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Copyright © 2006 Accenture All Rights Reserved. Accenture, its logo, and Accenture High Performance Delivered are trademarks of Accenture.
New Growth From Enterprise SystemsAchieving High Performance through Distinctive Capabilities
Jeanne G. HarrisDirector of [email protected]
3Copyright © 2006 Accenture All Rights Reserved.
Enterprise Systems and Value Creation
• Enterprise systems are the second most important technology of the last decade (after the Internet)
• Immense investment (time, money and attention) by businesses
• Previous Accenture Institute research (2002): How do companies maximize the value of their investment in enterprise solutions?
–Implementing an enterprise system results in sustained value creation
–Some organizations realize far more benefits than their less successful counterparts
3
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The 2005/2006 Accenture ES Study
• What’s changed since 2002 with firms that have adopted enterprise systems?
• Are the factors that drove value then still driving it today?
• Are enterprise systems enhancing competitiveness and distinctive capabilities?
• How important are business analytics to achieving value?
450 executives from 370+ organizations in 35 countries and 19 industries surveyed to find out:
Key Questions
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Nineteen executives from five countries responded to the survey from Latin America. This represents 5% of the sample.
Countries represented:• Argentina• Brazil• Mexico• Puerto Rico• Venezuela
Latin American Participation
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Key Findings
• Investing resources (time, money, skilled people and technology) to implement their enterprise system is merely a first step and does not guarantee results.
• There are clear winners and losers – some companies get considerably more value from their enterprise systems than others – and there is more opportunity for everyone.
• While some view enterprise systems as a commodity, more than half view their ES as a significant contributor to their distinctive capability.
• Better decision making remains the most-sought benefit and also the one most likely to have been realized.
• Organizations that get more value from their systems and use them for competitive distinction have superior financial performance.
• Analytical technologies and capabilities are particularly important to achieving value and high performance.
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Top Performing Companies …
1. Realize much more value from their systems and use them in distinctly different ways.
2. Likely to seek and measure tangible benefits, such as reduced cost and increased revenue.
3. Emphasis on integrating, optimizing and using analytics to drive improved business performance.
4. Extend systems throughout their organization and implement across a range of functions.
5. Integrate the organization and external systems of customers and suppliers.
6. Aggressively use information and analytics to improve decision making.
7. Use strategically for competitive differentiation.
8. Tailor systems to sustain competitive advantage and standardize other areas.
9. More likely to implement industry modules.
10. Twice as likely to take advantage of SOA.
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The Value Model Still Holds
Invest in enterprise systems
Implement extensively
Experience using enterprise systems
Integrate
Optimize
Analyze
Benefits realized
Prerequisites Value Drivers
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The Same Benefits Are Still Being Sought
…but just half of organizations have achieved most or all of these benefits
Better management decision making
Improved financial management
Faster, more accurate transactions
Cost reductionImproved inventory and asset management
Ease of expansion/growth and increased flexibility
Cycle time reduction
Headcount reduction
Improved customer service and retentionCompetitive advantage through distinctive capabilitiesFewer physical resources and improved logistics
Increased revenue 4%
7%
12%
17%
17%
22%
24%
24%
33%
41%
53%
46%
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Companies Are Integrating More Internally
Piloted in a single business unit but not rolled out
Implemented in a single business unit only
Implemented in about half of the organization
Implemented in most functions and business units
Implemented throughout entire organization
1%
7%
12%
30%
50%
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Companies Are Integrating More With Customers and Suppliers
Customer Linkages Supplier Linkages
2002
200617%
24%
12%
15%
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Companies Are Optimizing Processes and Customizing Systems More
Optimizing Processes Customizing Systems
20022006
75%
85%
45%
55%
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Use of Analytics Is Up Too
12%
4%
33%
22%
27%
36%
19%
33%
9%
5%
2002
2006
Very little access to data and no analytic capabilities
Data warehouse ad-hoc report writers, query and end-user access tools
Some analytic functionality in addition to data warehouse
Significant decision support or analytic functionality, supported by extensive and integrated management information
Extensive use of real-time analytics, sophisticated automated decision making to supplement human decision making
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The Ability to Analyze ES Data Is a Key Differentiator
15% of top performers versus 3% of low performers indicated that analytical capabilities are a key element of their strategy.
2002
2006
No analytical capability
Minimal analytical capability
Some analytical capability
Above average analytical capability
Analytic capability is a key element of
strategy
12%
0%
33%
8%
27%
37%
19%
47%
9%10%
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High Performers Use Analytics
65 % have significant decision-support/analytical capabilities 23 %
36 value analytical insights to a very large extent 8
77 have above average analytical capability within industry 33
77 have Business Intell/Data Warehouse modules installed 62
73 make decisions based on ES data and analysis 51
40 use analytics across their entire organization 23
High LowPerformers Performers
Top performers have a greater analytical orientation than low performers.
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The Word Is Out!
• Each of the factors that drive value from an enterprise system is up over the last three years– Integration–Optimization–Analysis
• Not surprisingly, the level of value achieved is also up
• But there are still substantial opportunities for improvement
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ESs Don’t Have to Be a Commodity!
Question: To what degree does your enterprise system contribute to your organization’s distinctive capabilities?
Not at all Slightly Somewhat Substantially To a very large extent
1%
8%
38%
42%
11%
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Many Companies Have Distinctive ESs
Not distinctive Only slight differences
versus other companies in the industry
Moderately different from the rest of the
industry
Somewhat distinctive—
capabilities or functionality not used elsewhere
in industry
Very distinctive—significant
capabilities or functionality not used elsewhere
in industry
4%
13%
29%
39%
15%
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What’s Distinctive Today?
Integrated critical processes
Accurate planning
Analytics for decision making
Monitoring and measuring progress against aggressive or stretch goalsInvesting resources in alignment with strategic objectives
Enabling flexibility to adapt change
Using IT as a strategic asset
Understanding how the organization creates value
Insight into customers
Disciplined project management
Creating new products or services
Not at all Slightly Somewhat Substantially To a very large extent
3% 7% 23% 36%
5% 12% 37% 33% 14%
2% 10% 29% 44% 15%
9% 17% 34% 27% 12%
10% 24% 34% 21% 11%
6% 20% 31% 28% 14%
6% 17% 28% 30% 19%
13% 16% 40% 24% 8%
13% 16% 40% 24% 8%
14% 22% 32% 24% 8%
16% 24% 33% 5%22%
Numbers do not equal 100% due to rounding
30%
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What’s Coming That’s Distinctive?
By optimizing business processes and fit with enterprise systems
Through new technology such as Web services, mobile services, etc.
By adding more enterprise systems applications
By integrating best of breed applications
By customizing existing applications
No plans to add distinctive capabilities
60%
57%
44%
30%
22%
5%
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What’s Coming in New ES Capability?
CRM BI/DW SRM HR PLM
29% 29%
21%
15%
Percent planning in two years
36%
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What Technologies Are Being Used Today?
0
10
20
30
40
50
60
70
EAI WS MDW SOA Comp.
% currently usingtechnology
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Future plans: Technologies to Augment ES in Next Year
14%
28 %
26 %
14%
30 %
34 %
40 %
27 %
13 %
33 %
Service-orientedarchitecture (SOA)
Web service
Integration technologies(e.g., EAI, EDI)
Other
None of the above
Low Performers
High Performers
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Lessons from Current Practice
•Companies are constantly changing their overall ES environments, and still squeezing more value from them
•For more value, work on: –Integration and consolidation–Optimization of the fit between your ES and your processes
–Analytics and fact-based decision-making•Pursue the technologies that make those goals possible