Crossing the big divide between strategy and operations

Image: How to hit a moving target An information mediation layer is the key to operationalizing agility and bridging the gap between strategy and operations.



Download Technology Forecast: Winter 09 for the complete article

To meet the demand for their products, most large original equipment manufacturers (oems) rely on extended global supply chains that have thousands of trading partners. inventory shortages, delays, forecast-commit mismatches, and other operational changes are common and usually cause havoc. Many enterprises manage such disruptions with standalone exception processes. implementing sudden changes throughout the operational systems can consume days or months, becoming an obstacle to achieving agility in an ever-changing business environment.

In contrast, imagine a service that enables customers to achieve a high level of agility by seamlessly incorporating sudden changes into an overall supply chain process. This service facilitates operations among trading partners by aggregating data and information and by providing shared visibility across extended supply chains. by using the information hub the service provides, customers and their partners can use standardized operational applications to run supply chain processes and can tap into business management applications to support functions that handle changes in operations. The hub enables information mediation by aggregating data from internal and external sources, by making it available for analysis, and by connecting the operational applications and business management applications. (see figure 1.)


Chart: The price of oil, 1987–2008

Figure 1: The agility-oriented enterprise application environment and how E2open’s supply chain service fits in.

 


This supply chain service exemplifies the importance of information mediation in bridging the divide that exists between operational applications and business management applications. Bridging this divide is essential to achieving agility. Specifically, information mediation is the key to creating a process that makes an enduring and responsive connection between strategy and operations so changes in one are reflected in the other. PwC calls this operationalizing agility.

The service in the example just described is E2open. And we single it out for the sake of illustrating and emphasizing the role of information mediation in achieving operational agility. As E2open suggests, information mediation enables a clear separation of duties between applications that support standard operations and those that require flexibility to handle changes. It resolves semantic differences between data and information used by all applications. It gives managers real-time shared visibility to aid timely decision making. And it enables operational connections between operational and business management applications to keep them in sync. These mediation features provide the balance needed in the pursuit of agility.

In this issue of the Technology Forecast, PwC advocates a new model for the enterprise application environment to achieve agility. The model illustrated in Figure 2 comprises three distinct layers:

  • Operational applications to provide standardization
  • Business management applications to provide flexibility
  • Information mediation to facilitate the connection between them

In this model, operational applications designed for efficiency are insulated from needing to be changed frequently. Business management applications are flexible and easier to change; they support collaboration, analysis, and decision support. To achieve agility, an organization must have the proper combination of standardization and flexibility.

In this article

  • The big divide
  • Information mediation for operationalizing agility
  • Understanding the big divide
  • Operationalizing agility: Bridging the big divide
  • Conclusion