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Monday, November 29, 2010

ENTERPRISE ENGINEERING

"Enterprise Engineering" is a term we coined in 1988 to reflect the third and final part of our concept of Information Resource Management (IRM) representing a triad of methodologies to design, develop, and control all of the resources needed to support the information requirements of an enterprise, be it a commercial or nonprofit endeavor. Earlier we had produced organized methodologies for "Information Systems Engineering" and "Data Base Engineering," but now our attention turned to producing an Enterprise Information Strategy, a plan for satisfying an enterprise's information requirements based on business priorities.
We used the term "engineering" in all three of our methodologies to emphasize they possessed a solid conceptual foundation derived from engineering and, as such, could be applied and taught as a science. The three methodologies are complementary; whereas "Information Systems Engineering" was primarily implemented by Systems Analysts and Programmers, "Data Base Engineering" was implemented by Data Analysts, DBA's, and Data Communications personnel. When we introduced "Enterprise Engineering" we invented the position of "Enterprise Engineer" to describe the type of person who would execute the methodology. What we described as "Enterprise Engineer" then is perhaps best exemplified by what is today called a "Business Analyst."
Among the innovations we introduced with the "PRIDE"-Enterprise Engineering Methodology (EEM), were two techniques we called "Enterprise Decomposition," and "Priority Modeling." As to the former, companies were all familiar with drawing hierarchical organization charts depicting administrative reporting relationships. Such graphics represent physical relationships which tended to be rather volatile in nature. For example, it is not unusual for organization charts to change from one moment to the next. We also realized jobs are created to implement certain business functions, such as sales, customer service, manufacturing, etc. Business functions are much less dynamic than jobs and personnel relationships. Wanting to invent a stable model of the business, we devised the Enterprise Decomposition technique which basically said within any enterprise, there are three fundamental functions, "Produce Income" (which is typically referred to as "Marketing"), "Administer Resources" (such as human, financial, and equipment resources, etc.), and "Produce Product/Service" (representing the outcome of the business, be it Manufacturing and/or a particular service"). With these high-level functions defined, we subdivided them into a three level hierarchy. Level-1 represents the fundamental "Operations" of the business; Level-2 is a "Control" level to oversee operations and implement executive directives, and; Level-3 was the highest level where "Policy" decisions are made.
This simple "three-across and three-down" approach resulted in a hierarchy of logical business functions representing a stable model of the business. We tried this on several types of businesses and found it to be an effective approach for modeling an enterprise. We also discovered that companies with the same business mission were identical in terms of the logical business functions to be performed. For example, all automotive manufacturers were essentially the same, as were life insurance companies, banks, etc. The difference between companies of the same sort was physically how they were organized and the effectiveness of their information systems. Nonetheless, this resulted in a template approach for modeling businesses.
The second unique technique we introduced in "PRIDE"-EEM was "Priority Modeling." At the time, one of the most fundamental flaws in planning was that plans were inflexible. After agonizing over the formulation of project plans, companies were hesitant to change them even though business conditions were changing due to such things as competition, economics, government regulations, and changing technology. No sooner were massive monolithic systems plans produced, they were already obsolete. This meant a company's information systems were never synchronized with changing business conditions. It also explains why so many systems projects were simply abandoned as opposed to completed.
Using our logical business model, we defined the objects needed to run the business, be it something as tangible as a product, a part, an employee, etc., or as intangible as an event, such as a customer order, a shipment, or a billing. From this, we could define the information requirements needed to support each business function. Requirements were then grouped together into business objectives based on commonality. Business objectives were then grouped into projects. Using a weighting technique based on the value of the information requirements, we devised a means to calculate the priority rankings of business objectives which, in turn, drove the priority rankings of projects. If a business objective's value changed, we could easily recalculate the priorities of all objectives and projects. This shuffling of priorities allowed executives and business analysts to play "what if" scenarios of corporate priorities, hence the expression "Priority Modeling."
In addition to "Enterprise Decomposition" and "Priority Modeling," "PRIDE"-EEM provided several byproducts, such as an organization analysis based on a comparison of the physical organization against the logical, defining the corporate culture, and producing a skills inventory.
"PRIDE"-EEM introduced a new and innovative way of looking at the enterprise, the objects and information requirements needed to run it, and provided a handy way of formulating an enterprise-wide information strategy under changing business conditions. As such, it is based on a simple concept, "If anything in life is constant, it is change."
The concepts and terminology used in "PRIDE"-EEM are pragmatic and straightforward and, as such, can be easily taught to others. For more information, see:
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Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com
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