Monday Jan 13, 2014

Business Value vs. ROI

Author: Rick Beers


Rick Beers is Senior Director of Product Management for Oracle Fusion Middleware. Prior to joining Oracle, Rick held a variety of executive operational positions at Corning, Inc. and Bausch & Lomb.

With a professional background that includes senior management positions in manufacturing, supply chain and information technology, Rick brings a unique set of experiences to cover the impact that technology can have on business models, processes and organizations. Rick will be hosting the IT Leader Editorial on a regular basis.

I still remember a conversation that changed the way I looked at enterprise systems as if it occurred last week, even though it was 17 years ago.

I was on the balcony of a convention style resort in Phoenix during an annual conference held by a large manufacturing technology research organization. I had recently been given responsibility for the supply chain technology portion of a global ERP program and was at the conference to learn more of an emerging (and at the time heavily hyped) technology known as Advanced Planning and Scheduling (APS). Systems such as PeopleSoft’s newly acquired Red Pepper and SAP’s APO were promising to replace the manual processes at the core of existing supply chain planning systems with automated modeling, detection and response technology. I was easily convinced. It was sexy, compelling and carried with it ROI’s in excess of 30%.

While at the conference I was pulled aside after dinner by a marketing executive at the research organization after he heard me in a panel discussion extolling the promise of APS. Out on the balcony, over a glass of wine, he advised “Be careful. Just because you have a system to tell you what to do doesn’t mean that you should do it, or even can in the first place. Your legacy manufacturing equipment and business processes must change to keep pace with the shorter run lengths and more frequent changeovers that the system will require.” This one piece of advice opened my eyes to three dynamics that have stayed with me ever since, and have guided my recent work with Oracle on AppAdvantage:

  1. That enterprise technology alone is rarely a determinant of value; rather it is the business value that technology enables.

  2. That enterprise technology rarely achieves its potential unless it is harmonized with its business surroundings: people, processes and physical assets.

  3. That the ROI of enterprise technology itself cannot be calculated because it is an enabler of a business outcome, not the outcome itself.

It’s the last one that was the most profound and is an issue still today. Our industry (providers, partners and practitioners) is still in search of quantifiable ROI from enterprise technology. It’s like the search for the Holy Grail: a worthy mission that cannot succeed because its basic premise is flawed.

Instead we should focus on business value. In effect, a contract with business leadership that identifies the outcomes that a technology project will be measured upon and the steps necessary to deliver them. This has five key components:

  • The Project itself described in terms of the business outcome rather that the specific systems involved. This creates a culture of business ownership and the identification of business owners.

  • An agreement on the measurable outcomes that have clear line of sight to the project.

  • An agreement by business owners of the processes that need to change and the investments required in skills and physical assets that the technology will require.

  • Line of sight metrics for both the delivery of the technology and the agreed upon business outcomes.

  • Clear accountability for those outcomes.

Oracle AppAdvantage, and the layered framework that it comprises, has been developed around the delivery of Business Value as opposed to more traditional technology ROI. In particular, its seven Entry Points are designed to facilitate Business Value discussions between IT leaders and Lines of Business leadership. Its visual similarity to a compass is deliberate; it provides directional guidance based upon desired business outcomes.

During February and March we will be conducting Oracle AppAdvantage Executive Roundtables in Asia, the Americas and Europe that will prompt such dialogue amongst the audience. I will discuss these in my blog next month.

Friday Sep 27, 2013

Global Perspective: ACE Director from EMEA Weighs in on AppAdvantage

Global Perspective is a monthly series that brings experiences, business needs and real-world use cases from regions across the globe. This month’s feature showcases a perspective from a well known ACE Director based in EMEA.

Author: Debra Lilley, Fujitsu

In 2008, just 5 years ago, a friend and I were stuck in an elevator in a hotel during Oracle Open World for a fair while, and at the time it caused quite a stir, not because we were in any danger but because we used social media to get attention. This was before anyone knew what social media was and the term used then was web 2.0. We became the OOW poster children for web 2.0 and came 3rd in Top Five Things you missed at OOW. The first was the HP / Oracle database machine, and we came just behind Beehive! How things have changed!

Looking at any technology we use today it is amazing how quickly things develop and yet, I always think, the uptake of technology in my world, Applications, takes so long. About the same as the web2.0 episode, I was as a user group leader trying to get applications users to understand the value of Oracle Fusion Middleware (FMW). I ran a group called the Product Development Committee of the International Oracle Users Community and we wanted to get the message out that the technology behind Fusion Applications being developed at the time was available already. Oracle had a group named FMW4Apps who had a similar remit and we worked together to find examples of Applications customers who had adopted them. Out of this initiative came the Oracle Excellence Awards but I found that when talking to users the feedback was that these examples were the biggest customers who had enormous projects and not really very representative of most users.

Then I attended a SOA Partner Community event in The Netherlands where Dr Andrew Sutherland, SVP for Middleware EMEA, and one of my favourite Oracle executives, gave a presentation on customer adoption of FMW. Most people who attended the event remembered the app he used to draw on his iPad and the world’s worst iceberg which appeared on the screen behind him. But, what resonated with me was that he was giving an explanation to what I was seeing. He talked about there being 3 strategies for adoption:

  • Standardization of Mid Tier Architectures
  • Rationalization of Integration
  • Extending value of packaged Applications

Those projects wining awards tend to be in the last category but, at that time - early 2010, most were in the first two categories and, to be blunt, not very exciting to a marketer.

I kept thinking about this and wanting to prove it, I thought I would do something for Oracle Open World (OOW) that year. The first thing you have to do when submitting a paper for OOW is come up with a good title. A technical friend of mine suggested that anything with the number 42 would be good. So, I submitted an abstract with the title ’42 Real Life Examples of Fusion Middleware with Applications’, and she was right! It got accepted. So now, all I had to do was find 42 examples!

By this time I had just been asked to be an ACE Director and was quite in awe of all these really technical people and worried about how I would be received by them. These people were the experts in technology. So, I put together a questionnaire asking for examples and without exception everyone I asked said their projects were not really exciting, which proved my point. So I spoke to the group as a whole, explained my theory and asked them to submit their examples. I then wrote a white paper giving all the examples and got accepted by the group.

Giving the presentation was a big challenge initially. How could I cover 42 examples in 60 minutes? But in case you haven’t realised, the number 42 is from “The Hitch-Hikers Guide to the Galaxy” by Douglas Adams. "Forty-two," said Deep Thought, with infinite majesty and calm, "The Answer to the Great Question, of Life, the Universe and Everything". And another friend said just present on that, so I talked about 3 case studies: Life or Life Sciences was based on ALMAC a pharmaceutical company, the Universe was CERN and, Everything was a Public Sector Shared Service.

I gave that paper at many a user group events around the world and real examples made more of a connection with the Applications communities, but over the last few years, FMW has become more mainstream and as I am often quoted “Fusion Applications are a window on FMW” so I am not sure the examples in my white paper are as relevant today. I have thought about repeating the questionnaire but apart from being an updated paper what would be the motivation? Then I was approached along with Mark by a team within Oracle with a new program charter called Oracle AppAdvantage, to discuss how we could work with them

“Oracle AppAdvantage is the incremental value gained by Oracle Applications customers leveraging Oracle Fusion Middleware” - exactly the area I am so passionate about, and the perfect excuse to re-run the questionnaire. The team, Mark and I will be talking to the ACE Directors during this year’s OOW and then collecting the new set of examples. Some, I hop,e will be the same organisations and how they have moved forward since and others will be new. Then, not only will we share the new white paper with this blog but showcase a few of the case studies and hopefully present again at events around the globe.

And, if you have an example I should be including, let me know.

About the Author:

Debra Lilley, Fujitsu Fusion Champion, UKOUG Board Member, Fusion User Experience Advocate and ACE Director.

Debra has 18 years experience with Oracle Applications, with E Business Suite since 9.4.1, moving to Business Intelligence Team Leader and then Oracle Alliance Director. She has spoken at over 100 conferences worldwide and posts at debrasoraclethoughts

Editor's Note: Debra has kindly agreed to share her musings and experiences in a monthly column on the Fusion Middleware blog so do stay tuned…

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