Transcript Accenture Oracle Leadership Council

New Growth From Enterprise Systems
Achieving High Performance through Distinctive
Capabilities
Jeanne G. Harris
Director of Research
[email protected]
Copyright © 2006 Accenture All Rights Reserved. Accenture, its logo, and Accenture High Performance Delivered are trademarks of Accenture.
Enterprise Systems and Value Creation
• Enterprise systems are the second most
important technology of the last decade (after
the Internet)
• Immense investment (time, money and
attention) by businesses
• Previous Accenture Institute research (2002):
How do companies maximize the value of
their investment in enterprise solutions?
–Implementing an enterprise system
results in sustained value creation
–Some organizations realize far more
benefits than their less successful
counterparts
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The 2005/2006 Accenture ES Study
450 executives from 370+ organizations in 35
countries and 19 industries surveyed to find out:
Key Questions
• What’s changed since 2002 with firms that
have adopted enterprise systems?
• Are the factors that drove value then still
driving it today?
• Are enterprise systems enhancing
competitiveness and distinctive
capabilities?
• How important are business analytics to
achieving value?
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Latin American Participation
Nineteen executives from five countries responded to the survey
from Latin America. This represents 5% of the sample.
Countries represented:
• Argentina
• Brazil
• Mexico
• Puerto Rico
• Venezuela
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Key Findings
• Investing resources (time, money, skilled people and technology)
to implement their enterprise system is merely a first step and does
not guarantee results.
• There are clear winners and losers – some companies get
considerably more value from their enterprise systems than others –
and there is more opportunity for everyone.
• While some view enterprise systems as a commodity, more than
half view their ES as a significant contributor to their distinctive
capability.
• Better decision making remains the most-sought benefit and also
the one most likely to have been realized.
• Organizations that get more value from their systems and use them
for competitive distinction have superior financial performance.
• Analytical technologies and capabilities are particularly
important to achieving value and high performance.
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Top Performing Companies …
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1. Realize much more value from their systems and
use them in distinctly different ways.
2. Likely to seek and measure tangible benefits,
such as reduced cost and increased revenue.
3. Emphasis on integrating, optimizing and using
analytics to drive improved business
performance.
4. Extend systems throughout their organization
and implement across a range of functions.
5. Integrate the organization and external systems
of customers and suppliers.
6. Aggressively use information and analytics to
improve decision making.
7. Use strategically for competitive differentiation.
8. Tailor systems to sustain competitive advantage
and standardize other areas.
9. More likely to implement industry modules.
10. Twice as likely to take advantage of SOA.
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The Value Model Still Holds
Prerequisites
Value Drivers
Invest in enterprise
systems
Integrate
Implement
extensively
Optimize
Experience using
enterprise systems
Analyze
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Benefits realized
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The Same Benefits Are
Still Being Sought
Better management decision making
53%
Improved financial management
46%
Faster, more accurate transactions
41%
Cost reduction
Improved inventory and asset management
24%
Ease of expansion/growth and increased
flexibility
24%
33%
22%
Cycle time reduction
Headcount reduction
17%
Improved customer service and retention
Competitive advantage through
distinctive capabilities
Fewer physical resources and improved
logistics
17%
Increased revenue
12%
7%
4%
…but just half of organizations have achieved most or all of these
benefits
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Companies Are
Integrating More Internally
50%
30%
12%
7%
1%
Piloted in a
single business
unit but not
rolled out
Implemented in
a single
business unit
only
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Implemented in
about half of the
organization
Implemented in
most functions
and business
units
Implemented
throughout
entire
organization
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Companies Are Integrating More With
Customers and Suppliers
24%
2002
2006
17%
15%
12%
Customer Linkages
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Supplier Linkages
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Companies Are Optimizing Processes
and Customizing Systems More
85%
2002
2006
75%
55%
45%
Optimizing Processes
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Customizing Systems
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Use of Analytics Is Up Too
36%
2002
2006
33%
33%
27%
22%
19%
12%
9%
5%
4%
Very little access
to data and no
analytic
capabilities
Data warehouse
ad-hoc report
writers, query
and end-user
access tools
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Some analytic
functionality in
addition to data
warehouse
Significant
decision support
or analytic
functionality,
supported by
extensive and
integrated
management
information
Extensive use of
real-time
analytics,
sophisticated
automated
decision making
to supplement
human decision
making
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The Ability to Analyze ES Data Is a Key
Differentiator
15% of top performers versus 3% of low performers indicated that analytical
capabilities are a key element of their strategy.
47%
2002
2006
37%
33%
27%
19%
12%
9%
8%
10%
0%
No analytical
capability
Minimal
analytical
capability
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Some analytical
capability
Above average
analytical
capability
Analytic
capability is a
key element of
strategy
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High Performers Use Analytics
Top performers have a greater analytical orientation than low performers.
High
Performers
Low
Performers
65 %
have significant decision-support/analytical capabilities
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value analytical insights to a very large extent
77
have above average analytical capability within industry
33
77
have Business Intell/Data Warehouse modules installed
62
73
make decisions based on ES data and analysis
51
40
use analytics across their entire organization
23
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23 %
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The Word Is Out!
• Each of the factors that drive value from
an enterprise system is up over the last
three years
– Integration
– Optimization
– Analysis
• Not surprisingly, the level of value
achieved is also up
• But there are still substantial
opportunities for improvement
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ESs Don’t Have to Be a Commodity!
Question: To what degree does your enterprise system
contribute to your organization’s distinctive capabilities?
42%
38%
11%
8%
1%
Not at all
Slightly
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Somewhat
Substantially
To a very large
extent
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Many Companies Have Distinctive ESs
39%
29%
15%
13%
4%
Not distinctive
Only slight
differences
versus other
companies in
the industry
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Moderately
different from
the rest of the
industry
Somewhat
distinctive—
capabilities or
functionality not
used elsewhere
in industry
Very
distinctive—
significant
capabilities or
functionality not
used elsewhere
in industry
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What’s Distinctive Today?
Integrated critical processes
3% 7%
23%
Accurate planning
5% 12%
37%
33%
14%
2% 10%
29%
44%
15%
27%
12%
Analytics for decision making
Monitoring and measuring progress
against aggressive or stretch goals
Investing resources in alignment with
strategic objectives
9%
17%
10%
34%
24%
34%
Enabling flexibility to adapt change
6%
Using IT as a strategic asset
6%
Understanding how the
organization creates value
13%
Insight into customers
13%
16%
Disciplined project management
14%
22%
Creating new products or services
16%
Not at all
Slightly
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20%
31%
17%
28%
16%
Somewhat
30%
36%
21%
28%
14%
30%
19%
40%
24%
40%
Substantially
Numbers do not equal 100% due to rounding
8%
24%
32%
24%
11%
8%
24%
33%
22%
8%
5%
To a very
large extent
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What’s Coming That’s Distinctive?
By optimizing business processes
and fit with enterprise systems
60%
Through new technology such as
Web services, mobile services, etc.
57%
By adding more enterprise systems
applications
44%
30%
By integrating best of breed applications
By customizing existing applications
No plans to add distinctive capabilities
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22%
5%
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What’s Coming in New ES Capability?
Percent planning in two years
36%
29%
29%
21%
15%
CRM
BI/DW
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SRM
HR
PLM
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What Technologies Are
Being Used Today?
70
60
50
40
% currently using
technology
30
20
10
0
EAI
WS
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MDW
SOA
Comp.
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Future plans: Technologies to Augment
ES in Next Year
Service-oriented
architecture (SOA)
14%
34 %
28 %
Web service
40 %
Integration
technologies
(e.g., EAI, EDI)
26 %
27 %
Low Performers
High Performers
Other
None of the above
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14%
13 %
30 %
33 %
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Lessons from Current Practice
• Companies are constantly changing their overall
ES environments, and still squeezing more value
from them
• For more value, work on:
–Integration and consolidation
–Optimization of the fit between your ES and your
processes
–Analytics and fact-based decision-making
• Pursue the technologies that make those goals
possible
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