Model under development will yield closed-loop solutions for harvesting IT benefits
By Staff -- Manufacturing Business Technology, 2/1/2006 7:00:00 AM
Manufacturers that have spent millions to implement enterprise systems remain frustrated by the failure to leverage those systems to accelerate decision-making.
So says Bob Parker, VP of Cambridge, Mass.-based IDC Manufacturing Insights, who adds, "Companies have invested a lot in automating processes, achieving consistent data models, and establishing corporate systems of record. This in and of itself is valuable, but to maximize it, they must create closed-loop systems on top of what they have to adjust quickly to circumstances as they change."
This finding prompted IDC to map a complex metric around three core value-stream processes. Parker says this mapping is necessary to create a new model of "information technology economics" for pinpointing areas of greatest opportunity (see box).
IDC will analyze a database of 300 companies to identify best practices in the three cores, and subsequently map cross-process/sub-function links for information flows that serve as a blueprint for forging closed-loop systems.
"The question is how to measure value," says Parker. "This research will provide an economic model manufacturers can use to assess where the greatest values for realization lay, and then guide them in making investments to harvest them."
Parker cites Dell Computer's response to the 2002 Los Angeles dock strike as an example of an intelligence-driven company exploiting what first appeared as an unfolding disaster in its supply chain.
"You think, they're going to take a hit—no source for monitors just as the Christmas season begins," says Parker. "What Dell did, however, was send people immediately to the Asia Pacific to lease a fleet of aircraft and start buying flat-panel displays. Dell had all the pieces in place to have confidence in that decision based on facts, and knowing how its processes would perform."
Investing in closed-loop linkage that sits above installed systems should take priority over adding new modules or full system replacement, Parker says, even as life cycles of current installed products approach sunset. "We think this should be the next wave of technology investment. Half of IT budgets should go to this," he claims.
On the demand side, it's a question of which processes need closed systems; on the supply side, it is how to better allocate resources to changing priorities.
Says Parker, "You want to prioritize what you do in an organized, quantitative way."
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