business model consulting the service providing an ... contrast to nec’s three cloud-orientation...

Business Model ConsultingKIKUCHI Noriko, OKU Kazuya, KURATA Yoji

AbstractIn order to deal effectively with changes in the business environment, a review of the management mechanism it-self is necessary. A solution to this issue might be to promote “standardization of the business process and of IT”and to optimize the management system by means of “IT, without owing it.” This paper introduces a service forachieving this solution called the “Business Model Consulting Service.” This is a compilation of our experience withNEC’s own management system technique reforms, and its application to the “cloud-oriented accounting service” bywhich the global accounting system environment built by NEC can be shared with users.

Keywords

standardization, IT, without owing it, BPR, BPM, total optimizationcode standardization, global rollout

1. Introduction

Following the globalization of markets and competitive en-vironments, diversification of customer needs and accelera-tion of the global standardization of accounting procedures,etc., the environments surrounding enterprises are changingrapidly. On the other hand, enterprises are often in the posi-tion that their current business processes and IT infrastruc-tures cannot deal with such changes and they thereby find ithard to effectively support their internal company manage-ment systems. Examples of this would be the cases of facingup to issues such as reduced flexibility due to the use of in-creasingly complex business processes and their systems, de-terioration in efficiency due to partial optimization peroperation or per region, and as a result of enhancements to in-ternal governance procedures.

The requisite orientation of reform for overcoming these is-sues may be to standardize the business processes, rules and ITsystems that have tended to vary between businesses as sim-ply as possible and to establish a suitable platform to supportongoing improvements. With regard to IT, it may also be nec-essary to use it as a service to enable reductions in systemintroduction/administration costs and to focus on core compe-tence with the help of “IT, without owing it.”

At NEC, we have collected the experiences of our own man-agement system reforms into techniques for advancing thestandardization of businesses and the global deployment of re-forms and we are able to provide these as the Business Model

Consulting service (BMC service) ( Fig. 1 ). In addition, wehave also applied the BMC technique to the business account-ing area and have developed the “cloud-oriented accountingservice,” which is provided jointly with the system environ-ment.

2. Positioning of the Service

In contrast to NEC’s three cloud-orientation service mod-els provided for implementing “IT, without owing it” includ-ing the customized, consortium center and SaaS models, theBMC service realizes the business process management to en-able customer solutions of management/business issues. TheBMC service standardizes businesses in order to maximize theeffects of the service provided by NEC, and the resulting re-duction of customizations enables rapid system introductionand cost reductions. With the customized model of the cloud-oriented service, we are able to apply BMC to an entire enter-prise group. On the other hand, in the case of the consortiumcenter model service, with which specific multiple enterpri-ses share a system we can examine adjustments of the BMC tobe matched to the consortium center standard model. Thisstrategy enables the speedy implementation of a cloud envi-ronment system.

The service providing an accounting business environmentfor the consortium center model is the “cloud-oriented ac-counting service.” This service assumes an enhancement offunctions per consortium center. With the SaaS model serv-

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Cloud-oriented Service Platform Solutions/Services (consulting, SaaS)

ice by which multiple enterprises uniformly utilize applica-tions prepared in advance, it is required to effectively matchBMC to the standard model. Important effects can be expec-

ted if this model can be applied properly to the target busi-ness area. Fig. 2 shows the business process managementapproach.

Fig. 1 Business Model Consulting service.

Fig. 2 Business process management approach.

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3. Features of the BMC Service

The Business Model Consulting service promotes businessprocess management for the solution of customer manage-ment/business issues. What is important in business processmanagement is to establish a PDCA mechanism to ensure con-tinual BPM (Business Process Management) for realizing aneffective business strategy, without the reforms becoming atransient event. The BMC service establishes a platform ena-bling continual improvements to the business process based onlinkages between the business process and the BPM promo-tion system. It thereby standardizes the business process/rulesand establishes a platform for continual improvement in or-der to implement an overall optimization mechanism that isconsistent from planning of strategy to introducing a demand-ing IT system. The result is a reduction in wasteful coordina-tion and man hours as well as cost reduction and improve-ments in the speeding up of business procedures. Fig. 3 showsthe concept of creating a platform for continual reform.

The three main features of the BMC service are as descri-bed below.

(1)Standardization of Business Processes and Manage-ment Data

The first feature is the standardization of business process-es and management data to be shared among users. In NEC’smanagement system reforms of the sales business, for ex-ample, we standardized more than 100 business processoperations into 22 classifications and succeeded in improv-ing business efficiency and compliance measures as well asin enhancing compliance measures. As our methodology weset techniques for defining the standard process and for ob-taining agreement between organizations and between

Fig. 3 Consistent standardization from strategy to IT, and a platformfor continual improvement.

linked tasks.In a large number of enterprises, the business flow for thesame task varies between sectors and organizations and thishas resulted in delays in business efficiency improvement orin the development of different business systems for eachtask. However, the standardization of business systems, rulesand processes is recognized as a critical management topicin the enhancement of global/group management proce-dures. If the same value chain can be applied regardless ofregion, the cost competitiveness and time differences of re-gions can be connected to business values. In addition, ifoperations can be standardized between different sectors ororganizations, it will lead directly to a concentration of op-erations and improvements in internal governance efficien-cy. From the viewpoint of IT costs, this strategy alsocontributes to TCO reduction by making the system slim-mer and by improving its ease of maintenance.(2)BPM for Establishing Continual ImprovementThe second feature of BMC is that it is based on the con-cept/techniques of BPM of establishing continual improve-ment instead of transient reform. In the context of alert andagile management, it is indispensable to continually im-prove the business process and the roles of organizations byresponding to changes in the business environment and strat-egy.The objective of the present management system reform isto create mechanisms for organized, continual improve-ments in deciding the method or allotment of work desira-ble for the enterprise group. Also targeted is their deploy-ment to the departments via education, monitoring ofenforcement status and performance in order to facilitateimprovements to characteristic inadequacies and the shar-ing of excellent business processes with other departmentsor enterprises. The BMC service compiles procedures andapplies inventiveness to the system, rules and tools in orderto promote the above system objectives.(3)Positive Use of BPM ToolsThe third feature is the positive use of BPM tools. By us-ing BPM tools, we try exhaustively to establish a compre-hensive standard model to cover all processes from businessflow to system flow and even for standard transactions,which are the target flows to be adopted for the globallystandardized models. Ongoing tasks such as unification andthe abstraction of notations for making assets continuallyreusable regardless of organizations (e.g. expressing depart-ments in terms of their essential functions instead of by theirtitles) are important criteria of the modeling work.

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Cloud-oriented Service Platform Solutions/Services (consulting, SaaS) Business Model Consulting

4. Configuration of BPM Service

With the BMC service, the targets including the establish-ment of a roadmap of the proposed reforms, standardization ofbusiness processes and codes and their global deployments aredefined into five service menus as shown in Fig. 4 .

Descriptions of the five service menus are given below.(1)BPM Maturity AssessmentThe maturity of BPM is assessed from the four viewpointsof strategy, design, implementation and evaluation/manage-ment. The BPM maturity assessment makes it possible toclarify the orientation of reforms and of the roadmap for theestablishment of the BPM promotion system.(2)Business Process ManagementTo succeed with the business process management, it is re-quired to establish “process standardization techniques” inorder to optimally advance both the business process man-agement and “BPM promotion system” aimed at support-ing promotion of the “process standardization techniques.”Fig. 5 shows how to advance the business process manage-ment based on the “process standardization technique.”The process model design standardizes each basic functioninto a model by considering specific process characteris-tics. For example, in the case of the sales function, stand-ardization perspectives include; 1) elimination of theorganizational elements from the analyzed process; 2) stand-ardization of the product elements by re-defining the solditems according to their product characteristics; 3) standard-ization of customer elements by grouping the tasks if theycan be regarded as being identical from the viewpoint ofprocess, even those that have been classified according tocustomer-based characteristics and so on. Relevant points

Fig. 4 BMC service system and related points.

are that; 1) since this domain involves frequent additions/changes of business procedures, the standardization shouldbe capable of dealing with changes; 2) the scenario shouldbe made executable by combining standard process opera-tions even when the sales patterns and methods differ and;3) as a result, an easy-to-understand structure is required bysimplifying and modularizing the process operations. Sub-sequent to the standardization model being set based on theabove, it is assessed again from the business perspective inorder to see whether or not it adversely affects the enter-prise and its validity is checked so that suitability at the totalenterprise level is obtained.The “BPM promotion system” is the system for maintain-ing the standard process of the entire group. This approachnecessitates authorizations for decision-making at the stand-ard process level and a mechanism for assuming responsi-bility for applying continual improvements. These arerespectively the process owner system and the BPM sup-port organization. A process owner is appointed at each levelin the hierarchy of global, regional and local layers and ofthe roles/authorizations, meetings organization and KPI(Key Performance Indicators). BPM support organizationsmonitor if they are being maintained and managed proper-ly. This BMP promotion system helps establish an effec-tive platform for the continual improvement of competi-tive, simple business processes. Fig. 6 shows how processstandardization techniques and the BPM promotion systemsupport business process management.(3)Code StandardizationStandardization of codes and their administration tasks makedata linkages smooth and render business and managementevents visible in a timely manner. What is important in thecode standardization is to create a code ownership system toenhance the maintenance and control of the code manage-ment system at the same time as standardizing the systemand the administration management processes of codes andtheir management information.(4)BPM Tool IntroductionBPM tools are used in turning the current status or projec-ted images into a model and applying it to an IT system.These tools make it possible to clarify the business flowstructure visually so that the issues to be solved for improv-ing the management efficiency can be discovered and solved.Not only do they allow the business flow or results to beshared but they also allow information regarding the busi-ness load to be identified. The use of BPM tools improvesthe work efficiency and allows the results achieved to be



shared, reused and deployed smoothly inside as well as out-side Japan.(5)Global RolloutIn order to deploy the business/IT reforms efficiently andeffectively among domestic and overseas bases, it is impor-tant to advance deployment by clearly defining the globaldeployment standards. In other words, while examining the

planned strategies, it is necessary to clarify the elements tobe standardized and the standard model for each of these el-ements while attempting coordination of elements such asorganizations/systems & rules, processes, applications/dataand IT infrastructures. Defining standard models as globaltemplates enables efficient, quick deployment. Fig. 7 showsthe approach based on the global templates.

Fig. 5 Outline of process standardization techniques.

Fig. 6 Process standardization techniques and BPM promotion system.

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Fig. 7 Approach for deployment based on global templates.

5. Cloud-Oriented Accounting Service

5.1 What is a Cloud-oriented Accounting Service?

The “cloud-oriented accounting service” is the implemen-tation of a Business Model Consultancy service by targetingthe accounting function. It offers a shared data center, vari-ous platforms and a global accounting system environment foruse by multiple enterprises. This service was created as a partof the management system reforms of NEC ( Fig. 8 ).

Environmental complications surrounding enterprises arecausing difficulties for globally deployed enterprises in speed-ily identifying their overall situations. In particular, some en-terprises that have been expanding their business via M&Aoften have problems in identifying the business process of eachgroup firm. Needless to say, this leads to an inability to unifyspecific business processes inside the group. In addition, en-terprises are also faced with the necessity of complying withaccounting standards such as IFRS and with internal gover-nance issues. The cloud-oriented accounting service is provi-ded within the concept of a simple business process and in thecontext of global competitiveness, real-time linked manage-ment and a shared management platform internal to the group.These concepts are shown as the reform issues in Fig. 9 .

Fig. 8 Diagram that explains use of the Cloud-oriented AccountingService.

Fig. 9 Reform issues of the Cloud-oriented Accounting Service.



5.2 Cloud-oriented Accounting Service Enforcement

In the use of the cloud-oriented accounting service, the keyto low-cost, speedy introductions and the implementation ofsimple business processes lies in how to match the user’s pro-cesses to the provided business model.

For the cloud-oriented accounting service, we have definedaccounting operations that have been developed based on ourown management system reforms at NEC and of cases adop-ted by other advanced enterprises as their standard model. Thestandard model covers compliance to new modifications suchas IFRS as well as to viewpoints adopted in the Finance &Accounting Skill Standards of the Japanese Ministry of Eco-nomics, Trade and Industry. The reform points, business rules,business flow and business manuals matching the standardmodel are also available. If the customer businesses can bealigned to the standard model, it is possible to quickly intro-duce the service at a low cost.

The introduction begins specifically with a fit/gap analysiscomparing the customer’s enterprise group policy and the pol-

icy/reform points of the standard model. The business process-es and functions of each firm are investigated based on thestandard model, and business process operations that are notfound in the standard model are recorded as local operations.The results of the surveys of each firm are totaled in order toexamine application possibilities as the standard model for thegroup. The local business process operations are also exam-ined to assess the possibility for application of the standardmodel. The application of the standard model is decided bydefining criteria such as “business processes that should com-ply with international standards,” “business processes in-volved in the management index (visualization)” and “busi-ness process that utilize the system functions.” Fig. 10 showsthe concept of process standardization.

Individual business process operations are applied by utiliz-ing templates for major examination points that have beenprepared based on the experiences gained in NEC’s manage-ment system reforms. The set business processes are subjec-ted to KPI setting and are secured continually by establishingthe “BPM promotion system.”

Fig. 10 Concept of process standardization.

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6. Conclusion

Standardization of business systems is a concept that is easi-ly stated but which is hard to achieve. It takes time to changesomething that has already been established, such as the tradi-tions of an enterprise, complicated modes of business, thegovernance situation or relationships with customers. Evenmore so, a continual review of standardized items is hard tomaintain unless it is defined into a mechanism. The “promo-tion of standardizations of business systems and IT” and IT,without owing it” are the assets of the in-house managementsystem reforms practiced at NEC. We should be delighted ifthe BMC service is able to effectively serve the desired re-forms and innovations of our customers.

Authors' Profiles

KIKUCHI NorikoGroup ManagerConsulting Business DivisionManufacturing and Process Industries Solutions Operations Unit

OKU KazuyaGroup ManagerConsulting Business DivisionManufacturing and Process Industries Solutions Operations Unit

KURATA YojiGeneral ManagerConsulting Business DivisionManufacturing and Process Industries Solutions Operations Unit



business model consulting the service providing an ... contrast to nec’s three cloud-orientation...

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