An Oracle White Paper January Aligning Technology to Enable Corporate Strategies

Transcription

1 An Oracle White Paper January 2010 Aligning Technology to Enable Corporate Strategies

2 Disclaimer The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle s products remains at the sole discretion of Oracle.

3 Executive Overview... 1 Introduction... 1 Determine Business Objectives... 4 Identify Value Drivers & Performance Targets... 5 Assess Capability Gaps... 6 Develop Prioritized Solution Map... 9 How can Oracle help? Oracle Insight Program Conclusion... 11

4 There are still some executives who are waiting for things to return to normal. It s not going to happen. Constant change is the New Normal the era of optimization, the era of disciplined expansion is dead. Success now requires not just doing it better, but mastering the ability to do it differently. Scott Anthony, Harvard Business Review, Oct About Oracle Insight The Oracle Insight Program is a comprehensive business strategy development program in which select customers work closely with Oracle business and IT strategy experts to identify the critical objectives and challenges for their unique business needs and understand how technology can help address them. Leveraging industry frameworks and best practices such as SCOR for Supply Chain or ITIL for Data Centers, Oracle Insight helps identify the capabilities needed to transform business or IT operations and quantifies the financial impact that can be achieved with these capabilities. The New Normal The New Normal is all about change, uncertainty and opportunity. Successful companies will embrace the New Normal and adapt their systems and processes to operate under an environment that requires more flexibility. Flexibility to: Easily accommodate changes in the business needs such as a move to more geographically distributed workforce Adjust to uncertainty in demand patterns Embrace opportunities to increase market share or revenue by capitalizing on every interaction with the end consumer. Companies should review their current systems and processes to ensure it provides the flexibility needed to survive in the New Normal. Introduction During time of rapid economic growth, technology tends to proliferate in many companies to support short term needs. Decisions are often made at lower levels to address a particular need for a particular division, function or project. For the most part, many of these technology decisions are done without consideration of the overall IT and business strategy. In the New Normal, companies are looking to reduce complexity keep costs 1

5 down and align technology with the overall business strategy. At the same time technology is evolving, creating opportunities to change the game. As a result, companies must not only look to rationalize what they have installed but also where they are headed. These game-changing technologies will provide: Greater adaptability: Highly adaptable and integrated industry best practice processes, enabling transformational performance and responsiveness. Greater productivity: Better, faster decisions with intuitive and pervasive business intelligence. Combined with global business collaboration, this will result in a transformation in how work gets done. Greater manageability: Faster implementations, easier integration and choice of adoption, resulting in faster ROI and a lower cost of ownership. Companies should not assume that the technology they have in place today will be adequate for the New Normal. An overly cautious approach to current and emerging technology trends and innovations could result in missed opportunities if not embraced. Now is the time to embrace the technologies that will enable the longer term corporate strategy. To do this, we recommend a four step process (Figure 1). Figure1. Oracle Insight Process 2

6 This process will help address questions such as: What are the industry best practices and how do we compare to these? How do we transform in alignment with our strategic vision? Does our IT strategy/roadmap align with the business priorities and objectives? What are the new IT enablers for these best practices and how do they impact us? How do we enable business processes and the required capabilities? 3

7 If you don't know where you are going, any road will take you there. Alice in Wonderland Determine Business Objectives How are your business objectives affected by the New Normal? The New Normal requires companies to anticipate and adapt to change more rapidly and dynamically. Will there be change in what you do or how you do it? According to Fast Company, there are two unique strategies out of the thirty-six strategies of ancient China, that are applicable to help companies develop an innovative approach for 2010 and the future: Seize the opportunity to lead a sheep away. While carrying out your plans, be flexible enough to take advantage of any opportunity that presents itself, however small, and avail yourself of any profit, however slight. Await the exhausted enemy at your ease. Take the time to choose the time and place for battle. Encourage your enemy to expend energy in futile quests while you conserve your strength. When he is exhaused and confused so you can attach with energy and purpose. For example, McDonald's has decided to offer free Wi-Fi to seize the opportunity to steal costconscious consumers away from Starbucks. Toys R Us is using the stratagem await the exhausted enemy as it moves to control the toy market by acquiring specialty toy stores such as FAO Schwarz, etoys, toy.com and KB Toys. At a large medical device company in the North America, three business objectives were identified to help them achieve their overall corporate vision of making the world infection-free. They felt that if they could support these three objectives with people, processes and technology, it would help transform their business. They had made several acquisitions and because of that, they had a variety of systems implemented that were not integrated. This created multiple inefficiencies and barriers to helping them achieve their business objectives. BUSINESS OBJECTIVE CHALLENGES Become a Market Led Organization No single view of customer Poor quoting capability Development not focused Slow to market 4

8 Focus on Lean Operations Poor forecasting Multiple manufacturing systems Limited supply chain integration between plants Limited collaboration amongst divisions and suppliers Improve Planning, Talent and Performance Management Multiple platforms/systems Manual processes Limited process integration Inconsistent metrics Once you define your strategy, it is important to understand whether you have the technology to support the strategy and enable you to be successful. Best practice suggests a team be formed with representatives from various functions. To ensure that the team is driving the recommendation in alignment to the overall corporate strategy, the CEO or President must sponsor the activity and define the 3-5 year vision. Identify Value Drivers & Performance Targets Once you ve settled on the key business objectives, then it is important to determine the key business drivers. For example, if the strategic goal is to be the number one supplier in the industry, then some key business drivers might be the number (and effectiveness) of the distribution channels, the quality of the sales force, and the organization s ability to retain and reference existing customers. After identifing the primary value drivers, the best practice approach would be to then define the key performance indicators (KPI s) to measure the success of the drivers. Using the example above, the KPI s might be channel growth (revenue as well as quantity), client satisfaction level, client retention rate, and sales win rate (as a reflection of sales staff quality). The top down approach ensures that the KPI s are aligned to the business objectives. KPI s should offer a good mix of financial as well as operational measures. Financial measures generally look at the past to understand how the organization has performed historically. Nonfinancial measures offer a good indicator of the future. For example, if client satisfaction is trending down today, it s very likely that future revenue streams will move in the same directions as clients fail to renew maintenance agreements or refuse to be references for new prospects. As an example, Oracle Insight was engaged at a large multinational bank based out of Singapore to help with their business objective of developing a consistent framework for performance management. The value drivers were to increase the effectiveness of the finance organization, improve data quality and increase the value that the systems deliver. The KPI s identified were 5

9 The Insight assessment provided us with a better understanding of where we are in our transformation to best practices, not only regarding our application foundation but also compared to other industry players. Patricia LaForge, Vice President, Information Technology, Cogdell Spencer ERDMAN 1 increased accuracy of budgeting and reporting, reduced reporting time, and improved visibility (based on number of people that leverage the system). Assess Capability Gaps In order to explore the critical business processes, it is helpful to have some type of framework. The framework helps define the processes that should be explored in relation to the objectives. Every industry will have unique processes and even companies within an industry might have different processes. There is no right or wrong framework as long as everyone agrees that the framework created encompasses all of the key processes. At a high tech company a framework like Figure 2 might be leveraged to illustrate all of the key processes. Figure 2: Oracle Insight High Technology Industry Framework 1 6

10 Or you could use an even simpler framework like below: Figure 3: Oracle Smart Strategies Framework Once the team has defined the framework, they need to assess the capabilities required, understand the current capabilities and identify the desired capabilities as well as determine the priority of those capabilities. To enable the capability assessment, we recommend leveraging a capability maturity model such as the one in Figure 3. Figure 4: Oracle Insight Capability Maturity Model To provide some structure around this process, it is helpful to have some guides around the capabilities you are looking for and where they fall in the process maturity. An example of some of the types of questions for Human Resources can be found in Table 1. 7

11 BUSINESS PROCESS MARGINAL STABLE BEST PRACTICE TRANSFORMATIONAL Management Considerations To what extent are Limited consistency General consistency Consistency at a Single consistent processes consistent in HR-related within business macro level. global process for across the processes units/ geo locations. Processes are each major process organization? The processes are administered centrally flow across all administered locally entities within the organization How automated are Manual input into Automated systems Self service Self service your systems? multiple systems with a mix of "best of capabilities for HR capabilities for HR breed" administration administration with single point of access for all benefits-type issues By interviewing various members of the organization through workshops or one on one discussions, the team can gather the data for each of the key processes identified. Typically, the capabilities will touch on people, process and technology needed to enable the transformation to meet the business objectives. Oracle Insight worked with Scholastic Corporation 2 to help them develop an effective corporatewide customer relationship management (CRM) vision that leverages the individual business units products and customer relationships. To do this, Oracle Insight understood Scholastic s strategic direction and collaboratively developed a CRM vision. As part of the process, Oracle Insight gained a clear understanding of Scholastic s key strategic strengths, objectives, issues, and challenges. They then identified and prioritized the capabilities required to meet the organization s challenges. Through the process, a strong consensus was built among Scholastic s executives on the logical need to share and leverage data at the corporate level. In another example, Oracle Insight worked with the largest apparel retailer in Japan to assess the capability gaps across the enterprise (including store ops, merchandise planning and procurement, supply chain, product design, back office, IT, etc) to support the business and the growing geographic presence

12 Develop Prioritized Solution Map The solution priority map is usually the first stage in identifying where untapped opportunities lie in your business, providing you a clear view of where to focus to improve profitability and market leadership. Opportunities are then mapped to the various technology and process enablers to estimate the financial impact, as well as the effort required to attain higher-level capabilities. Figure 5: Oracle Insight Solution Priority Map Once the team has a clear understanding of the top priorities, they can then look at what changes need to be made with people, processes and technology. From a technology point of view, an inventory of what applications are currently in place should be done for these high priority projects. The team should look at what capabilities are needed and whether any of the technologies in place can address those needs so they can rationalize or consider ripping out and replacing. If a replacement or expansion of one of the applications is determined to be the best solution, the team will typically need to build out a business case to justify this investment. At Claro 3, a leading wireless carrier in Brazil, Oracle Insight: Identified new IT capabilities that could support Claro s new strategic direction, and produced an outline of expected benefits Developed a recommended business-aligned, IT organization to support Claro s growth goals 3 9

13 Delivered a prioritized roadmap to facilitate IT decisions According to Ricardo Santoro, Executive Director at Claro, In determining how to create the best IT organization, we realized that the implementation must increase the value to the company. Oracle Insight expedited our achieving this by helping to design an IT organization that was aligned to our business. How can Oracle help? Oracle realizes that not all companies will have the resources or inclination to execute this type of exercise on their own. Even those that do may not have the knowledge on the new capabilities that technology can bring. To help you with this process, Oracle has several resources available to you. If you need help understanding existing or new product capabilities in Oracle s product lines, Oracle product specialists, solution architects and sales consultants can help you understand what features and functions are available to address the capabilities you need. If you are looking for help with the complete process, Oracle Insight brings business and IT strategist together with industry and product specialist to help select customers align their technology roadmap to help enable their corporate strategies. Oracle Insight Program 4 Oracle Insight uses a proven methodology which is flexible and customized to individual company objectives. Most engagements consist of four steps: Industry Perspective, Discovery, Solution Design, and Solution Presentation. Industry Perspective Given the plethora of acquisitions made by Oracle, we want to help you understand how these new capabilities have helped others in your industry. Oracle facilitates an in-depth discussion with your executives about industry trends, best practices, vision, strategy, challenges and roadblocks. Discovery 4 Oracle Insight, 10

14 Leveraging established industry frameworks and robust intellectual property, Oracle Insight collaborates with you to assess your current business processes and identify the capabilities required to achieve your corporate strategy. Solution Design Oracle recommends best practice processes and supporting technology, including a time-tobenefit analysis and implementation plan. Solution Presentation The Insight team works with you to create an executive presentation including supporting information, business benefits, and value drivers, to help you build consensus among colleagues and executive management or secure funding from your board. Oracle Insight engagements are flexible. Once executive commitment is secured, the program will be customized to your needs and objectives as it relates to your project. Conclusion As the economy starts to pick up, now is the time to explore how technology can deliver impact to the bottom line. In McKinsey s fourth annual survey on information technology strategy and spending, they found that most respondents foresee an increase in IT investment, perhaps because companies are applying IT to solve problems across the business. When there is a payback, it seems businesses are willing to invest; many of these investments are geared toward improving business operations, both to lower costs and improve effectiveness, according to IT in the New Normal 5. Companies need to define a methodology to help identify the highest priority items that will drive them toward their corporate strategy and enable them to meet the business objectives. These items should be incorporated into the technology roadmap to help drive greater adaptability, productivity and manageability. 5 IT in the new normal: McKinsey Global Survey, McKinsey & Company, December

15 White Paper Title [Month] 2009 Author: Susan Poser, Sr. Director, Oracle Insight Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA U.S.A. Worldwide Inquiries: Phone: Fax: oracle.com Copyright 2009, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle and Oracle Insight are registered trademarks of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. 0109