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| Chapter 1: The Extended Enterprise |
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Extreme business-cycle volatility is norm in today's economy. The pace of
business change has been accelerating over the past few years. Businesses have
to deal with an array of business change forces. There is no way to insure your
business against change. The way to insure and hedge your business against
change is to change constantly. Businesses must change in order to prosper.
Changes in government policy, global economy, rules & regulations, corporate
mergers and acquisitions, demographics, competition and technology are some of
the forces that force business to be Agile. Business Change Here are some real time examples of Business Change happening today. Below factors will make it clear that the rate of business change is accelerating and it is happening now. Government Policy and Rules & Regulation The Federal Sarbanes-Oxley Act of 2002 known as SOX establishes rules effecting corporate governance, financial disclosure, and the practice of public accounting .Companies have to comply with SOX thus making changes to existing business processes and gaining visibility into their business practices .Most enterprises do not have complete visibility into their business processes. As a result they are struggling to comply with Sarbanes-Oxley Act and spending huge amount of resources on -- Documenting and updating changes to the Company's existing business, accounting and financial reporting processes -- Identify existing control points in the Company's processes, as well as "control gaps" requiring remediation ...... ...... Customers There has been a shift in the balance of power away from the companies and towards the customer. Thanks to the internet customers have become more demanding to a point of being ruthless. Changing customer demands and habits are reshaping entire industries .... In today's business environment one company cannot produce everything needed for the end product. Suppliers, partners, customers are involved in the value chain. We are talking about the "Extended Enterprise". The driver or the central nervous system of the extended enterprise is the business process. ..... The Process is the Enterprise Business conditions are changing at a rapid pace. Working in the same business conditions -some companies continue to thrive while others get caught in the tsunami wave of business change and struggle for survival. What differentiates them is the way these companies get the job done- that is the called the business process Business Values Companies need to manage their business processes in the ever changing landscape of the business. Companies need the process mindset, organization structure, process culture, tools and technologies to manage their business processes in the face of market changes happening now. Table 1.1 is a list of attributes needed by an enterprise today. All the previous initiatives like TQM (Total Quality Management), BPR (Business Process Re-engineering) and Six Sigma have one message in common "Business processes are key and managing the business process is vital to the health of the enterprise". ... IBM, Dell, Gateway, HP and Compaq are all in the PC business. Dell continues to prosper and the rest are struggling in their personal computer businesses. The only differentiator between these companies is the direct model business process of Dell. IBM recently sold off its personal computer business to a firm based in China named Lenovo. HP acquired Compaq and Gateway is struggling with loses. It is pretty clear that the business process is the differentiator here. All these firms could not copy Dell's business process. I would safely and with confidence say that in today's information age and knowledge based economy "Process is the Enterprise". Dell has continuously improved its direct model business process from a cost, efficiency and quality standpoint. Dell is an example of a great "process managed enterprise". Excellence in process management enables companies to execute business strategies on time. ... ... |
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