Enterprise Engineering

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Enterprise Engineering
Larry Whitman whitman_at_imfge.twsu.edu (316)
691-5907 (316) fax
Industrial Manufacturing Enterprise
Department The Wichita State University http//www
.mrc.twsu.edu/enteng
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IE880I

• Text
• The Great Transition Using the Seven
  Disciplines of Enterprise Engineering to Align
  People, Technology, and Strategy
• by James Martin
• Hardcover - 503 pages (September 1995)
• AMACOM ISBN 0814403158
• Also, significant outside articles will be
  assigned.

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IE880I - Topics

• Overview of Enterprise Engineering (3 weeks)
• Basic overview of what is enterprise engineering
  and its benefits. Students will learn the
  advantages of EntEng and associated terminology
  and philosophy.
• IE880I - Exam 1 - February 5, 1999.
• Test will be closed book/notes - fill in the
  blank/essay format.
• One hour long, then we begin the next topic.
• We will have class Feb 26, 1999
• Dr. Mahlzahn will be guest speaker on Activity
  Based Costing

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What is an Enterprise?

• An Enterprise is a complex systemof cultural,
  process, and technology components ...

Enterprise
Enterprise
... a system engineered to accomplish
organizational goals.
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What do Engineers do?
Design things!
Same as other engineers, Enterprise Engineers
design things. Only their thing is the
enterprise
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Systems Approach
Environment
System
Enterprise Goals
input
output
External Suppliers
External Customers
Your Supplier
Your Customer
Your Process
feedback
feedback
People Tools Machines
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Today

• Martin Chapter 3-5
• IE and IT Article by Davenport and Short
• EntEng A Discipline? Article by Liles, et al.
• Verndat Chapter 1

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Wrong use of Automation (Chap 3)
Design

• How can we automate
• what already exists?

Replace to make fundamentally better
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Wrong use of Automation (Chap 3)

• System must fit the users and not the reverse?
• Not always, frequently the users must change
  their ways in order to maximize profits from
  automation

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Redesign, then automate!

• Little change, little payoff
• Big change, big payoff
• A small change with some payoff may mean it is
  much more difficult to make the right change
  later.

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Russell Ackoff

• If each part of a system, considered separately,
  is made to operate as efficiently as possible,
  the system as a whole will not operate as
  effectively as possible.

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Martin

• It is appalling how many authorities on
  business process reengineering advocate
  modeling and modifying an existing business
  process when the right thing to do is scrap the
  process and take an integrated approach to
  building cyber-crop value streams (discussed
  later)
• Raise questions about overall architecture,
  culture, and IT

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Electronic Organism (chap 4)

• As systems become more complex, the design of
  these systems must be automated.
• Automation of Automation
• Reaction times shrink, complexity increases,
  decisions become less intuitive.

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Key concept

• JOINT creativity of business and computer people

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Architecture - Martin

• The architecture of an enterprise is the basic
  overall organization within which work takes
  place.
• Note how this compares with later definitions

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EntEng Definition (Martin) (Chap 5)

• an integrated set of disciplines for building
  or changing an enterprise, its processes, and
  systems. It integrates the most powerful change
  methods and makes them succeed. The goal is a
  human-technological partnership of maximum
  efficiency in which learning takes place at every
  level. (Martin)

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Goal of the Enterprise Engineer

• Identify and integrate the most valuable and
  successful ways to change an enterprise, and to
  take them into a professional discipline with a
  teachable methodology and measures of
  effectiveness.

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What do Enterprise Engineers do?

• Identify and Integrate best and most successful
  ways to change an enterprise

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What do Enterprise Engineers do?

• Two aspects
• Understand new mechanisms
• New ways of organizing work
• New Corporate Architectures must be understood
• Understand methods that can change an enterprise

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Two questions Enterprise Engineers always ask

• What should the enterprise be?
• How do we get there from here?

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Seven Components of Enterprise Engineering
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TQM, Kaizen

• Continuous change applied across an enterprise
• Kaizen - Japanese term for continuous improvement
• Everybody improves everything all the time
• If it aint broke dont fix it!

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Procedure Redesign

• Discontinuous reinvention of existing processes
• Quick hit
• Low lying fruit

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Value Stream Reinvention

• Discontinuous reinvention of end to end streams
• Breakthrough improvement for the CUSTOMER

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Enterprise Redesign

• Discontinuous redesign
• Holistic change to a new world architecture,
  sometimes accomplished by building new business
  units of subsidiaries.

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All for changing processes

• Simplifying work
• Improving results

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Simplification of Work (note order)

• Eliminate (bureaucracy and non-value added)
• Simplify (work flow, etc.)
• Work Smarter
• Reduce Middlemen (eliminate)
• Refine IIS
• Automate
• Automate Automation

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Strategic Visioning

• What is a vision?

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Strategic Visioning
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Resisting the Tide of Change

• Doing your best is not enough.
• W. Edwards Deming

You must know what to do, how to do it and be
willing to pay the price to do it.
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A Disciplined Planning Process
Vision, Values, Mission
Issues, Concerns, Assumptions
Goals
Identify Risk
Obstacles
Plan
Evaluate Alternatives
Strategies
Do
Act
Check
Assign Actions
Objectives
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An Iterative Process
Strategic Purpose
Environmental Assessment
Management Commitment

• Focus on the customer

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A Disciplined Planning Process
Vision, Values, Mission
Issues, Concerns, Assumptions
Goals
Identify Risk
Obstacles
Plan
Evaluate Alternatives
Strategies
Do
Act
Check
Assign Actions
Objectives
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Do You Need a New Purpose?

• Confusion about where organization is going
• Complaints about inability to contribute
• Losing customers
• Not current on the latest developments
• Use of We and They
• Excessive risk avoidance
• Difficulty in describing improvement
• Hyperactive rumor mill

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Purpose
A Process
Output/ Outcome
Input
Activity
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Vision
RIP
RIP
Humanity is grateful that someone who so adored
their species lived among them
I would rather be here than in Philadelphia
What do you want said?
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Vision

• What the organization
• ASPIRES
• to become

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Vision Statement

• Appropriate
• Inspiring
• Directing
• Focusing
• Guiding
• Unique

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Vision Statement

• A vision statement can be used as a marketing
  tool as well as an inspiration to employees
• Ford's vision
• Quality is job 1.
• ADM's vision
• Supermarket to the world
• If the vision motivates employees, it will
  influence customers.

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Mission

• What the organization
• SHOULD
• be doing

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Mission Statement

• Broadest strategic planning choices of what the
  organization should do
• Products/services
• Markets
• Customers
• Competitors

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Values

• Guides the
• organizations
• BEHAVIOR

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Values

• Communicates what is and what is not right
• Provide context for decision making
• Enduring
• Widely shared

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Values Statement

• Based on values of organization
• Commits resources to achieve vision
• Not a slogan
• Lived everyday
• Drives behavior of employees at all levels

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Statement of Purpose

• "We will create a corporation in which all
  people, particularly technical employees, are
  respected and are able to work to the best of
  their ability."
• "We will not imitate the products of our
  competitors, but will try to create goods that
  have never existed in our market before."
• "We will focus on the consumer market and apply
  the most advanced technology to the consumer
  products area."
• Sony Corporation, 1946
• Total Assets 500

I know those guys!
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Assignment

• For your own (pretend) company, develop
• Vision
• Mission
• Values

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A Discipline?

• Article by Liles, Johnson, and Meade 1996
• Industrial Engineering Research
  Conference

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Characteristics of a Discipline
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Focus of Study

• Unique fundamental question
• Must be meaningful as technology changes
• Enterprise Engineering - how to design and and
  improve all elements associated with the total
  enterprise through the use of engineering and
  analysis methods and tools to more effectively
  achieve its goals and objectives

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World View

• Paradigm
• Guides the discipline through research and
  practice
• Enterprise Engineering
• Enterprise can be viewed as a complex system
• Enterprise is to be viewed as a system of
  processes that can be engineered both
  individually and holistically
• Engineering rigor is required in transforming an
  enterprise
• Enterprise CAN be engineered

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Reference Disciplines

• Supporting disciplines must be discovered and
  assessed not merely adopted.
• Allows other researchers to follow the links for
  the grounding of theories

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Principles and Practices

• Principles - Define philosophical approach to
  problem solving
• Practices - methodologies, models, procedures,
  and theories used to apply knowledge
• Theory - sound principles
• Abstraction - modeling or representation
• Design - synthesis - iterative generation and
  evaluation of alternatives
• Implementation

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Active Research Agenda

• Hypothesis generated and tested
• Multiple subquestions
• Examples
• Enterprise Transformation Methodology
• Strategic Justification Methodology
• Ontology Development
• Virtual Enterprise Architecture

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Education and Professionalism

• Conferences - ISEE Conferences
• Journals - IIE Transactions, Special Issues
• Curricula - UTA, Toronto, Edinburgh, Australia
• Professional Society - ISEE

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Disciplines - Summary
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The New Industrial Engineering

• Article by Davenport and Short
• Sloan Mgmt Review Summer 1990

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IT and BPR

• IEs use IT in Manufacturing
• IEs now penetrate offices

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The New IE

• Recursive View of IT and BPR

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What are Business Processes?

• a set of logically related tasks performed to
  achieve a defined business outcome
• A set of processes forms a business system
• Characteristics of business processes
• Customers - recipients of outcomes
• Cross organizational boundaries

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Redesign with IT - Five Steps

• Develop Business Vision and Process Objectives
• ID Processes to be Redesigned
• Understand and Measure the Existing Process
• ID IT Levers
• Design and Build a Prototype of the New Design

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Types of Processes
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Management Issues

• Management Roles - commitment even through across
  functional boundaries
• Processes and Organization
• Skills - new ones required
• Continual Organization Improvement
• IT Organization in Enterprise may change
• Continuous Process Improvement

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Vernadat - Text - Definitions

• CIM - integrates man and machine by
• facilitating communication
• cooperation
• coordination
• across departments
• JIT - reduce procurement delays and stock
• assumes good integration of info and good
  logistics
• Lean manufacturing - minimize product devlopment
  costs by elim NVA, outsourcing, org changes
• Concurrent Engineering - integrating all
  departments to make things better, faster, cheaper

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Vernadat - Text - Definitions (cont.)

• Enterprise - within the bounds of the company
• intra-enterprise integration
• Extended Enterprise - beyond the bounds of the
  company
• inter-enterprise integration
• Agility -adapt quickly (able to respond to
  unanticipated change)
• Virtual Enterprise - Extended enterprise on a
  temporary basis.
• Hetarchical organization - autonomy

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Reasons for CIM Failures

• Top Down Approach
• One massive project
• Too Complex
• Bottom Up Approach
• Integrating Piece-by Piece
• Islands of Automation
• Failed to consider people

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Loose Integration vs Full Integration

• Loose
• simple exchange of info
• no guarantee of same interpretation
• ex. Dedicated interface
• Full
• specificities are known only the the one system
• two systems contribute to a common task
• two systems share the definition of items
  exchanged

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Horizontal vs Vertical Integration

• Business viewpoint
• Horizontal - from dock to stock
• technologically dependant
• Vertical - various mgmt levels
• decision flow

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System/Application/Business Int
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Model What?

• Products
• Resources
• Information
• Organization (and decisions)
• Business Processes
• Human (effects)

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Role of EM

• Prereq for enterprise integration
• History
• integration of data and info
• really business process coordination
• integrating infrastructure
• enterprise model - semantic unification

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Problems with EI/EE

• Cost (unclear)
• project size and duration
• complexity
• management support - does not clearly relate to
  strategy
• skilled people

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Next Week

• BPR
• Hammer and Champy Book
• Article by Meyer, deWitte