations we surveyed was 16,862. Figure A: Industries represented Figure B: Geographies represented Financial services Australia 13% 6% Products 30% Government 18% United States 35% Europe 59% Resources Communications 19% and high technology 20% 7
  8. 8. Blade Runner In revealing that Harrison Ford's character was an android, director Ridley Scott restored the original, bleaker and more ironic ending to his director's cut of Blade Runner. The studio had demanded that the original conclusion be dropped for a more standard, “happy” outcome. Scott also deleted the voice-over narration by Ford that the studio had added to the theatre version. The director's cut also further emphasized the romance between the Ford and Sean Young characters. Sources: and
  9. 9. Laying the foundation for value Before organizations can realize value, for organizations to achieve value as 1997. Organizations reported spending however, certain prerequisites must be they integrate, optimize and informate. an average of $51 million on enterprise fulfilled. Our research indicates that Our research indicates that organizations solutions over the past five years, and benefits achieved when organizations that integrate, optimize and informate fully 69 percent of organizations in our integrate, optimize and informate are without fulfilling these necessary study had implemented enterprise most likely to be realized when three prerequisites only achieve minimal value solutions in most or all functions and other factors also are present: from their enterprise solutions. business units (see Figure 2 below). 1. The organization has invested significant resources (time, money, This is good news for those organizations But unlike earlier systems, for which users skills, technology) in enterprise that have already implemented most core could realize substantial benefits as soon solutions. enterprise solutions functionality. These as the system was installed, our research 2. The organization has implemented organizations probably already have the suggests that enterprise solutions take enterprise solutions extensively foundation for realizing value in place, time to deliver benefits, and that some throughout the organization. and are in the position of being able to benefits are realized more quickly than 3. The organization has several years of capitalize quickly on the latent benefits others (see Figure 3 below). In the case experience with enterprise solutions. of their enterprise solutions. Most of overly ambitious “big bang” organizations, according to our research, implementations, productivity may even Alone, these three factors do not implemented their first enterprise solutions decline initially. Why? significantly impact realization of benefits. module between 1995 and 1999, with These factors must be in place, however, the mean date of implementation being Figure 2: Extensiveness of enterprise solutions installed in the Figure 3: Enterprise solutions benefits achieved over time organization Piloted in a single business Targeted benefits achieved 2% 36% unit but not rolled ou t within 1 year Implemented in a single Targeted benefits achieved 12% 29% business unit only within 1-2 years Implemented in about half of Targeted benefits achieved 15% 15% the organization within 2-4 years Implemented in most functions Targeted benefits achieved 33% 8% and business units in 4 years or longer Implemented throughout the Targeted benefits have never 36% 12% entire organization been achieved 9
  10. 10. Figure 4: Percent of additional functionality organizations plan on implementing in the next two years Customer relationship management 24% Human resources 19% Management reporting and metrics 13% Performance management 12% Planning and analysis 11% Supply chain 10% Sales and marketing 9% Product development 4% Finance 3% First, it takes time to implement the date if an organization wants to continue already have implemented core enterprise system extensively throughout the to reap value from their systems. If one solutions functionality are like “pythons organization. In fact, contrary to popular had listened to the media at the turn of digesting pigs.” The digestion process opinion, most organizations that we the millennium, one would have thought simply takes a while to proceed. studied were still implementing enterprise that organizations had long given up their solutions functionality (see Figure 4 enterprise solutions initiatives in favor of Those organizations that are just now above). Only after enterprise solutions electronic commerce. Most organizations, embarking on implementing core permeate multiple functions, geographies however, were in fact quietly forging ahead enterprise solutions functionality have an and business units does the promise of with filling out their enterprise solutions opportunity to learn from the mistakes enterprise solutions—integration within functionality and gaining a thorough and successes of others. Many of these and across enterprises—become possible. understanding of their new systems' organizations, we believe, had patched Second, whether due to the rush to meet capabilities. As one executive explained, up legacy systems to get through Y2K. Of Y2K deadlines or the sheer lack of “We had to live with the system a while course, organizations just now embarking attention left over when undertaking a before we could understand how to on implementing core enterprise large and complex technology project, wring additional benefits from it.” What solutions functionality must also lay in most organizations failed to information technology (IT) pundits place the foundation for achieving value. simultaneously optimize their business mistook for exhaustion and executives' But to some extent, organizations with processes during system implementation, short attention spans was, in fact, the extraordinary levels of resources and despite their best intentions to do so.3 reflection of a need to absorb the impact management focus on enterprise of enterprise solutions prior to the next solutions-enabled change may choose to Those organizations that started wave of business value realization. As implement enterprise solutions while implementing enterprise solutions years one IT executive in the insurance industry they simultaneously integrate, optimize ago have realized that there is no “finish” pithily explained, organizations that and informate. 10
  11. 11. Cinema Paradiso The director's cut of Cinema Paradiso featured an additional half hour of new footage, including a reunion scene between the hero and a lost lover who vanished from his life 30 years earlier. As director Giuseppe Tornatore explained, “The fact that the audience can now know the entire story can make them curious and make them understand how a story sometimes is forced to change slightly to reach its audience.” Source:
  12. 12. Enterprise solutions benefits targeted What does achieving value from enterprise solutions really mean? To find out, we asked organizations what top 10 benefits they target with enterprise solutions. Here is how they responded (see also Figure 13 on page 25): 1. Improved management decision making 6. Headcount reduction Managers supported by efficient decision-making Through greater systems and operational efficiencies capabilities are able to make better, faster decisions that enabled by enterprise solutions, organizations can minimize are aligned with the organization's strategies. their support staff and thereby reduce costs. 2. Improved financial management 7. Cycle time reduction Financial and general managers can exert tighter financial Shortening cycle time enables an organization to be more control, make better predictions about financial performance nimble, cut costs and improve responsiveness to employees and assess the implications of operational changes on key and customers. performance metrics. 8. Improved inventory/asset management 3. Improved customer service and retention Consistent, tightly integrated systems allow organizations to Integrated customer information allows organizations to provide better service and reduce costs through supply serve their customers faster and more effectively, thereby chain efficiencies such as better asset management or increasing customer satisfaction, loyalty and retention. inventory reductions. 4. Ease of expansion/growth and increased flexibility 9. Fewer physical resources/better logistics Robust enterprise solutions enable a more agile, flexible By streamlining logistics and minimizing the associated organization. They position an organization for growth, and physical resources, organizations can attain increased can enable easier integration of newly acquired entities. operational efficiency and cost reduction. 5. Faster, more accurate transactions 10. Increased revenue Highly integrated, accurate databases result in reduced IT Highly integrated business processes can enable an costs, improved data quality and better customer service. organization to offer new products or exploit new channels, Accurate transactions are an intermediate benefit that thus creating new opportunities to generate revenue. enables other business objectives. 12
  13. 13. Formula for a blockbuster: Integrate, optimize and informate No movie director calls his movie complete once he has finished the filming process. A movie only really begins to achieve its full potential once it is edited, scored and marketed to its chosen audience. Yet when it comes to enterprise solutions, too many organizations stop after they have only completed the prerequisites of implementing enterprise solutions extensively and spending money and time to do it. Accenture’s statistical analysis shows that these are the organizations that only achieve half or less of the benefits from enterprise solutions they had targeted. In contrast, the 42 percent of the Figure 5: Realization of targeted enterprise solutions benefits organizations in our study that completed the prerequisites and went on to integrate, optimize and informate realized the None of the targeted benefits 2% realized majority or all of the benefits they had targeted (see Figure 5 right and the sidebar on page 12 for a description of Small number of targeted benefits the targeted benefits). We tested for 19% realized more than 20 possible predictors of value. Among those variables, we found that integrating has the most significant About half of the targeted benefits 38% impact on value realization. Optimizing realized has the second most significant impact, followed by informating. Knowing which Majority of targeted benefits factors have the most significant impact realized 38% on value can help organizations better manage both implementation and post- implementation value realization All targeted benefits realized 4% strategies, and do so with greater accountability. 13
  14. 14. Integrate Enterprise solutions were built on the managed to integrate its information and When one telecommunications firm was value proposition of integration. By processes to their full potential. Fully 42 formed through the merger of eight centralizing operational information in percent of the organizations in our different companies, for example, the one place where it can be shared by all study—all of whom had implemented at firm ended up with multiple unique the company's key functional systems least two major enterprise solutions enterprise solutions instances from a and standardizing business processes modules—had achieved no or limited variety of different vendors (including across functions, enterprise solutions integration of their enterprise solutions GEAC Computer Corporation, SAP, indeed offer the promise of integration. (see Figure 6 below). Yet integration is PeopleSoft, J.D. Edwards and Oracle Integration, and the standardization of the single most important action an Corporation). More than 50 percent of data and processes that usually organization can take to achieve greater the organizations in our Accenture study accompanies it, saves money, speeds up value from enterprise solutions. have more than one instance of enterprise communications and improves decision solutions, with the mean number of making. Financials from diverse business For most organizations, integration is an instances being 7.9 (see Figure 7 below). units can be consolidated easily. A global ongoing process that continues long customer's orders can be viewed by after implementation of core enterprise Integration does not stop within a anybody within the company from one solutions functionality. Organizations company's own four walls. Integrating location. The perennial aggravation of must continue to integrate enterprise with a firm's customers, suppliers and conflicting management reports can be solutions from disparate best-of-breed business partners can also lead to dramatic banished forever. With integration also vendors, as well as with existing legacy improvements in operational efficiencies comes the possibility of linking more systems. In addition, most organizations that can have a clear relationship to easily to customers and suppliers. must work to integrate different profitability. Yet less than 30 percent of instances of enterprise solutions that have organizations have achieved even limited Just because an organization has proliferated due to the unique demands information exchange with the majority implemented enterprise solutions, however, of different geographies or business of their customers or suppliers (see does not mean that it has successfully units, or due to mergers and acquisitions. Figures 8 and 9 on page 17). Figure 6: Integration of enterprise solutions Figure 7: Number of enterprise solutions instances Numerous disconnected applications and instances— 7% 1 instance 27% no integration Many disconnected applications and instances—just started the 12% 2-5 instances 41% integration process Have made some progress towards integrating applications 23% 6-9 instances 8% and instances Most processes and applications 10-20 39% 10% are integrated instances Have a single, global enterprise More than 20 solutions instance and have 18% 14% instances fully integrated all applications 14
  15. 15. Fatal Attraction Initial audiences reacted negatively to Fatal Attraction's original, ironic twist ending. Nearly a year after initial production was completed, a new ending was filmed in which Glenn Close's character is killed by Anne Archer's character. The director, Adrian Lyne, created his director's cut with the original ending in which the Glenn Close character gets revenge on the Michael Douglas character from beyond the grave. Source: Philip Wuntch, “Showtime to air 'other' 'Fatal Attraction' ending”, Knight-Ridder News Service, 8/6/94
  16. 16. Once Upon a Time in America c The original version of Once Upon a Time in America was cut and reassembled chronologically into 138 confusing minutes by studio executives worried about the length and violence of the film. The director's cut restored the epic's originally released time-shifting structure along with an additional 81 minutes. The film “represents the classic confrontation between a film artist and Hollywood money men.” Source: David N. Meyer, “Once Upon a Time, an Epic was Shorn of Grandeur,” New York Times, 2/14/99
  17. 17. Figure 8: Integration with customers Figure 9: Integration with suppliers No integration. Customers have No integration. Suppliers have no 36% 33% no access to our data access to our data Selective sharing of data with Selective sharing of data with a small 35% 42% a small number of customers number of suppliers Most suppliers have limited access to Most customers have limited 12% information abou t products and/or 13% access to information order status/tracking Some direct links between supplier Some direct links have been and company systems have been established. Periodic sharing of 14% 9% established. Periodic sharing of operational and planning data operational and planning data Automated, direct integration Automated, direc t integration between our suppliers' systems and between our customers' 3% 3% our own. Routine, automated sharing systems and our own of operational and planning data If improving integration is the single most implemented centralized shared service percent expect to do so in the next two significant action an organization can centers, and 5 percent more expect to in years. Organizations may also experiment take to realize value from their enterprise the next two years. From an IT perspective, with using emerging integration solutions, what can organizations do to consolidation may involve reducing the technologies like Web services. Because achieve it? One approach is simply to number of data centers and hardware Web services promise to make integration minimize the number of enterprise platforms. A US consumer products within and (in particular) between solutions instances (defined as a particular company, for example, consolidated 75 organizations even easier and less expensive, set of applications with an integrated data centers worldwide into two and now fully 87 percent of the organizations database) through consolidation. uses a single hardware platform. Thirty- surveyed expect to experiment with them Consolidating applications into a single three percent of the organizations in our in the next two years. global instance can improve integration study are even taking the concept of and significantly reduce the costs of consolidation and shared services beyond In addition to organizational and enterprise solutions' human and technical the organization's four walls by sharing technology changes, organizations also support. The project manager at the applications, hardware or core business can improve integration by going through telecommunications company responsible processes with other organizations to the often painful process of agreeing on for consolidation of the firm's enterprise further reduce costs. a common way to define key information solutions instances estimates that and perform key business processes. Many consolidation saved the company $25 Another approach used to achieve organizations, for example, have a dozen million over two years. He explained, integration is to integrate enterprise or more definitions for words such as “Getting funding to consolidate was the solutions package modules with other “customer.” Significantly reducing the easiest business case I've ever written.” legacy systems. For this approach, number of data and process definitions organizations may employ enterprise will not only help internal integration, From a business perspective, the most application integration (EAI) tools to but pave the way for easier external obvious route to consolidation-related cost connect disparate applications together. integration as well. We recommend that savings is the adoption of shared services. Forty-six percent of organizations in our this process and information integration Sixty-nine percent of organizations have study already employ EAI, and another 9 be done during, not after, implementation. 17
  18. 18. Optimize Optimization of enterprise solutions and eliminating the possibility of any real One consumer products company, for the business processes they support has business change. Even where that was example, regularly examines the processes the second most significant impact on not the goal, managers have found it its enterprise solutions support. System value realization. In fact, it was the difficult to institute enterprise solutions- deployment is highly centralized; however, concept of reengineering business enabled change before living with the the process improvement program, while processes that led to the large wave of new system for a while and learning companywide, is implemented locally. enterprise solutions implementations in about its capabilities. Some seasoned Each operating unit or geography decides the 1990s in the first place. By adopting executives we interviewed recommend where to focus and how best to implement enterprise solutions software, that organizations just beginning to change, and best practices are transferred organizations hoped to quickly reengineer implement enterprise solutions try to get quickly from one area of the company to and standardize the majority of their 75 percent of optimization accomplished another. business processes to reflect best practice during implementation, and leave room processes. At the same time, organizations to tweak the remaining 25 percent after Once an organization determines the sought to carefully configure the systems the organization fully understands the process flows it desires, the organization so that they aligned with organizations' new system's capabilities. often will need to modify the system to business processes and objectives, and to make sure the system fits the processes simultaneously restructure their What can an organization do to optimize and the business the processes support. organizations and processes to take its enterprise solutions? While few Modification might involve some post- advantage of new data. organizations are interested in the radical implementation customization to the new process designs advocated in the system—usually through careful Yet only 40 percent of organizations have early days of reengineering, there still is a reconfiguration of the system through achieved significant optimization of their need to refine and continuously improve the setting of parameters or "switches." enterprise solutions (see Figure 10 below). business processes. Leading organizations In addition, better alignment between While a few organizations were successful that have succeeded in capitalizing on desired processes and the system itself in “changing everything at once,” most their enterprise solutions continuously can be achieved through the found it difficult. In many cases— examine and improve how the processes implementation of systems or modules particularly those involving organizations flow and fit with the system, and how that are specifically built to fit an trying to meet Y2K deadlines—getting the system and processes support the organization's given industry (see Figure the system in became the only objective, needs of the business. 11 below). Figure 10: Optimization of enterprise solutions Figure 11: Customization of enterprise solutions No effort to optimize processes 2% No customization 3% Some limited adaptation of business Minimal changes made processes to match enterprise 20% to the enterprise solutions 23% solutions' capabilities software Some customization Moderate amount of adaptation and 35% through setting of 26% optimization of business processes parameters Significant ongoing optimization efforts, requiring fundamental business Industry-specific process change and modifications to 40% 21% customization the enterprise solutions implementation Radical restructuring of business Highly customized processes and business model requires 26% 2% enterprise solutions that are a new implementation of enterprise solutions unique to our business 18
  19. 19. Outsourcing enterprise solutions and processes What do organizations do when they are not achieving enough Business process outsourcing, if designed and executed carefully value from their enterprise solutions? Research shows that many with the right provider, even can help organizations integrate, turn to outsourcing for help. optimize and informate. New types of outsourcing arrangements enable a provider to take over the entire function (for example, Outsourcing enterprise solutions applications can significantly human resources) or even multiple functions, thereby enabling reduce the costs of enterprise solutions and make implementing, greater integration of processes within and between functions. maintaining and upgrading them substantially easier. By Too many organizations have outsourced their enterprise enabling multiple organizations to share a common application solutions and applications to many different organizations, only or application platform, outsourcing can achieve economies of to find that integration rapidly deteriorates. Outsourcing providers scale. Outsourcing of enterprise solutions applications is a big also can help organizations improve managerial information and market that is continuing to grow—40 percent of the organizations optimize their business processes so that they conform to best- in our study currently are outsourcing enterprise solutions accepted standards. AT&T Consumer’s Services’ long distance applications, and another 10 percent plan to do so in the next business unit, for example, is working collaboratively with its two years. provider to implement and develop sophisticated customer relationship management analytic capabilities and best practice Outsourcing the business process in addition to the application customer segmentation and contact center processes. Close, can help organizations achieve even greater value. Business collaborative working relationships and shared business goals process outsourcing traditionally has been used to achieve and objectives will help those organizations seeking more incremental cost reductions in narrowly defined, transaction- strategic aims through outsourcing to manage value actively and intensive back-office business processes (for example, payroll). realize benefits. Recent developments in outsourcing, however, have made business process outsourcing a flexible and powerful approach that can be used to achieve a wide range of tactical and strategic aims. According to one recent study on business process outsourcing, organizations commonly turn to outsourcing providers to help them achieve such goals as transformation of capital into expense, centralization and standardization of processes and technology, and access to unique expertise and best practice processes.4 Thirty percent of organizations in our Accenture enterprise solutions study are currently outsourcing business processes in addition to applications, and another 8 percent expect to do so in the next two years. 19
  20. 20. 1776 The producer of 1776 trimmed 25 minutes from the film for its premiere. His cuts included the musical number “Cool, Cool Considerate Men” after a screening with President Nixon who reportedly felt the scene unpatriotic leading up to America's bicentennial. When director Peter Hunt created his director's cut, he restored this, and several other musical numbers. Sources: and
  21. 21. Although closer alignment of the system executives at Owens Corning decided a PolyOne—had undergone so much and processes to the needs of the unique order fulfillment capability would business model change (it had a new business results in greater realization of improve its ability to compete, for core product and required an altogether benefits, organizations that do not example, they chose to modify and different organizing hierarchy) that it engage in these things thoughtfully supplement the code on their existing SAP needed a new implementation. could end up diminishing the value from system. enterprise solutions. Organizations that To ensure that optimization and modify the underlying code to support While early critics of enterprise solutions customization of processes and systems highly customized processes risk losing argued that enterprise solutions might is achieved in the most advantageous many of the benefits of integration. rigidly limit an organization's process way before or during implementation, Highly customized applications are not options and flexibility, our research executives may want to take steps to only harder to integrate with others, but shows such limits occur only rarely. ensure that non-IT managers and are much more costly and difficult to Rather, enterprise solutions have employees fully understand the upgrade and maintain. Successful promoted best practice processes and implications of the new system on their organizations customize the majority of capabilities, and have enabled greater potential processes. In the next round of their solutions by picking and choosing flexibility to adapt to changing business enterprise solutions implementation at options set out for them by the system conditions. Only 2 percent of PolyOne, for example, managers are itself in the form of parameters. Only organizations in our quantitative study educating employees about the system functionality that provides an organization had such significant business model or and testing potential processes by with competitive differentiation is worth process changes that they needed to creating simulations and literally walking the difficulties that can come from completely reimplement new enterprise business people through the impacts of modifying the code itself, or from solutions. Only one organization in our the changes that the system could have developing custom extensions. When qualitative study—chemicals firm on their processes. Informate Organizations in our Accenture survey However, building a robust analytic For these reasons, it is not surprising that desired improved decision making more capability that uses data to make informed only 28 percent of organizations felt that than any other benefit of enterprise decisions requires far more than mere they had achieved significant access to solutions. Driven by the desire for data access and technological tools.5 Just their enterprise solutions data and a accurate, consistent, complete, real-time as optimizing business processes often robust analytic capability (see Figure 12 information, executives are seeking the takes time for an organization to on page 22). Most of the organizations in same type of efficient, transparent and accomplish because people must first our survey plan to take several steps to “frictionless” real-time decision making “live with the system,” improving enhance their decision making capabilities. capability that many manufacturers managerial information also tends to be These include implementing new achieved with just-in-time manufacturing. an evolutionary process. Managers and functionality, improving data access and In the real-time enterprise, senior other professionals must learn what data developing more sophisticated analytics. executives can manage their business is available and how it can best support differently with immediate, global, cross- the business. Most organizations felt that Extending the reach of enterprise solutions functional data. Front-line workforces as they had largely achieved their goal to to additional geographies, business units diverse as sales, product development, create better data, but that their and functional areas gives managers finance, customer service, purchasing, organizations were still learning how to unprecedented access to data. Companies and strategic or supply chain planning use this data to its full potential. Explained also may implement new enterprise can draw on enterprise solutions data and one executive, "Our challenge has been solutions functionality such as analytic capabilities to improve their job going from a lot of transactional data to performance measurement applications performance through fact-based decision good business information. Slowly but to obtain managerial information not making. To realize this goal, organizations surely, people are doing their jobs in otherwise captured by their systems. must informate (that is, transform different ways. About six months after enterprise solutions data into context- implementation, people start to understand rich information and apply it to support what they can do with the data." business analysis and decision making). 21
  22. 22. Figure 12: Ability of employees to access and analyze enterprise solutions data to support their work Very little access to data and no analytic 12% capabilities Tools allow end user access and generation of ad hoc reports. The organization has a 33% centralized data warehouse Some analytic functionality in addition to 27% a data warehouse Significant decision support or analytic functionality, supported by extensively 19% integrated management information Extensive use of analytics. Sophisticated automated decision making supplements 9% human decision making Using a balanced scorecard application, in context, thereby empowering employees require the development of individuals for example, the Texas Education Agency to better understand the implications of with analytic skills. Although some is able to track performance on a monthly information and to act upon it. Portals, a experts argue that intelligent software basis. Its enterprise solutions capabilities technology 81 percent of organizations agents and Web services ultimately will enable the agency to handle information in our study say they will experiment be able to integrate and analyze data requests quickly, and analyze management with over the next two years, can help and automate routine decisions such as information in new ways to generate knowledge workers access and interpret purchasing of inventory, most complex insights into their operations. enterprise solutions information relevant analytic processes will still need skilled to specific tasks. In addition, portals can professionals involved. Organizations also can informate by draw upon disparate sources of improving the ability for employees to information to assimilate highly structured Organizations with highly advanced access data. The first step toward data with other useful information such abilities to use information derived from improving data access is to improve the as documents, invoices, procedure enterprise solutions have the potential to availability and quality of enterprise manuals and online tools. For example, a alter their work processes or job roles, solutions data by making sure it is timely, sales manager's portal could link multiple change their organizational structures or consistent and accurate. As users become internal and external data sources seek out new business opportunities. more familiar with the data available, their specifically needed by the sales manager Dow Chemical, for example, changed to a need for data often exceeds the standard to tools that facilitate common tasks flatter and more customer-focused reporting functionality that comes with performed in the sales function, such as organizational structure to take advantage enterprise solutions. Implementing data preparing a sales forecast. of new enterprise solutions information. warehouses, ad hoc reporting functionality Dow's use of enterprise solutions and portals empowers employees to access As employees gain greater familiarity and managerial information has enabled Dow and manipulate the data they need. insight into enterprise solutions data, to achieve a level of insight its competitors there is a growing demand for more just cannot achieve. According to Leading organizations, however, do not robust analytic capabilities. Forty-nine someone who once worked for a Dow just give people access to data. They give percent of the organizations in our study competitor, “[By comparison], we were access to the right data most applicable plan on experimenting with advanced running blind.” to the person and the problem at hand. In analytic applications in the next two other words, they present the information years. Strong analytic capabilities also 22
  23. 23. E.T. - The Extra Terrestrial In his director's cut of E.T. - The Extra Terrestrial, Steven Spielberg decided that the police officers chasing Elliott and ET should not be carrying guns in a scarier, terrorist-filled world. So he digitally replaced the guns with walkie-talkies. He also added new special effects and removed a scene with Elliott's brother dressed as a terrorist for Halloween. Source:
  24. 24. Accelerating time to value What speeds up the time it takes organizations to achieve value significantly speeds time to value. The 31 percent of organizations from their enterprise solutions? Accenture’s research determined that actively track metrics for the majority or all of the expected that in addition to optimizing, informating, and one aspect of benefits reported that they achieved benefits significantly earlier integrating (fewer systems instances), two other factors than those that did not actively measure or capture benefits (see significantly speed up the process of value realization. Although Figure C below). Likewise, the 65 percent of organizations that they may not result in a greater degree of value realization overall, hold a dedicated individual responsible for realizing enterprise measuring the benefits obtained from enterprise solutions and solutions benefits also achieved benefits earlier than those who holding someone accountable for realization of targeted benefits held no one responsible for benefits realization. Figure C: Measurement of enterprise solutions benefits Do not have a formal business case that identifies specific benefits 12% Do not actively seek to measure and capture benefits 22% Actively track metrics for a few key benefits post-implementation 35% Actively track metrics for the majority of expected benefits. Some incentives and processes have been changed to support benefits 20% realization All processes and incentives are designed to encourage and track 11% progress of benefits identified in the business case 24
  25. 25. Achieving specific benefits from enterprise solutions Many organizations seek highly specific cost reduction over other more strategic, Our study shows that some benefits of benefits from enterprise solutions. Some long-term benefits such as ease of enterprise solutions are more prized than organizations may value certain benefits expansion and growth or improved others (see Figure 13 below). In addition, over others, and different benefits at decision making. Likewise, an organization certain benefits tend to be achieved different times in their business life that competes on customer intimacy may more often or more quickly than others cycle. In today's economic climate, for value the benefit of improved customer (see Figures 14 and 15 on page 26). example, many organizations may seek service and retention more than other to immediately achieve the benefits of benefits such as reduced cycle time. Figure 13: Key benefits targeted by enterprise solutions Percent of responses Benter management decision making 22% 14% 14% Improved financial management 17% 11% 14% Improved customer service and retention 19% 14% 9% Ease of expansion/growth and increased 7% 14% 11% flexibility Faster, more accurate transactions 7% 10% 12% Headcount reduction 5% 8% 13% Cycle time reduction 9% 8% 8% Improved inventory and asset 7% 8% 7% management Fewer physical resources and improved 3% 7% 11% logistics Increased revenue 4% 5% 3% First priority Second priority Third priority 25
  26. 26. Figure 14: Benefits achieved by organizations Improved financial management 70% Faster, more accurate transactions 69% Better managerial decision making 63% Improved inventory and asset management 60% Ease of expansion/growth and increased flexibility 55% Fewer physical resources and improved logistics 54% Cycle time reduction 53% Improved customer service and retention 47% Headcount reduction 40% Increased revenue 36% Figure 15: Enterprise solutions benefits achieved over time Percent of 100% organizat ions that have achieved the benefit 80% 60% 40% 20% 0% Benefit achieved Benefit achieved Benefit achieved Benefit achieved in within 1 year in 1-2 years in 2-4 years more than 4 years Time to achieve benefit Faster, more accurate information transactions Improved financial management Better managerial decision making Improved inventory and asset management Cycle time retuction Fewer physical resources and improved logistics Ease of expansion/ growth and increased flexibility Improved customer service retention Headcount reduction Increased revenue 26
  27. 27. Apocalypse Now Redux Francis Ford Coppola released Apocalypse Now Redux twenty-two years after the original release. The additional 49 minutes in his director's cut enabled Coppola to restore scenes providing greater character detail for Willard, his crew and Colonel Kurtz. He also added an expanded Playboy Playmates sequence after Willard's helicopter is downed and an additional French colonial plantation sequence. Source:
  28. 28. Aliens: The Special Edition In the director's cut of Aliens: The Special Edition, Ripley learns she has been drifting for 57 years and that her daughter, last seen at age 11, is now an adult. Her guilt from missing seeing her daughter grow up helps explain her attachment to Newt. The impact of adding this maternal instinct enhances her later confrontation with the Alien Queen. Source:
  29. 29. Interestingly, the most highly targeted sought-after benefits—improved decision functionality. Our research suggests that benefits—improved decision making, making and financial management—have improvement of customer service and customer service and financial been achieved by a greater number of retention—the second most highly sought- management—tend not to be the benefits organizations and in a quicker time frame after benefit—for example, is most highly that originally sold the organization on than cost savings and other desired dependent on the extensiveness of implementing enterprise solutions. Most benefits. implementation of customer relationship organizations justified their enterprise management and sales and marketing solutions implementation—formally at What actions can an organization take to functionality, as well as on how integrated least—on easier-to-quantify benefits such achieve a specific benefit? Most general an organization's enterprise solutions are as reduced headcount and cost savings that benefits, such as improved cycle time, with its customers. Considering that so would ensue from increased operational ease of expansion and growth, faster few organizations have implemented efficiencies. However, most organizations information transactions and improved such functionality or have deeply actually achieved only modest information decision making, depend most on the integrated their solutions with those of technology and operational cost savings ability of an organization to integrate, their customers, it is no surprise that this of under $10 million, and only 40 percent optimize and informate. Some benefits benefit is achieved less often, and more of organizations achieved any headcount are more narrowly defined, however, and slowly, than other benefits. Other specific reduction—and when it happened, it did may depend more on highly specific benefits and the actions that organizations so at a much slower pace than most actions or the extensive implementation can take to achieve them are profiled in other benefits. Two of the top three most of specific pieces of enterprise solutions Figure 16 below. Figure 16: Specific benefits and the actions organizations can take to achieve them Benefit Actions producing the benefit Information technology (IT) cost • Offshore development savings • Shared service centers • Measurement of benefits • Enterprise application integration (EAI) Organizational and operational • Shared service centers cost savings • Offshore development • Measurement of benefits • Integration Increased revenue • Extensive implementation of: – Customer relationship management (CRM) functionality – Sales and marketing functionality Improved inventory and asset • Extensive implementation of: management – Supply chain functionality – Planning and analysis functionality • Integration with suppliers’ systems • Improvement of managerial information • Customization of enterprise solutions Fewer physical resources and • Extensive implementation of: improved logistics – Supply chain functionality – Performance management functionality 29
  30. 30. Future directions of enterprise solutions technologies Our Accenture research shows that organizations are eagerly 4. A wider variety of information input and output devices expanding their use of various enterprise solutions technologies Enterprise solutions are only as good as the information (see Figures D below and E right). Only 1 percent of the that feeds into them and the information that comes out of organizations in our study do not plan to experiment with any them. Because data entry is subject to so much human error emerging enterprise solutions-related technologies at all in the and attention, many organizations—79 percent—say they next two years, and 83 percent of organizations surveyed planned plan to experiment with technologies that will automate to implement additional enterprise solutions functionality data entry. One such technology may be radio frequency sometime in the near future. In general, interest seems to be identification tags (RFID), which 28 percent of the focused on expanding core enterprise solutions to address the organizations surveyed say they will experiment with in the following areas: next two years. Using wireless mobile communications and advanced tagging and sensor technologies, RFID enables 1. The customer, supplier and other external organizations objects such as individual parts, products or entire product Customer relationship management (CRM) solutions and shipments to carry and transmit information inexpensively supply chain software help organizations manage their without human intervention. Combined with enterprise suppliers and customers. Although more organizations have solutions functionality, RFIDs can dramatically improve an implemented supply chain software—45 percent of the organization's ability to ensure that customers receive the organizations surveyed already have implemented supply right item at the right time, for example. In addition, 73 chain functionality—it is the customer relationship percent of organizations surveyed expect to experiment management software market that is growing the most with wireless computing. Wireless computing enables rapidly. Only 19 percent of the organizations surveyed workers, whether on the floor or out making sales calls, to currently have customer relationship management software, have full access to the latest enterprise solutions data. but fully 43 percent expect to have it in the next two years. Enterprise application integration (EAI) technology also helps organizations manage relationships with external groups by enabling intra-organizational enterprise integration. Thirty- eight percent of organizations now use EAI, and 46 percent Figure D: Emerging technologies organizations plan to expect to within two years. A less established technology, experiment with in the next two years Web services, also promises to help organizations better integrate with their customers and suppliers. Fully 87 percent of organizations plan to experiment with Web services in Web services 87% the next two years. Portals 81% 2. Information access and analytics Eighty-one percent of the organizations expect to experiment with portals, an information access device, in the next two Automated data 79% years. Forty-nine percent of organizations in our survey say entry they expect to experiment with advanced analytics, the next Mobile computing or stage in a typical organization's evolutionary focus on 72% wireless technology information, in the next two years. Up to half expect to implement analytic-related functionality such as management reporting and metrics, planning and analysis, and performance Advanced analytics 49% management in the next two years. Radio frequency 28% 3. Knowledge work processes identification (RFID) Other popular extensions of enterprise solutions include applications that focus less on transactions and more on None of the above 1% knowledge. Examples include enterprise solutions modules relating to sales and marketing, new product development, and strategic planning and analysis. These solutions can improve knowledge workers' productivity by automating routine tasks and by providing knowledge workers with useful management information to improve their decision making. 30
  31. 31. Figure E: Enterprise solutions functionality implemented and expected to be implemented in the next two years 82% Finance 85% 44% Human resources 63% 44% Supply chain 55% 39% Sales and marketing 48% 37% Management reporting and metrics 50% 35% Planning and analysis 46% 25% Performance management 37% 21% Product development 25% 19% Customer relationship management 43% Now Within 2 years 31
  32. 32. Management implications Leading organizations do not give up on organizations that focus on only one consultants or leaders for specific enterprise solutions just as they are ripe strategy to the exclusion of others enterprise solutions-related initiatives. to deliver value. Rather, they formulate achieve less overall benefit from Alternatively, there could be specific action plans that enable them to enterprise solutions than those that specialization by the type of business achieve both overall benefits and specific focus on all three. change, particularly when specific ones based on current business needs. In groups—like a Six Sigma organization— our research, we found that leading • Manage enterprise solutions as an already exist. organizations: ongoing program No matter how much enterprise • Prioritize benefits and create an • Invest the effort required to get a solutions functionality you have action plan to achieve them critical mass of implementation implemented, enterprise solutions In addition to achieving overall value, Only those organizations that have require ongoing management and some organizations will also want to invested the time and resources attention. New functionality beyond achieve highly specific benefits, and necessary to extensively implement transaction processing inevitably will some before others. In particular, the enterprise solutions throughout their be installed and integrated with uncertainties in today's economic organizations will be able to capitalize existing functionality, business climate suggest that many on enterprise solutions' promise of processes will need to be continuously organizations may choose to adopt a better integration and seamless revisited and optimized, and “bifocal” approach to achieving value information flows between functions, managerial information will require from enterprise solutions: a dual focus business units and geographies. constant attention if it is to be on short-term benefits related to cost transformed into useful knowledge. reductions and long-term general • Integrate, optimize and informate benefits. In other cases, an organization in parallel Dedicating ongoing resources to may decide a particular strategic Leading organizations take a three- enterprise solutions can help benefit such as improved customer pronged approach to achieving value organizations continue to focus on, service and retention is more important from their enterprise solutions. They measure, and manage the benefits than other types of benefits. Leading work to integrate enterprise solutions from enterprise solutions. organizations will prioritize their internally and with those of other Organizations like Canada Post benefits and corresponding plans for organizations through activities like Corporation have set up “SAP Centers action to achieve what is most consolidation of system instances, of Excellence” to help them achieve important to them. use of integration technologies, and value from their enterprise solutions. standardization of data and process The U.S. Defense Logistics Agency For those executives who feel their definitions. Simultaneously, they work plans to name a “benefit realization organizations have yet to realize the to both optimize enterprise solutions manager,” whose job will be to promise of enterprise solutions, the answer by improving how processes flow and enforce changes and achieve benefits is clear: do not give up yet. This is a great fit with the system and business needs, from enterprise solutions. Other time of opportunity. Like directors who and informate work by using robust organizations, like Intel Corporation, revisit their films and subsequently data access and analytic capabilities may choose to set up a permanent transform them from flops into critical to transform enterprise solutions data organizational unit dedicated to and commercial successes, business leaders into useful knowledge that can be achieving value from enterprise have the opportunity to revisit their applied to an organization's unique solutions. Organizational units may be commitment to enterprise solutions and business problems and work forces. positioned centrally within a company realize the original vision of enterprise Our research indicates that those so its staff can serve as internal solutions. 32
  33. 33. Whether you are just embarking on your enterprise solutions journey or you are well on your way, achieving value from these systems requires ongoing, consistent attention. Organizations that integrate, optimize and informate go far beyond just establishing an enterprise solutions technical infrastructure: they integrate and internalize the system into their business, and use it to dramatically improve their ways of working. Star Wars: The Special Edition George Lucas, in Star Wars: The Special Edition, added back into his director's cut a brief meeting between Luke and Biggs Darklighter before the Battle of Yavin. With this additional meeting, viewers better understand the impact on Luke when Biggs' X-Wing is destroyed. Lucas was also able to take advantage of new technology to enhance several scenes. Source:
  34. 34. Notes About the Authors 1 Zuboff, S. 1988. In the Age of the Thomas H. Davenport is the executive director of the Accenture Institute for High Smart Machine: The Future of Work Performance Business and a professor at Babson College in Wellesley, Massachusetts. He and Power. New York: Basic Books. is an acclaimed author and speaker on the topics of enterprise systems, information and knowledge management, reengineering, and electronic business and markets. Mr. 2 Enterprise solutions modules from a Davenport can be reached in Wellesley, Massachusetts, at +1 617 454 8201 or via e- variety of leading vendors were mail at included in our study to ensure objectivity. Discussion of vendor Jeanne G. Harris is a senior research fellow and director of research-Chicago at the differences, however, is not the Accenture Institute for High Performance Business. Her research focuses on improving focus of this study. managerial performance, business intelligence, knowledge management and enterprise systems; she also speaks frequently on these topics to executive audiences. Her work has 3 The Y2K problem (“y” means year, been published in publications such as Sloan Management Review, California Management “2k” means 2000) refers to the Review, CIO, Strategy and Leadership, and Outlook. Ms. Harris can be reached in inability of older hardware and Chicago, Illinois, at +1 312 693 7633 or via e-mail at software to recognize the century change in a date. Susan Cantrell is a research fellow at the Accenture Institute for High Performance Business. Her research has focused on business innovation, information systems and 4 Jane C. Linder and Susan Cantrell, organizational change. Her work has been published in publications such as Industry “Business Process Outsourcing Big Standard, Across the Board, Strategy and Leadership, and Outlook. Ms. Cantrell can be Bang: Creating Value in an reached in Wellesley, Massachusetts, at +1 617 454 8697 or via e-mail at Expanding Universe,” Accenture Institute for Strategic Change Research Report, 2002. 5 For more insight into the steps Acknowledgements needed to develop a robust analytic capability, see Thomas Davenport et The authors wish to thank the partners of Accenture and the Accenture Institute for al., “Data to Knowledge to Results: High Performance Business for their support of this research project, especially Christy Building an Analytic Capability,” Bass, Marty Brown, Dan London and the many other Accenture partners who have California Management Review 43/2 significant, first-hand enterprise solutions experience with their clients. (Winter 2001): 117-138. We would like to thank the more than 200 executives and industry analysts who so generously gave their time to be interviewed. We appreciate the following industry analysts' review and insight into our analysis: Gartner, Inc., International Data Corporation, AMR Research, Hurwitz Group, and the Dobrin Group. We appreciate the assistance of Dr. Robert B. Smith, President, American Statistical Association, Boston Chapter, during the statistical data analysis. We also wish to acknowledge NOP World for conducting the survey. Finally, we want to express our thanks to our colleagues in Accenture Global Business Solutions and the Accenture Institute for High Performance for their help in the realization of this report, including Mark Jones, Mary Puskar, Alex Broking and Alex Beal. Finally, we wish to thank Rebecca Gorse for her patience and creative design solutions. If you would like to discuss this report, please contact Jeanne G. Harris, senior research fellow, Accenture Institute for High Performance Business at +1 312 693 7633 or via e-mail at To obtain additional copies of the report, please contact Mary Puskar in Enterprise Solutions at +1 312 693 4335 or via e-mail at You may also download the report in PDF format at 34
  35. 35. About Accenture Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance. With approximately 90,000 people in 48 countries, the company generated net revenues of US$11.8 billion for the fiscal year ended August 31, 2003. Its home page is About the Accenture Institute for High Performance Business The Accenture Institute for High Performance Business creates strategic insights into key management issues through original research and analysis. Based in Wellesley, Massachusetts, its management researchers combine world-class reputations with Accenture's extensive consulting, technology, outsourcing and client experience to conduct innovative research and analysis into what makes great companies and high performing organizations. Its home page is and may be contacted at 35
  36. 36. Appendix
  37. 37. Industry variation in the survey findings Accenture interviewed 163 senior executives from large Appendix figure 2: Realization of targeted enterprise solutions organizations representing a wide range of industries. To analyze benefits the data, we grouped organizations into five industry sectors. Appendix figure 1 is an analysis of survey participants by 2% industry sector and a list of industries included in each sector. 3% None of the 0% Appendix figure 1: Industry sectors targeted benefits 7% realized 0% 0% 18% 19% 30% Small number of 28% 19% targeted benefits 16% realized 10% 21% 20% 38% 48% About half of the 50% targeted benefits 13% realized 23% 33% 33% 19% 38% 17% Majority of Government Financial services 31% targeted benefits Communications and high technology Products 47% realized 52% Resources 42% 4% While executives worldwide were fairly consistent in their 4% perspectives, a few significant variations emerged between the All targeted 0% industry sectors. This appendix summarizes some of the key benefits realized 7% differences we found. 5% 4% Part I. Cross-industry analysis Cross-industry mean Resources Government Financial services Benefits targeted and achieved Communications and high technology Products There was considerable variation between industries in the degree of overall benefits achieved. Financial services and resources were most likely to achieve a majority of benefits, while nearly one-third Priorities for benefits differed among the industry sectors. Most of the government agencies reported little or no benefit achieved notably, financial services companies favored improved financial to date. management, resources favored improved inventory and asset management, and communications and high technology favored ease of expansion/growth and increased flexibility. In addition, government preferred better managerial decision making. Products tended to most closely align with the cross-industry mean. The 38