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The big oil-field services company crafts a way to add visibility to its business processes, understand where things are going wrong, and take action to correct problems in real time. A case study with Tony Aming, enterprise business and applications architect with Baker Hughes, and Dave Brooks, senior director of strategic business solutions with Software AG.
Baker Hughes is an oil field services company with operations in more than 90 countries, 50,000 employees and 2010 revenues of $14bn. The company's challenge, says Aming, centered around improving its cash conversation cycle by improving visibility and agility. "We did not know what we did not know," he says.
Brooks says Baker Hughes needed to conduct a step-by-step examination of its global supply chain. It had to understand all of the trade-offs involved in making key decisions about sourcing, production and logistics. "We need to bring some measure of visibility into what's going on in a real-time environment," he says.
The answer lay in business activity monitoring. All aspects of the company's products - volume, velocity, quality, value and risk - had to be scrutinized. A system of alerts was needed, to inform the company when something was going wrong.
The exercise is being implemented across all nine regions of the world in which Baker Hughes operates, Aming says. Key to that effort is the standardization of business processes, to ensure the participating and understanding of everyone involved. As with any large company, there were a number of corporate "silos" that had to be dismantled. "We are redefining processes so that we can measure them properly," he says.
To cut across traditional barriers, companies need to obtain "buy-in" at all levels of the organization. Steering committees are a valuable tool to promote leadership, and assign responsibility for sponsoring various projects. "Make sure that everybody sees 'what's in it for me,'" Aming says.
Baker Hughes has already realized a number of benefits from its initiative, including a reduction in days sales outstanding amounting to "tens of millions of dollars," says Aming. The next step, adds Brooks, is to incorporate historical data into a simulation model to predict future developments. Such capability will help the company to tackle the difficult task of risk analysis and mitigation.
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