Introduction to the issues of complexity and to the concepts of Enterprise Systems Engineering that can be useful in Quality Management

1. Issues of Complexity in Enterprise & Quality
Management
Nicola Mezzetti, Ph.D.
Department of Information Engineering and Computer Science
University of Trento
nicola.mezzetti@gmail.com
A.A. 2014/2015
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise & Quality Management

2. Everyone knows that not all change is good or even necessary. But
in a world that is constantly changing, it is to our advantage to
learn how to adapt and enjoy something better.
Ken Blanchard1
1In the foreword of "Who moved my cheese?" by Spencer Johnson
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise & Quality Management

3. Overview
Quality is a concept that covers many aspects across the
whole enterprise, seen as a system, and its processes.
Quality can be seen as an aspect of Enterprise Systems
Engineering.
This discipline has emerged in direct response to the increasing
complexity of enterprises.
We will review the basic concepts of Enterprise Systems
Engineering in order to understand:
The system approach principle which is important for quality
makers,
The tools it enables to quality makers, and
Issues about quality management in complex environments.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise & Quality Management

4. Dealing with Messes
In a real sense, problems do not exist. They are distractions
from real situations. The real situations from which they are
abstracted are messes.
A mess is a system of interrelated problems. We should be
concerned with messes, not problems.
The solution to a mess is not equal to the sum of the solution
to its parts. The solution to its parts should be derived from
the solution of the whole; not vice versa.
Science has provided powerful methods, techniques and tools
for solving problems, but it has provided little that can help in
solving messes. The lack of mess-solving capability is the
most important challenge facing us.
Russ Acko, University of Pennsylvania
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

5. Messes Complexity
Experiencing a mess often indicates that we are dealing with
complexity.
Complexity
Complexity is that property of a model which makes it dicult to
formulate its overall behavior in a given language, even when given
reasonably complete information about its atomic components and
their interrelations.
Complexity (Organizational)
Condition of having many diverse and autonomous but interrelated
and interdependent components or parts linked through many
(dense) interconnections. In the context of an organization,
complexity is associated with (1) interrelationships of the
individuals, (2) their eect on the organization, and (3) the
organization's interrelationships with its external environment.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

6. Complexity Science
Complexity Science is a novel approach developed for studying
interdisciplinary phenomena. Complexity science:
spans many disciplines, including physics, biology, and systems
theory.
is not a single technological innovation, but a shift in scienti

7. c
approach with the potential to profoundly aect business,
organizations and government.
strives to uncover the underlying principles and emergent
behavior of complex systems.
The goal of complexity science is to understand complex systems,
what rules govern their behavior, how they adapt to change,
learn eciently, and optimize their own behavior.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

8. Business Success is a Matter of Complexity!
Despite the importance of strategy in the business literature, there
is a paucity of understanding and consensus around foundational
issues in the discipline.
What exactly is the nature of those intangible competencies,
capabilities, resources, and assets that enable one enterprise
to succeed while another stumbles?
Must an enterprise's strategy

9. t the environment, or can it
successfully shape its environment to suit its existing
capabilities?
Business success and failure are outcomes of complex interactions
between an organization and its changing environment, without
simple cause and eect relationships.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

10. What's an Enterprise?
Enterprise (Oxford Dictionary )
A business or company;
An enterprise consists of a purposeful combination of
interdependent resources (e.g., people, processes, organizations,
supporting technologies, and funding) that interact with
each other to coordinate functions, share information,
allocate funding, create work
ows, and make decisions, etc.;
and
their environment(s) to achieve business and operational
goals through a complex web of interactions distributed across
geography and time2.
2Rebovich, G. and B.E. White (eds.). 2010. Enterprise Systems
Engineering: Advances in the Theory and Practice. Boca Raton, FL, USA:
CRC Press.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

11. Other de

12. nitions
The term enterprise has been de

13. ned as follows:
1 One or more organizations sharing a de

14. nite mission, goals,
and objectives to oer an output such as a product or service.
(ISO 2000)
2 An organization (or cross organizational entity) supporting a
de

15. ned business scope and mission that includes
interdependent resources (people, organizations and
technologies) that must coordinate their functions and share
information in support of a common mission (or set of related
missions). (CIO Council 1999)
3 A complex, (adaptive) socio-technical system that comprises
interdependent resources of people, processes, information,
and technology that must interact with each other and their
environment in support of a common mission. (Giachetti
2010)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

16. Purposes of an Enterprise
An enterprise must accomplish two purposes:
1 Develop things within the enterprise to serve as either external
oerings or as internal mechanisms to enable achievement of
enterprise operations, and
2 Transform the enterprise itself so that it can most eectively
and eciently perform its operations and survive in its
competitive and constrained environment.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

17. Enterprises and Organizations
The terms enterprise and organization are not equivalent:
There are enterprises that are not organizations;
In self-organizing enterprises the sentient beings in the
enterprise will

18. nd for themselves some way in which they can
interact to produce greater results than can be done by the
individuals alone. This kind of enterprise is often more
exible
and agile than organized ones.
There are organizations that are not enterprises;
Giachetti (2010)3 distinguishes between enterprise and
organization:
an organization is a view of the enterprise which de

19. nes the
structure and relationships of the organizational units, people,
and other actors in an enterprise.
3Giachetti, R.E. 2010. Design of Enterprise Systems: Theory, Architecture,
and Methods. Boca Raton, FL, USA: CRC Press, Taylor and Francis Group.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

20. The New Enterprises
Enterprises are evolving in a highly complex manner and the
management approaches applied are shifting from the modern to
postmodern.
There is a growing need for enterprises to operate on a global level,
thus considering an expanded set of factors, which includes:
the economical, legal and political context;
technological innovation;
culture and multiculturalism;
management of natural resources;
the social and ecological impacts of decisions and action;
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

21. The Enterprises' Stakeholder
In any complex enterprise there
are multiple stakeholders.
i.e., any group or individual
who can aect or is aected
by the achievements of the
organization's objective
The stakeholder set involved in
the design, development, and
sustainment of modern
enterprises is large and represents
many diverse perspectives.
Balancing the needs of all
stakeholder is the critical success
factor for today's enterprises.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

22. The Creation of Value
Business is the activity of providing goods and services involving

23. nancial, commercial, and industrial aspects.
http://sebokwiki.org/w/images/0/01/ESE-F01.png
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

24. Enterprise Value Framework
From Lean Enterprise Value (Murman et al, 2002)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

25. The Enterprise Value Chain
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

26. Value Enablers
Projects, Programs and Businesses:
Programme: a temporary
exible organization structure
created to coordinate, direct and oversee the implementation
of a set of related projects and activities in order to deliver
outcomes and bene

27. ts related to the organization's strategic
objectives.
Project: unique activity focused on the creation of a set of
deliverables within agreed cost, time and quality parameters.
Knowledge:
What people know, how they work together, and how well they
are organized and motivated.
Quality Management
Resource Optimization
Systems Engineering
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

28. Enterprise Systems Engineering
Enterprise Systems Engineering (ESE) is de

29. ned as the application
of Systems Engineering principles, concepts, and methods to the
planning, design, improvement, and operation of an enterprise.
To enable more ecient and eective enterprise transformation,
the enterprise needs to be looked at as a system, rather than
merely as a collection of functions connected solely by information
systems and shared facilities (Rouse 2009).
Enterprise Systems Engineering includes
1 those traditional principles, concepts, and methods that work
well in an enterprise environment, and
2 an evolving set of newer ideas, precepts, and initiatives derived
from complexity theory and the behavior of complex systems
(such as those observed in nature and human languages).
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

30. Welcome to the middle of the lecture...
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

31. Welcome to the middle of the lecture...
... let's talk about Systems' Theory Engineering
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

32. System Theory in Quality Management
Without profound knowledge of processes, potential variations in
products and the psychology of people, management action can
cause signi

33. cant ruination (Demings, 1991).
Deming's System of Profound Knowledge for quality management
comprises four interconnected parts:
1 Theory of Systems: A system is a series of functions or activities
that work together within an organization to achieve the
organization's aim (Deming, 1991).
2 Theory of Variation: The organization experiences higher costs of
operation because management is unable to isolate the cause of the
variation (Deming, 1986).
3 Theory of Knowledge: managers should use scienti

34. c processes -
explain, predict and control - to gain more knowledge about the
systems and processes in the organizations.
4 Knowledge of Psychology: managers need to know how people
interact, their individual needs, their working and learning styles.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

35. What's a System?
System
Collection of parts (or subsystems) integrated to accomplish an
overall goal. Every System has at least two parts, and these parts
are interconnected.
Systems have:
input,
processes,
outputs,
outcomes.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

36. System Properties
The system's overall behavior depends on its entire structure
(not the sum of its various parts).
If one part of the system is removed, the nature of the system
is changed.
Systems can be considered in two ways: closed or open.
Systems have boundaries which separate them from their
environments.
Boundaries are very dicult to delineate in social systems,
such as organizations.
Systems tend to seek balance with their environments.
Feedback from the environment help

37. nding a steady state.
Systems that do not interact with their environment tend to
reach limits.
A system is composed of subsystems of lower order and is also
part of a supra-system.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

38. Open Systems
The open system can be viewed as a transformation model. In a
dynamical relationship with its environment, it receives various
inputs, transforms these inputs in some way, and exports outputs.
External Environment
The external environment includes a wide variety of phenomena
that can aect the organization, but which the organization cannot
directly control.
Open systems have permeable boundaries between itself and a
broader supra-system.
Open systems exchange information, energy, or material with
their environments.
Open systems appear to move in the direction of greater
dierentiation, elaboration and a higher level of organization.
An open system may attain a state where the system remains
in a dynamic equilibrium through the continuous in
ow of
material, energy, and information.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

39. For the Sake of Completeness...
Complex System
A complex system is compose of numerous, varied, simultaneously
interacting parts (or agents).
A system can become more complex due to an increase in size as
well as with an increase in the amount of data, variables, or the
number of

40. elds that are involved in the design.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

41. Systems Engineering
Systems Engineering (SE) is an interdisciplinary approach and
means to enable the realization of successful systems4
It considers both the business and the technical needs of all
customers with the goal of providing a quality product that
meets the user needs:
it deals with work processes, optimization methods, and risk
management tools.
it overlaps technical and human-centered disciplines (e.g.,
organizational studies and project management).
It integrates all of the disciplines and specialty groups into a
team eort forming a structured development process that
proceeds from concept to production to operation.
SE's approach is inherently complex since the behavior of and
interaction among system components is not always clear or
known.
De

42. ning and characterizing systems, subsystems and the
interactions among them is one of SE's goals.
4De

43. nition from System Engineering Handbook, INCOSE, 2004
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

44. Systems Engineering (cont.)
It focuses on de

45. ning customer needs and required
functionality early in the development cycle, documenting
requirements, then proceeding with design synthesis and
system validation while considering the complete problem:
Operations
Performance
Test
Manufacturing
Cost Schedule
Training Support
Disposal
The dierence with traditional engineering lies primarily in the
greater emphasis on de

46. ning goals, the creative generation of
alternative designs, the evaluation of alternative designs, and
the coordination and control of the diverse tasks that are
necessary to create a complex system.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

47. The Systems Engineering Process
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

48. Achievement of System Engineering
The continuing evolution of
systems engineering comprises
the development and
identi

49. cation of new methods
and modeling techniques.
Popular tools that are often used
in the systems engineering
context were developed during
these times, including
Universal Systems Language
Uni

50. ed Modeling Language
Quality Function
Deployment
Integration DEFinition
QFD's House of Quality
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

51. System Engineering Complexity
Systems engineering encourages the use of tools and methods to
better comprehend and manage complexity in systems, for instance:
System model, Modeling, and Simulation,
System architecture,
Optimization,
System dynamics,
Systems analysis,
Statistical analysis,
Reliability analysis, and
Decision making
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

52. Applying System Engineering
The principles of systems engineering can be applied to any system
provided systems thinking 5 is employed at all levels.
In [5] it is shown that
the optimal eort spent on
systems engineering is about
15-20% of the total project
eort.
systems engineering
essentially leads to reduction
in costs among other
bene

53. ts. The scope of systems engineering activities.
5the process of understanding how things, regarded as systems, in
uence
one another within a whole (http://en.wikipedia.org/wiki/Systems thinking).
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

54. Some System Design Tools
Concurrent Engineering: a team of specialists from all
aected areas is established and collectively responsible for
the design of a product or process.
Quality Function Deployment: procedure to assure that
customer needs drive the product design and production
process by translating them into the technical requirements of
the product and then into a process for delivering a
product/service that meets those requirements.
Human-Factors Engineering: focus on integrating the
human element into systems analysis, modeling, and design.
Failure Mode-Eect Analysis: a methodical approach for
evaluating the robustness of a product design and for
analyzing potential failures, as well as the impact of such
failures.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

55. Quality Function Deployment: Matrix Relationships
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

56. The V Model of System Development
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

57. Spiral Model of System Development
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

58. Some Systems Analysis Tools
Modeling and Simulation
Queuing methods
Discrete-event simulation
Enterprise-Management Tools
Supply-chain management
Game theory and contracts
Systems-dynamics models
Productivity measuring and monitoring
Financial Engineering and Risk Analysis Tools
Stochastic analysis and value-at-risk
Optimization tools for individual decision making
Distributed decision making (market models and agency
theory)
Knowledge Discovery in Databases:
Data mining
Predicting modeling
Machine learning
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

59. Some System Control Tools
Statistical Process Control: with SPC a provider of a given
procedure can know if that procedure is within acceptable
limits, and, if not, whether corrective actions should be taken.
Control Charts: a way of detecting whether a process is under
control; a limited number of measurements are made over
time, and the mean and range are then calculated.
Scheduling: operations method of matching supply and
demand to achieve desired goals or objectives.
before scheduling can begin, however, key processes must be
analyzed and optimized, and work, workload, and forecasted
demands must be measured.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

60. Other System Engineering Tools
Requirements Management: Stakeholder Map, Model Based
System Engineering, Viewpoint Analysis, Functional Modeling, Need
Means Analysis, Function Means Analysis, Holistic Requirements
Model
Design: Value Stream Mapping, Taguchi Method, Design Structure
Matrix, N2 Analysis, Matrix Diagram
Project Management: Earned Value Management System, Gantt
Chart, Project Evaluation and Review Technique, SIPOC Diagram
Problem Solving: System Optimization, System Dynamics,
Ishikawa Diagram, 5 Whys, Quality Clinic Process Charts, Relentless
Root Cause Analysis, Mistake Proo

61. ng, Functional Failure Mode
and Eects Analysis
Collaboration: Nominal Group Technique, Material
ow analysis,
Anity Diagrams, Context Diagram, Benchmarking
Decision Making: Risk Cubes, Cost-Risk-Bene

62. t Analysis, Pugh
Matrix
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

63. Ok, now let's get back to Enterprise Systems
Engineering
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

64. Doing Enterprise (Systems) Engineering
Enterprise design does not occur at a single point in time like the design
of most systems. Instead, enterprises evolve over time and are constantly
changing, or are constantly being designed.
(Giachetti 2010)
The body of knowledge for enterprise engineering is evolving under such
titles as enterprise engineering, business engineering, and enterprise
architecture... Many systems and software engineering principles are
applicable to enterprise engineering, but enterprise engineering's unique
complexities require additional principles... Enterprise engineering's intent
is to deliver a targeted level of enterprise performance in terms of
shareholder value or customer satisfaction... Enterprise engineering
methods include modeling; simulation; total quality management; change
management; and bottleneck, cost, work
ow, and value-added analysis.
(Joannou 2007)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

65. Enterprises are Social Structures
Social structures are essentially contrived systems. They are made
of men and are imperfect systems. They can come apart at the
seams overnight, but they can also outlast by centuries the
biological organisms which originally created them. The cement
which holds them together is essentially psychological rather than
biological. Social systems are anchored in the attitudes,
perceptions, beliefs, motivations, habits, and expectations of
human beings.6
Enterprises allow three levels of analysis:
the level of the environment.
the level of the organization as a system.
the level of subsystems (human participants) within the
organization.
6D. Katz, R.Kahn, The social psychology of organizations (1966)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

66. Holistic View of the Enterprise
Enterprises must be viewed holistically as a complex integrated
system.
Understanding the enterprise in terms of its subsystems is made
hard by the complex process structure:
Enterprise processes must cover a comprehensive set:
e.g., product development cannot be eectively accomplished
without the extensive involvement of other life cycle processes
such as manufacturing, supply chain and customer.
Leadership and enabling processes, in particular organizational
and information infrastructure issues, must all be considered
in parallel and in an integrated fashion with the lifecycle
processes needed to produce a product.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

67. The Enterprise Structure
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

68. A Process Framework Example
Nightingale, D. and Mize, J., Development of a Lean Enterprise Transformation Maturity Model (2002)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

69. Extended Enterprises
In some cases (e.g., modeling, assessment, quality management,
and decision making) it could be important to observe an enterprise
beyond the boundaries of the single organizations involved in it.
Extended Enterprise
Wider organization representing all associated entities - customers,
employees, suppliers, distributors, etc. - who directly or indirectly,
formally or informally, collaborate in the design, development,
production, and delivery of a product (or service) to the end user.
The extended enterprise could include upstream suppliers,
downstream consumers, and end user organizations, and perhaps
even sidestream partners and key stakeholders.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

70. Enterprises and their Environment
Organization
A social unit of people that is structured and managed to meet a
need or to pursue collective goals. All organizations have a
management structure that determines relationships between the
dierent activities and the members, and subdivides and assigns
roles, responsibilities, and authority to carry out dierent tasks.
Organizations are open systems { they aect and are aected
by their environment.
As open systems, enterprises can not be separated from their
environment.
In their environment, enterprises experience risks in form of:
threats
opportunities
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

71. The Complexity of Enterprises' Environment
For an enterprise, the external environment is the combination of
dierent aspects:
Culture
Unions and other social parties
Economy
Politics
Law
Social structure and composition
Natural phenomena and climate
Scienti

72. c research
Governative and non-governative authorities
... and so on!
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

73. An Example of Strategy in Organization Systems
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

74. Managing Quality in Complex Environments
Quality management strategies must consider the
environment in its complexity, for instance
Law determines how quality has to be delivered.
Culture and social responsibility can strongly in
uence
perceived quality7.
Quality is a perspective for seeing opportunities in the
changes aecting the environment
Consumer expectations about quality have increased to the
point where it is assumed to be the primary requisite for entry
into the market sphere (Schneider and Bowen, 1994).
Quality, it is almost universally agreed, is fundamental to
success in the emerging environment confronting organizations
(Grove, 1999).
7Romenti, S. et al. Organisations' conversations in social media: applying
dialogue strategies in times of crises (2014)
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

75. Concluding Remarks
There are more things in heaven and earth, Horatio,
Than are dreamt of in your philosophy.
(W. Shakespeare, Hamlet)
(Enterprise) Systems Engineering provides us with mindset and
tools for managing those dimensions of complexity that we can
rationally describe and treat.
World's complexity goes far beyond what we understand; a formal
approach is not enough to drive real world's enterprises to success.
Business success, and quality as well, will always depend on our
ability to see opportunities and to combine common sense and
preparation.
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management

76. References
Acko, R., Towards a System of Systems Concepts. Journal
of Management Science, Vol. 17 n.11 , July 1971
Acko, R., From mechanistic to social system thinking.
System Thinking in Action Conference, November 1993
Nightingale, D., and Rhodes, D., Enterprise Systems
Architecting: Emerging Art and Science within Engineering
Systems. MIT Engineering Systems Symposium,
Massachusetts Institute of Technology, Cambridge, MA, 2004.
Romenti, S., Murtarelli, G., Valentini, C. (2014).
Organisations' conversations in social media: applying dialogue
strategies in times of crises. Corporate Communications: An
International Journal, 19(1), 10-33.
Honour, E. C. (2004, June). Understanding the value of
systems engineering. In Proceedings of the INCOSE
International Symposium (pp. 1-16).
Nicola Mezzetti, Ph.D. Issues of Complexity in Enterprise Quality Management