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Quality Business Solutions
Raising The Bar In Information Technology Consulting and Project Leadership

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Enterprise-Wide Systems Integration
Information Technology / Business Systems Integration Case Study

Managed by Darryl Barlett

Aligning Information Systems Support With Business Requirements and implementing Integrated Business Support Applications

Company Profile:
$936 million dollar vertically integrated global pharmaceutical corporation comprised of 14 wholly owned subsidiaries, 9 manufacturing facilities, 17 international affiliates and 3 distribution centers. The company has business facilities in New Jersey, Michigan, Texas, Ohio, Florida, Virginia, Europe and Asia.

Statistics:
11 member Board of Directors, 4 inside, 7 outside.

16 Senior Managers

30 Functional Business Areas: (Domestic Sales, International Sales, Marketing, Customer Service, Distribution, Information Systems, Public Relations, Government Affairs, Safety, Quality Control, Contract Administration, Research and Development, Regulatory Compliance, Manufacturing, Finance, Tax, Accounts Receivable, Accounts Payable, Cost Accounting, Purchasing, Shipping and Receiving, Human Resources, Operations, Insurance and Claims Administration, Accounting, Engineering, Legal, Payroll, General Administration, Repair and Maintenance).

* 920 Employees.

* Incorporated 1961, average EPS since 1987 has been 28%.

* Return on average equity since 1987 has been 32%.

PROBLEM STATEMENT:

The company had enjoyed a highly successful operating environment and strong profitability until mid-1996 when certain government regulations changed and six new players entered their market. This new competition had begun to vigorously compete for major national accounts based on lower pricing, long term contracts, 24 hour delivery commitments and higher product quality standards. The company had lost 24 national accounts representing a 5% market share to this competition in 10 months. What had been perceived as a strong degree of customer loyalty had been over estimated.

At this same time, the company's major competitor, who commanded a 31% market share, had introduced three new products, directly contributing to an additional 3% market share loss to the client. Senior Management had begun to focus their energies on improving the competitive capabilities of the company. They perceived and were seeking opportunities to:

* Regain lost customers;

* Implement enterprise-wide Integrated Information Support Systems;

* Regain their #1 market share position, a 43% share in 2 years had been targeted;

* Decrease operating costs by 30% in 14 months;

* Introduce six new products in the current year;

* Improve processes in all functional areas of the business.

Certain competitive intelligence had been obtained by the client, largely by their sales force, pointing to the fact that their competition was using computer techniques to out perform them. Senior management believed Information Systems and Technology could make a significant difference in helping them realize their objectives, but lacked expertise in analyzing the opportunities for Information Systems to make a strategic contribution to improving their competitive position.

THEY KNEW THE FOLLOWING:

* Information systems had been in place for fifteen years;
* The cost of information systems support had increased each of the last five years;
* Numerous complaints about the company's information systems had been registered;
* Staffing had disproportionately increased within the business when compared to revenues;
* Information systems did not appear to be well aligned with the business;
* Senior management had been advised by numerous functional areas of the company that in order to improve they needed help from the information systems organization.

WHAT SENIOR MANAGEMENT DID NOT KNOW:

* If their investment in information systems could be salvaged;
* What was wrong with their current systems;
* How to define what was required of their information systems;
* The information systems organization did not have an adequate business support plan;
* How to apply information systems to improve the business;
* How to benchmark their competitors information systems capabilities;
* The information systems organization had a 3 year backlog of business support requests;
* How to gain competitive advantage through vendor relations and integrated information systems capabilities;
* How to properly invest in new information technology systems products to obtain a stated and necessary return on their investment;
* How to build consensus as to what was required and set reasonable expectations;
* How to develop and execute an aggressive information systems strategic business support and implementation plan.

MAJOR ISSUES:

* Company was currently supported on multiple computer platforms;
* Systems integration was lacking;
* There was no product or information systems development process;
* Functional areas of the business had widely different requirements and expectations;
* Internal hidden political agendas existed;
* Information Systems credibility suffered;
* The Information systems organization was in a reactionary mode, responding to the "squeakiest wheel" in the organization;
* Documentation of the company's internally developed systems was inadequate;
* Ability to prioritize and develop an action plan was a major barrier;
* Certain biases existed as to what information technology should be used;
* Historic information systems decisions were based on these biases rather than business requirements;
* Competitive intelligence was minimal;
* Process to build consensus did not exist;
* Process ownership did not exist.

SOLUTION:

Align the Information Services organization with the business and implement fully integrated enterprise-wide information systems.

APPROACH USED:

Step 1 Gained commitment from Senior Management to support and sponsor the initiative. A "Point of Entry Sub Process" was used with the support of senior management to define to middle management personnel the priority and commitment that the initiative would have in conjunction with other business activities.

Step 2 Identified all functional areas of the business. Erred on the side of inclusion, not exclusion.

Step 3 Identified process owners (stakeholders) in each functional area and work group.

Step 4 Discovered, quantified and normalized natural relationships and interdependencies between functional areas regarding information flow, needs, format, cycles, content and definitions which became critical components of the "Enterprise Model".

Step 5 Performed, understood and documented detailed tasks of each role in each functional area of the Enterprise. Documented each current task process. Performed process analysis identifying opportunities for process improvement.

Step 6 Implemented multiple debriefing sessions with information systems management group to gain their perspective regarding issues, needs, problems and structure.

Step 7 Met with responsibility related members of the information systems organization to understand duties, tasks, expertise level, internal processes and communication techniques.

Step 8 Performed each specific task within information systems to understand and document process approach, key measurement criteria, missing processes and opportunities for improvement.

Step 9 Evaluated and benchmarked key information systems processes and performance measurements against industry standards.

Step 10 Reviewed existing information systems strategic plan for approach and reasonableness. Documented weaknesses in the plan based on company objectives, strategies and tactics.

Step 11 Reviewed and evaluated both prior and current year information systems budget and operating statements.

Step 12 Reviewed and evaluated all existing information systems vendor contracts, relationships and outstanding proposals. Documented all terms, conditions, options and pricing.

Step 13 Facilitated information systems strategic planning process. Identified and documented key strengths, weaknesses, opportunities and threats.

Step 14 Defined and attained consensus as to a new information systems mission statement. The organization now understood that they existed as a "service provider" to the rest of the company.

Step 15 Identified, quantified and gained consensus on 5 "vital few" success goals information systems had to attain within 9 months to support company objectives.

Step 16 Evaluated and recommended key strategies and tactics for achieving "vital few" goals.

Step 17 Developed consensus on key strategies, tactics and required resource commitments.

Step 18 Presented and gained consensus as to key internal process activities for information systems organization. All processes were prioritized as to importance in supporting key company objectives and a "process owner" was chosen for each process to lead improvement efforts.

Step 19 Developed and implemented problem solving and process improvement teams for all key information systems processes.

Step 20 Identified key measurement criteria for each process to be improved.

Step 21 Identified and eliminated non value-added processes within information systems organization.

Step 22 Recommended and implemented a test "phased in" approach for all process improvement activities.

Step 23 Monitored all process improvement activities based on previously identified key measurements.

Step 24 Recommended and designed a "Systems Development And Implementation" process.

Step 25 Recommended and designed a "Change Management" process to control changes to all information systems.

Step 26 Recommended and gained consensus on improvements in organizational structure and changes in reporting relationships within Information Systems.

Step 27 Recommended and implemented key "service level commitments" between Information Systems organization and internal customers (users) based on industry standards.

SPECIFIC VALUE RECEIVED:

* Enterprise Model Consisting of:
- Data flow between all operating entities in diagram format;
- Information redundancies in matrix format;
- Business Process flows in diagram format;
- Functional relationships in diagram format;

* Prioritized systems descriptions in matrix format;
* Quantified information systems support and service requirements;
* Conducted evaluation of "under development" information systems;
* Developed Information Systems Strategic Business Support Plan consisting of:

- Mission Statement;
- Goals and Objectives;
- Strategies and Tactics;
- Identification of non value-added activities;
- Key process identification, process "owners" and process improvement opportunities;
- Identification of and recommendations for key performance measurements;
- Integration Requirements;
- Custom designed Systems Development and Implementation process;
- Implementation Plan timeline, resource requirements and key success measurements.

PAYOFF:

Specific Improvements---- Information Systems Department

* Implemented a systems development and implementation process;
* Reduced system implementation cycle time by 41%;
* Improved "internal customer"(User) service levels by 36%;
* Eliminated 3-year information systems support backlog;
* Integrated all business support systems and transactions;
* Reduced staffing 22%;
* Implemented customer service/satisfaction rating system;
* Reduced operating costs 29%.
* Renegotiated seven vendor contracts, reducing expenditures by $570,000;
* Improved 13 departmental processes;
* Eliminated 5 non value-added processes;
* Significantly enhanced credibility;
* Implemented 19 new business support systems in 16 months;
* Implemented "change management" process reducing errors in system changes from 34% to 2%, a 94% improvement.

COMPANY-WIDE IMPROVEMENTS:

This initiative achieved the following:

* Identification and implementation of 244 business support requirements;
* Implementation of a common computer platform and network base;
* Removal of all identified information redundancies and duplication from the business;
* Reduction of inventory carrying costs by 18%;
* Reduction of product obsolescence by 36%;
* Decrease in operating expenses by 31%;
* Increase in EPS 38%;
* Reduction of staffing by 27%;
* Implementation of a new customer complaint and tracking system, reducing complaints 43%;
* Increase in global customer base by 16%;
* Reduction in average "days sales outstanding" (DSO) by 28%;
* Improvement of 91 internal business processes; elimination of 14 processes;
* Reduction of cycle time from "point of order to point of delivery" from 5 days to 24 hours;
* Implementation of a new shop floor control system, reducing work in process by 46%;
* Implementation of a new order processing system, increasing the number of orders processed per hour by 38%;
* Reduction of customer billing errors from 8% to zero;
* Implementation of new product distribution and routing system, reducing shipment costs by 34%;
* Reduction in the cost of returned product by 44%;
* Implementation of new product development and engineering change system, reducing cycle time from 120 days to 19;
* Redesign of sales reporting system, contributing to increased revenues of 29%;
* Brought 8 new products to market prior to the end of the year
* Evaluated, selected and implemented an enterprise-wide fully integrated information systems application suite.
* Attainment of #1 market share position.