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July 2009

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True enterprise automation

Making the business case for SOA, BPM in manufacturing environment

By Peter Woodhull

The manufacturing sector has evolved into an industry where work and assembling processes have been standardized and organizations have consistently measured the results.

However, in quite a few cases, automation ends there and does not flow into the business processes. Manufacturing companies have been slow to adopt new technological approaches to business process management for reasons including resistance to change, cost, and fear of losing functionality in existing legacy IT systems. At the end of the day, however, the largest obstacle to change is commonly people. People know the technology and the business processes are not complex, but change requires people to reconsider how they go about their jobs.

Technology exists that allows organizations from having to start over in order to capture the knowledge of managing business processes. Companies do not need to replace all of their existing systems. New technologies can integrate with existing systems. In fact, the first step in deploying a service-oriented architecture (SOA) is to identify mechanisms to leverage existing legacy systems.

Typically, manufacturing companies have large investments enterprise resource planning (ERP) and supply chain management (SCM) software. Historically, this has caused executives and key IT decision-makers to resist change and ultimately embrace process management solutions.

Service-oriented computing has the potential to combine these technologies in order to get greater control of processes that span multiple systems. Today’s global manufacturing organizations face an increasingly challenging, operational environment. New regulatory and compliance mandates, shorter product life-cycles, rapidly changing customer demands, and the need to integrate disparate systems running multiple applications are all driving today’s manufacturing firms to consider business process management (BPM) as an IT technology tool.

ID processes

Business process management provides a set of tools that allow manufacturing organizations to identify and define human and system-centric business processes throughout their business. The processes can then go out as applications that provide managers the ability to view, analyze, adapt, and improve business operations in real time, while at the same time the tools can integrate with existing ERP and SCM, as well as relevant “external” processes of a company’s suppliers and partners. Business processes are what link enterprise systems together for true connectivity. Ultimately, processes can improve employee workload management and productivity, foster greater collaboration with suppliers and partners, and respond quicker to changing customer needs.

Any BPM solution for manufacturing must be adaptive to business changes, be event-enabled, reduce non-value-add activities, provide secure access to process data, and span across multiple systems with a diverse set of process participants including employees, customers, suppliers, and partners. More pragmatically, BPM for manufacturing can address a variety of business processes including shipping, billing, inventory management, sales order entry and change, new product development and measurement of key performance indicators, among many others. The strategies to implement BPM will be individual for each manufacturing company based on the current topology of IT framework, core processes, and key pain areas within the enterprise, but the real return on investment (ROI) is universal.

While all manufacturers want to have a universal system, the reality is the complexity resulting from the use of multiple legacy systems and siloed software landscapes within individual plants is a roadblock to widespread adoption of Service-Oriented Architectures (SOA). In the real world, manufacturing plants often operate autonomously and under tight cost-constraints. Software purchases occur at the plant level, making them tactical, rather than strategic. As a result, the software ecosystem within individual plants can be dramatically different.

For manufacturers seeking to minimize IT complexity and gain efficiencies, the adoption of SOA for manufacturing operations is definitely on the radar. But, CIOs at manufacturing organizations are having a tough time seeing the proverbial forest through the trees and recognizing SOA can make everything more interoperable. SOA allows manufacturers to integrate application management and other components with ERP systems, linking data between multiple and disparate systems, offering a promise of integration and flexibility. But, while manufacturing has been slow to change and SOA is seen as a new approach, with an end-goal of minimizing redundancy and streamlining capacity, all manufacturing organizations should operate in a capacity to leverage capabilities as if they were pure services.

SOA is an IT architecture used to design applications and business processes at a component level. If you look at business functions such as segmenting customers, ordering products, and determining inventory as components of an overall business process then you can consider them services. There are three key operations, or services categories, within such IT architecture: The service requestor, service broker, and service provider.

When a service requester, a network node that invokes other software services like a program, for example, needs a service, it asks a service broker, which, in itself, is a repository for software interfaces published by the service provider. Once the service broker finds a service provider, a service interface for a specific set of tasks or services offered by a business entity, the service requester can than directly interact with the service provider. Find, interact, and publish are the three key operations of the three key service roles. SOA has the opportunity to deliver business value on many fronts. By “wrapping” existing applications as services, a user can reuse their functionality, extend application lifetime, and reduce the cost of developing new functionality. By leveraging existing services, new applications can deploy and bring value much more quickly.

Take the case of a large manufacturing company that is a leader in the design, manufacture, and service of commercial and military rotor-wing aircraft.

Several years ago the company experienced significant performance issues while reviewing and updating the massive and complicated technical publications for their products. Manual administration, paper forms, lack of a uniform process, and redundant data entry lead to increased customer delays and consumed costly labor hours. In addition, the company needed to comply with federal mandates set forth by their customers. Once they implemented a process-oriented system for deliverables to the clients for flight systems, they were able to not only improve efficiency, but ensure 100% accuracy of the data.

Prior to the implementation of the process-oriented system, the company already utilized numerous software systems to help with the creation and retention of their technical documentation. This included engineering systems, computer aided design/manufacturing software, content management systems, professional illustration software, and an industrial database system for data persistence. The implementation of an SOA and a process-driven management system meant they were able to leverage all of their existing IT software and systems. Service-enabling their legacy systems enabled the integration of those capabilities into the new process-oriented system. The company gained process compliance, automation, management visibility, and future agility, yet lost none of the historical investment made in legacy systems.

A process-centric approach

Service-oriented computing principles help organizations leverage tools such as BPM to differentiate them in an era when there is a distinct lack of advantage gained simply from procuring and deploying IT systems. Successful companies have successful processes, and IT systems enable and control those processes. The companies’ business schools utilize as case studies those that have superior processes and superior process controls. Financial analysts study and evaluate a company based upon how successful it is at performing its critical business processes. Process control and execution is the singular reason Toyota can make a superior automobile for less money. An organization’s ability to successfully execute its business process has quietly become a benchmark metric in many industries. Logistics has the P.Log certification. Computer software development now has the CMMI as a certification of an organization’s ability to follow a process detailing how they generate software. And manufacturing has ISO and Six Sigma certifications.

If the value and strength of a company lies within its business processes, and technology can now effectively execute those processes, quite a few organizations ask the question: How is a “process centric” approach really different from a “technology centric” approach? Technology exists today that allows companies to develop rules, roles, and workflows based on what their current requirements are instead of what they thought they needed yesterday when they were focused on programming logic. The benefit of a services-oriented computing environment that puts the focus on process instead of technology is it allows for more execution control, better organizational knowledge capture, and efficient use of existing resources in the time of change. Besides the obvious corporate value, this ultimately aligns business and IT strategy.

Organizations that had the most-successful BPM initiatives spent more than 40% of the initial project time on process discovery, according to Gartner Research Inc. Establish core team responsibilities, select the right tools, and use an iterative method to create a process model that supports ever-changing business conditions.

Those findings fall exactly in line with a “process centric” approach. Too often, organizations see a certain benefit in process or one of the specific tools and decide that is what they need and then strike out without a plan or a methodology for success. This often leads to unwieldy projects deemed failures, and the value of process becomes diminished.

A good process-centric strategy allows an organization to address the project slowly and deliberately without moving too fast too soon. The key is to get started with a project geared for success. Almost any part of an organization has some process that its personnel understand and know is failing. Highlighting and addressing this type of project is the best way to introduce the process centric approach and set it up for mainstream acceptance. Everyone is already using process; they simply don’t call it that. As a manufacturing organization, the right first step is to find an obvious process, apply a process centric approach, examine the results, and determine the correct criteria for ROI. A successful pilot project that is more than a proof of concept can be extremely effective in illustrating the benefits of this approach to executive management.

When it comes to achieving greater efficiencies for business processes within the manufacturing space, change often comes in the form of a complete mindset transplant. A process centric approach does not necessarily require a forklift upgrade of existing systems and infrastructure, but a change in management philosophy, a willingness from the top-down to rethink IT systems and recalibrate tools and infrastructures to react in real time to issues in the supply chain, with suppliers and partners and to customer demand.

ABOUT THE AUTHOR

Peter Woodhull (peter.woodhull@modus21.com) is president and co-founder of Modus21, a services and consulting IT firm.