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Putting "e" technology into perspective: The integration of ERP and IT e-business components

The integration of ERP and e-business applications raises many concerns from staffing to budgeting. E-business consultant Richard Whiting outlines how executives can make the most of their IT strategy and resources.

The short history of ERP implementations has provided ample proof that the key to a successful implementation doesn't involve the speed of the implementation or the amount of money spent. Successful implementations follow a disciplined business plan that includes IT as a business variable and adheres to a step-by-step action plan, requiring the test and validation of the basic steps before advancing to subsequent implementation activities. The "Big Burst" implementation can no longer be regarded as a reasonable approach to e-business enablement. Indeed, it is becoming increasingly clear that the real issue is not e-commerce enablement, but managing the convergence of the IT and business models into a new interactive, interconnective, and scalable e-business structure.

In my previous article, "‘E’ technology: The convergence of IT and business," I recommend that a planning and assessment model (PAM) be used to ensure that IT decisions are made within the context of IT/business convergence reality, not short term e-commerce-based fears. The article further outlines a road map to guide the management of IT/business convergence to pinpoint where your enterprise stands in relation to the “best practice” position.

This follow-up article explores the IT decision-making model in greater detail, including the Organizational Status Assessment Model (OSAM), the Company IT Asset Status Assessment Continuum (ASAC), and the Company IT Asset Qualitative Analysis Matrix (AQAM). It also addresses the importance of managing human resources in the “e” environment.

What are the components of the IT/business integrated decision-making model?
OSAM integrates IT into a new e-business decision-making model by defining IT assets as business variables, and justifies IT decisions on ROI. This integration of IT and business assets into a working business model fills the void for those non-IT literate CEOs and other P&L (profit and loss) level executives who must provide the leadership required to manage the “e” technology revolution and create a strategic plan to guide migration to becoming e-business enabled.

PAM acts as a framework for managing the IT/business convergence and e-business evolution on a step-by-step basis:
  1. Assessment (a variation of KPMG benchmarking[1]) of company IT asset status and needs identification
  2. Diagnosis of the company’s IT deficiencies and needs
  3. Development of a prescription or IT decision-making/management plan
  4. Implementation, monitoring, and testing of the IT management plan, evaluation and validation of IT performance, and reassessment of status and need

How can a company determine its IT asset status?
E-BMC’sCompany IT Asset Status Assessment Continuum (ASAC) determines where the company’s IT assets fall on a continuum ranging from a Class I Company with minimal IT assets to a highly sophisticated Class IV Company. The Class IV Company would have best practice, fully interactive IT assets, which are scalable and supportive of both front-end Web-enabled sales and customer relationship management (CRM) components, and the full range of back-end support systems, such as ERP, Supply Chain Management (SCM), Employee Relationship Management (ERM), and business-to-business commerce applications. Within the E-BMC ASAC scheme, the Class II Company is more sophisticated than the Class I Company, but with IT assets limited to a local area network (LAN) and the sharing of resources, and without Internet access. The Class III Company has advanced to the point of having a LAN and WAN, Internet access, e-mail, and a passive Web presence, but it has not evolved to the point of having become e-commerce enabled.

The use of the E-BMC scheme makes it possible for P&L-level decision makers to clearly define deficiencies in their existing IT assets, and set clear goals targeted at overcoming the deficiencies and advancing to the next company IT status classification.

In each IT classification, a qualitative component measures a company’s status against a best practice criteria, such as scalability, interconnectivity, and where it stands within the Technology Adoption Life Cycle[2] (TALC). E-BMC refers to this assessment as the CompanyIT Asset Qualitative Analysis Matrix (AQAM).

Using this tool, a company can follow the PAM step-by-step process to assess, classify, and identify specific deficiencies in their IT assets, regardless of the sophistication of their technology infrastructure. Based on the ASAC, a company can then develop an IT/business convergence management plan to guide their evolving IT program, minimize the risk of poor implementation, and achieve optimum return on their IT investments.

The human side of IT/business convergence
Many of the problems associated with getting IT components to work properly (e.g., the Hershey ERP problem), come from P&L executives poorly applying the PAM principles to the human element of process reengineering. Once a company develops a strategic plan for IT/business convergence, it can use the ASAC and the AQAM to evaluate IT components, applications, and systems. IT vendors, developers, and service providers have come to recognize that their futures lie with products and services that add value in an e-business environment. As a result, there are a growing number of “mainstream” products, such as solutions by PeopleSoft, Tivoli, and Computer Associates, that are looking to be fully functional within an e-business environment.

Just a word of caution. History has proven that reengineering processes alone do not change organizations; people do. The companies that have been successful in transforming their companies from traditional brick and mortar companies into e-businesses, have used the principles of process reengineering[3] to break down the traditional barriers and achieve optimum “e” technology efficiency. They've also placed equal importance on the reengineering of the human resource[4] to ensure that employees expected to implement the processes and use the technology on a day-to-day basis can perform their roles effectively. An e-business ERP implementation that lacks a human resource reengineering component is likely to face more problems following implementation, and take longer to achieve a return on the investment. Projects that include a quality human resource reengineering component are likely to achieve the cultural shift that necessarily accompanies process reengineering with less employee resistance and with longer-lasting returns.

Companies that choose to ignore the reality of IT/business convergence and the displacement of traditional brick and mortar management principles, will find it increasingly difficult to match price, customer service, and convenience with Web-based competitors. The key to keeping pace with emerging technology is to employ valid decision-making models to manage change.

[Editor’s note: Readers wanting more detailed information on the ASAC and the AQAM can visit the E-Business Management Consulting Web site.]
  1. KPMG Benchmarking and Best Practices
  2. Moore, Geoffrey A., Inside the Tornado, (HarperCollins Publishers, Inc.: New York), 1995.
  3. Hammer, Michael and Champy, James, Reengineering the Corporation (New York: Harper Business A Division of HarperCollins Publishers), 1993.
  4. Whiting, John T., “Processing Reengineering; A Historical Perspective and Critique of the Book Reengineering the Corporation” (B&EC Business & Education Consulting: Vernon, NJ), 1993.

John T. Whiting is the Managing Director of E-BMC E-Business Management Consulting, based in northern New Jersey.

[1] See KPMG Benchmarking and Best Practices, http://www.us.kpmg.com/benchmarking/ [2] See, Moore, Geoffrey A., Inside the Tornado, (Harper Collins Publishers, Inc.: New York), 1995.[3] Hammer, Michael and Champy, James, Reengineering the Corporation (New York: Harper Business A Division of Harper Collins Publishers), 1993.[4] Whiting, John T., “Processing Reengineering; A Historical Perspective and Critique of the Book Reengineering the Corporation,” B&EC Business & Education Consulting: Vernon, NJ) 1993.
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