Business Strategy Series
Benef it s of int egrat ed business planning, f orecast ing, and process management Tajinder Pal Singh Toor Teena Dhir
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To cite this document:Tajinder Pal Singh Toor Teena Dhir, (2011),"Benefits of integrated business planning, forecasting, and process management", Business Strategy Series, Vol. 12 Iss 6 pp. 275 - 288
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Benefits of integrated business planning,
forecasting, and process management
Tajinder Pal Singh Toor and Teena Dhir
Introduction
Integrated business planning and forecasting
Organizations face an increasing challenge as they attempt to improve their performance and competitive position while adjusting to rapid changes in the economy, commodity prices and financial markets. An organization’s planning process must provide its executives and management across the entire organization with the ability to integrate business planning and forecasting, which will result in better coordination in establishing plans consistent with corporate strategy. Integrated business planning (IBP) refers to the technologies, applications and processes which connect the planning function across the enterprise and improve organizational alignment and financial performance. Once the overall company plan reflects this strategy, an integrated business planning process links strategic targets with tactical and operative planning on all hierarchy levels of the enterprise. By deploying a single model across the enterprise and leveraging the organization’s information assets; corporate executives, business unit heads and planning managers can use IBP to evaluate plans and activities based on the true economic impact of each consideration. All downstream plans get specific business targets, in order to ensure the adherence of strategic targets.
Integrated business process management
Today’s businesses are more likely to have a heterogeneous and confused mixture of disconnected applications and processes. These disconnected applications and processes cannot easily accommodate growth in transactions, cannot be easily scaled to accommodate more users, and have severe database limitations. Additional applications can be added leaving businesses with a disconnected slew of applications. The ramifications include (but are not limited to) lost productivity in attempting to consolidate data from the disparate systems, lack of visibility to the information necessary to make decisions, and outgrown applications that cannot be scaled to allow the business to grow. The business is trapped by the limits of the very technology that was intended to help the company grow and thrive.
Addressing the plethora of disconnected applications and processes is the first step a business can take to gain better control of its business operations and increase the efficiency of those operations. A single integrated suite of applications/processes provides significant advantages to the business, accommodating the breadth of the company’s business, while providing the flexibility for even small companies to tailor the suites to meet their specific business needs. New advances in technology bring benefits of a single business management suite without the cost, complexity, and rigidity of traditional applications.
Tajinder Pal Singh Toor is a Business Solutions who opened my eyes to the world of publishing.
This paper highlights business planning and forecasting, business process modeling, and integrated business process management concepts. Three different case studies are used to highlight benefits.
Advanced business intelligence; the crucial role of integrated business planning and forecasting
Integrated business planning (IBM)
Organizations face an increasing challenge as they attempt to improve their performance and competitive position while adjusting to rapid changes in the economy, commodity prices and financial markets. An organization’s planning process must provide its executives and management across the entire organization with the ability to integrate business planning and forecasting, which will result in better coordination in establishing plans consistent with corporate strategy. Integrated business planning (IBP) refers to the technologies, applications and processes of connecting the planning function across the enterprise to improve organizational alignment and financial performance. Once the overall company plan reflects this strategy, an integrated business planning process links strategic targets with tactical and operative planning on all hierarchy levels of the enterprise. By deploying a single model across the enterprise and leveraging the organization’s information assets, corporate executives, business unit heads and planning managers use IBP to evaluate plans and activities based on the true economic impact of each consideration. All downstream plans get specific business targets, in order to ensure the adherence of strategic targets.
‘‘Integrated business planning’’ (IBP) is a new term applied to a longstanding objective of finance and corporate executives: to bring together the disparate strands of forward looking activities across a corporation in a way that fosters internal alignment and enhances agility, enabling it to increase its financial returns and improve its strategic position. Organizations engage in a range of forward-looking activities. Sales organizations have pipelines to forecast sales. Manufacturing organizations set and reset demand plans and near-term production schedules, often as a result of longer-term production plans that determine where and how they will make them. Logistics people plan inbound and outbound shipments. Marketing departments plan advertising and promotional campaigns. HR departments coordinate staffing requirements and salary and benefit costs.
IBP means exactly what it says: It is about planning (not just budgeting) across an entire business (not just one department, business unit or function) in an integrated fashion. IBP incorporates advanced planning techniques, including driver-based planning, rapid planning cycles and rolling-quarters time frames.
IBP applications
IBP has been used to successfully model and integrate the planning efforts in a number of applications, including:
B product profitability;
B customer profitability;
B capital expenditures;
B manufacturing operations;
B supply chain;
B business processes (human and information-based);
B business policy;
B market demand curves;
B competitive strategy.
Business goals and objectives
B Increasing revenue to maximize profitability.
B Increasing transparency and accountability. Provide decision support
B Providing an integrated planning platform across marketing, operations and finance.
B Generating a holistic understanding of performance.
B Optimize capital equipment and asset utilization.
B Reducing operating costs and increasing efficiency.
B Increasing business flexibility.
B Quantifying financial risk.
Integrated business planning (IBM)
Balancing the interests and priorities among different functions of organization. A cost benefit analysis is done to determine how well, or how poorly, a planned action will turn out. The real trick to doing a cost benefit analysis well is making sure you include all the costs and all the benefits and properly quantify them. It is an analysis of the cost effectiveness of different alternatives which addresses whether the benefits outweigh the costs. Inputs are typically measured in terms of opportunity costs – the value in their best alternative use. The process involves monetary value of initial and ongoing expenses versus expected return. Constructing plausible measures of the costs and benefits of specific actions is often very difficult. We need to balance different interests and priorities among the major functions of an organization.
Different functions of an organization:
B marketing;
B engineering;
B business/finance;
B manufacturing.
The remit of marketing, engineering, business/finance, and manufacturing is quite different, yet they all push for the same interest of the organization. We have to make sure that we balance out different interests and priorities among different functions of the organization. Criteria of decisions could involve some of the issues listed below:
B opportunity cost;
B development risk;
B manufacturing risk.
For a short life cycle product or highly innovative product in a competitive environment that changes rapidly, an organization must react quickly to each new product that enters the market.
Getting the product to market faster is no advantage if the organization chooses inadequate technology, creates the product that cannot meet potential customer’s needs, designs the product that cannot be manufactured, or must set the price so high that nobody can afford the product.
Listed below are two case studies where imbalance of different interests and priorities among different functions of the organization did not deliver the desired results. The opportunity cost of missing a fast moving market, the risk of entering a market with wrong product, and the risk of introducing a product that cannot be produced pulls managers in opposite directions.
Case Study 1
B Company. IBM
B Product. Personal computer
B Environment. Forecasted annual growth rate of 60 percent. Competitors: Apple, Tandy are controlling market developments and are beginning to cut into IBM traditional office market.
B Analysis. Opportunity cost is high. Development cost is low ($10 million compared to IBM’s equity value of $18 billion). The technology of design and process are stable and internally viable.
B Decision. Crashing program approach-develop, design, manufacture, and market the product within two years
B Approach details. Deviate the standard eight phases design procedure. Give the development team complete freedom in product planning; keep interference to a minimum; and allow the use of a streamlined, relatively informal management system. Use a so-called zero procedure approach, focusing on development speed rather than risk reduction of product, manufacturing, and so on.
B Results. Introduced the product within two years. Customer acceptance is good. Cost overrun by 15 percent. Cost of goods sold is about 5 percent unfavorable to the original estimate. Market share is questionable. Long term effects not known.
Case Study 2
B Company. Boeing
B Product. Boeing 727 replacement aircraft (767)
B Environment. Replacement within ten years is inevitable (may be reduced to five years). Competitor, i.e. Airbus, has started its design. A new mid-range aircraft may take 727 replacement market away due to the operating/fuel inefficiency, level of comfort, and Environment Protection Agency (EPA) restraints.
B Analysis. Opportunity cost is high. (There is a need for 200-300 seat market; 727 is becoming obsolete.). Development cost is high (estimated $1.5 billion compared to entire company equity of $1.4 billion). Development and manufacturing risk is high. Technology and customer preferences are predictable but not yet crystallized. (Should it have two engineers or three? Should its cockpit allow for two people or three? Cruise range? Fuel consumption? Pricing?)
B Decision. Perfect product design approach. Complete the development of all new technologies of design and manufacturing processes in the early stages of research and development (R and D). Test everything in sight, and move product to launch only when success is nearly guaranteed. Eight-year design lead time.
B Approach details. Form R and D team of 400 engineers/managers that includes designer, manufacturing engineer, quality, purchasing, and marketing. (The team member number goes up to 1,000 right before go-ahead). Apply concurrent engineering and DFMA process fully in the product R and D stage.
B Results. Introduced the 767 on schedule (which compares to Airbus’ 310 eight months behind schedule). Although Boeing had missed the 300-350 seat market and lost some of the 727 replacement market to Airbus 300, Boeing got to keep 200-300 seat market with a successful 767. Development costs were within budget and cost of goods sold was 4 percent favorable to the original estimates. No recall record so far. Long term effects – likely good.
Business process modeling
Business model
A business model is a framework for creating economic, social, and/or other forms of value. The term business model’ is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.
Business process
A business process is a collection of related, structured activities or tasks that produce a specific service or product. There are three main types of business processes:
1. Management processes, the processes that govern the operation of a system. Typical management processes include ‘‘Corporate governance’’ and ‘‘Strategic management’’.
2. Operational processes, processes that constitute the core business and create the primary value stream. Typical operational processes are purchasing, manufacturing, marketing, and sales.
3. Supporting processes, which support the core processes. Examples include accounting, recruitment, technical support.
A business process can be decomposed into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super-process. The analysis of business processes typically includes the mapping of processes and sub-processes down to activity level. A business process model is a model of one or more business processes, and defines the ways in which operations are carried out to accomplish the intended objectives of an organization. Such a model remains an abstraction and depends on the intended use of the model. It can describe the workflow or the integration between business processes. It can be constructed in multiple levels.
Business process modeling (BPM)
Business process modeling (BPM) in systems engineering and software engineering is the activity of representing processes of an enterprise, so that the current process may be analyzed and improved in the future. BPM is typically performed by business analysts and managers who are seeking to improve process efficiency and quality. The process improvements identified by BPM may or may not require information technology involvement, although that is a common driver for the need to model a business process, by creating a process master.
Change management programs are typically implemented to put the improved business processes into practice. With advances in technology from large platform vendors, the vision of BPM models becoming fully executable (and capable of simulations and round-trip engineering) is coming closer to reality every day.
Business process modeling plays an important role in the business process management (BPM) discipline. Since both business process modeling and business process management share the same abbreviation (BPM), these activities are sometimes confused with each other. BPM addresses the process aspects of a business architecture, leading to an all encompassing enterprise architecture. The role of business processes in the context of the rest of the enterprise systems (e.g. data architecture, organizational structure, strategies, etc.) creates greater capabilities when analyzing and planning enterprise changes.
Business process modeling tools
Business process modeling tools provide business users with the ability to model their business processes, implement and execute those models, and refine the models based on
as-executed data. As a result, business process modeling tools can provide transparency into business processes, as well as the centralization of corporate business process models and execution metrics.
Modeling and simulation. Modeling and simulation functionality allows for pre-execution ‘‘what-if’’ modeling and simulation. Post-execution optimization is available based on the analysis of actual as-performed metrics.
Business process modeling diagrams are:
B Use case diagrams.
B Activity diagrams.
Some business process modeling techniques are:
B Business Process Modeling Notation (BPMN).
B Cognition enhanced Natural language Information Analysis Method (CogNIAM).
B Extended Business Modeling Language (xBML).
B Event-driven process chain (EPC).
B IDEF0 used since early 1990s.
B Unified Modeling Language (UML).
Programming languages tools for BPM
BPM suite software provides programming interfaces (web services, application program interfaces (APIs)) which allow enterprise applications to be built to leverage the BPM engine.
Programming languages that are being introduced for BPM include (see Table I):
B Architecture of Integrated Information Systems (ARIS) supports EPC.
B Business Process Execution Language (BPEL).
B Web Services Choreography Description Language (WS-CDL).
B XML Process Definition Language (XPDL).
Other technologies related to business process modeling include model-driven architecture and service-oriented architecture.
Business process integration
A business model, which may be considered an elaboration of a business process model, typically shows business data and business organizations as well as business processes. By showing business processes and their information flows, a business model allows business stakeholders to define, understand, and validate their business enterprise. The data model part of the business model shows how business information is stored, which is useful for developing software code. See Figure 1 for an example of the interaction between business process models and data models.
Usually a business model is created after conducting an interview, which is part of the business analysis process. The interview consists of a facilitator asking a series of questions to extract information about the subject business process. The interviewer is referred to as a facilitator to emphasize that it is the participants, not the facilitator, who provide the business process information. Although the facilitator should have some knowledge of the subject business process, but this is not as important as her mastery of a pragmatic and rigorous method interviewing business experts. The method is important because for most enterprises a team of facilitators is needed to collect information across the enterprise, and the findings of all the interviewers must be compiled and integrated once completed.
Business models are developed as defining either the current state of the process, in which case the final product is called the ‘‘as is’’ snapshot model, or a concept of what the process should become, resulting in a ‘‘to be’’ model. By comparing and contrasting ‘‘as is’’ and ‘‘to
be’’ models the business analysts can determine if the existing business processes and information systems are sound and only need minor modifications, or if reengineering is required to correct problems or improve efficiency. Consequently, business process modeling and subsequent analysis can be used to fundamentally reshape the way an enterprise conducts its operations.
Business Process Query Language (BPQL) BPMI Administration and monitoring interface Business Process Semantic Model (BPSM) BPMI Process metamodel, in fashion of Object
Management Group (OMG) Model-Driven Architecture (MDA)
Business Process Extension Layer (BPXL) BPMI BPXL extension for transactions, human workflow, business rules
UML Activity Diagrams OMG Notation language
Workflow Reference Model Workflow Management Coalition (WfMC) Architecture XML Process Definition Language (XPDL) WfMC Execution language
Workflow API (WAPI) WfMC Administration and monitoring, human
interaction, system interaction
Workflow XML (WfXML) WfMC Choreography (or similar to it)
Business Process Definition Metamodel (BPDM)
OMG Execution language and/or notation
language, as MDA metamodel Business Process Runtime Interface (BPRI) OMG Administration and monitoring, human
interaction, system interaction, as MDA metamodel
Web Services Choreography Interface (WSCI)
World Wide Web Consortium (W3C) Choreography
Web Services Choreography Description
Web Services Flow Language (WSFL) IBM Execution language Business Process Schema Specification
(BPSS)
OASIS Choreography (and collaboration)
Figure 1 Example of the interaction between business process and data models
Business process reengineering
Business process reengineering (BPR) is an approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations. The key to business process reengineering is for organizations to look at their business processes from a ‘‘clean slate’’ perspective and determine how they can best construct these processes to improve how they conduct business (see Figure 2).
Business process reengineering (BPR) began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. A key stimulus for reengineering has been the continuing development and deployment of sophisticated information systems and networks. Leading organizations are becoming bolder in using this technology to support innovative business processes, rather than refining current ways of doing work.
Integrated business process management
Business process management
Business process management is a field of management focused on aligning organizations with the wants and needs of clients. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. As organizations strive for attainment of their objectives, business process management attempts to continuously improve processes – the process to define, measure and improve your processes – a ‘‘process optimization’’ process.
Integrated business process management
Today’s businesses are more likely to have a heterogeneous and confused mixture of software products in use in their business. These disconnected applications cannot easily accommodate growth in transactions, cannot be scaled easily to accommodate more users, and have severe database limitations. Additional applications – inventory or warehouse management, customer relationship management (CRM), or ecommerce, etc., may be added – leaving businesses with a disconnected slew of applications – and what is worse – the problems of manually entering and re-entering data across these multiple products. The ramifications of all these various applications include lost productivity in work hours spent re-entering data manually and attempting to consolidate data from the disparate systems;
Figure 2 Business process re-engineering cycle
extremely high error rates, as manually entered data is highly prone to mistakes; lack of visibility to the information necessary to make decisions; and outgrown applications that cannot scale to allow the business to grow.
Addressing the plethora of disconnected applications comprising a business process/processes will help business take better control of its business operations and increase the efficiency of those operations. A single integrated suite of software provides significant advantages to the business, accommodating the breadth of the company’s business processes, while providing the flexibility for even small companies to tailor the suites to meet their specific business needs. New advances in technology bring benefits of a single business management suite without the cost, complexity, and rigidity of traditional software applications.
Benefits of integrated suite of business applications (integrated business process) over a collection of stand-alone applications (unintegrated business process):.
1. Scalability. Integrated suite solutions are designed to grow with your company. Stand-alone applications are generally ‘‘top out’’ without transition paths to other solutions, leaving you to start over from scratch with a new and different application. You can add more users, more modules, increase your database size, increase your volume of transactions as your business grows without any disruption in business.
2. Improved productivity. Stand-alone applications cannot easily talk to one another and thus require spending a great deal of time doing the same task reiteratively – entering the same data in different programs.
3. Functionality/affordability. Access to all the core functionality required to run the business over time at an affordable price point.
4. Gain business visibility. With an integrated business management suite, there is a ‘‘single version of the truth’’ that only needs to be entered once to be propagated to all parts of the business. All business processes, all employees who touch the application, and all the executives who make decisions for the company see the same version of reality, in real time, all the time.
5. Business process customization and automation. Only with an integrated business management suite can actually tailor the entire business processes that underpin how to conduct business. Workflow underlies the entire suite and not just fragmented parts of it, rendering tools to customize the solutions to work exactly how their businesses work – rather than having an application that dictates how the business has to be run.
6. Total cost of application ownership. Companies with an integrated suite save the costs of multiple license fees, multiple support contracts, and the on-going cost of integrating the disparate applications.
7. Vendor management and support. An integrated suite gives you one solution supplier to work with. The ability to access affordable service and support is also critical. It is easier to support an integrated application environment than a hodgepodge of different applications.
8. Long term cost of ownership. Allowing businesses to subscribe to a service rather than purchase, install, and maintain an in-house solution – companies can better forecast and manage their costs, and eliminate high internal support costs.
9. Better monitoring and controlling of expenses. Integrated suite solutions are designed to better monitor and control expenses.
10. Unified business processes across the enterprise. With a single, integrated platform for CRM, accounting/ERP and ecommerce, you can automate key business functions across all departments, including sales, marketing, service, finance, inventory, order fulfillment, purchasing, and employee management. Your employees no longer have to re-enter data in different systems, rectify inconsistent or inaccurate data, or wait for batch updates. Instead, all your employees view and share accurate data in real time,
leading to greater collaboration among departments and increased productivity across your business.
11. Better decision making. Customizable dashboards offer real-time access to key performance metrics, supporting intelligent, timely business decisions. In addition, full visibility into unified customer records results in more efficient and highly personalized sales, fulfillment, and service processes.
Case study: DTE Energy
DTE Energy unlocks synergy and gains flexibility with common, integrated business processes
Innovation that matters. DTE Energy is a 150-year-old company with $9B in revenues and manages $23B in assets. These include Detroit Edison with 2.2 million electric customers, nine fossil units, and the Fermi 2 nuclear power station, generating 11,000 megawatts, as well as MichCon, serving 1.3 million gas customers in Michigan. DTE Energy operates non-regulated businesses in 38 states.
Business challenge. With the utility business becoming more competitive by the day, Midwestern energy giant DTE Energy needed to position itself for the future. Disparate systems and process fragmentation across nearly 200 different business units prevented the company from realizing all of the underlying synergies from acquisitions.
Solution. With the help of IBM, DTE Energy undertook a massive consolidation of its business systems, which made possible the complete redesign and standardization of its business processes across all business units. DTE Energy chose IBM’s Maximo Asset Management integrated with SAP, Advantex, ESRI, and Primavera. DTE Energy can now drive optimization efforts as an enterprise-not a collection of business units.
Key components
1. Software:
B IBM WebSphere Enterprise Service Bus.
B IBM DB2.
B IBM Maximo.
2. Servers – IBM System p.
3. Services – IBM Global Business Services
4. Timeframe:
B Selected IBM 3Q 2003.
B Phase 1 – Go live 3Q 2005.
B Fossil generation – Phase 2 – Go live 2Q 2007.
B Enterprise – expanded deployment ongoing.
Key business benefits
B Projected $75 million in annual operating cost savings.
B Improved decision-making through increased transparency across business units.
B Unified access to inventory availability across all businesses.
B Consistent integration of acquired companies, enabling faster realization of operational synergies.
B Improved ability to share and implement best practices across the enterprise.
Over the years, much has been said about the pros and cons of diversification and vertical integration. In today’s increasingly globalized economy, the prevailing view of the ‘‘right’’ business model stresses the importance of maintaining a single strategic focus and
remaining flexible to adapt to a dynamic marketplace. Utilities, however, stand as a notable exception to this maxim. Indeed, some of the most effective utility business models combine distinctly different lines of business – whether it is natural gas and electric power, generation and distribution, or nuclear and non-utility businesses. That is because despite obvious differences, these lines of business have much in common below the surface in such competency areas as effective work planning, common processes based on best practices, and inventory optimization.
Orchestrating optimization. Unlocking the potential efficiencies embedded in utility business models requires a level of operational orchestration across the entire business, whether it is common processes, common resources or supply-chain integration. In the wake of industry consolidation, many utilities have assembled a business portfolio that looks synergistic on paper, but still faces tremendous challenges in aligning with their acquired or merged businesses. DTE Energy, comprising Detroit Edison and Michigan Consolidated (MichCon) Gas, is one company that has risen to the challenge. Complementing its regulated electric and gas utility businesses are a highly diverse array of non-regulated businesses, ranging from coal transportation to energy trading.
Like most utilities that have grown through acquisition, DTE Energy’s efforts to consolidate the business were constrained by a proliferation of systems, which – by keeping information confined to pockets within business units – made it difficult to gain insight required to make critical business decisions. Though the problem was not new, it reached a new level of intensity in the immediate aftermath of the MichCon merger. Disparate systems across the organization provided difficulties with a number of activities, from financial reporting to spare parts inventories. Such were the challenges that led DTE Energy, a company with 2007 revenue of $9 billion, to rebuild the foundation of its business from the ground up, and to choose IBM as a partner to help it get there. DTE Energy wanted to improve the management of all business units and functions, link them together and make them best-in-class.
New and improved. The focus of DTE Energy’s transformation efforts is an innovative project named ‘‘DTE2,’’ which delivered an ERP called ‘‘Enterprise Business Systems (EBS).’’ As the name connotes, its aim is to position DTE Energy to meet a new set of challenges by fundamentally changing nearly all of its core business processes. Part and parcel of this effort was the need to establish a common, standardized set of business applications that could be employed across the company’s business units, a task whose complexity – based on a wide variety of business models and processes at work within the company – cannot be overstated. To address the company’s more general finance, human resources and supply chain requirements, DTE Energy selected SAP. The other major application area – more specialized and in some ways more operation-critical – was asset management and work management. DTE Energy wanted to be able to manage ‘‘all types of assets’’ on one common system, including fossil, nuclear, gas and electric distribution, facilities, vehicle fleets, and, even – in the future – rail cars used to transport coal across the Midwest.
Among its many uses, asset management is critical for utilities seeking to proactively service and maintain their $23 billion base of plant and equipment in order to minimize downtime and thus deliver the highest quality service to customers. With the utility workforce aging, asset management systems have become an increasingly important way for utilities to do more with less. Work management systems work hand in glove with asset management by helping utilities control the resources – human and material – required to get these critical jobs done. DTE Energy selected the IBM Maximo Asset Management as its assets and work management platform and selected IBM Global Business Services to not only design and deploy the overall EBS solution, but to help integrate it deeply into the fabric of the business.
It is not every day that a utility with operations in 38 states has the opportunity to build a clean slate IT infrastructure for the future, and DTE Energy was determined to make the most of it. While the best-of-breed applications it selected provided solid building blocks, the company realized that integration was the essential ingredient needed to achieve the flexibility, efficiency and transparency it sought. IBM helped advance this vision by designing the EBS architecture to employ service oriented architecture (SOA) components – most notably IBM
WebSphere? Enterprise Service Bus – to link processes and applications across all of DTE Energy’s business units. IBM System peservers provide the hardware platform for EBS, while IBM DB2? provides a common data repository for all applications. With this as a foundation, the IBM team then supported DTE Energy to optimize business processes in a way that took maximum advantage of its SOA-based integration capabilities.
By running all of its business processes on a consolidated platform, DTE Energy now has a way to unleash the potential synergies and operational efficiencies that were difficult to achieve due to the fragmentation of systems and information. The DTE2 project eliminated more than 400 legacy systems and interfaces. Consider, for example, the highly specialized spare parts required to fix and maintain power generation equipment, whose importance to plant operations is the ability to view all parts inventory levels. Because the new system enables employees to view parts inventory levels across all plants – not just their own – they have the ability to find a part within another DTE Energy facility.
In terms of what is important to any utility, nothing comes before safety and reliability – and no application has any greater impact on these outcomes than asset management. A key part of asset management is the ability to perform preventative maintenance (PM) on key assets, not just because it catches problems before they happen, but because it enables utilities to plan and execute PM in a way that optimizes the use of their human and financial resources. Because EBS provides a single window onto all PM requirements, DTE Energy can now manage PM holistically instead of on a plant-by-plant basis. DTE Energy also stands to gain more flexibility in prioritizing plant maintenance work. The centralization of asset management reporting means that DTE Energy can conform more rapidly to any new financial reporting requirements.
Why it matters. In an industry where diversity reigns, Midwestern energy giant DTE Energy is more diversified than most, with operations that range from coal transportation to appliance repair services and nuclear power. Using SOA technology, DTE Energy was able to consolidate all of its highly diverse businesses under one core business platform – enabling the realization of operational synergies that would have otherwise been difficult to achieve.
Sharing the best. The broad theme of the DTE Energy story is how flexibility and integration enable even the most complex companies to think, act and optimize as a single company. It is seen in the way process standardization and flexible, SOA-based integration enables DTE Energy’s business units to share and adopt best practices for the benefit of all, and how these same attributes enable DTE Energy to rapidly and fully integrate future acquisitions. Ron May, Senior Vice President, Major Enterprise Projects, expects EBS to elevate the company to a whole new level of operational efficiency.
Conclusion
Integrated business planning and forecasting
IBP is about planning (not just budgeting) across an entire business (not just one department, business unit or function) in an integrated fashion. IBP incorporates advanced planning techniques, including driver-based planning, rapid planning cycles and rolling-quarters time frames. Organizations engage in a range of forward-looking activities to bring together the disparate strands across a corporation in a way that fosters internal alignment and enhances agility, enabling it to increase its financial returns and improve its strategic position.
Integrated business process management
Addressing the plethora of disconnected applications/processes is a crucial step a business can take to gain better control of its business operations and increase the efficiency of those operations. A single integrated suite of applications/processes provides significant advantages to the business. Today, business processes may be very sophisticated and complex, the solutions, with their integrated processes, simpler management, easy usability, and advanced business intelligence, are changing the way to conduct business.
Benefits at a glance
Integrated business planning and forecasting
B Evaluate plans and activities based on the true economic impact of each consideration.
B Improve organizational internal alignment.
B Improve strategic position.
B Improve financial performance.
B Increase transparency and accountability.
B Provide decision support.
B Optimize capital equipment and asset utilization.
B Increase business flexibility.
B Quantify financial risk.
Integrated business process management
B Increase operational efficiency.
B Gain business visibility.
B Improve customer relationship.
B Streamline production.
B Optimize IT investment.
B Comply with regulations.
B Cut costs.
B Bring product to market sooner.
B Monitor and control expenses.
B Reduce errors.
B Get accurate, timely information.
B Support your changing needs.
B Make better business decisions.
B Deliver the right product at the right time.
B Ability to modify/configure statutory changes.
B Reduce product cost, reduce expediting.
B Improved closure rates, increased market share.
B Global reach, better inventory visibility, reduced distribution costs, higher customer satisfaction.
Further reading
Dufresne, T. and Martin, J. (2003), ‘‘Process modeling for e-business’’, INFS 770 Methods for Information Systems Engineering: Knowledge Management and E-Business. Spring.
Hommes, L.J. and Hommes, B.-J. (n.d.), ‘‘The evaluation of business process modeling techniques’’, doctoral thesis. Technische Universiteit Delft, Delft.
IBM Corporation (n.d.), ‘‘DTE Energy unlocks synergy and gains flexibility with common, integrated business processes’’ available at: www-01.ibm.com/software/success/cssdb.nsf (accessed 15 August 2009).
Ko, R.K.L., Lee, S.S.G. and Lee, E.W. (2009), ‘‘Business process management (BPM) standards: a survey’’,Business Process Management Journal, Vol. 15 No. 5.
Laguna, M. and Marklund, J. (2004), Business Process Modeling, Simulation, and Design, Pearson/Prentice Hall, Englewood Cliffs, NJ.
Shi, X., Han, W., Li, Y. and Huang, Y. (2007), ‘‘Integrated business-process driven design for service-oriented enterprise applications’’, International Journal of Pervasive Computing and Communications, Vol. 3 No. 2, pp. 1742-73.
Stamatis, D.H. (2002),Six Sigma and Beyond: Design for Six Sigma, CRC, Boca Raton, FL.
Wikipediaw(n.d.), ‘‘Business process modeling’’ available at: http://en.wikipedia.org/wiki/Business_
process_modeling (accessed 30 September 2009).
Williams, S. (1967), ‘‘Business process modeling improves administrative control’’, Automation, December, pp. 44-50.
About the authors
Tajinder Pal Singh Toor, PMP, PMI-SP has more than nine years of IT industry experience encompassing a wide range of skill set, roles, and industry verticals. He has experience in leading and managing complex projects. He has handled multiple roles – project manager, business solution manager, advisory/senior quality consultant, lead process reviewer, advisory IBM audit etc. He is a published author with Emerald and has published several papers with them (Business Strategy Series, ISSN: 1751-5637, Emerald UK). He acts as expert reviewer forBusiness Process Management Journal (BPMJ) and is a member of Emerald Literati Network. Tajinder Pal Singh Toor is the corresponding author and can be contacted at: tajitoor@in.ibm.com; toor.tajinder@yahoo.com
Teena Dhir is an army officer and has about five years of work experience in the Logistics Department of Defence. She has a Master’s in Research in Microbiology.
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