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The Return of Enterprise Solutions: The Director's Cut Thomas H. Davenport, Jeanne G. Harris and Susan Cantrell

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Page 1: The Return of Enterprise Solutions:

The Return of Enterprise Solutions: The Director's CutThomas H. Davenport, Jeanne G. Harris and Susan Cantrell

Page 2: The Return of Enterprise Solutions:

The Director's Cut Explained

How do movie directors create new value with their

previously released films? They issue a “director's cut”—

a revised, updated version of a previously released

movie over which the director has complete artistic

control. In issuing an original film, directors battle

against deadlines, budgets, resource constraints and

movie studio executives who sometimes demand a

different product than the director's original vision.

But with the advent of new technologies, new

marketing opportunities and newly available funds

and resources, a director has the opportunity to

revisit his original idea and deliver a new and

stronger film. As the director of the 1982 film DasBoot said about his 1997 director's cut of the same

film, “I always thought that even though the film

version I delivered worked well it would be wonderful

to one day go back and cut my own ideal version—to

ask what is the best way for me to tell the story of

Das Boot based purely on creative rather than

commercial considerations.”

In this report, we present images intended to tell the

story of a number of notable director’s cuts.

We hope you enjoy the show!

Source: http://www.movietreasury.com/das_boot/director.html

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DDaass BBoooottWhen Das Boot originally was filmed back in the 1980s, directorWolfgang Petersen shot footage not only for the motion picturebut also for a six-hour epic for German television. Although thetheatre edition of the film went on to win international acclaim,Petersen always felt that the film could be even stronger. Increating his director's cut, he used the available extra footage toheighten the film's tension and create a film based on creative,rather than commercial, considerations.Source: http://www.movietreasury.com/das_boot/director.html

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Achieving the vision

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In the mid—to late—1990s, most large corporations undertook one of the most ambitiousinformation systems projects in their histories: the implementation of packaged enterprisesolutions (for a definition of enterprise solutions, see above). Millions of dollars—not tomention years of organizational attention—were spent to achieve a seamless flow ofinformation and transaction processes across diverse business functions, business unitsand geographic boundaries. Big business benefits were promised to follow, includingheadcount reduction, more accurate business planning and the ability to serve customersbetter, cheaper and faster.

Yet few organizations have achieved thebenefits they expected. A clear majorityof organizations Accenture recentlysurveyed have achieved half or less ofthe benefits they had targeted. It shouldbe no surprise, then, that many leadingorganizations are revisiting the originalpromise of enterprise solutions, and takingactions now to realize the value theyneed from the systems they implemented.

and the value

Like a film director returning to rework amovie so that it reflects his originalcreative vision—often called a "director'scut" (see page 2)—these organizationsare once again turning their attention toenterprise solutions to ensure that theyachieve the vision—and the value—ofwhat these systems were meant to be.

What are enterprise solutions?

Enterprise solutions are software applications that connect and manage informationflows across complex organizations, allowing managers to make decisions based oninformation that truly reflects the current state of their business. These systems alsoautomate complex transaction processes and thus save costs. Enterprise solutionsstarted out as enterprise resource planning (or "ERP") packages, or "back-office" systemscapable of integrating and automating transaction-intensive processes across functionslike human resources and finance. Today, the notion of enterprise solutions has greatlyexpanded to include a wide variety of additional functionality such as performancemanagement, planning and analysis, supply chain management, customer relationshipmanagement, product development and advanced analytic applications. By integratingadditional functionality with already integrated core back office systems, organizationsstand to reap even greater benefits from seamless information flows within and acrossorganizations.

To help organizations determine just howto leverage one of their most underutilizedassets, Accenture conducted a quantitativeanalysis of information obtained fromsurveys of 163 people at 163organizations with enterprise solutionsalready in place. In addition, we studiedthe experience of 28 organizationsconsidered to be leading adopters ofenterprise solutions (see page 7).

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Integrate

Optimize

Informate

Faster, more accurate transactions

Headcount reduction

Fewer physical resourcesand improved logistics

Improved inventory and asset management

Increased revenue

Invest resources

Build experience

Implement extensivelyFoundations of Value

Drivers of Value

Components of Value

Improved management decision making

Improved customer service and retention

Improved financial management

Cycle time reduction

Ease of expansion/growth and increased flexibility

Results of the research show that toachieve benefits from enterprise solutions,executives must start acting more likemovie directors and less like movieproducers. Many organizations initiallyapproached their enterprise solutionsinitiative as a mammoth “deal” or one-time project to be accomplished.Executives in these companies viewedtheir role as bringing together andoverseeing the necessary resources (time, money, technology, skilled people)needed to build a new capability.However, these investments, while aprerequisite, are a long way from thefinished product. Simply assembling theraw components of a vision—the actors,script and locations for a film, or thetechnology for an enterprise solution—can only yield a limited amount of value.Rather, our research reveals thatsubstantial benefits are realized onlywhen an organization creatively takesthe raw components, claims them as its

own and directs them to meet its uniquebusiness vision. For organizationsseeking to capture the original promise ofenterprise solutions, this means they must:

Integrate - unify and harmonizeenterprise solutions, data and processeswith an organization's unique existingenvironment, and use the systems tobetter connect organizational units andprocesses, as well as customers andsuppliers.

Optimize - standardize most processesusing best practices embodied inenterprise solutions software, mold andshape processes to fit the unique orstrategic needs of the business, andensure that processes flow and fit withthe systems themselves.

Informate - to employ a term coined byShoshana Zuboff in her path breakingbook In the Age of the Smart Machine,

organizations “informate” when they useinformation to transform work.1 In thecontext of enterprise solutions,organizations informate by transformingenterprise solutions data into context-rich information and knowledge thatsupports the unique business analysisand decision-making needs of multiplework forces.

Accenture's research has found thesethree actions to be absolutely essentialto maximize the value of enterprisesolutions. A profound payoff awaitscompanies that integrate, optimize andinformate (see Figure 1 below). The 42percent of the organizations in our studythat went on to significantly integrate,optimize and/or informate their enterprisesolutions after establishing the necessarytechnical infrastructure realized themajority or all of the benefits they hadtargeted.

Figure 1: Achieving value from enterprise solutions

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Europe59%

United States35%

Australia6%

Financial services13%

Government18%

Resources19%

Communications and high technology

20%

Products 30%

Our research methodology

We conducted our research in two parts over 12 months. First,to understand what leading organizations were doing to achievevalue from their enterprise solutions, we interviewed more thana dozen industry analysts and experts, as well as studied 28organizations in a wide range of industries that had realizedexceptional value from their enterprise solutions.

Second, to statistically determine which actions led to valuerealization of enterprise solutions, we engaged market research

firm NOP World to gather quantitative survey data from 163organizations that had implemented at least two major enterprisesolutions modules.2 We then applied statistical methods,including multivariate regression techniques, to the data toproduce the insights and conclusions highlighted in this report.

The type of industries and geographies represented are shownbelow in Figures A and B. The mean number of employees in theorganizations we surveyed was 16,862.

Figure A: Industries represented Figure B: Geographies represented

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BBllaaddee RRuunnnneerrIn revealing that Harrison Ford's character was an android,director Ridley Scott restored the original, bleaker and more ironicending to his director's cut of Blade Runner. The studio haddemanded that the original conclusion be dropped for a morestandard, “happy” outcome. Scott also deleted the voice-overnarration by Ford that the studio had added to the theatreversion. The director's cut also further emphasized the romancebetween the Ford and Sean Young characters.Sources: http://www.filmsite.org/blad.html and http://www.mediacircus.net/dc.html

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Laying the foundation for valueBefore organizations can realize value,however, certain prerequisites must befulfilled. Our research indicates thatbenefits achieved when organizationsintegrate, optimize and informate aremost likely to be realized when threeother factors also are present:1. The organization has invested

significant resources (time, money,skills, technology) in enterprisesolutions.

2. The organization has implementedenterprise solutions extensivelythroughout the organization.

3. The organization has several years ofexperience with enterprise solutions.

Alone, these three factors do notsignificantly impact realization of benefits.These factors must be in place, however,

for organizations to achieve value asthey integrate, optimize and informate.Our research indicates that organizationsthat integrate, optimize and informatewithout fulfilling these necessaryprerequisites only achieve minimal valuefrom their enterprise solutions.

This is good news for those organizationsthat have already implemented most coreenterprise solutions functionality. Theseorganizations probably already have thefoundation for realizing value in place,and are in the position of being able tocapitalize quickly on the latent benefitsof their enterprise solutions. Mostorganizations, according to our research,implemented their first enterprise solutionsmodule between 1995 and 1999, withthe mean date of implementation being

1997. Organizations reported spendingan average of $51 million on enterprisesolutions over the past five years, andfully 69 percent of organizations in ourstudy had implemented enterprisesolutions in most or all functions andbusiness units (see Figure 2 below).

But unlike earlier systems, for which userscould realize substantial benefits as soonas the system was installed, our researchsuggests that enterprise solutions taketime to deliver benefits, and that somebenefits are realized more quickly thanothers (see Figure 3 below). In the caseof overly ambitious “big bang”implementations, productivity may evendecline initially. Why?

Figure 2: Extensiveness of enterprise solutions installed in theorganization

Figure 3: Enterprise solutions benefits achieved over time

36%Targeted benefits achieved within 1 year

29%Targeted benefits achieved within 1-2 years

15%Targeted benefits achieved within 2-4 years

8%Targeted benefits achieved in 4 years or longer

12%Targeted benefits have never been achieved

2%Piloted in a single business unit but not rolled out

12%Implemented in a single business unit only

15%Implemented in about half of the organization

33%Implemented in most functions and business units

36%Implemented throughout the entire organization

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First, it takes time to implement thesystem extensively throughout theorganization. In fact, contrary to popularopinion, most organizations that westudied were still implementing enterprisesolutions functionality (see Figure 4above). Only after enterprise solutionspermeate multiple functions, geographiesand business units does the promise ofenterprise solutions—integration withinand across enterprises—become possible.Second, whether due to the rush to meetY2K deadlines or the sheer lack ofattention left over when undertaking alarge and complex technology project,most organizations failed tosimultaneously optimize their businessprocesses during system implementation,despite their best intentions to do so.3

Those organizations that startedimplementing enterprise solutions yearsago have realized that there is no “finish”

date if an organization wants to continueto reap value from their systems. If onehad listened to the media at the turn ofthe millennium, one would have thoughtthat organizations had long given up theirenterprise solutions initiatives in favor ofelectronic commerce. Most organizations,however, were in fact quietly forging aheadwith filling out their enterprise solutionsfunctionality and gaining a thoroughunderstanding of their new systems'capabilities. As one executive explained,“We had to live with the system a whilebefore we could understand how towring additional benefits from it.” Whatinformation technology (IT) punditsmistook for exhaustion and executives'short attention spans was, in fact, thereflection of a need to absorb the impactof enterprise solutions prior to the nextwave of business value realization. Asone IT executive in the insurance industrypithily explained, organizations that

already have implemented core enterprisesolutions functionality are like “pythonsdigesting pigs.” The digestion processsimply takes a while to proceed.

Those organizations that are just nowembarking on implementing coreenterprise solutions functionality have anopportunity to learn from the mistakesand successes of others. Many of theseorganizations, we believe, had patchedup legacy systems to get through Y2K. Ofcourse, organizations just now embarkingon implementing core enterprisesolutions functionality must also lay inplace the foundation for achieving value.But to some extent, organizations withextraordinary levels of resources andmanagement focus on enterprisesolutions-enabled change may choose toimplement enterprise solutions whilethey simultaneously integrate, optimizeand informate.

Figure 4: Percent of additional functionality organizations plan on implementing inthe next two years

24%Customer relationship management

19%Human resources

13%Management reporting and metrics

12%Performance management

11%Planning and analysis

10%Supply chain

9%Sales and marketing

4%Product development

3%Finance

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CCiinneemmaa PPaarraaddiissooThe director's cut of Cinema Paradiso featured an additional halfhour of new footage, including a reunion scene between thehero and a lost lover who vanished from his life 30 years earlier.As director Giuseppe Tornatore explained, “The fact that theaudience can now know the entire story can make them curiousand make them understand how a story sometimes is forced tochange slightly to reach its audience.” Source: http://www.rgj.com/news/stories/html/2002/06/25/17672.php

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Enterprise solutions benefits targeted

What does achieving value from enterprise solutions reallymean? To find out, we asked organizations what top 10 benefitsthey target with enterprise solutions. Here is how they responded(see also Figure 13 on page 25):

1. Improved management decision making Managers supported by efficient decision-makingcapabilities are able to make better, faster decisions thatare aligned with the organization's strategies.

2. Improved financial managementFinancial and general managers can exert tighter financialcontrol, make better predictions about financial performanceand assess the implications of operational changes on keyperformance metrics.

3. Improved customer service and retentionIntegrated customer information allows organizations toserve their customers faster and more effectively, therebyincreasing customer satisfaction, loyalty and retention.

4. Ease of expansion/growth and increased flexibilityRobust enterprise solutions enable a more agile, flexibleorganization. They position an organization for growth, andcan enable easier integration of newly acquired entities.

5. Faster, more accurate transactionsHighly integrated, accurate databases result in reduced ITcosts, improved data quality and better customer service.Accurate transactions are an intermediate benefit thatenables other business objectives.

6. Headcount reductionThrough greater systems and operational efficienciesenabled by enterprise solutions, organizations can minimizetheir support staff and thereby reduce costs.

7. Cycle time reductionShortening cycle time enables an organization to be morenimble, cut costs and improve responsiveness to employeesand customers.

8. Improved inventory/asset managementConsistent, tightly integrated systems allow organizations toprovide better service and reduce costs through supplychain efficiencies such as better asset management orinventory reductions.

9. Fewer physical resources/better logisticsBy streamlining logistics and minimizing the associatedphysical resources, organizations can attain increasedoperational efficiency and cost reduction.

10. Increased revenueHighly integrated business processes can enable anorganization to offer new products or exploit new channels,thus creating new opportunities to generate revenue.

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Formula for a blockbuster:Integrate, optimizeand informateNo movie director calls his movie complete once he has finished the filming process. Amovie only really begins to achieve its full potential once it is edited, scored and marketedto its chosen audience. Yet when it comes to enterprise solutions, too many organizationsstop after they have only completed the prerequisites of implementing enterprisesolutions extensively and spending money and time to do it. Accenture’s statisticalanalysis shows that these are the organizations that only achieve half or less of thebenefits from enterprise solutions they had targeted.

In contrast, the 42 percent of theorganizations in our study that completedthe prerequisites and went on to integrate,optimize and informate realized themajority or all of the benefits they hadtargeted (see Figure 5 right and thesidebar on page 12 for a description ofthe targeted benefits). We tested formore than 20 possible predictors of value.Among those variables, we found thatintegrating has the most significantimpact on value realization. Optimizinghas the second most significant impact,followed by informating. Knowing whichfactors have the most significant impacton value can help organizations bettermanage both implementation and post-implementation value realizationstrategies, and do so with greateraccountability.

Figure 5: Realization of targeted enterprise solutions benefits

4%

38%

38%

19%

2%

All targeted benefits realized

Majority of targeted benefitsrealized

About half of the targeted benefits realized

Small number of targeted benefits realized

None of the targeted benefitsrealized

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Integrate

Enterprise solutions were built on thevalue proposition of integration. Bycentralizing operational information inone place where it can be shared by allthe company's key functional systemsand standardizing business processesacross functions, enterprise solutionsindeed offer the promise of integration.Integration, and the standardization ofdata and processes that usuallyaccompanies it, saves money, speeds upcommunications and improves decisionmaking. Financials from diverse businessunits can be consolidated easily. A globalcustomer's orders can be viewed byanybody within the company from onelocation. The perennial aggravation ofconflicting management reports can bebanished forever. With integration alsocomes the possibility of linking moreeasily to customers and suppliers.

Just because an organization hasimplemented enterprise solutions, however,does not mean that it has successfully

managed to integrate its information andprocesses to their full potential. Fully 42percent of the organizations in ourstudy—all of whom had implemented atleast two major enterprise solutionsmodules—had achieved no or limitedintegration of their enterprise solutions(see Figure 6 below). Yet integration isthe single most important action anorganization can take to achieve greatervalue from enterprise solutions.

For most organizations, integration is anongoing process that continues longafter implementation of core enterprisesolutions functionality. Organizationsmust continue to integrate enterprisesolutions from disparate best-of-breedvendors, as well as with existing legacysystems. In addition, most organizationsmust work to integrate differentinstances of enterprise solutions that haveproliferated due to the unique demandsof different geographies or businessunits, or due to mergers and acquisitions.

When one telecommunications firm wasformed through the merger of eightdifferent companies, for example, thefirm ended up with multiple uniqueenterprise solutions instances from avariety of different vendors (includingGEAC Computer Corporation, SAP,PeopleSoft, J.D. Edwards and OracleCorporation). More than 50 percent ofthe organizations in our Accenture studyhave more than one instance of enterprisesolutions, with the mean number ofinstances being 7.9 (see Figure 7 below).

Integration does not stop within acompany's own four walls. Integratingwith a firm's customers, suppliers andbusiness partners can also lead to dramaticimprovements in operational efficienciesthat can have a clear relationship toprofitability. Yet less than 30 percent oforganizations have achieved even limitedinformation exchange with the majorityof their customers or suppliers (seeFigures 8 and 9 on page 17).

Figure 6: Integration of enterprise solutions Figure 7: Number of enterprise solutions instances

14%

10%

8%

41%

27%1 instance

2-5 instances

6-9 instances

10-20 instances

More than 20 instances

18%

39%

23%

12%

7%Numerous disconnected applications and instances— no integration

Many disconnected applications and instances—just started the integration process

Have made some progress towards integrating applications and instances

Have a single, global enterprise solutions instance and have fully integrated all applications

Most processes and applications are integrated

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FFaattaall AAttttrraaccttiioonnInitial audiences reacted negatively to Fatal Attraction's original, ironic twist ending. Nearly a year after initialproduction was completed, a new endingwas filmed in which Glenn Close'scharacter is killed by Anne Archer'scharacter. The director, Adrian Lyne,created his director's cut with the originalending in which the Glenn Close charactergets revenge on the Michael Douglascharacter from beyond the grave.Source: Philip Wuntch, “Showtime to air 'other''Fatal Attraction' ending”, Knight-Ridder NewsService, 8/6/94

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OOnccee UUppoonn aa TTiimmee iinn AAmmeerriiccaaThe original version of Once Upon a Time in America was cut andreassembled chronologically into 138 confusing minutes bystudio executives worried about the length and violence of thefilm. The director's cut restored the epic's originally releasedtime-shifting structure along with an additional 81 minutes. Thefilm “represents the classic confrontation between a film artistand Hollywood money men.”Source: David N. Meyer, “Once Upon a Time, an Epic was Shorn of Grandeur,”New York Times, 2/14/99

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If improving integration is the single mostsignificant action an organization cantake to realize value from their enterprisesolutions, what can organizations do toachieve it? One approach is simply tominimize the number of enterprisesolutions instances (defined as a particularset of applications with an integrateddatabase) through consolidation.Consolidating applications into a singleglobal instance can improve integrationand significantly reduce the costs ofenterprise solutions' human and technicalsupport. The project manager at thetelecommunications company responsiblefor consolidation of the firm's enterprisesolutions instances estimates thatconsolidation saved the company $25million over two years. He explained,“Getting funding to consolidate was theeasiest business case I've ever written.”

From a business perspective, the mostobvious route to consolidation-related costsavings is the adoption of shared services.Sixty-nine percent of organizations have

implemented centralized shared servicecenters, and 5 percent more expect to inthe next two years. From an IT perspective,consolidation may involve reducing thenumber of data centers and hardwareplatforms. A US consumer productscompany, for example, consolidated 75data centers worldwide into two and nowuses a single hardware platform. Thirty-three percent of the organizations in ourstudy are even taking the concept ofconsolidation and shared services beyondthe organization's four walls by sharingapplications, hardware or core businessprocesses with other organizations tofurther reduce costs.

Another approach used to achieveintegration is to integrate enterprisesolutions package modules with otherlegacy systems. For this approach,organizations may employ enterpriseapplication integration (EAI) tools toconnect disparate applications together.Forty-six percent of organizations in ourstudy already employ EAI, and another 9

percent expect to do so in the next twoyears. Organizations may also experimentwith using emerging integrationtechnologies like Web services. BecauseWeb services promise to make integrationwithin and (in particular) betweenorganizations even easier and less expensive,fully 87 percent of the organizationssurveyed expect to experiment with themin the next two years.

In addition to organizational andtechnology changes, organizations alsocan improve integration by going throughthe often painful process of agreeing ona common way to define key informationand perform key business processes. Manyorganizations, for example, have a dozenor more definitions for words such as“customer.” Significantly reducing thenumber of data and process definitionswill not only help internal integration,but pave the way for easier externalintegration as well. We recommend thatthis process and information integrationbe done during, not after, implementation.

Figure 8: Integration with customers Figure 9: Integration with suppliers

3%

9%

13%

42%

33%No integration. Suppliers have no access to our data

Selective sharing of data with a small number of suppliers

Most suppliers have limited access to information about products and/or order status/tracking

Some direct links between supplier and company systems have been established. Periodic sharing of operational and planning data

Automated, direct integration between our suppliers' systems and our own. Routine, automated sharing of operational and planning data

36%No integration. Customers have no access to our data

35%Selective sharing of data with a small number of customers

12%Most customers have limited access to information

14%Some direct links have been established. Periodic sharing of operational and planning data

3%Automated, direc t integration between our customers' systems and our own

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Optimize

Optimization of enterprise solutions andthe business processes they support hasthe second most significant impact onvalue realization. In fact, it was theconcept of reengineering businessprocesses that led to the large wave ofenterprise solutions implementations inthe 1990s in the first place. By adoptingenterprise solutions software,organizations hoped to quickly reengineerand standardize the majority of theirbusiness processes to reflect best practiceprocesses. At the same time, organizationssought to carefully configure the systemsso that they aligned with organizations'business processes and objectives, and tosimultaneously restructure theirorganizations and processes to takeadvantage of new data.

Yet only 40 percent of organizations haveachieved significant optimization of theirenterprise solutions (see Figure 10 below).While a few organizations were successfulin “changing everything at once,” mostfound it difficult. In many cases—particularly those involving organizationstrying to meet Y2K deadlines—gettingthe system in became the only objective,

eliminating the possibility of any realbusiness change. Even where that wasnot the goal, managers have found itdifficult to institute enterprise solutions-enabled change before living with thenew system for a while and learningabout its capabilities. Some seasonedexecutives we interviewed recommendthat organizations just beginning toimplement enterprise solutions try to get75 percent of optimization accomplishedduring implementation, and leave roomto tweak the remaining 25 percent afterthe organization fully understands thenew system's capabilities.

What can an organization do to optimizeits enterprise solutions? While feworganizations are interested in the radicalnew process designs advocated in theearly days of reengineering, there still is aneed to refine and continuously improvebusiness processes. Leading organizationsthat have succeeded in capitalizing ontheir enterprise solutions continuouslyexamine and improve how the processesflow and fit with the system, and howthe system and processes support theneeds of the business.

One consumer products company, forexample, regularly examines the processesits enterprise solutions support. Systemdeployment is highly centralized; however,the process improvement program, whilecompanywide, is implemented locally.Each operating unit or geography decideswhere to focus and how best to implementchange, and best practices are transferredquickly from one area of the company toanother.

Once an organization determines theprocess flows it desires, the organizationoften will need to modify the system tomake sure the system fits the processesand the business the processes support.Modification might involve some post-implementation customization to thesystem—usually through carefulreconfiguration of the system throughthe setting of parameters or "switches."In addition, better alignment betweendesired processes and the system itselfcan be achieved through theimplementation of systems or modulesthat are specifically built to fit anorganization's given industry (see Figure11 below).

Figure 10: Optimization of enterprise solutions Figure 11: Customization of enterprise solutions

3%No customization

23%Minimal changes made to the enterprise solutions software

26%Some customization through setting of parameters

21%Industry-specific customization

26%Highly customized enterprise solutions that are unique to our business

2%No effort to optimize processes

20%Some limited adaptation of business processes to match enterprise solutions' capabilities

35%Moderate amount of adaptation and optimization of business processes

40%

Significant ongoing optimization efforts, requiring fundamental business process change and modifications to the enterprise solutions implementation

2%

Radical restructuring of business processes and business model requires a new implementation of enterprise solutions

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Outsourcing enterprise solutions and processes

What do organizations do when they are not achieving enoughvalue from their enterprise solutions? Research shows that manyturn to outsourcing for help.

Outsourcing enterprise solutions applications can significantlyreduce the costs of enterprise solutions and make implementing,maintaining and upgrading them substantially easier. Byenabling multiple organizations to share a common applicationor application platform, outsourcing can achieve economies ofscale. Outsourcing of enterprise solutions applications is a bigmarket that is continuing to grow—40 percent of the organizationsin our study currently are outsourcing enterprise solutionsapplications, and another 10 percent plan to do so in the nexttwo years.

Outsourcing the business process in addition to the applicationcan help organizations achieve even greater value. Businessprocess outsourcing traditionally has been used to achieveincremental cost reductions in narrowly defined, transaction-intensive back-office business processes (for example, payroll).Recent developments in outsourcing, however, have madebusiness process outsourcing a flexible and powerful approachthat can be used to achieve a wide range of tactical andstrategic aims. According to one recent study on businessprocess outsourcing, organizations commonly turn to outsourcingproviders to help them achieve such goals as transformation ofcapital into expense, centralization and standardization ofprocesses and technology, and access to unique expertise andbest practice processes.4 Thirty percent of organizations in ourAccenture enterprise solutions study are currently outsourcingbusiness processes in addition to applications, and another 8percent expect to do so in the next two years.

Business process outsourcing, if designed and executed carefullywith the right provider, even can help organizations integrate,optimize and informate. New types of outsourcing arrangementsenable a provider to take over the entire function (for example,human resources) or even multiple functions, thereby enablinggreater integration of processes within and between functions.Too many organizations have outsourced their enterprisesolutions and applications to many different organizations, onlyto find that integration rapidly deteriorates. Outsourcing providersalso can help organizations improve managerial information andoptimize their business processes so that they conform to best-accepted standards. AT&T Consumer’s Services’ long distancebusiness unit, for example, is working collaboratively with itsprovider to implement and develop sophisticated customerrelationship management analytic capabilities and best practicecustomer segmentation and contact center processes. Close,collaborative working relationships and shared business goalsand objectives will help those organizations seeking morestrategic aims through outsourcing to manage value actively andrealize benefits.

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1177776The producer of 1776 trimmed 25 minutes from the film for itspremiere. His cuts included the musical number “Cool, CoolConsiderate Men” after a screening with President Nixon whoreportedly felt the scene unpatriotic leading up to America'sbicentennial. When director Peter Hunt created his director's cut,he restored this, and several other musical numbers.Sources: http://www.broadway.com/template_1.asp?CT=8&CI=19006 and

http://www.rgj.com/news/stories/html/2002/06/25/17672.php

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Although closer alignment of the systemand processes to the needs of thebusiness results in greater realization ofbenefits, organizations that do notengage in these things thoughtfullycould end up diminishing the value fromenterprise solutions. Organizations thatmodify the underlying code to supporthighly customized processes risk losingmany of the benefits of integration.Highly customized applications are notonly harder to integrate with others, butare much more costly and difficult toupgrade and maintain. Successfulorganizations customize the majority oftheir solutions by picking and choosingoptions set out for them by the systemitself in the form of parameters. Onlyfunctionality that provides an organizationwith competitive differentiation is worththe difficulties that can come frommodifying the code itself, or fromdeveloping custom extensions. When

executives at Owens Corning decided aunique order fulfillment capability wouldimprove its ability to compete, forexample, they chose to modify andsupplement the code on their existing SAPsystem.

While early critics of enterprise solutionsargued that enterprise solutions mightrigidly limit an organization's processoptions and flexibility, our researchshows such limits occur only rarely.Rather, enterprise solutions havepromoted best practice processes andcapabilities, and have enabled greaterflexibility to adapt to changing businessconditions. Only 2 percent oforganizations in our quantitative studyhad such significant business model orprocess changes that they needed tocompletely reimplement new enterprisesolutions. Only one organization in ourqualitative study—chemicals firm

PolyOne—had undergone so muchbusiness model change (it had a newcore product and required an altogetherdifferent organizing hierarchy) that itneeded a new implementation.

To ensure that optimization andcustomization of processes and systemsis achieved in the most advantageousway before or during implementation,executives may want to take steps toensure that non-IT managers andemployees fully understand theimplications of the new system on theirpotential processes. In the next round ofenterprise solutions implementation atPolyOne, for example, managers areeducating employees about the systemand testing potential processes bycreating simulations and literally walkingbusiness people through the impacts ofthe changes that the system could haveon their processes.

Informate

Organizations in our Accenture surveydesired improved decision making morethan any other benefit of enterprisesolutions. Driven by the desire foraccurate, consistent, complete, real-timeinformation, executives are seeking thesame type of efficient, transparent and“frictionless” real-time decision makingcapability that many manufacturersachieved with just-in-time manufacturing.In the real-time enterprise, seniorexecutives can manage their businessdifferently with immediate, global, cross-functional data. Front-line workforces asdiverse as sales, product development,finance, customer service, purchasing,and strategic or supply chain planningcan draw on enterprise solutions data andanalytic capabilities to improve their jobperformance through fact-based decisionmaking. To realize this goal, organizationsmust informate (that is, transformenterprise solutions data into context-rich information and apply it to supportbusiness analysis and decision making).

However, building a robust analyticcapability that uses data to make informeddecisions requires far more than meredata access and technological tools.5 Justas optimizing business processes oftentakes time for an organization toaccomplish because people must first“live with the system,” improvingmanagerial information also tends to bean evolutionary process. Managers andother professionals must learn what datais available and how it can best supportthe business. Most organizations felt thatthey had largely achieved their goal tocreate better data, but that theirorganizations were still learning how touse this data to its full potential. Explainedone executive, "Our challenge has beengoing from a lot of transactional data togood business information. Slowly butsurely, people are doing their jobs indifferent ways. About six months afterimplementation, people start to understandwhat they can do with the data."

For these reasons, it is not surprising thatonly 28 percent of organizations felt thatthey had achieved significant access totheir enterprise solutions data and arobust analytic capability (see Figure 12on page 22). Most of the organizations inour survey plan to take several steps toenhance their decision making capabilities.These include implementing newfunctionality, improving data access anddeveloping more sophisticated analytics.

Extending the reach of enterprise solutionsto additional geographies, business unitsand functional areas gives managersunprecedented access to data. Companiesalso may implement new enterprisesolutions functionality such asperformance measurement applicationsto obtain managerial information nototherwise captured by their systems.

Page 22: The Return of Enterprise Solutions:

22

Figure 12: Ability of employees to access and analyze enterprise solutions data tosupport their work

12%Very little access to data and no analytic capabilities

33%Tools allow end user access and generation of ad hoc reports. The organization has acentralized data warehouse

27%Some analytic functionality in addition to a data warehouse

19%Significant decision support or analytic functionality, supported by extensively integrated management information

automated decision 9%Extensive use of analytics. Sophisticated

making supplements human decision making

Using a balanced scorecard application,for example, the Texas Education Agencyis able to track performance on a monthlybasis. Its enterprise solutions capabilitiesenable the agency to handle informationrequests quickly, and analyze managementinformation in new ways to generateinsights into their operations.

Organizations also can informate byimproving the ability for employees toaccess data. The first step towardimproving data access is to improve theavailability and quality of enterprisesolutions data by making sure it is timely,consistent and accurate. As users becomemore familiar with the data available, theirneed for data often exceeds the standardreporting functionality that comes withenterprise solutions. Implementing datawarehouses, ad hoc reporting functionalityand portals empowers employees to accessand manipulate the data they need.

Leading organizations, however, do notjust give people access to data. They giveaccess to the right data most applicableto the person and the problem at hand. Inother words, they present the information

in context, thereby empowering employeesto better understand the implications ofinformation and to act upon it. Portals, atechnology 81 percent of organizationsin our study say they will experimentwith over the next two years, can helpknowledge workers access and interpretenterprise solutions information relevantto specific tasks. In addition, portals candraw upon disparate sources ofinformation to assimilate highly structureddata with other useful information suchas documents, invoices, proceduremanuals and online tools. For example, asales manager's portal could link multipleinternal and external data sourcesspecifically needed by the sales managerto tools that facilitate common tasksperformed in the sales function, such aspreparing a sales forecast.

As employees gain greater familiarity andinsight into enterprise solutions data,there is a growing demand for morerobust analytic capabilities. Forty-ninepercent of the organizations in our studyplan on experimenting with advancedanalytic applications in the next twoyears. Strong analytic capabilities also

require the development of individualswith analytic skills. Although someexperts argue that intelligent softwareagents and Web services ultimately willbe able to integrate and analyze dataand automate routine decisions such aspurchasing of inventory, most complexanalytic processes will still need skilledprofessionals involved.

Organizations with highly advancedabilities to use information derived fromenterprise solutions have the potential toalter their work processes or job roles,change their organizational structures orseek out new business opportunities.Dow Chemical, for example, changed to aflatter and more customer-focusedorganizational structure to take advantageof new enterprise solutions information.Dow's use of enterprise solutionsmanagerial information has enabled Dowto achieve a level of insight its competitorsjust cannot achieve. According tosomeone who once worked for a Dowcompetitor, “[By comparison], we wererunning blind.”

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EE..TT.. - TThhee EExxttrraa TTeerrrreessttrriiaallIn his director's cut of E.T. - The Extra Terrestrial, Steven Spielbergdecided that the police officers chasing Elliott and ET should notbe carrying guns in a scarier, terrorist-filled world. So hedigitally replaced the guns with walkie-talkies. He also addednew special effects and removed a scene with Elliott's brotherdressed as a terrorist for Halloween. Source: http://www.filmsite.org/etth.html

Page 24: The Return of Enterprise Solutions:

Accelerating time to value

What speeds up the time it takes organizations to achieve valuefrom their enterprise solutions? Accenture’s research determinedthat in addition to optimizing, informating, and one aspect ofintegrating (fewer systems instances), two other factorssignificantly speed up the process of value realization. Althoughthey may not result in a greater degree of value realization overall,measuring the benefits obtained from enterprise solutions andholding someone accountable for realization of targeted benefits

significantly speeds time to value. The 31 percent of organizationsthat actively track metrics for the majority or all of the expectedbenefits reported that they achieved benefits significantly earlierthan those that did not actively measure or capture benefits (seeFigure C below). Likewise, the 65 percent of organizations thathold a dedicated individual responsible for realizing enterprisesolutions benefits also achieved benefits earlier than those whoheld no one responsible for benefits realization.

11%

20%

35%

22%

12%Do not have a formal business case that identifies specific benefits

Do not actively seek to measure and capture benefits

Actively track metrics for a few key benefits post-implementation

Actively track metrics for the majority of expected benefits. Some incentives and processes have been changed to support benefits realization

All processes and incentives are designed to encourage and trackprogress of benefits identified in the business case

Figure C: Measurement of enterprise solutions benefits

24

Page 25: The Return of Enterprise Solutions:

Achieving specific benefits from enterprise solutions

25

Many organizations seek highly specificbenefits from enterprise solutions. Someorganizations may value certain benefitsover others, and different benefits atdifferent times in their business lifecycle. In today's economic climate, forexample, many organizations may seekto immediately achieve the benefits of

cost reduction over other more strategic,long-term benefits such as ease ofexpansion and growth or improveddecision making. Likewise, an organizationthat competes on customer intimacy mayvalue the benefit of improved customerservice and retention more than otherbenefits such as reduced cycle time.

Our study shows that some benefits ofenterprise solutions are more prized thanothers (see Figure 13 below). In addition,certain benefits tend to be achievedmore often or more quickly than others(see Figures 14 and 15 on page 26).

Figure 13: Key benefits targeted by enterprise solutions

4%

3%

7%

9%

5%

7%

7%

19%

17%

22%

5%

7%

8%

8%

8%

10%

14%

14%

11%

14%

3%

11%

7%

8%

13%

12%

11%

9%

14%

14%

First priority Second priority Third priority

Benter management decision making

Improved financial management

Improved customer service and retention

Ease of expansion/growth and increased flexibility

Faster, more accurate transactions

Headcount reduction

Cycle time reduction

Improved inventory and asset management

Fewer physical resources and improved logistics

Increased revenue

Percent of responses

Page 26: The Return of Enterprise Solutions:

Figure 15: Enterprise solutions benefits achieved over time

Benefit achieved in more than 4 years

0%

20%

40%

60%

80%

100%

Faster, more accurate information transactions Improved financial management

Better managerial decision making Improved inventory and asset management

Cycle time retuction Fewer physical resources and improved logistics

Ease of expansion/ growth and increased flexibility Improved customer service retention

Headcount reduction Increased revenue

Time to achieve benefit

Percent of organizat ions that have achieved the benefit

Benefit achieved within 1 year

Benefit achieved in 1-2 years

Benefit achieved in 2-4 years

26

Figure 14: Benefits achieved by organizations

36%

40%

47%

53%

54%

55%

60%

63%

69%

70%Improved financial management

Faster, more accurate transactions

Better managerial decision making

Improved inventory and asset management

Ease of expansion/growth and increased flexibility

Fewer physical resources and improved logistics

Cycle time reduction

Improved customer service and retention

Headcount reduction

Increased revenue

Page 27: The Return of Enterprise Solutions:

AAppooccaallyyppssee NNooww RReedduuxxFrancis Ford Coppola released Apocalypse Now Redux twenty-two years after the original release. The additional 49 minutes in hisdirector's cut enabled Coppola to restore scenes providing greater character detail for Willard, his crew and Colonel Kurtz. He also addedan expanded Playboy Playmates sequence after Willard's helicopter is downed and an additional French colonial plantation sequence.Source: http://www.filmsite.org/apoc.html

Page 28: The Return of Enterprise Solutions:

AAlliieennss:: TThhee SSppeecciiaall EEddiittiioonnIn the director's cut of Aliens: The Special Edition, Ripley learnsshe has been drifting for 57 years and that her daughter, lastseen at age 11, is now an adult. Her guilt from missing seeingher daughter grow up helps explain her attachment to Newt.The impact of adding this maternal instinct enhances her laterconfrontation with the Alien Queen.Source: http://www.mediacircus.net/dc.html

Page 29: The Return of Enterprise Solutions:

29

Interestingly, the most highly targetedbenefits—improved decision making,customer service and financialmanagement—tend not to be the benefitsthat originally sold the organization onimplementing enterprise solutions. Mostorganizations justified their enterprisesolutions implementation—formally atleast—on easier-to-quantify benefits suchas reduced headcount and cost savings thatwould ensue from increased operationalefficiencies. However, most organizationsactually achieved only modest informationtechnology and operational cost savingsof under $10 million, and only 40 percentof organizations achieved any headcountreduction—and when it happened, it didso at a much slower pace than mostother benefits. Two of the top three most

sought-after benefits—improved decisionmaking and financial management—havebeen achieved by a greater number oforganizations and in a quicker time framethan cost savings and other desiredbenefits.

What actions can an organization take toachieve a specific benefit? Most generalbenefits, such as improved cycle time,ease of expansion and growth, fasterinformation transactions and improveddecision making, depend most on theability of an organization to integrate,optimize and informate. Some benefitsare more narrowly defined, however, andmay depend more on highly specificactions or the extensive implementationof specific pieces of enterprise solutions

functionality. Our research suggests thatimprovement of customer service andretention—the second most highly sought-after benefit—for example, is most highlydependent on the extensiveness ofimplementation of customer relationshipmanagement and sales and marketingfunctionality, as well as on how integratedan organization's enterprise solutions arewith its customers. Considering that sofew organizations have implementedsuch functionality or have deeplyintegrated their solutions with those oftheir customers, it is no surprise that thisbenefit is achieved less often, and moreslowly, than other benefits. Other specificbenefits and the actions that organizationscan take to achieve them are profiled inFigure 16 below.

Figure 16: Specific benefits and the actions organizations can take to achieve them

Benefit Actions producing the benefit

Information technology (IT) cost savings

• Offshore development • Shared service centers• Measurement of benefits• Enterprise application integration (EAI)

Organizational and operational cost savings

• Shared service centers• Offshore development• Measurement of benefits• Integration

Increased revenue • Extensive implementation of:– Customer relationship management (CRM)

functionality– Sales and marketing functionality

Improved inventory and asset management

• Extensive implementation of:– Supply chain functionality– Planning and analysis functionality

• Integration with suppliers’ systems• Improvement of managerial information• Customization of enterprise solutions

Fewer physical resources and improved logistics

• Extensive implementation of:– Supply chain functionality– Performance management functionality

Page 30: The Return of Enterprise Solutions:

Our Accenture research shows that organizations are eagerlyexpanding their use of various enterprise solutions technologies(see Figures D below and E right). Only 1 percent of theorganizations in our study do not plan to experiment with anyemerging enterprise solutions-related technologies at all in thenext two years, and 83 percent of organizations surveyed plannedto implement additional enterprise solutions functionalitysometime in the near future. In general, interest seems to befocused on expanding core enterprise solutions to address thefollowing areas:

1. The customer, supplier and other external organizationsCustomer relationship management (CRM) solutions andsupply chain software help organizations manage theirsuppliers and customers. Although more organizations haveimplemented supply chain software—45 percent of theorganizations surveyed already have implemented supplychain functionality—it is the customer relationshipmanagement software market that is growing the mostrapidly. Only 19 percent of the organizations surveyedcurrently have customer relationship management software,but fully 43 percent expect to have it in the next two years.Enterprise application integration (EAI) technology also helpsorganizations manage relationships with external groups byenabling intra-organizational enterprise integration. Thirty-eight percent of organizations now use EAI, and 46 percentexpect to within two years. A less established technology,Web services, also promises to help organizations betterintegrate with their customers and suppliers. Fully 87 percentof organizations plan to experiment with Web services inthe next two years.

2. Information access and analytics Eighty-one percent of the organizations expect to experimentwith portals, an information access device, in the next twoyears. Forty-nine percent of organizations in our survey saythey expect to experiment with advanced analytics, the nextstage in a typical organization's evolutionary focus oninformation, in the next two years. Up to half expect toimplement analytic-related functionality such as managementreporting and metrics, planning and analysis, and performancemanagement in the next two years.

3. Knowledge work processes Other popular extensions of enterprise solutions includeapplications that focus less on transactions and more onknowledge. Examples include enterprise solutions modulesrelating to sales and marketing, new product development,and strategic planning and analysis. These solutions canimprove knowledge workers' productivity by automatingroutine tasks and by providing knowledge workers with usefulmanagement information to improve their decision making.

4. A wider variety of information input and output devicesEnterprise solutions are only as good as the informationthat feeds into them and the information that comes out ofthem. Because data entry is subject to so much human errorand attention, many organizations—79 percent—say theyplan to experiment with technologies that will automatedata entry. One such technology may be radio frequencyidentification tags (RFID), which 28 percent of theorganizations surveyed say they will experiment with in thenext two years. Using wireless mobile communications andadvanced tagging and sensor technologies, RFID enablesobjects such as individual parts, products or entire productshipments to carry and transmit information inexpensivelywithout human intervention. Combined with enterprisesolutions functionality, RFIDs can dramatically improve anorganization's ability to ensure that customers receive theright item at the right time, for example. In addition, 73percent of organizations surveyed expect to experimentwith wireless computing. Wireless computing enablesworkers, whether on the floor or out making sales calls, tohave full access to the latest enterprise solutions data.

Figure D: Emerging technologies organizations plan toexperiment with in the next two years

Future directions of enterprise solutions technologies

30

1%

28%

49%

72%

79%

81%

87%Web services

Automated data entry

Mobile computing or wireless technology

Advanced analytics

None of the above

Portals

Radio frequency identification (RFID)

Page 31: The Return of Enterprise Solutions:

31

Figure E: Enterprise solutions functionality implemented and expected to be implemented in the next two years

Finance

Human resources

Supply chain

Sales and marketing

Management reporting and metrics

Planning and analysis

Performance management

Product development

Customer relationship management 43%

25%

37%

46%

50%

48%

55%

63%

19%

21%

25%

35%

37%

39%

44%

44%

82%

85%

Within 2 yearsNow

Page 32: The Return of Enterprise Solutions:

32

Management implicationsLeading organizations do not give up onenterprise solutions just as they are ripeto deliver value. Rather, they formulatespecific action plans that enable them toachieve both overall benefits and specificones based on current business needs. Inour research, we found that leadingorganizations:

• Invest the effort required to get acritical mass of implementationOnly those organizations that haveinvested the time and resourcesnecessary to extensively implemententerprise solutions throughout theirorganizations will be able to capitalizeon enterprise solutions' promise ofbetter integration and seamlessinformation flows between functions,business units and geographies.

• Integrate, optimize and informatein parallel Leading organizations take a three-pronged approach to achieving valuefrom their enterprise solutions. Theywork to integrate enterprise solutionsinternally and with those of otherorganizations through activities likeconsolidation of system instances,use of integration technologies, andstandardization of data and processdefinitions. Simultaneously, they workto both optimize enterprise solutionsby improving how processes flow andfit with the system and business needs,and informate work by using robustdata access and analytic capabilitiesto transform enterprise solutions datainto useful knowledge that can beapplied to an organization's uniquebusiness problems and work forces.Our research indicates that those

organizations that focus on only onestrategy to the exclusion of othersachieve less overall benefit fromenterprise solutions than those thatfocus on all three.

• Manage enterprise solutions as anongoing programNo matter how much enterprisesolutions functionality you haveimplemented, enterprise solutionsrequire ongoing management andattention. New functionality beyondtransaction processing inevitably willbe installed and integrated withexisting functionality, businessprocesses will need to be continuouslyrevisited and optimized, andmanagerial information will requireconstant attention if it is to betransformed into useful knowledge.

Dedicating ongoing resources toenterprise solutions can helporganizations continue to focus on,measure, and manage the benefitsfrom enterprise solutions.Organizations like Canada PostCorporation have set up “SAP Centersof Excellence” to help them achievevalue from their enterprise solutions.The U.S. Defense Logistics Agencyplans to name a “benefit realizationmanager,” whose job will be toenforce changes and achieve benefitsfrom enterprise solutions. Otherorganizations, like Intel Corporation,may choose to set up a permanentorganizational unit dedicated toachieving value from enterprisesolutions. Organizational units may bepositioned centrally within a companyso its staff can serve as internal

consultants or leaders for specificenterprise solutions-related initiatives.Alternatively, there could bespecialization by the type of businesschange, particularly when specificgroups—like a Six Sigma organization—already exist.

• Prioritize benefits and create anaction plan to achieve them In addition to achieving overall value,some organizations will also want toachieve highly specific benefits, andsome before others. In particular, theuncertainties in today's economicclimate suggest that manyorganizations may choose to adopt a“bifocal” approach to achieving valuefrom enterprise solutions: a dual focuson short-term benefits related to costreductions and long-term generalbenefits. In other cases, an organizationmay decide a particular strategicbenefit such as improved customerservice and retention is more importantthan other types of benefits. Leadingorganizations will prioritize theirbenefits and corresponding plans foraction to achieve what is mostimportant to them.

For those executives who feel theirorganizations have yet to realize thepromise of enterprise solutions, the answeris clear: do not give up yet. This is a greattime of opportunity. Like directors whorevisit their films and subsequentlytransform them from flops into criticaland commercial successes, business leadershave the opportunity to revisit theircommitment to enterprise solutions andrealize the original vision of enterprisesolutions.

Page 33: The Return of Enterprise Solutions:

SSttaarr WWaarrss:: TThhee SSppeecciiaall EEddiittiioonn George Lucas, in Star Wars: The SpecialEdition, added back into his director's cuta brief meeting between Luke and BiggsDarklighter before the Battle of Yavin.With this additional meeting, viewersbetter understand the impact on Lukewhen Biggs' X-Wing is destroyed. Lucaswas also able to take advantage of newtechnology to enhance several scenes.Source: http://www.mediacircus.net/dc.html

Whether you are just embarking on your enterprise solutions journeyor you are well on your way, achieving value from these systemsrequires ongoing, consistent attention. Organizations that integrate,optimize and informate go far beyond just establishing an enterprisesolutions technical infrastructure: they integrate and internalizethe system into their business, and use it to dramatically improvetheir ways of working.

Page 34: The Return of Enterprise Solutions:

34

Notes

1 Zuboff, S. 1988. In the Age of theSmart Machine: The Future of Workand Power. New York: Basic Books.

2 Enterprise solutions modules from avariety of leading vendors wereincluded in our study to ensureobjectivity. Discussion of vendordifferences, however, is not thefocus of this study.

3 The Y2K problem (“y” means year,“2k” means 2000) refers to theinability of older hardware andsoftware to recognize the centurychange in a date.

4 Jane C. Linder and Susan Cantrell,“Business Process Outsourcing BigBang: Creating Value in anExpanding Universe,” AccentureInstitute for Strategic ChangeResearch Report, 2002.

5 For more insight into the stepsneeded to develop a robust analyticcapability, see Thomas Davenport etal., “Data to Knowledge to Results:Building an Analytic Capability,”California Management Review 43/2(Winter 2001): 117-138.

About the Authors

Thomas H. Davenport is the executive director of the Accenture Institute for HighPerformance Business and a professor at Babson College in Wellesley, Massachusetts. Heis an acclaimed author and speaker on the topics of enterprise systems, information andknowledge management, reengineering, and electronic business and markets. Mr.Davenport can be reached in Wellesley, Massachusetts, at +1 617 454 8201 or via e-mail at [email protected].

Jeanne G. Harris is a senior research fellow and director of research-Chicago at theAccenture Institute for High Performance Business. Her research focuses on improvingmanagerial performance, business intelligence, knowledge management and enterprisesystems; she also speaks frequently on these topics to executive audiences. Her work hasbeen published in publications such as Sloan Management Review, California ManagementReview, CIO, Strategy and Leadership, and Outlook. Ms. Harris can be reached inChicago, Illinois, at +1 312 693 7633 or via e-mail at [email protected].

Susan Cantrell is a research fellow at the Accenture Institute for High PerformanceBusiness. Her research has focused on business innovation, information systems andorganizational change. Her work has been published in publications such as IndustryStandard, Across the Board, Strategy and Leadership, and Outlook. Ms. Cantrell can bereached in Wellesley, Massachusetts, at +1 617 454 8697 or via e-mail [email protected].

Acknowledgements

The authors wish to thank the partners of Accenture and the Accenture Institute forHigh Performance Business for their support of this research project, especially ChristyBass, Marty Brown, Dan London and the many other Accenture partners who havesignificant, first-hand enterprise solutions experience with their clients.

We would like to thank the more than 200 executives and industry analysts who sogenerously gave their time to be interviewed. We appreciate the following industryanalysts' review and insight into our analysis: Gartner, Inc., International Data Corporation,AMR Research, Hurwitz Group, and the Dobrin Group. We appreciate the assistance ofDr. Robert B. Smith, President, American Statistical Association, Boston Chapter, duringthe statistical data analysis. We also wish to acknowledge NOP World for conductingthe survey. Finally, we want to express our thanks to our colleagues in Accenture GlobalBusiness Solutions and the Accenture Institute for High Performance for their help in therealization of this report, including Mark Jones, Mary Puskar, Alex Broking and Alex Beal.Finally, we wish to thank Rebecca Gorse for her patience and creative design solutions.

If you would like to discuss this report, please contact Jeanne G. Harris, senior researchfellow, Accenture Institute for High Performance Business at +1 312 693 7633 or via e-mail at [email protected].

To obtain additional copies of the report, please contact Mary Puskar in Enterprise Solutionsat +1 312 693 4335 or via e-mail at [email protected]. You may alsodownload the report in PDF format at www.accenture.com/isc.

Page 35: The Return of Enterprise Solutions:

35

About Accenture

Accenture is a global management consulting, technology services and outsourcingcompany. Committed to delivering innovation, Accenture collaborates with its clients tohelp them become high-performance businesses and governments. With deep industryand business process expertise, broad global resources and a proven track record,Accenture can mobilize the right people, skills, and technologies to help clients improvetheir performance. With approximately 90,000 people in 48 countries, the companygenerated net revenues of US$11.8 billion for the fiscal year ended August 31, 2003. Its home page is www.accenture.com.

About the Accenture Institute for High Performance Business

The Accenture Institute for High Performance Business creates strategic insights intokey management issues through original research and analysis. Based in Wellesley,Massachusetts, its management researchers combine world-class reputations withAccenture's extensive consulting, technology, outsourcing and client experience toconduct innovative research and analysis into what makes great companies and highperforming organizations. Its home page is www.accenture.com/institute and may becontacted at [email protected].

Page 36: The Return of Enterprise Solutions:
Page 37: The Return of Enterprise Solutions:

Appendix

Page 38: The Return of Enterprise Solutions:

38

Accenture interviewed 163 senior executives from largeorganizations representing a wide range of industries. To analyzethe data, we grouped organizations into five industry sectors.Appendix figure 1 is an analysis of survey participants byindustry sector and a list of industries included in each sector.

Appendix figure 1: Industry sectors

While executives worldwide were fairly consistent in theirperspectives, a few significant variations emerged between theindustry sectors. This appendix summarizes some of the keydifferences we found.

Part I. Cross-industry analysis

Benefits targeted and achieved

There was considerable variation between industries in the degreeof overall benefits achieved. Financial services and resources weremost likely to achieve a majority of benefits, while nearly one-thirdof the government agencies reported little or no benefit achievedto date.

Appendix figure 2: Realization of targeted enterprise solutions benefits

Priorities for benefits differed among the industry sectors. Mostnotably, financial services companies favored improved financialmanagement, resources favored improved inventory and assetmanagement, and communications and high technology favoredease of expansion/growth and increased flexibility. In addition,government preferred better managerial decision making. Productstended to most closely align with the cross-industry mean. The

Industry variation in the survey findings

Government

Communications and high technology

Resources

Financial services

Products

30%

13%

19%

20%

18%

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

4%

42%

33%

21%

0%

5%

52%

33%

10%

0%

7%

47%

23%

16%

7%

0%

31%

50%

19%

0%

4%

17%

48%

28%

3%

4%

38%

38%

19%

2%

All targeted benefits realized

Majority of targeted benefits realized

About half of the targeted benefits realized

Small number of targeted benefits realized

None of the targeted benefits realized

Page 39: The Return of Enterprise Solutions:

top three desired benefits across all industries were bettermanagerial decision making, improved financial management,and improved customer service and retention.

Appendix figure 3: Key benefits targeted by enterprise solutions*

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

11%

26%

24%

31%

22%

29%

33%

44%

42%

38%

19%

9%

4%

24%

28%

37%

28%

29%

46%

56%

11%

19%

41%

26%

31%

27%

23%

45%

23%

53%

16%

16%

16%

19%

26%

26%

55%

45%

39%

42%

7%

29%

22%

21%

25%

29%

18%

39%

43%

68%

13%

21%

22%

25%

29%

32%

42%

42%

49%

26%

Better managerial decision making

Improved financial management

Improved customer service and retention

Ease of expansion/ growth and increased flexibility

Faster, more accurate transactions

Headcount reduction

Cycle time reduction

Improved inventory and asset management

Fewer physical resources and improved logistics

Increased revenue

39

In general, financial services and products organizationsachieved more specific benefits in virtually every area. Resourcesorganizations also were above the cross-industry mean inimproved customer service, fewer physical resources andimproved logistics and headcount reductions.

Appendix figure 4: Benefits achieved by organizations

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

44%

48%

48%

69%

58%

38%

77%

69%

81%

81%

50%

36%

59%

59%

46%

77%

64%

68%

82%

77%

29%

52%

55%

45%

74%

48%

58%

61%

65%

74%

33%

30%

39%

52%

42%

52%

42%

58%

64%

61%

24%

28%

38%

35%

45%

41%

48%

55%

52%

52%

36%

40%

47%

53%

55%

60%

63%

69%

70%

54%

Improved financial management

Faster, more accurate transactions

Better managerial decision making

Improved inventory and asset management

Ease of expansion/ growth and increased flexibility

Fewer physical resources and improved logistics

Cycle time reduction

Improved customer service and retention

Headcount reduction

Increased revenue

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

*Percent of organizations listing this benefit as one of their top three benefits sought

Page 40: The Return of Enterprise Solutions:

40

Prerequisites

TimeReflecting enterprise solutions' historical background inmanufacturing as enterprise resource planning (ERP) ormanufacturing resource planning (MRP) software, organizationsin products and resources have had their enterprise solutionslonger than organizations in other industries. Governmentagencies are most likely to have spent the shortest time ondeveloping their enterprise solutions.

Appendix figure 5: Year the first enterprise solutions module was implemented

Spending on enterprise solutionsBecause spending tends to correlate closely with the length oftime an organization has spent on enterprise solutions,investment in enterprise solutions is higher in products andresources organizations, and lower in government organizations.

Appendix figure 6: Spending on enterprise solutions over the past five years

1995 or earlier

1996-1998

1999-2000

2001 or later

11%

23%

40%

26%

14%

13%

23%

50%

0%

20%

50%

30%

7%

31%

31%

31%

26%

18%

26%

30%

11%

22%

35%

32%

Less than $10m

$10-$50m

$50-$100m

$100m or more

7%

3%

52%

38%

6%

12%

35%

47%

26%

22%

17%

35%

15%

15%

30%

40%

0%

9%

30%

61%

11%

11%

34%

44%

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

Page 41: The Return of Enterprise Solutions:

41

FunctionalityResources organizations are most likely to have implementedbroad enterprise solutions functionality. Government agencies,many of which began their enterprise solutions implementationmuch later (when industry-specific functionality becameavailable), generally have implemented the fewest modules.Finance enterprise solutions are the most commonly installed ineach industry, followed by supply chain and human resources.

Some industries have focused their efforts on implementingfunctionality in particular areas. Products and resourcesorganizations are more likely to have implemented supply chainapplications, while resources, financial services and governmentorganizations are more likely to implement human resources.This difference may also be explained by the different strengthsof enterprise solutions vendors in each industry sector.

In a few industries, notably products, resources andcommunications and high technology, nearly one-half of theparticipants have implemented sales and marketing functionality.In contrast, government and financial services have made salesand marketing a much lower priority.

Thirty-eight percent of the resources participants haveimplemented performance management capabilities, comparedto the cross-industry mean of 25 percent. These organizationsare also far more likely to have management reporting andmetrics functionality implemented than their counterparts inother industries.

Resources and communications and high technology have bothimplemented customer relationship management (CRM)capabilities approximately 25 percent of the time, compared toproducts, financial services and government, which haveimplemented them only 13 to 15 percent of the time.

Appendix figure 7: Percent of enterprise solutions functionality currently implemented

13%

22%

21%

35%

32%

47%

53%

32%

81%

15%

18%

22%

39%

30%

23%

21%

45%

76%

26%

25%

36%

38%

49%

47%

55%

55%

89%

24%

21%

27%

31%

33%

49%

47%

45%

85%

15%

11%

17%

35%

43%

3%

22%

49%

74%

19%

21%

25%

35%

39%

44%

44%

82%

37%

Finance

Human resources

Supply chain

Sales and marketing

Management reporting and metrics

Planning and analysis

Performance management

Product development

Customer relationship management

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

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Future plans vary by industry as well. Financial servicesorganizations, for example, are more likely than their counterpartsin other industries to plan to implement human resources,management reporting and performance management functionalityover the next two years.

Appendix figure 8: Percent of additional functionality organizations plan on implementing in the next two years

Integrating enterprise solutions

The majority of organizations have five or fewer enterprisesolutions instances installed. However, there was considerableindustry variation, with products and resources organizationshaving more instances in operation than the cross-industrymean. Government agencies were most likely to have the fewestinstances.

Appendix figure 9: Number of enterprise solutions instances

0%

2%

0%

0%

4%

4%

10%

14%

24%

6%

1%

0%

18%

14%

8%

21%

33%

17%

0%

0%

11%

14%

13%

16%

9%

17%

26%

0%

13%

12%

11%

15%

15%

19%

21%

22%

0%

0%

9%

12%

12%

19%

6%

4%

22%

3%

4%

9%

10%

12%

13%

19%

24%

11%

Customer relationship management

Human resources

Management reporting and metrics

Performance management

Planning analysis

Supply chain

Sales and marketing

Product development

Finance16%

9%

7%

42%

26%

32%

0%

0%

26%

42%

15%

18%

4%

37%

26%

6%

16%

13%

34%

31%

8%

0%

13%

62%

17%

14%

10%

7%

41%

28%

1 instance

2-5 instances

6-9 instances

10-20 instances

More than 20 instances

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

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Organizations have made significant progress toward integratingenterprise solutions applications and processes, with productsand communications and high technology companies makingmore progress than government organizations.

Appendix figure 10: Integration of enterprise solutions

In addition, resources and product organizations were morelikely to have higher levels of integration with their suppliersthan their counterparts in other industry sectors were. We foundlittle variation by industry sector with respect to level ofintegration with customers.

Appendix figure 11: Integration with suppliers

11%

56%

14%

17%

2%

19%

38%

24%

10%

9%

28%

31%

24%

7%

10%

27%

37%

30%

3%

3%

10%

28%

27%

21%

14%

18%

39%

23%

12%

7%

Numerous disconnected applications and instances—no integration

Many disconnected applications and instances—just started the integration process

Have made some progress toward integrating applications and instances

Most processes and applications are integrated

Have a single, global enterprise solutions instance and have fully integrated applications

2%

10%

15%

45%

28%

0%

10%

10%

35%

45%

3%

10%

16%

32%

39%

0%

9%

10%

58%

23%

10%

5%

14%

33%

38%

3%

9%

13%

42%

33%

No integration. Suppliers have no access to our data

Selective sharing of data with a small number of suppliers

Most suppliers have limited access to information about products and order status/tracking

Some direct links between supplier and company systems have been established. Periodic sharing of operational and planning data

Automated, direc t integration between our suppliers’ systems and our own. Routine, automated sharing of operational and planning data

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

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Optimizing enterprise solutions

A vast majority of the large organizations have attempted tooptimize their business processes to improve the fit with theenterprise solutions applications that support these processes.However, there was little variation by industry. Government wasless likely than its counterparts in private industry to customizesoftware in order to optimize enterprise solutions.

Appendix figure 12: Optimization of enterprise solutions

Informating enterprise solutions

Support of data analysis from analytical tools is not very advanced.Only 28 percent of respondents help their employees make useof enterprise solutions data through significant decision supportand sophisticated analytics. Data access and analytics were mostdeveloped in products and government, with communicationsand high technology lagging behind other industry sectors.

Appendix figure 13: Ability of employees to access and analyzeenterprise solutions data to support their work

0%

42%

44%

12%

2%

0%

45%

36%

18%

0%

3%

39%

45%

13%

0%

3%

46%

21%

21%

9%

7%

28%

24%

41%

0%

2%

40%

35%

20%

2%

No effort to optimize processes

Some limited adaptation of business processes to match enterprise solutions’ capabilities

Moderate amount of adaptation and optimization of business processes

Significant ongoing optimization efforts, requiring fundamental business process change and modifications to enterprise solutions implementation

Radical restructuring of business processes and business model requires a new implementation of enterprise solutions

13%

25%

23%

33%

6%

0%

23%

36%

27%

14%

6%

19%

30%

35%

10%

3%

15%

22%

39%

21%

21%

10%

31%

28%

10%

9%

19%

27%

33%

12%

Extensive use of real-time analytics. Sophisticated automated decision making supplements human decision making

Significant decision support or analytic functionality, supported by extensively integrated management information

Some analytic functionality in addition to a data warehouse

Very little access to data and no analytic capabilities

Tools allow end user access and generation of ad hoc reports. The organization has a centralized data warehouse

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

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Approaches in developing and managing enterprisesolutions

A significant proportion of organizations are using advancedapproaches for developing and managing enterprise solutions.The most popular are shared service centers, enterpriseapplication integration (EAI) software tools and outsourcing ofenterprise solutions applications management.

Appendix figure 14: Enterprise solutions approaches used

Planned future enterprise solutions informationtechnology initiatives

Over the next two years, organizations are planning to experimentwith a number of new technologies, the most popular being Webservices and portals. Products organizations will experimentmore with radio frequency identification tags (RFID) technology,while financial services organizations plan to focus more onautomated data entry technologies.

Appendix figure 15: Emerging technologies organizations planto experiment with in the next two years

10%

20%

24%

37%

56%

76%

15%

45%

55%

50%

35%

70%

19%

15%

27%

50%

54%

81%

17%

31%

17%

45%

34%

62%

8%

48%

52%

24%

44%

52%

13%

30%

33%

40%

69%

46%

Centralized shared service centers for business units or the entire organization

Enterprise application integration (EAI) or other integration technologies

Information technologyoutsourcing of enterprisesolutions software application management

Joint venture with other companies to share common functions and software

Offshore development— development in low labor cost countries or overseas development centers

Outsourcing of enterprise solutions applications and business process

0%

48%

50%

69%

73%

73%

83%

0%

0%

50%

73%

91%

91%

86%

3%

29%

52%

71%

74%

81%

81%

0%

21%

58%

82%

85%

85%

91%

0%

21%

35%

69%

76%

83%

93%

1%

28%

48%

72%

81%

87%

79%

Web services

Portals

Automated data entry

Mobile computing or wireless technology

Advanced analytics

Radio frequency identification (RFID)

None of the above

Cross-industry mean

Government

Communications and high technology

Resources

Financial services

Products

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Part II: Industry snapshots

Products

Forty-eight products organizations participated in our survey.Products organizations were among the first to implemententerprise solutions. Products organizations implement moreproduct development, sales and marketing and supply chainfunctionality than other industry sectors. Somewhat surprisingly,however, products lags behind other industries in customerrelationship management implementations. Integration is ahigher priority for products organizations, however. Similarly, dataaccess and analytic capabilities are more developed in productsorganizations than in other industry sectors. Finally, productsorganizations are more likely to plan to experiment with radiofrequency identification tags.

Resources

Thirty-one resources organizations participated in the survey.Resources organizations were the earliest to embrace enterprisesolutions software. As a result, they have spent more over timeon their enterprise solutions than other industries and have themost extensive implementations. Even so, only one-half of theparticipants reported that they have fully implemented theirenterprise solutions. Thirty-six percent of the resourcesparticipants have implemented performance managementcapabilities, compared to the cross-industry mean of 25 percent.Resources organizations also have implemented more customerrelationship management, management reporting and metrics,product development, sales and marketing and supply chainfunctionality than other industries.

Communications and high technology

Thirty-three communications and high technology organizationsare included in the survey. Communications and high technologyorganizations targeted different benefits (especially ease ofexpansion/growth and increased flexibility and headcountreduction) than other industries. Communications and hightechnology organizations implemented more sales and marketingfunctionality than any other industry. They also expect toimplement more sales and marketing, product development, andplanning and analysis functionality relative to other industries inthe next two years. This industry sector lags behind otherindustries, however, in enabling management access to data andanalytics. Sixty-five percent of communications and hightechnology organizations reported high levels of integration,more than any other industry.

Financial services

Twenty-two financial services organizations completed the survey.The majority of financial services organizations reported thatthey had implemented enterprise solutions prior to 1994 or after1999. This is in sharp contrast to the other industries, most ofwhich began their implementations after 1994. They are alsoamong the most centralized, with nearly one-half of theorganizations having a single global enterprise solutions instance.Financial services organizations have installed relatively lowlevels of customer relationship management, sales andmarketing and supply chain functionality. Over the next twoyears, however, financial services organizations expect toimplement significant new capabilities, with a particular emphasison human resources, management reporting and metrics, andsupply chain functionality. Financial services organizations aremuch more likely to consider information technology outsourcing,business process outsourcing and joint ventures to shareenterprise solutions applications and processes than companiesin other industries. Future technology investments are focusedupon automated data entry, with 91 percent of the organizationsindicating they plan to experiment with these technologies.

Government

Twenty-nine government organizations were included in thesurvey. Government was the last industry sector to implemententerprise solutions and the most likely to have the leastextensive enterprise solutions implementations. But governmentorganizations have installed more human resources functionalitythan other industry sectors. They also lead in implementingmanagement reporting and metrics. Government organizationshave been slow to integrate or optimize enterprise solutions.However, they are considerably more likely to employ businessprocess outsourcing and joint ventures as a tactic to buildcapability and realize value.

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We interviewed 163 senior executives from large organizationsrepresenting a wide range of industries and the public sector inAustralia, France, Germany, Spain, the United Kingdom and theUnited States.

Appendix figure 16: Geographies represented

While executives worldwide were fairly consistent in theirperspectives, a few significant variations emerged between theUnited States and Europe. This appendix summarizes some of thekey differences we found.

Benefits targeted and achieved

There was little variation between European and USorganizations in the degree of overall benefits achieved.

Appendix figure 17: Realization of targeted enterprise solutions benefits

However, priorities for top benefits differed between the UnitedStates and Europe. US organizations were more likely to indicatethat their most desired benefits were customer service andretention, improved cycle time and improved inventory and assetmanagement. European companies, in contrast, placed asignificantly higher priority on gaining ease of expansion/growthand increased flexibility, improved logistics and fewer physicalresources and improved financial management.

Geographic variation in the survey findings

Australia

United States

Spain

France UK

Germany

Europe:

35%

14%18%

12%

15%

6%

United States Europe

Majority of targeted benefits realized

All targeted benefits realized 4%

41%

32%

20%

3%

3%

32%

44%

21%

0%

About half of the targeted benefits realized

Small number of targeted benefits realized

None of the targeted benefits realized

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48

Appendix figure 18: Key benefits targeted by enterprise solutions

3%

6%

4%

4%

13%

13%

4%

7%

4%

11%

8%

6%

21%

17%

16%

15%

23%

24%

8%

2%

8%

7%

8%

9%

5%

16%

8%

14%

7%

14%

18%

12%

15%

15%

4%

11%

15%

3%

13%

7%

3%

13%

6%

11%

13%

11%

12%

11%

14%

7%

7%

15%

15%

13%

15%

11%

2%

2% 7%

2%

Benter management decision making

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

United States

Europe

Improved financial management

Improved customer service and retention

Ease of expansion/growth and increased flexibility

Faster, more accurate transactions

Headcount reduction

Cycle time reduction

Improved inventory and asset management

Fewer physical resources and improved logistics

Increased revenue

First priority Second priority Third priority

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49

In general, US organizations achieved more benefits related toimproving customer service and retention and reducingheadcount than did European companies. European organizationswere more likely to improve their ability to expand and growthan those in the United States.

Appendix figure 19: Benefits achieved by organizations

Prerequisites

Time

European organizations began implementing enterprise solutionsearlier than those in the United States.

Appendix figure 20: Year the first enterprise solutions modulewas implemented

Spending on enterprise solutions

To date, mean investment in enterprise solutions is slightlyhigher for European companies at US $63 million than for thosein the United States at US $43 million.

Appendix figure 21: Spending on enterprise solutions over the past five years

United States Europe

39%

35%

43%

56%

53%

62%

57%

62%

68%

73%

37%

47%

58%

51%

60%

44%

61%

61%

67%

63%Improved financial management

Faster, more accurate transactions

Better management decision making

Improved inventory and asset management

Ease of expansion/growth and increased flexibility

Fewer physical resources and improved logistics

Cycle time reduction

Improved customer service and retention

Headcount reduction

Increased revenue

United States Europe

13%

20%

30%

37%

9%

20%

45%

26%1995 or earlier

1996-1998

1999-2000

2001 or later

United States Europe

15%

12%

32%

42%

7%

14%

38%

40%Less than $10m

$10m-$50m

$50-$100m

$100m or more

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50

Functionality

No matter where they are located, most organizations haveinstalled more finance functionality than anything else, followedby supply chain and human resources functionality. There aresome significant differences geographically, however, withEurope further ahead in implementing financial applications, andthe United States leading in human resources, managementreporting and metrics, planning and analysis, performancemanagement and product development.

Appendix figure 22: Percent of enterprise solutions functionality currently implemented

In addition, there are some differences by geography regardinghow much more additional functionality organizations plan toinstall in the next two years. European companies plan oninstalling more management reporting and metrics and customerrelationship management, whereas US companies plan oninstalling more finance, supply chain, planning and analysis andproduct development.

Appendix figure 23: Percent of additional functionality organizations plan on implementing in the next two years

United States Europe

19%

19%

23%

33%

34%

37%

45%

43%

85%

21%

27%

33%

43%

44%

40%

46%

47%

78%Finance

Human resources

Supply chain

Sales and marketing

Management reporting and metrics

Planning and analysis

Performance management

Product development

Customer relationship management

United States Europe

1%

4%

9%

10%

11%

12%

14%

20%

26%

5%

7%

10%

13%

14%

13%

11%

19%

22%Customer relationship management

Human resources

Management reporting and metrics

Performance management

Planning and analysis

Supply chain

Sales and marketing

Product development

Finance

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Integrating enterprise solutions

The majority of organizations have five or less enterprisesolutions instances installed. However, there is considerablevariation in the number of instances organizations maintain.

Appendix figure 24: Number of enterprise solutions instances

Organizations also have made significant progress towardintegrating enterprise solutions applications and processes, withEuropean organizations making more progress than those in theUnited States.

Appendix figure 25: Integration of enterprise solutions

United States Europe

15%

16%

5%

31%

33%

4%

4%

14%

58%

22%1 instance

2 – 5 instances

6 – 9 instances

10 – 20 instances

More than 20 instances

Mean instances installed: United States – 4.9Europe – 7.8

Mean instances installed: United States – 4.9Europe – 7.8

United States Europe

19%

43%

22%

12%

4%

18%

35%

23%

14%

11%Numerous disconnected applications and instances— no integration

Many disconnected applications and instances—just started the integration process

Have made some progress towards integrating applications and instances

Most processes and applications are integrated

Have a single, global enterprise solutions instance and have fully integrated all applications

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Optimizing enterprise solutions

A vast majority of large organizations have attempted to optimizetheir business processes to improve the fit with the enterprisesolutions applications that support these processes. Europeanorganizations have made more progress than their US counterparts.

Appendix figure 26: Optimization of enterprise solutions

Informating enterprise solutions

Support of data analysis from analytical tools is not veryadvanced. US organizations, however, have made more progressin developing analytic capabilities than European organizations.

Appendix figure 27: Ability of employees to access and analyze enterprise solutions data to support their work

United States Europe

1%

46%

39%

13%

2%

5%

30%

30%

33%

2%

No effort to optimize processes

Moderate amount of adaptation and optimization of business processes

Significant ongoing optimization efforts requiring fundamental business process change and modifications to the enterprise solutions implementation

Radical restructuring of business processes and business model requires a new implementation of enterprise solutions

Some limited adaptation of business processes to match enterprise solutions’ capabilities

United States Europe

2%

23%

25%

34%

16%

21%

14%

32%

26%

7%Very little access to data and no analytic capabilities

Tools allow end user access and creation of ad hoc reports. The organization has a centralized data warehouse

Some analytic functionality in addition to a data warehouse

Significant decision support or analytic functionality, supported by extensively integrated management information

Extensive use of analytics. Sophisticated automated decision making supplements human decision making

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Approaches in developing and managingenterprise solutions

A significant proportion of organizations are using advancedapproaches for developing and managing enterprise solutions.The most popular are shared service centers, enterpriseapplication integration (EAI) software tools and the outsourcingof enterprise solutions applications management. WhereasEuropean organizations seem to favor more outsourcing ofenterprise solutions software application management, USorganizations seem to favor more use of EAI, joint ventures withother companies to share common functions and software, andoffshore software development to take advantage of lessexpensive labor rates.

Appendix figure 28: Enterprise solutions approaches used

Planned future enterprise solutions informationtechnology initiatives

Over the next two years, organizations are planning toexperiment with a number of new technologies, the mostpopular being Web services and portals. US organizations areslightly more likely to experiment with new technologies such asradio frequency identification tags (RFID). However, Europeanorganizations are more likely to plan to enhance their analyticalcapabilities through the introduction of advanced analytic tools.

Appendix figure 29: Emerging technologies organizations planto experiment with in the next two years

United States Europe

10%

30%

29%

45%

42%

67%

22%

33%

41%

35%

53%

67%

Enterprise application integration (EAI) or other integration technologies

Information technology outsourcing of enterprise solutions software application management

Joint venture with other companies to share common functions and software

Outsourcing of enterprise solutions applications and business processes

Offshore development—development in low labor cost countries or overseas development

Centralized shared service centers for business units or the entire organization

United States Europe

0%

21%

52%

71%

78%

82%

88%

2%

39%

48%

73%

80%

82%

88%

Portals

Automated data entry

Mobile computing or wireless technology

Radio frequency identification (RFID)

None of the above

Web services

Advanced analytics

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