David Caruso Keynote Address


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Keynote Address given by David Caruso, founder and Principal of David Caruso & Associates, at Transformation and Innovation 2007.

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  • David Caruso Keynote Address

    1. 1. <ul><li>David Caruso </li></ul><ul><li>Principal </li></ul><ul><li>David Caruso & Associates, Inc. </li></ul><ul><li>Targeting Business Process Performance: Unlocking Your Company’s Profit Potential </li></ul>Welcome to Transformation and Innovation 2007 The Business Transformation Conference Welcome
    2. 2. The art of winning an unfair game
    3. 3. The Impact of Supply Chain Applications 2000
    4. 4. There Are Financial Correlations… <ul><li>Demand Driven leaders have: </li></ul><ul><li>15% less inventory </li></ul><ul><li>17% stronger order fulfillment </li></ul><ul><li>35% shorter cash-to-cash cycle times </li></ul><ul><li>Which translates to: </li></ul><ul><li>60% better profit margins </li></ul><ul><li>65% better EPS </li></ul><ul><li>2-3X the ROA </li></ul>Source: AMR Benchmark Analytix <ul><li>Right Process </li></ul><ul><li>Right Technology </li></ul><ul><li>Right Metrics </li></ul>
    5. 5. IT Forensics: Typical Findings <ul><li>IT budget is skewed toward business as usual </li></ul><ul><ul><li>IT budget is within industry norms but… </li></ul></ul><ul><ul><li>The risk: limited future productivity investments </li></ul></ul><ul><li>IT projects don't deliver the bang they should </li></ul><ul><ul><li>Project management is not focused on business value creation </li></ul></ul><ul><ul><li>Corporate-wide initiatives aren’t uniformly adopted </li></ul></ul><ul><li>Strategic planning processes must be revisited and improved </li></ul>
    6. 6. ERP Benefits Realization Study - 2005 <ul><li>Key Success Factors: </li></ul><ul><ul><li>Common corporate vision </li></ul></ul><ul><ul><li>Process Improvement Group </li></ul></ul><ul><ul><li>Programmatic Financial Analysis </li></ul></ul>Size, Scale, complexity, 9% Other, 11% Resources/ People, 7% Agreeing on common processes 11% Executive Buy-in/ Adoption/ Change Management, 12% Technical Issues, 13% Cost-Business Case- ROI not understood, 38%
    7. 7. The CIO’s Conundrum Stage 1 Data Visibility & Control Stage 2 Operating Effectiveness Stage 3 Market Position Stage 4 Strategic Moves IT Value Creation Strategic Value of IT Value of Cost Savings Metrics
    8. 8. Perfect Order SCM Cost Demand Forecast Key to Profitability Assess Diagnose Correct Supplier Quality Supplier On-Time Purch Costs Dir Mtl Costs RM Inv Cost Detail Production Sched Variance Plant Utilization WIP + FG Inventory Order Cycle Time Perfect Order Detail AP AR Inventory Total Cash-to-Cash Operational Applications & Performance Visibility
    9. 9. Perpetuating Business as Usual… Typical Today’s world:
    10. 10. The Difference Between Leaders and Laggards is Significant
    11. 11. The Money is in the Business Process… “… just implementing I.T. Systems without the supporting business processes is a waste of money” Supply Chain Management Review May/June 2005. David Simchi-Levi (MIT) Claus Heinrich (Univ of Mannheim)
    12. 12. IT Operating Expense Reduction: Tops out A Little Perspective: The Sources of Business Value <ul><li>One company’s Business Improvement Benefits: </li></ul><ul><li>2.3 % SG&A reduction: $23M = 5.6% vs 5.4% Net </li></ul><ul><li>COGS: a 2% reduction = $150M in ongoing cost reductions at current revenue levels </li></ul><ul><li>Inventory =Increasing turns from 6.9 to 8 would free up $138M </li></ul><ul><li>Using these rates for 2007 with a 5% revenue increase yields a $450M improvement over 2005 </li></ul>
    13. 13. Who’s Driving the Bus? …Influence and Control in IT Projects IT’s Ability to Control Business’s Ability to Control High Low High Low 1) Schedule & Budget 2) System Adoption 3) Improved Process KPIs 4) Actual Financial Returns Measure for Accountability Measure for Credibility “ Definition of Victory”
    14. 14. Understanding Capability and Maturity is Essential Creating Business Value Process Maturity Information Maturity KPI & KPD Measurement <ul><li>Best Practices: </li></ul><ul><li>Global operations </li></ul><ul><li>Demand visibility </li></ul><ul><li>Innovation management </li></ul><ul><li>Customer insight </li></ul><ul><li>New product introduction </li></ul><ul><li>Service delivery </li></ul>Quality & Availability of Data
    15. 15. From the Leaders: Milestones to Performance Orchestrate Collaborate Anticipate React Understand demand: Sources, quality, variability Global visibility Reduce complexity Value chain level Performance metrics Call to action Organize for success: Strategic planning PMO
    16. 16. Closing thoughts… <ul><li>Every business decision results in an IT decision… </li></ul><ul><li>How central to your success is your Information Technology? </li></ul>
    17. 17. Thank Y <ul><li>David Caruso </li></ul><ul><li>Principal </li></ul><ul><li>David Caruso & Associates, Inc. </li></ul><ul><li>Contact Information: </li></ul><ul><li>781-545-6660 </li></ul><ul><li>[email_address] </li></ul>ou Thank Y ou