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Case study value of it strategy in hi tech industry
1. Value of IT Strategy
in
Hi - Tech Industry
25 Sept 2014
IASA India Chapter
Webinar by Vinu Jade & Anil Prasad
2.
Strategic Imperatives – Value through Strategic Planning
Business Value Capability areas
Business Model
Domain Model
Process Model
Adoption to Operating Model
Design IT Strategy for meeting the Capabilities, Models & Imperatives
Application Portfolio Management, Risk and Governance using EA – COBIT, ITIL Framework
Steps for a Value Driven Enterprise Architecture
3. Products – Semicon fab equipment, servers, test & measurement, etc.
Forecast-driven suppliers feed in- house/EMS CTO final build & assy
Products sold direct to businesses
Products – Processors, DRAM, embedded controllers, etc. High cost of fabs pushing industry towards fabless model Products sold on volume contract
Services – Outsourced design, test, manufacturing/assembly & logistics
B2B supply chain collaboration and event synchronization
Products shipped to OEM partners or drop-shipped to end customer
Products – PCs, cell phones, PDAs, stereo equipment, etc.
Multi-channel demand feeds dominant outsourced mfg model
Products sold via retailers & online
High –Tech
Industry Segments
Complex Equipment
Semiconductor
Contract Manufacturing
Consumer Electronics
Segments in High Technology Industry
4. Case Study : The Complex Equipment Value Chain Process Model Areas
OEMs
Component Mfg
Sub Assy Mfg
Contract Mfg (EMS)
Silicon Source
Semiconductor
Fabrication
Direct Sales & Service
Tiered Supply Base
OEMs, Sales & Distribution
Customer
5. Business and Its Strategy – IASA Cutting Edge Paradigm Architecting to meet Demand with Effective Supply
6. Business and Its Strategy – IASA Cutting Edge Paradigm Architecting to meet Demand with Effective Supply
Enterprise Architecture
& Strategy Focus
Enables Cutting Edge
7. Complex Equipment Industry Drivers The Value – Strategic Imperatives
Design Complexity
•
How can I reduce design cycle time, and development of customer-specific products?
•
How can existing designs be leveraged to reduce design complexity?
Supply Variability
•
What can be done when component lead times exceed finished product lead times?
•
How can I fully leverage a global manufacturing and supply base?
Configuration Management
•
How can I better manage configuration changes that occur once manufacturing has begun?
•
Is there a better way to increase the accuracy of configured orders?
Service Delivery
•
How can I transform my service operations to a profitable business?
•
How can I ensure high quality services performed by 3rd parties?
Tiered Supply Base
OEMs, Sales & Distribution
8. Business and IT(s) Strategy – How to use Strategic Imperatives
Must Have – An Approach and Methodology for Business Strategy Modeling, helping in Agile Business and Agile IT. – Value thru Strategic Planning?
Improve the Supply & Demand Alignment (SAD) with improved Product Utilization, Leverage Levels (PULL) in market and meet Agile Customer Experience (ACE) – Qualitative Domain modeling?
Technology Strategy ( IT inclusive and NOT conclusive!) to enable the consumer meet the product, with Governance and Process Model (GAP). - Logical Process Modeling?
Operational Strategy for Support, Sustain and Succeed (ICE) with agile Technology enablement? -Adopt Enterprise Architecture?
9. •
Simultaneous optimization of supply & build strategies
•
Outsourcing with complete visibility across multiple tiers
•
Integration of configure-to-order processes and service
•
Emergence of customer service as a strategic differentiator
•
Lean initiatives to reduce cycle time and waste
Capabilities - A Need for Change in Business
10. Capabilities - A Need for Change in Process Extend Lean Initiatives Across the Enterprise
Sales & Mktg
Information Technology
Engineering
Supply Management
Service
Finance
Sales & Operational Planning
Production
Continually Improve Quality, Cost and Cycle Time
•
Poor Quality & Excess WIP
•
High Material & Supply Costs
•
Lengthy ECO Approval Process
•
Error Prone Order Processing
•
Incorrect Resource Dispatching
•
Conflicting Demand Signals
•
Duplicate & Erroneous Data
•
Isolated Departmental Systems
Common Areas of Waste
11. Alignment to business is critical aspect of “envision” - ‘Business-IT Alignment’ - It has multiple perspectives - 11
-
•
There are 4 dimensional perspectives for assessing Business-IT Alignment
–
Business Strategy as a driver
•
Strategy Execution (1 – 2 – 4)
•
IT Transformation (1 – 3 – 4)
–
IT Strategy as an Enabler
•
Competitive Potential (3 – 1 – 2)
•
Service Level (3 – 4 – 2)
•
Each of the above perspective requires different role play of management team
•
All perspectives are important to consider while defining IT Strategy and managing it.
12. Derived IT Strategy
Establish and Sustain Profitable Innovation
Enable Lean, Agile Supply Networks
Manage and Grow a Profitable Service Business
Command and Control Outsourced Operations
13. 1. Multi-Tier Supply Chain Planning via Process Modeling
Value Through Strategic Planning : Synchronize Plans To Reduce Lead Times
Extend Visibility to Multiple Tiers
Communicate requirements to all suppliers
Replenish and maintain inventories at customer sites on a consignment basis
React Faster to Supplier’s Constraints
Get visibility to supplier capacity
Reallocate key components
Make alternate sourcing decisions
Reduce Obsolescence
Understand impact of BOM changes to your CM or Supplier
Reduce Non-value Added Costs and Exception Overload
User-configurable exceptions
Automated exception handling via workflow
Run plan
Demand
‘equipment’
Supply
forecast
Consensus forecast
Run plan
Forecast
‘CPUs’
Supply commit
‘controller’
Supply commit ‘CPUs’
Forecast
‘controller’
VMI Hub
VMI Hub
Customer Consigned Inv Hub
Visibility
Semicon Supplier
Customer
EMS
You
14. 1. Multi-Tier Supply Chain Planning Domain and Process Model Integration Risk Pooling via Inv. Optimization & Postponement
•
Reduce inventory without sacrificing customer service
•
Use analysis tools to determine:
−
Where to optimally hold inventory (stage & location)
−
What quantities to hold
−
What safety stock to keep
•
Evaluate KPIs to assess service levels, postponement strategies, revenues, costs, etc.
Prod A
Prod B
Assy 1
Assy 2
Sub Assy
Finished Product
Major Optional Assemblies
Sub- Assembly
C 1
C 2
Qty=100
Qty=100
Qty=125
Components
Risk is “pooled” because a lower quantity of a common sub-assy is required to meet a given service level
Qualitative Domain Modeling : Use Planned Inventory Points that Enable Flexibility
15. Support Lean Manufacturing Practices to Reduce Cycle Time and Waste
Sequenced Demand
Customers
Suppliers
Production Line
Sequenced POs
Inventory
Bin 1
Bin 2
Operation 10
Feeder Plant
Feeder Line
Synchronized Production
Bin 1
Bin 2
Operation 20
Bin 1
Bin 2
Operation 30
Bin 1
Bin 2
Operation 40
Kanban
Replenishment
Build a Mix of Models and Configurations on the Same Line
Logical Process Modeling
2. Flow Mfg for Cost Effective Production
16. 2. Manufacturing & Logistics Integration Efficiently Move Products from Assembly to Customers - Logical Process Modeling
Warehouse Management Integration
•
Cross-dock and direct ship to / from manufacturing
•
Comply with labeling requirements
•
Create & track LPNs and lot / serial numbers
•
Enable simple kitting to full bill of materials or work order jobs
•
Support seamless configure-to-order (CTO) flow
Sales Orders
Mfg Operations
WMS Solution
Transportation Management Integration
•
Promise orders and plan transportation based on material availability
•
Incorporate true transit times and transportation costs into supply plan
•
Re-plan transportation if manufacturing delays require expediting
Transportation Plan
Mfg Operations
17. 2. Automatically Verify Entitlements
•
Define service coverage and determine entitlements
•
Sell different types of services on a single contract
-
Warranties, extended warranties
-
Usage-based or subscription-based
•
Bill accurately based on actuals or estimates
-
Time-based per regular service fees
-
Usage-based per volume / incidents
•
System routes customer based on existing info (e.g., gold-level customer)
•
Analyze renewals for recurring revenue opportunities
•
Coverage Times
•
Response Time Commitments
•
Discounts
•
Resource Preferences
•
Time Zone & Breaks
Notifications
•
Expirations
•
Renewals
Service Contracts Repository
Instantaneous
Verification
Service Rep
Customers
Accelerate Response via Seamless Contract Integration – Value Through Strategic Planning
18. 3. Know Installed Base Configurations Data Modeling to meet the Process
Record Mfg, Quality and Maintenance Specifications
Track the Status and History of All Changes
Manage Configurations / “As Maintained” BOM
Record Operational Metrics
Review Resolution for Similar Products With Similar Issues
Track Depreciation and Accounting Information
Common Product Repository
Design Specs
BOM / Configuration
Quality Data
Usage / Status
Maintenance & Service History
Warehouse / Packaging
Sales / Shipping
Ownership / Installation
Capture Information From Inception to Retirement – Qualitative Domain Modeling
19. 3. Field Service Resource Planning
Increase Productivity and Service Quality – Logical Process Modeling
Issues
•
General Inquiries
•
Call Backs
•
Inspections
•
Component Returns
•
Replacements
•
Field Repair & Maintenance
Optimize Workloads & Schedules
•
Priorities
•
Costs
•
Travel Time / Distance
•
Locations / Road-Level Routing
Optimizing Engine
Scheduling Criteria
Resource Workload
Spares Inventory
Products
Resources / Skills
Territories
Contracts / Customer Value
20. 3. Field Service Deployment
Spare Parts
Access Options:
•
Wireless connected
•
Disconnected w/ periodic synchronization
•
View and update schedule
•
Access service levels
•
Update product / issue data real-time
•
Order parts remotely
•
Report time, material and expenses incurred
Mobile Capabilities
Optimize
Schedule
Create Field Work Order
Identify Resolution Needs
Resolve On-Site
Dispatch Field Techs
Debrief
Invoice Customer
Reduce Repair Time & Cost, Leverage Mobile Capabilities
21. 4. Manage Product Returns
Support Complete Logistics & Repair Processing Needs in the Model
Receive and Inspect
Estimate and Approve
Plan and Schedule
Store, Ship
Debrief and Bill
Billing
Mfg & Inventory
Shipping /
Receiving
Human Resources
Contracts
Exchanges
In-House Repair
Repair, Refurbish, Reclaim
Identify Resolution Needs
Send Loaner or Exchange
Direct Product Return
Identify Resolution Needs
Generate RMA
Monitor Return of Damaged and Serviceable Products
–
Perform diagnostics and job estimates
–
Execute shipment back to customer and invoice for services rendered
Track Repair Status and Actual Costs
Automatically Update Product Configuration and Repair History
22. 5. Installed Base Preventive Maintenance
Improve Spare Parts Planning
Create
PM Programs
Optimize Schedule
•
Define programs, including default schedule, required resources, and covered items
•
Link programs to Contracts to initiate coverage
•
Auto-generate field work orders
•
Auto-generate service requests and tasks based on plans
•
Assign resources, including spare parts and equipment
•
Automate stocking rules
•
Manage excess inventories
•
Utilize automatic replenishment rules based on lead times
•
Debrief time, labor & materials
•
Invoice customer
•
Feedback results to plan to adjust timing of next PM activity
Debrief & Invoice
Dispatch Technicians & Perform PM
•
View customer and PM work info remotely
•
Execute PM against established procedures
Support Planned Maintenance & Reduce Breakdowns in the Logical Process Model
23. Customers,
Suppliers,
Products, …
Project & Contract Mgmt
HR & Finance
Planning & Purchasing
3rd Party & Legacy Apps
Manufacturing
Order Mgmt & Warehousing
Product Development
Service
Asset Maintenance
Sales & Marketing
Foundation: Common Data Model
Single definition of customers, suppliers, products, etc.
Immediate access to accurate, complete global information
Consolidate data from multiple systems
Scale to meet growth demands
A Single Source of Truth – Using Qualitative Domain Model
24. Deliver Daily Business Intelligence
–
Objective: Set institutional targets
–
Fact: Provide performance-based metrics
–
Exception: Continuously evaluate performance
Manage By…
What are the project schedule and budget impacts of design change?
How can I best adjust to planning exceptions?
How should I allocate production resources to meet variable demand?
How are supplier deliveries impacting my on-time delivery capability?
How is my backlog of open service requests changing?
Real-Time Access to Complete Business Information
25. Corporate Governance: Use EA, GRC and APM Tools for Visibility, Control, Efficiency
Automate Processes and Extend to Customers & Suppliers
Your Company
Customers & Suppliers
•
Identify issues early
•
Enable real-time information access & performance mgmt
•
Consolidate global financials
•
Unify corporate reporting
•
Consolidate and reconcile information rapidly
•
Automate business processes and broaden use of self-service
•
Simplify IT infrastructure
•
Leverage best practices from different groups / regions
Visibility
Efficiency
Provide Single Source of the Truth
Centrally Manage Policies and Procedures
•
Integrate and centralize business operations
•
Document processes and support compliance
•
View, test, and certify internal controls
•
Manage corporate communications
Control
Orders
Invoices
Payments
Requisitions
26. IT Cost and Business Value Realignment – Via APM
Innovation at System Level
Define the Differentiating Factors
Codify Systems of Record
28.
Business Model → WHAT
Operating Model → HOW Constitutes the business architecture and consists of the following models:
Process model
Decision model
Structure model
Performance model
Governance model
Each business model type has a corresponding operating model type
Manu- facturer
Integrated Collaborative Environment Business Model to Operating Model Value Through Strategic Planning
29. There is evidence of a strong link between organisational performance and architecture maturity Use Enterprise Architecture Methodology 29
MIT research shows a relationship between high performing companies and a mature Enterprise Architecture practice
Architecture Maturity
Discussion
•
Research has shown that as companies become more high performing as their architecture matures towards Business Modularity
•
Global EA maturity study showed that over 60% of surveyed organizations with mature EA realized value through decreased cost, minimized risk, decreased complexity and increased agility
Key Characteristics
Local and functional optimisation
IT efficiency
Operational efficiency
High Performance Company
IT Investment practices
Invest heavily into local applications addressing local business needs
Invest into shared infrastructure services
Selectively invest into shared data and standardised business processes
Focus on reusable application and process components for a modular operating model
30. Enterprise Architecture helps in aligning IT with business strategy than a detailed solution design 30
Architecture operates across the entire organisation (i.e. multiple lines of business) and is aligned to the corporate strategy and outcomes
Description
Architecture relevant to specific business unit(s) or operating models within an organisation
Also referred to as segment architecture and is aligned to business strategy & outcomes
Architecture supports detailed design and technology implementation relevant to support specific projects or capability outcomes
Architecture Capability Continuum
High
Example Principles
Enterprise Architecture Principles include “Customer 1st” or “Build in Agility”
Domain Architecture Principles include “Universal role based Front End” or “Single customer repository”
Solution Architecture Principles include “Customise common sales & service platform locally” or “Introduce risk based pricing tool”
Less Detailed
Less Strategic
More Strategic
Enterprise Architecture
Domain
Architecture
Solution Architecture
EA Focus
More Detailed
Decision Level
Typical decisions include definition and prioritisation of capabilities and applications to meet end state requirements
Typical decisions include clarifying business processes to be undertaken and the resultant requirements
Typical decisions include types of products, information flows and overall timing of solution
31. EA generates eight outputs including strategic considerations, design principles and architectural views 31
Output
Description
Strategic Considerations
Outlines and details a consistent view of the strategic considerations from each business unit within the organisation
Design Principles
Provides guidance in decision making and acceptable trade-offs when defining the Target State Architecture
Standards
Formulates and applies enterprise-wide IT standards and processes
Current Business Model
Baselines the client business model and IT infrastructure to identify and prioritise opportunities for improvement
Architectural Views
Identifies the levels, layers, and linkages that identify and help enable capabilities within the business and describe how IT supports client business and performance objectives (the views can be current or future state)
Scenarios
Depicts a potential future state customer situation to illustrate the capabilities required and help identify the current limitations that hinder it
Blueprint
Provides a clear link to the development of future IT systems, investment planning and portfolio management
Roadmap
Describes the implementation plan to achieve the target state architecture
Governance
Identifies design guidelines and patterns to ensure IT operates in the most efficient manner to achieve the future state architecture
Enterprise Architecture Outputs
32. Thank You
Learning from Case Study 5 Steps to Success in Adopting EA
Set Business Value through Strategic Planning, Focus on Strategic Imperatives, Define Capability Continuum
Adopt IT Strategy to meet the Capability Continuum – Both Business Model and Operating Model Canvas
Define Qualitative Domain modeling, Define Logical Process Modeling
Select Application, Information delivery to within the above Domain and Process Boundaries
Adopt Enterprise Architecture for IT Application Portfolio, Governance and Risk to Define EA Roadmap for meeting the Set Business Value