Honam Petrochemical's Quest for Better Management Reports
You may soon hear more about Honam Petrochemical Corporation (HPC). Headquartered in Seoul, South Korea, this company manufactures and sells petrochemical products, including synthetic resins; synthetic industrial materials, including ethylene glycol and ethylene oxide for making polyester; automobile antifreeze solutions; benzene; propylene; and ethylene. HPC has about 1,700 employees, and its 2011 revenues were close to US$7.3 billion. It's a leader in Korea's heavy chemical industry. HPC's primary market is South Korea, but the company has set its sights on becoming a top-tier chemical company throughout Asia and achieving sales of US$10 billion. Honam plans to do this by strengthening its existing businesses, extending its overseas business, and developing new businesses. Honam has nine affiliate companies in China, Malaysia, Indonesia, Pakistan, and the United Kingdom, and overseas branches in Shanghai, Qingdao, Guangzhou, Hong Kong, Moscow, and New York City. To manage its far-flung operations, HPC needs reliable reports that are able to accurately measure management performance and provide useful, accurate information for increasing sales and reducing costs. HPC's existing systems provided managers with reports to guide their business decisions, but in many cases the data in the reports were out-of-date and "sanitized." Individual managers were processing and manipulating the data to make their departments "look better" to senior management. The report data were also somewhat stale and presented only on a periodic basis. Executives at the chemical firm wanted access to the data before they went through manipulation or processing. They didn't want each department's own interpretation of reports. Instead, executives wanted to see current data to get a real view of what was actually happening on the plant floor or in the sales office. Developing a business intelligence solution specifically for executives requires a good deal of up-front requirements gathering. HPC's executive decision makers did not want to work with last quarter's numbers. They wanted anytime access to the most timely data, but they did not want to be overloaded with unnecessary data so they could focus on the "watch-up indicators" considered crucial to the business. They wanted up-to-the-minute reports that they could see quickly on their desktops. They also wanted access via the Web or their mobile devices. Finally, HPC executives wanted enterprise-wide data that could be accessed and shared easily across various business units and functions to support the company's expansion geographically and by product line. These requirements drove the technology selection process. HPC's information systems team reviewed a number of different software products and vendors and selected SAP BusinessObjects Dashboards and SAP BusinessObjects Web Intelligence. The company already had seven years' experience running SAP's ERP system, so this vendor seemed like an appropriate choice. SAP BusinessObjects Dashboards is a drag-anddrop visualization tool designed to create interactive analytics for powerful, personalized dashboards based on SAP's BusinessObjects business intelligence platform. BusinessObjects software tools can be used for performance management, planning, reporting, query and analysis, and enterprise information management, and provide self-service access to data from databases and Excel spreadsheets. SAP BusinessObjects Web Intelligence is an ad hoc query, reporting, and analysis tool that is used to create queries or use existing reports, format retrieved information, and perform analysis to understand trends and root causes. Once HPC's project team determined the business intelligence tools for the solution, its focus turned to determining which data and reports were required by the company's 200 high-level users of the new system. The information systems team started by asking executives to list existing reports they were already receiving and to assess the usefulness of each. The list was cut to a more manageable size and the executives were asked if there were any additional reports or data from which their organizational groups could benefit. These findings were very useful in determining the right set of reports and dashboards for HPC executives. Once these user requirements were clarified, the information systems team designed a system that could extract data from a SAP NetWeaver Business Warehouse and present them to executives using the SAP BusinessObjects Dashboards software and SAP Crystal Reports, an application for designing and generating reports from a wide range of data sources. A highly intuitive Web-based user interface was created to make the system very accessible. This interface was so simple and well-designed that users required little training on how to use the system or to access data and reports. To encourage users to start working with the system, members of the information systems department visited various manufacturing plants where the system was being rolled out and had in-depth discussions with executives about the system's benefits as well as how to use it. Even after the system was up and running, the information systems department continues to run campaigns to ensure that executives are using the system-and using it in the most effective way. HPC used a phased approach in implementing the new system. Rather than pushing a new system onto executives early in the ERP life cycle, HPC waited until the company was experienced with ERP software and confident in its data quality and its data collection and processing methods. According to HPC CIO Jong Pyo Kim, nothing would sidetrack an executive-level system more quickly than inaccurate or untimely data flowing into an executive's dashboard. Kim also emphasized the importance of benchmarking before designing and implementing an executive-facing system. Most manufacturing executives will want access to similar data and performance indicators, so benchmarking with other companies in the industry can provide a good look at what data brings the most value. HPC's system went live in January 2011, and executives started immediately accessing reports and dashboards on a daily, weekly, and monthly basis. The system enabled them to view key performance information such as manufacturing costs by plant, transportation costs, daily production and inventory rates, and global product price trends, and the information can be displayed visually in dashboards and management cockpits. Thirty executives tested mobile devices providing anytime, anywhere access to the new system. Delivery of the information is personalized and differentiated for high-level executives, middle managers, and front-line employees. It is still too early to assess the long-term business impact of the system, but one benefit was immediate: Executives no longer are limited to sanitized, stale data in an outdated presentation format. Management discussions and decisions are based on timely, consistent, and accurate companywide data. Because the system reduces the time required to collect, process, and track the data, executive decision making takes place more rapidly. HPC's information systems are now ready for global information-sharing as the company expands.
CASE STUDY QUESTIONS
1. List and describe the information requirements of HPC's new management system. What problems was the new system designed to solve?
2. To what extent were "people" problems affecting management decision making at HPC? What were some of the management, organization, and technology issues that had to be addressed by the new system? How did the system's designers make the system more "people-friendly?"
3. What role did end users play in developing HPC's new system? How did the project team make sure users were involved? What would have happened to the project if they had not done this?
4. What other steps did HPC take to make sure the system was successful?
5. What types of system-building methods and tools did HPC use for building its system?
6. What were the benefits of the new system? How did it change the way Honam ran its business? How successful was this system solution?