Case Study: Integration Methodology in a Decentralized Enterprise
Global Consumer Products Company
We often hear IT leaders say, “We can’t adopt a centralized integration methodology in our company—our business units are highly independent and won’t accept a standard method that is dictated by head office. It just won’t work in our culture.”
The following case study challenges this perceptual roadblock by looking at how a global consumer products company, in a highly diversified culture with strongly independent operating groups, was able to adopt a standard integration methodology.
The enterprise we looked at is a 60-year-old consumer products company with over 100,000 employees worldwide. The company operates in 46 countries and 30 languages and prides itself on being successful by using a highly decentralized management structure where each of the 80-plus business units has a high degree of autonomy. The company’s tremendous growth is attributed to its culture of “acting locally” while still being part of a global brand and striving to optimize the enterprise overall. The “glue” that keeps all these independent groups aligned is a set of management principles that have become part of the day-to-day culture of the company.
Despite the high degree of success that the company realized through its decentralization strategy, challenges began to emerge in the 1990s and became increasingly difficult after the turn of the century. Globalization combined with organic growth and acquisitions created an ever-increasing need for collaboration of business processes, applications, and data sharing across multiple operating companies. IT and business alignment was key to enabling and sustaining continued growth. Global visibility of information was becoming increasingly important for growth, quality, and cost effectiveness. In 2002 the company decided to implement an ICC to enable business units to continue with a successful decentralized management approach while simultaneously improving shared information management.
The Integration Challenge
The charter of the ICC was to create a strategy and platform for integrating business processes and applications. Previously, operating companies developed these services on their own. They were not using a common platform or a common process, and as a result they created systems that could not integrate easily with systems in other operating units. Each operating unit was creating its integration strategies using its own architecture, tools, and data standards. This approach prevented them from leveraging enterprise solutions deployed at other operating units and minimized knowledge sharing. The results were high maintenance costs and many disparate applications and business processes across the enterprise. There was often duplication of efforts that prevented the business from working efficiently.
The Solution: ICC and TPI
The ICC team strategy included the development of a global architecture and an integration methodology—total process integration or TPI for short. It served as a framework to allow the operating units to connect with each other and with their external business partners using a common approach. As a result, the separate units were better able to integrate information and use common processes and tools. The role of the ICC group was to provide services and support in the following areas:
- Global coordination and strategic planning
- Design consulting and consistency in the use of integration standards
- Centralized repository management
- Comprehensive education and training
- Production management and performance monitoring
- Deployment of flexible and open integration tools
The ICC was launched to develop a culture of sharing resources, solutions, and methodologies—including infrastructure and tools—to be leveraged across the enterprise.
The TPI methodology was a business-process-oriented approach used during the integration life cycle. It is a top-down approach that addresses the specific integration needs of the entire enterprise, not just individual applications or operating companies. The methodology uses standards, a process orientation, a common design approach, templates, and a philosophy of reuse to ensure an efficient and successful integration, and it covers the entire integration life cycle from project initiation to deployment.
As a result, the separate companies are better able to integrate information and use common processes and tools. Relying on an integration platform, the company has leveraged the TPI methodology in numerous projects to recognize substantial benefits that impact the bottom line.
Example: Procure to Pay
One of the early ICC successes was the “Procure to Pay” project, which benefited from the TPI methodology. The objective was to build reusable interfaces that integrated affiliate companies’ ERP systems with the corporate procure-to-pay system. The ICC team fostered communications across multiple organizational levels and multiple operating companies to build a consensus around the objectives, strategy, and goals for the integrated solution as well as to build support for the adoption of the TPI methodology.
Sessions with internal customers (users) identified business process commonality and differences across business sectors. The TPI methodology guided the project’s implementation. The project was deployed in the first year and made a powerful impact on end-to-end business operations. Information was orchestrated between Ariba (a web-based procurement system) and multiple ERP instances (60 of them) using a standard integration platform.
The ICC and the TPI methodology made three important contributions to the company’s business: reduced costs, better decisions, and improved governance.
The ICC and TPI shared infrastructure generated cost avoidance savings of over $8 million in the first year, including
- $2 million saved from hardware consolidation
- $2.6 million saved from standardization on an integration platform
- $500,000 saved on shared education and training initiatives
- $3 million saved on shared code components, architecture, and design
Quality decisions depend on access to the right information at the right time. Highly decentralized organizations need to be able to share information and communicate easily between operating units and with external business partners. TPI supported this objective by leveraging consistent and accepted data definitions. This standardization improved production, manufacturing, inventory planning, and other business functions. As operating units improved communications and process integration, they realized
- Improved production, manufacturing, inventory planning, and other business functions
- Consolidation and elimination of redundant business processes
- Improved quality of data to get closer to “one version of the truth”
In subsequent years, the organization moved from decentralized IT toward common global and regional systems while continuing to support an extremely successful decentralized business model. IT teams were able to overcome the country and business group barriers to implement more enterprise-level applications because of the ICC success. After five years, the enterprise enhanced TPI and adopted it as part of its governance process for SOX, security, and integration. Key Lessons There are many roadblocks to an ICC being accepted and thriving and growing in an organization with a highly decentralized operating model. The ICC in the case study was able to overcome the barriers through the following key attributes:
- The TPI methodology served as a rallying point for IT and business staff. The ICC followed an open process to gain input from disparate groups to enhance the methods, tools, and templates. It also put a significant amount of effort into internal marketing to build awareness and support for TPI.
- There was persistent leadership in the ICC group. There were many issues that the ICC needed to overcome; if it weren’t for the determination of two key individuals in the group, the barriers would not have been overcome. The individuals were not “superstars”; they simply had a clear vision for the company and were determined to realize it.
- Frequent communications celebrated success. The internal marketing of successful projects made use of concrete measurable results, not just qualitative statements.
- There was bottom-up versus top-down support. The ICC did have senior management support, but it operated day to day in a way that built bottom-up support from staff across the organization.