by Matt Dunstan, Application Platform Group Manager, Microsoft
In a climate where emerging economies, such as India's and China's are putting the UK manufacturing industry under increasing pressure to compete, it has become even more important for companies to find ways to reduce costs and complexity, maximise productivity and fully understand their business.
Business Process Management can play a key role in meeting this goal and has been used to refine manufacturing processes since the turn of the 20th century, though under a different name. But focussing purely on the physical in the 21st century will not reap the rewards desired; IT systems and processes are equally as important.
Today, Business Process Management (BPM) is about connecting systems, people, processes and partners together in an orchestrated, but dynamic system that evolves with the organisation's requirements. At the heart of this system, is a BPM Server, such as Microsoft's BizTalk Server 2006, which understands all the processes and human interactions - not just transactional operations which are already automated.
The importance of automation is its ability to enable manufacturers to respond to business events in real-time, make products in accordance with customer demand and outsource a wide variety of functions. And depending on the specifics of the manufacturing industry, these challenges can become quite complex, and in some cases, crippling to business productivity. Manufacturers in a range of disciplines including the automotive, chemicals, consumer packaged goods, high technology and oil and gas sectors need to deploy a flexible, scalable and reliable technology platform. Thus empowering them to shorten product development cycles, integrate operations with partners and suppliers, acquire and share intelligence in real-time and more easily communicate with customers. Business Process Management solutions integrate across legacy systems and trading partners, as well as providing visibility of end-to-end manufacturing processes.
Aligning IT strategy with those that run the business is the first step in effective BPM. Better alignment of IT and business strategy equates to more robust operations, greater visibility and improved communication between the functions of an organisation. People create and run companies, but applications link them together. If people aren't factoring this into the company at board level, these 'business bridges' are doomed to collapse. Often organisations make the transition more complicated than necessary by seeing BPM as forcing a review of business and IT strategies at the same time as trying to align them. If you know your business is working well, but IT can make it better, then why touch the business strategy?
To align Business and IT strategies and ensure that they evolve with the same rhythm of the business, the IT department must be represented on the board. However, research conducted by Loudhouse on behalf of Microsoft in March 2007 found that only 47% of businesses have IT representation at this level, with this number falling to 44% in businesses with 1000+ employees. The results ironically suggest that IT is regarded as less of a strategic asset in bigger companies; a perception that appears to be rooted in a lack of understanding of the impact IT can have on business performance.
In terms of the technology, the world of BPM can seem like a daunting place for first-time implementers. Once IT is represented at board level this becomes easier but by working with a technology partner this transition can be simplified and leaves the business with the in-house skills it needs to continue evolving systems with the business in the future.
One such company which has identified significant return on its investment is Lockheed Martin Systems Integration - a provider of advanced technology products, services and systems integration solutions to defense, civil and commercial customers worldwide. The company was keen to extract greater efficiencies from its 'Spares and Availability' support system - by automating more of its business processes and integrating it with external legacy Government systems.
Using Microsoft BizTalk 2004, Microsoft's partner Solidsoft, rapidly designed, developed and implemented solutions for three core business processes at Lockheed. This resulted in significant benefits including: unsurpassed ROI, 90% of transactions automated, process time reduction from four days to 25 seconds and a 1,900% efficiency gain. Solidsoft also equipped Lockheed Martin with the relevant skills and knowledge to independently automate a further 45 business processes, ensuring the company can continue to adapt its own systems as the business evolves.
This automation led to a dramatic increase in productivity and enabled the organisation to rapidly meet the demands of its consumers thereby out-maneuvering its competitors. From this example, it is clear to see how an opportunity and solution can be identified at board level, provided the expertise is represented and strategies joined up throughout the company.
A Bathwick Study, commissioned by Microsoft in March 2006, revealed the significance of an organisation's ability to respond to market and business changes. Speedier implementation of new IT projects or achieving a faster "Time to Solution" is critical in achieving that responsiveness. If IT is represented at board level, "Time to Solution" can be significantly reduced. It currently takes an average of 24 weeks to roll out significant changes to core application functionality and one of the most often cited reasons for IT project failure is that business requirements change before a new solution is implemented.
By implementing technology that can respond to and inform business, companies become more agile and evolve in a controlled but incisive way. Manufacturing in the UK may have been in decline in recent years, but BPM is proving itself capable of enhancing productivity and creating insight for competitive advantage. This is even more important in the manufacturing industry where small improvements can make as big an impact as small errors on success.