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Linking Business and IT Successfully

Enterprise Architecture in Forest & Paper Industry

Executive Brief

Reference Architecture for Forest & Paper IBM Global Business Services

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Reference Architecture for Forest & Paper IBM Global Business Services

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Executive Summary

Contents

1 Executive Summary

2 Business requirements in Forest & Paper Industry

3 Enterprise Architecture

4 Reference Model for Forest and Paper Industry

5 How mature is Forest & Paper Industry?

6 Conclusions

Forest and paper industry as a whole is facing severe challenges especially in Europe and US; reading habits are changing, printing paper demand is declining, energy cost are rising, recession after internet boom, centre of gravity in pulp production is moving to South America and so on. The outcome has been persistent profitability problems in a large number of companies. This has forced the companies to look for new ways to improve efficiency as well as new business models and ways of working. IBM Forest and Paper Innovation Centre has proposed a number of useful ideas in the previous white papers [1, 2].

Business and Information Technology (IT) alignment has an important role in this business transformation. IT is not only a cost factor; it is also needed in making sustainable changes and improvements in the business. Unfortunately, aligning IT and business is not as straight forward as cost cutting. It requires special skills, tools and methods. Enterprise Architecture (EA) is a promising approach and it is getting more popular today in the companies as part of IT strategy.

Enterprise Architecture starts from the business strategy and desired business model. These should define the target state and drive the development in the different layers of Enterprise Architecture; business process architecture, application architecture and infrastructure architecture. The key question is the degree of harmonization and integration of business processes. Naturally, closely coupled business processes require integrated systems. Companies will always benefit from harmonized IT infrastructure regardless of the business model because homogenius servers, workstations, networks and system software brings economy of scale and improved security.

Based on IBM Forest and Paper Industry Center’s experience and discussion with the experts more focus is needed especially in the business development. Companies and business units with well defined and documented strategies and processes are able to realize business value of IT more efficiently. Clearly, it is difficult to align IT with business if the business is unclear. Typical application architecture is heterogeneous after a number of mergers and acquisitions and this makes the current architecture unsuitable for new business models like shared service centers. Enterprise Architecture is a valuable tool in IT governance to direct the IT investments towards business aligned IT architecture. Because of the long technical

2 Reference Architecture for Forest & Paper IBM Global Business Services

tradition in governance and architecture work in hardware, the infrastructure architecture is complete and well maintained in the companies.

Business requirements for forest based industries

The rules of the game have changed. Over capacity is dominating and strategies need to be changed. It is no longer sufficient to wait for the next boom to justify the investments. Looking forward over the next 15 years, IBM’s Forest and Paper Innovation Centre projects the following five key drivers – drivers which will differentiate the more successful players from the less successful ones between now and 2020:

Relentless Focus - through Core and Differentiating Activities Forward Thinking Business Models Excelling at Comprehensive, Enterprise Wide Change A Passion for Personnel and Knowledge Mobility Mastery of Network Partner Management Skills

Taken together, these will be the key differentiators which when applied rigorously and innovatively will support companies to be the winners of the competitive race. IT is the enabler of many changes. IT can create more efficent supply chain, reduce costs in procurement, improve customer interface or even bring new business opportunities like RFID.

Only one out of five Chief Information Officers (CIO) said he's aligned with his business's

strategic goals, according to "The State of the CIO 2007"

survey by CIO Magazine.

However, these strategic goals do not transform directly into requirements for IT. The business environment and company structure influence naturally the way we build the Enterprise Architecture. It is useful to analyze the business processes by using two dimensions:

Business process integration meaning how tightly the different business processes need to interact with each other.

Business process standardization meaning how repeatable and well defined the business processes are.

Using these two dimensions we can make the following four fields:


Coordination- Unique busines units with a need to know each other’s transactions- Example: board mills and box plants in the same company- IT requirements: access to shared data, standard interfaces

Unification- Single business with global standards and global data access- Example: global printing paper manufacturer - IT requirements: enterprise systems enforcing standard processes and providing global data access

Diversification- Independent business units with different customers and expertise- Example: tissue and printing papers in the same company- IT requirements: provide economies of scale without limiting independence

Replication- Independent but similar business units- Example: fine and magazine papers in the same company- IT requirements: provide standard components for global efficiency

Business Process Standardization

Bus

ines

s P

roce

ss In

tegr

atio

n

HIGHLOW

LOW

HIG

H

Picture 1. Business process integration and standardization [3].

Most industrial companies are in or targeting to Unification and this is also a natural place for many forest and paper companies. Production processes are typically integrated from saw mill to pulp mill and paper mill which creates a natural dependence between the businesses. However, there can be cases when Replication is more suitable: for example board mills and tissues mills do not have much in common. Diversification is not common any more when companies are focusing on core business. For example chemical plants have been divested. Coordination is not exploiting fully all potential improvements and the companies in this area should work on business process harmonization in relevat areas in order to get to Unification.


Enterprise Architecture

CIOs who said they were aligned with the business

reported that IT had enabled a new revenue stream more than

twice as often as those CIOs who said they were not aligned (24 percent versus 11 percent).

More important, more aligned CIOs said they had used IT to

create a competitive advantage for the company than unaligned

CIOs (38 percent versus 23 percent) according to "The

State of the CIO 2007" survey by CIO Magazine.

Enterprise Architecture is a comprehensive approach for aligning business and IT. Enterprise Architecture comprises a coherent whole of principles, methods and models that are used in the design and realization of the enterprise’s organizational structure, business processes, information systems and infrastructure [4].

A frequently used metaphor for EA is that of “city planning”, where the design of an individual building is governed by the overarching city plan, which in turn is based on the city’s avowed purpose and goals. Similarly, deriving from the strategy of the organization, principles and guidelines are formulated that guide the organization in the actual design of its infrastructure. In other words, EA “sits between” the enterprise’s business and IT strategies, and the delivery of change programs.

.

Picture 2. Enterprise Architecture.


Architecture models

IEEE standard 1471 defines architecture as “the fundamental organization of a system embodied in its components, their relationships to each other, and to the environment, and the principles guiding its design and evolution”. EA approach focuses on the architecture of an entire enterprise (as opposed to the architecture of a single information system or application). In addition to being enterprise-wide, EA does not focus on the technical aspects only, but also on the organizational context in which the IT systems operate. Another difference to system architecture / software architecture is the level of abstraction. For an EA to have reasonable complexity in order to avoid delivering an architecture which is already out of date due to rapid process changes and the lengthy design time, the EA modeling have to be on a higher abstraction level than traditional software architecture modeling [5].

In EA, the architecture of an enterprise is frequently conceptualized as a stack of layers, the idea being that an upper layer is supported and served by the layer below or the upper layer is giving the requirements to the lower one. Each layer can be described and modeled from the viewpoints of different stakeholders, and furthermore, different aspects of the architecture are typically each described with separate models. Basically, the models describe high-level abstractions of enterprise entities and how they relate to each other. These include organizational entities such as business processes, business components, goals, organizational structures, and workflows, as well as technical entities such as data, applications, functionality, interfaces and physical infrastructure.

Environment

Business layer

Application layer

Technology layer

Picture 3. In EA, the architecture of an enterprise is frequently conceptualized as a stack of layers.

Some models also have an information layer between business and application layer which can make the conceptual model more complete. However, this layer does not yet have a strong role in forest and paper. The


reason could be that the EA work today is very application oriented. There is not much room for information structures outside the applications and standardization work like papiNet covers only some information needs. The importance of the information architecture will increase together with application integration.

It is important to note that there are strong dependencies between these layers. For example, the goal of core processes in the business layer is to realize the company’s products and services for the use of the environment. Software applications / information systems support business processes, while the technical infrastructure is needed to run the applications.

In order to have a clear, integrated vision on the relation between its business and IT, it is essential to determine how the different layers are interrelated. Without an understanding of the interrelationships, the IT will never adequately support the business, and the business will not optimally profit from IT developments. Making the relations between related model elements explicit facilitates the analysis of how a change in one element may affect another element. This ability to map the dependencies between related model elements is called traceability [6].

Unfortunately, the traceability is problematic. The stakeholder views within the layers constitute different architectural domains. For each architectural domain, due to historical reasons, architects use their own modeling techniques and concepts, tool support, visualization techniques, etc [7]. Due to this, the relationships between successive architectural layers and between interrelated architectural domains often remain poorly described and poorly understood.

Governance

Besides the description of an enterprise’s structure, “architecture models”, an enterprise architecture includes principles and guidelines that guide the design and evolution of the architecture.

EA is not a one-time engineering project; it should also be used and maintained over time. This long-term aspect is called governance. Because EA is closely linked with business development, it requires top management commitment.

EA governance comprises two areas: First, the governance of the architecture itself, i.e. the management processes needed to define and maintain the architecture models. And second, the governance needed to ensure that the actual projects and programs adhere to the agreed


architecture principles and guidelines. EA governance embraces all business development and IT projects and programs, as well as ICT-enabled business transformation programs (which typically address both business aspects, such as organizational and process changes, and implementation of information systems that enable the changes).

Enterprise Architecture framework is not limited to a fixed set of methods and tools. The different aspects and layers can be modeled and analyzed in a number of ways.

Component Business Model (CBM)

The CBM is a technique for 'dissolving' an enterprise into its constituent building blocks, or components. CBM is one technique that can be used to define business architecture. A component is a logical grouping of people, technology, and resources that deliver specific business value, and can operate independently.

CBM is not the same as business process models. Traditional analysis and development has aligned the activities to establish end to end processes while CBM seeks to identify the collection of special capabilities that can be combined as a network to support the full array of processes. Component contains similar business activities and competencies and it has well defined interfaces. The process perspective does not force the generalization of common tasks nor help rationalize shared activities. CBM combines similar activities and reduces the number of separate activities resulting in increased efficiencies and flexibility.

A component is a business in microcosm. It has activities, resources, applications and

infrastructure. It has a governance model. It provides

and consumes goods and business services.

In the component map the enterprise-in-scope is partitioned into non-overlapping business components. Evaluation criteria are selected based on the problem at hand. For example, components are often evaluated according to whether or not they help the enterprise differentiate itself in its market. Sometimes considerable ingenuity is needed to invent appropriate new criteria. The results are displayed on the characteristic CBM diagram, usually using colors to distinguish different values. Based on these evaluations, opportunities for innovation and improvement are identified and transition initiatives defined.


Control

Execute

Direct Business Planning

Business Unit Tracking Sales

ManagementCredit

AssessmentReconciliatio

n

Compliance

Staff Appraisals

Relationship Management

Sector Management

Product Management

Production Administratio

n

Product FulfillmentSales

Marketing Campaigns

Product Directory

Credit Administratio

n

Customer Accounts

GeneralLedger

Document Management

Customer Dialogue

Contact Routing

StaffAdministratio

n

BusinessAdministratio

n

New Business Development


Servicing & Sales

Product Fulfilment

Financial Control and Accounting

Sector Planning

Portfolio Planning

Account Planning

Sales Planning

FulfilmentPlanning

FulfilmentPlanning

A Business Component is a part of an enterprise that has the potential to operate independently, in the extreme as a separate company. Each business component is a logical view of part of an enterprise that includes the resources, people, technology and know-how necessary to deliver some value.

Columns are Business Competencies, defined as large business areas with characteristic skills and capabilities.

An Accountability Levelcharacterises the scope and intent of activity and decision-making.

Revenue/Profit improvement opportunity

Cost control opportunity

What do you want? Identify enabling strategic capabilities.Define evaluation criteria Evaluate components

can also evaluate applications against componentsPrioritise, sequence opportunities.CBM is complementary to

process modelling.

Control

Execute



ManagementCredit


n

Compliance

Staff Appraisals


Sector Management

Product Management


n


Marketing Campaigns

Product Directory


n

Customer Accounts

GeneralLedger

Document Management

Customer Dialogue

Contact Routing

StaffAdministratio

n


n



Servicing & Sales

Product Fulfilment


Sector Planning

Portfolio Planning

Account Planning

Sales Planning

FulfilmentPlanning

FulfilmentPlanningControl

Execute

Direct

Control

Execute



ManagementCredit


n

Compliance

Staff Appraisals


Sector Management

Product Management


n


Marketing Campaigns

Product Directory


n

Customer Accounts

GeneralLedger

Document Management

Customer Dialogue

Contact Routing

StaffAdministratio

n


n



Servicing & Sales

Product Fulfilment



n



Servicing & Sales

Product Fulfilment


Sector Planning

Portfolio Planning

Account Planning

Sales Planning

FulfilmentPlanning

FulfilmentPlanning

A Business Component is a part of an enterprise that has the potential to operate independently, in the extreme as a separate company. Each business component is a logical view of part of an enterprise that includes the resources, people, technology and know-how necessary to deliver some value.

Columns are Business Competencies, defined as large business areas with characteristic skills and capabilities.

An Accountability Levelcharacterises the scope and intent of activity and decision-making.

Revenue/Profit improvement opportunity

Cost control opportunity

What do you want? Identify enabling strategic capabilities.Define evaluation criteria Evaluate components

can also evaluate applications against componentsPrioritise, sequence opportunities.CBM is complementary to

process modelling.

Picture 4 CBM map visualizes the component analysis.

In practice, the component map can be used to make a number of business and technology decisions. Once the company’s operations are broken into their constituent components on a single page map, this framework provides the foundation for numerous qualitaive and quantitative analyses that can help enterprises:

With the CBM, an enterprise can be seen as a collection of networked components. Like

Lego blocks or atoms, they can be infinitely combined and

recombined, creating different structures.

Identify their key differentiating operations as well as those that contribute only minimally to their growth and profit;

Identify business-activity consolidation opportunities to create single instance components to support their business operations;

Prioritize high cost or high capital components as candidates for operational change;

Prioritize transformation initiatives; Align IT investments with business needs; and Define quantitative results for business and technological change

initiatives.

Typically, companies in the same industry share a number of similar business components. In the next chapter we will present the CBM model for forest and paper industry. .

Reference model for forest and paper industry

We will now demonstrate how EA approach can be applied in two business areas; supply chain and maintenance. We will use CBM technique with the following steps:


define and analyze the requirements from the business environment related to supply chain and maintenance

identify services and components as business architecture specify service characteristics as application architecture realize services as combined application and infrastructure architecture

Business requirements in supply chain

Combined with the capital-intensive nature of the industry, the forest and paper industry has historically been regionally developed, resulting in the global forest and paper industry being the least consolidated of all global manufacturing industries. Major players have moved to consolidate by grade to achieve economies of scale, counteract the power of consolidating/ globalizing customers and maintain better price stability during the cycle. Increased size forces the companies to work also on their customer interface. If an organization is to become customer focused, it must address its supply chain – transforming supply chain capabilities to make-to-order, while also enabling customers to do business in a simple and cost efficient way. To begin this process, companies need to identify how they can better leverage the size, scale and commonality of processes to drive business wide efficiencies and customer satisfaction. In its totality, achieving a more efficient and integrated supply chain involves reengineering order management, planning demand and supply, streamlining sourcing, optimizing production and conversion management, improving distribution/ transportation management, and aligning performance measures with the organization.

In addition to efficiency, there are other forces that urge for more integration in supply chain. Competitive environment is changing from competition between companies to competition between value chains. Companies need to have closer relationship with partners in the same value chain in order to be competitive. Also environmental regulations have an influence: in order to show the origin of wood or calculate CO2 emissions companies need information from their partners.

Many companies have identified efficient supply chain as one of the focus areas and decided to invest in IT systems in this area. After a chain of mergers and acquisitions in the 1990’s, a number of Finnish paper companies started to develop and implement global supply chain management systems round year 2000. After some difficulties in the projects as well as in the business environment, the implemented systems are now starting to deliver benefits. These companies have been able to reduce the


days of supply (the number of days the average inventory is capable to satisfy the average demand) [8].

Business requirements in maintenance

It is possible to define also mill maintenance as a core function but many companies have decided differently. There are a number of maintenance outsourcing cases in pulp and paper. Typically, maintenance does not help the forest and paper company to differentiate. Maintenance can influence the product quality but it is basically a support function. An outside service provider is able to get better economy of scale.

We can take a look at the evolution of maintenance concepts and CMMS (Computerized Maintenance Management Software) solutions to see the link between the business models and architecture.

Time period Business model in maintenance

Software architecture and market

up to early 80’s

Dominating maintenance strategy was “run to failure”. Mills are quite independent.

Merging market for CMMS. Mainframe database systems dominate so only big sites can afford CMMS

80’s and 90’s Increasing focus on preventive and predictive maintenance

PC applications expand the CMMS to all mills. Innovative functionalities. A lot of local software providers

from late 90’s Optimizing maintenance and focus on productivity. More centralized governance of maintenance.

CMMS is mature, modest development in functionalities. ERP takes over maintenance from mill-centric applications. Consolidation of software providers.

today and in the future

Maintenance as business component. Outsourcing of maintenance.

CMMS as shared service

Identification of services and components

With the CBM map we can define the business components related to supply chain and maintenance in more detail. We need to analyze the business components in order to find out the biggest benefit potential. We can look at, for example, the IT costs in each component or performance of the component. This is called a heat map. It allows us to focus on the most interesting components which we analyze further. In our reference CBM for forest and paper industry we have identified the following components to have the biggest benefit potential today:


Demand planning Maintenance performance modeling and analysis Supply chain planning and optimization Asset monitoring and diagnostics

Product/process Development Production Supply chain Procurement Marketing and

salesBusiness

administrationFinancial

management

Portfolio strategy and planning

Production strategy

Supply chain strategy and

desing

Supplier relationship

planning

Custoner relationship

strategy

Corporate/Division Strategy and

Planning

Financial planning and forecasting

Research and development on

materials and processes

Master production planning

Demand planning ContractingSales and promotion planning

Organization and process policies

Capital appropriation

planning

Design rules and policies

Maintenance Strategy

Brand management Alliance strategies

Enterprise Architecture

design

Product & Service Program

management

Production forecasting &

planning

Supply chain performance monitoring

Supplier management

Relationship monitoring

Human capital management

Risk management and

internal audit

Intellectual property Management

Producton monitoring

Logistics management

Supplier performance monitoring

Demand forecast and anaysis

Legal and regulatory audits Treasury

Quality management

Supply chain planning &

optimizationService contracts Merchant

managementBusiness

performance Tax management

Maintenance management

Warranties & Claims IT governance

Performance Modelling and

Analysis

Master Data Management

Product pilots Production scheduling

Inventory management

Wood Procurement

Order management

Knowledge and learning

Accounting and general ledger

Mill process improvements

Mill Operations & asset

optimization

Transportation management

Raw material Procurement

Customer relationship

management

Buildings, facilities and equipment

Cost management

Investment projects Shop floor transportation Claim handling Indirect

ProcurementIT systems and

operationsDesign-out

maintenanceCorrective

maintenance In-bound logistics Spare part management

Document management

Preventive maintenance

Out-bound logistics Refurbishment Invoice handling

Work safety Asset Monitoring & Diagnostics Energy System

Integration

Maintenance components

Supply chain components

Directing

Controlling

Executing

Picture 5 CBM map for forest and paper industry focusing on supply chain and maintenance.

Specification of service characteristics

The service characteristics describe in more detail the business component. Each component has different capabilities, resources, functions and interfaces. One important source of information for the service characteristics is the business process in the company. Another source can be international standards and widely accepted technologies and applications

For example, the top level business process for supply chain can be defined like in the picture below:


DemandForecasting

CapacityManagement

AllocationManagement

LogisticsPlanning

Sales OrderProcessing

Production Scheduling &

Execution

LogisticsExecution Invoicing

Planning

Fullfilment

Profitability analysis

Picture 6 Typical supply chain processes.

OPC UA OPC stands for open connectivity in industrial automation and the enterprise systems. This over 10 years old, originally Microsoft-based industry standard is not answering today’s needs and technical challenges. The original OPC was merely designed to integrate systems on the process control level. The increase in the level of networking on the automation equipment creates needs for the communication that was not anticipated originally. There is need for enhanced integration technology that can be used in both vertical and horizontal integration from equipment level to business level systems like MES (Mill Execution System) and ERP (Enterprise Resource Planning). Security and reliability of the solutions based on the existing OPC specification are not on the level needed on the networked enterprises. The new OPC-UA (Unified Architecture) specification is harmonizing and upgrading all of the existing OPC technology. The open standards mean no longer just Microsoft technology but XML and web services. OPC vendors are already working through the design and implementation phase of their OPC UA technology products. Source: www.opcfoundation.org

The demand planning component could include the following characteristics: The component can access current and past sales and customer data

through XML-interfaces. The component can calculate a forecast and take into account general

economic trends as well as history. The component can also evaluate the accuracy of the forecast. The component negotiates with the stakeholders to achieve a consensus

of the forecast. The component communicates the forecast when requested.


There are several ways to define maintenance processes and system structures. For example, the business processes in asset management can be defined as follows (adopted from ISO 18435):

Intra-enterprise activities: Business Planning, Orders & Production, Maintenance

Maintenance Planning & Scheduling

Level R4 Enterprise/Site

Maintenance Execution & Tracking

Level R3 Area

Level R2 Work Center

Level R1 Work unit

Level R0 Asset

Asset Configuration, Calibration & Repair/Replace

Asset Indentification and Location

System Level Business Process

Picture 7 System levels and busines processes in asset management.

OpenO&M In today’s world production and maintenance are tightly connected. Enterprise asset management (EAM) and maintenance management comprise of multiple applications that need to be integrated. Further these systems have to exchange data between MES-level applications and operation control systems. This has been realized also by the standardization bodies. The OpenO&M Initiative involves multiple industry standards organizations collaborating to provide a harmonized set of information standards for the exchange of Operations & Maintenance (O&M) data. Source: www.openoandm.org

The maintenance performance modeling and analysis component could include the following characteristics:

The component depicts the relevant features of maintenance and operation effectiveness and the relationship between those two.

The component integrates maintenance and operational plans in a manufacturing setting

The component defines condition monitoring and inspection functions. The component passes information between maintenance and

production systems.


Realization of the services

As a last step we define the application architecture. Here we use Service Oriented Architecture (SOA) as a framework. In brief, SOA is an architectural style that supports service orientation and networked operating model so it extends nicely the CBM technique. SOA helps to link the internal or external repeatable business tasks i.e. services. SOA makes building and adjusting the applications that support the business faster and easier.

Software providers are adopting SOA thinking and developing adaptors. For example, ABB

MES has standard interfaces to SAP MM, PM, SD and PP-PI.

SAP, as the dominant ERP software in the industry, is

supporting this process and has formed the industry value

network (IVN) for forest and paper companies. These IVN

members are initially collaborating to deliver pre-

integrated, standard, and complete solutions and

services.

SOA can be implemented on a “build-as-you-go” basis allowing capabilities and project level solutions to be easily added as new business requirements are addressed over time. The reference architecture is a foundation for laying out roadmaps for pursuing SOA. At the core of the SOA is the Enterprise Service Bus (ESB). This delivers all of the inter-connectivity capabilities required to leverage the services implemented across the entire architecture.

Our selected hot components require information and functionalities that typically reside inside different applications. Demand planning combines features from CRM, ERP and SCM. In addition to standard services we probably need to develop some special functions related to statistical analysis of the forecast. Maintenance performance modeling integrates functions and data from condition monitoring, asset management and mill execution system.

Business Performance Management Services Business Intelligence

Interaction Services

Process services Information ServicesERP CRM HR SCM

KPI reporting Real-TimeCost TrackingMail System Management

Supply ChainPlanning

LogisticsPortals

BusinessProcess

Modelling

Projectmanagement

SecurityHR Service Service Service Service

Enterprise Service Bus

Partner Services Information AssetsService Service Service ServiceEquipment support Document management

MESConditionMonitoring

DCS Asset ManagementChemical suppliers ArchivingWarehouse

HistorianMarket places ProductionplanningWork ordersPLC

Infrastructure Services RFIDWorkstations Networks Handhelds

Picture 8 Reference architecture for forest and paper industry


How mature is forest and paper industry?

Forest and Paper Innovation Centre conducted a research on EA in the indusrty. We interviewed companies and research institutes in order to find out the current practice and we were able to study about 10 cases. It turned out that business process thinking is relatively new in Forest and Paper industry. There are a number or forces pushing the companies to this way, like Sarbanes-Oxley requirements, global ERP implementations and new shared service centers for functions like HR or accounting. Typically, business processes are defined in projects and for project needs and there is no dedicated team for process development. Forest and paper companies are still very much function oriented, not processes oriented. This means that a lot of effort is needed to complete the fragmented process documentation and to keep them up to date.

Harmonization of the application architecture is a clear goal but it is challenging. The application portfolio is very heterogeneous because of the many mergers and acquisitions. Traditionally, mills have had a lot of decision power also in IT application selection which has resulted in poor standardization in the company level. The importance of the application architecture documentation has just been realized so the architecture descriptions are still incomplete. However, EA is used more and more as a tool to achieve application harmonization.

IT governance is dealing with the practical harmonization and IT – Business alignment issues. Unfortunately business does not always appreciate when IT is trying to follow the structured management approach: The proper planning and prioritization of the requests from business takes time and effort. However, if there is understanding and commitment to global processes in the company then there is also more understanding to IT processes in the business and they see IT more flexible than in companies where global processes are not implemented.

Forest and paper industry is quite advanced in infrastructure architecture, especially hardware. If we include middleware, like enterprise service bus, in this level we can see more room for improvement. Current Enterprise Application Integration solutions are aging. The hardware and networks documentation is complete and the benefits of harmonization have been recognized, as the model in picture 1 suggests.

As a summary, we can conclude that Forest and Paper companies need to put more effort on the business process architecture. This is the basis of the whole EA work. Then they can concentrate on the application architecture


and with application harmonization drive benefits out of EA work. This has been summarized in the following picture. The benchmark level comes from leading companies in consumer products, banking and petrochemical.

BusinessProcessArchitecture

ApplicationArchitecture

InfrastrucureArchitecture

Arc

hite

ctur

al M

atur

ity

Benchmark level

Picture 9 Forest & Paper industry needs more effort on business process architecture.

The seven stages of Service Integration Maturity

Service Integration Maturity Model is a maturity model and process for achieving desirable stages of maturity [9]. The level of de-coupling and amount of flexibility achievable at each stage of maturity are what make up the seven levels of maturity: 1. Silo (data integration): The organization starts from proprietary and quite

ad-hoc integration, rendering the architecture brittle in the face of change. 2. Integrated (application integration): The organization moves toward some

form of EAI (Enterprise Application Integration), albeit with proprietary connections and integration points.

3. Componentized (functional integration): At this level, the organization componentizes and modularizes major or critical parts of its application portfolio. Legacy systems are renovated to have clear component boundaries and scope, exposing functionality in a more modular fashion.


4. Simple services (process integration): The organization embarks on the early phases of SOA by defining and exposing services for consumption internally or externally for business partners.

5. Composite services (supply-chain integration): Services form a contract among suppliers, consumers, and brokers who can build their own eco-system for on-demand interaction.

6. Virtualized services (virtual infrastructure): The organization now creates a virtualized infrastructure to run applications.

7. Dynamically reconfigurable services (eco-system integration): The organization now has dynamically re-configurable software architecture.

Forest and Paper companies have considerable EAI experience and solutions and there are numerous links between internal and external systems. SOA concept is getting attention and the benefits of SOA are recognized. However, the current systems do not support large scale service orientation and component models are not actively pushed in new projects. So in the maturity scale the Forest and Paper companies are mostly doing application and functional integration (levels 2-3) and in some areas moving to process integration (level 4). Virtualization (levels 6-7) is in the distant future.

Conclusions

Service Oriented Architecture is hot at the moment. Gartner says that by 2008, SOA will provide the basis for 80 percent of new IT transformation projects. Service-oriented architecture isn’t a new concept, it is a natural evolution based on communication and open platforms. But because of today’s rapidly changing marketplace, complexity in information technology infrastructures, and the race to remain competitive, SOA has emerged as a key tool to help clients become on demand businesses.

The technology alone is not enough. Enterprise Architectures are an emerging approach for capturing complex knowledge about organizations and technology. Together with focused IT governance it enables business-IT alignment.

Forest and paper companies are starting their architecture work. Global ERP projects and Sarbanes-Oxley Act are forcing the business processes to be better defined and managed, more structured. Some work is already done but much more effort is needed to complete and maintain the business


process architecture. Business should be driving this work, not IT. If the business strategy and processes are not clear and defined, it is hard to align IT with it.

The business strategy should be clear and described in the enterprise architecture. Then EA guide IT projects and investments. EA is no one time exercise, there needs to be devoted resources and skills to maintain the EA. The mergers and acquisitions in the industry make sure that EA is changing all the time.

The roadmap to successful EA includes the following steps: Define EA principles and guidelines Assign EA teams and responsible people Document and map the existing architecture Define the target architecture Plan transition Manage and follow up transition Maintain and improve EA


About the authors

Jari Kallela is Practice Leader in the IBM Forest and Paper Innovation Centre in Helsinki, Finland. He has been serving the industry 20 years in various roles, including system development, maintenance outsourcing and business consulting. His expertise covers applications used in the mills, including maintenance management systems and manufacturing execution systems. He holds a Doctorate degree in Automation Engineering from Helsinki University of Technology. Jari is a member of the Finnish Paper Engineers Association. Contact Jari at [email protected]

Jorma Saarikorpi is Managing Director of the IBM Forest and Paper Innovation Centre in Helsinki, Finland. He has worked over 20 years in global paper companies holding various vice president positions in strategy and information management. He holds a Doctor of Business Administration from the University of Tampere and he has been appointed professor at the Tampere University of Technology, department of industrial management. Contact Jorma at [email protected].

Aino Lahdenperä is consultant in IBM Global Business Services, IBM Finland. She has studied software systems, software engineering and industrial management at the Helsinki University of Technology. She has worked as a software engineer and conducted her master's thesis on service management information systems. Her interests focus on the interface between business and IT, ranging from requirements engineering through business process modeling to Enterprise Architectures and ICT-enabled business transformation. Contact Aino at [email protected]

Acknowledgements

The authors acknowledge the very important contributions of a number of experts in the industry for this paper, especially Ian Dennis (M-real), Turkka Keskinen (UPM), Simo Nieminen (M-real), Marko Mattila (Helsinki University of Technology), Giorgio Danesi (IBM).

mailto:[email protected]




About IBM Global Business Services

With consultants and professional staff in more than 160 countries globally, IBM Global Business Services is the world’s largest consulting services organization. IBM Global Business Services provides clients with business process and industry expertise, a deep understanding of technology solutions that address specific industry issues and the ability to design, build and run those solutions in a way that delivers bottom-line business value.

About IBM’s Forest & Paper Innovation Centre

The Forest and Paper Innovation Centre in Helsinki, Finland, was established in 2002. The centre has taken over from the original Vancouver, Canada centre (established in 1985) as the lead centre of our Global Forest and Paper Practice.

The Forest and Paper Innovation Centre’s primary responsibility is to serve clients and manage IBM’s forest and paper resources in EMEA – spanning from the Nordic countries through to South Africa. The Innovation Centre also provides overall thought leadership and knowledge management support to our Americas and Asia Pacific client teams serving these markets.

The Innovation Centre is an important vehicle for forest and paper companies to improve their customer service and global competitiveness. Our mission is to foster profitable innovation and execution excellence in the forest, paper and packaging industry by leveraging IBM’s competencies. IBM executives work to confirm current and future challenges facing the industry as then focus the search for innovative solutions. The Innovation Centre is responsible for developing IBM points-of-view for the industry and develops and manages IBM’s benchmarking programs specific to the industry. At the heart of fostering profitable innovation, is our ability through the centre to link forest, paper and packaging industry clients to IBM Research and its world wide network of research centres.


References

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7. Jonkers, H., Lankhorst, M., Van Buuren, R., Hoppenbrouwers, S., Bonsangue, M., Van Der Torre, L. 2004. Concepts for Modeling Enterprise Architectures. International Journal of Cooperative Information Systems. Vol. 13, No. 3, pages 257-287.

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9. Ali Arsanjani, Kerrie Holley. 2005. Increase flexibility with the Service Integration Maturity Model (SIMM) - Maturity, adoption, and transformation to SOA. http://www-128.ibm.com/developerworks/webservices/library/ws-soa-simm/index.html

http://www-128.ibm.com/developerworks/webservices/library/ws-soa-simm/index.html




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