A process-based approach to IT helps Datacard Group deliver solutions across the lines of business.
by Monica Mehta, May 2013
When the goal of your business is securing access to personal data and physical locations, how do you create a business and IT culture that encourages openness?
This is a challenge that managers at Datacard Group—a global provider of identity-based card issuance solutions—faced a few years ago. Business units had a focused but limited view of business operations. And the IT solutions that supported the business were appropriately siloed and delivered without a holistic view of the company. Leadership knew things had to change, and that required a transformation of the way the company was running.
Now, four years after a business process–based transformation, customers are more satisfied, employees are more productive and collaborative, and revenue has grown significantly—the company is on track in year four of a five-year plan to double revenues. Oracle Applications and Oracle Exadata have helped to greatly improve productivity and efficiency by rationalizing fragmented IT solutions and mapping them to real business processes. Datacard Group’s journey of transformation provides valuable lessons in the importance of collaboration in corporate culture and the open exchange of ideas between IT leaders and their business peers.
Established in 1969, Datacard Group produces machines and software for the issuance of personalized financial cards, passports, driver’s licenses, identification cards, and mobile devices. Today, Datacard Group’s solutions are used to personalize and deliver more than 10 million cards and 7 million smartcards, including more than 90 percent of the world’s payment cards. As a part of doing business with Datacard Group, customers—who include financial institutions and card bureaus, government agencies, and major corporations—trust the Minnetonka, Minnesota–based company with large volumes of confidential business data.
In 2008, Datacard Group’s newly appointed CEO, Todd Wilkinson, led an effort to achieve three major business goals: grow the company’s market enough to increase revenue, improve customer satisfaction, and increase operational efficiency and employee productivity. Wilkinson also recognized that there was an opportunity to enhance cross-departmental communication so business-related issues could be effectively communicated through the whole organization.
This new business process approach also influenced IT strategy. Traditionally, IT had a service-based relationship with the lines of business. Business unit managers who had a problem to solve would request a solution from the IT department, which would validate, source, and deliver a solution with the oversight (and blessing) of the office of the chief financial officer. This approach to enterprise IT can be direct and fast—but it can also lead to fragmented IT systems that are based on specific, short-term departmental needs.
Smart leadership, however, takes a different approach. The strategy of business process reengineering—as defined by MIT Professor Michael Hammer, who pioneered the concept in the 1990s, in the 1993 book Reengineering the Corporation: A Manifesto for Business Revolution (HarperBusiness), coauthored by corporate thought leader James Champy—involves “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance.” In a business process–driven organization, IT projects are viewed holistically—in relation to the other processes and departments in the organization—and from the perspective of a specific business event or activity. Design decisions are made collaboratively with input from business leaders from many lines of business and with the goals of the organization as a whole in mind. The goal is to match IT investment with an accurate understanding of how business is actually executed as it flows across a company.
People are at the table wanting to help improve things. They feel they are in a partnership now, and as a result they have a lot of other great ideas—not just for their own teams but for the business overall.
Datacard Group executives realized that fixing their problems and achieving their goals was going to take no less than a complete business transformation. In 2010, Wilkinson hired Chris Pelletier to lead the business process reengineering effort. With a master’s degree in management information systems and a master’s in business administration, Pelletier had spent years in cross-functional roles translating between business and IT.
Pelletier, now senior vice president of strategy execution and business process at Datacard, believes that in order for a company to be successful, IT needs to be in sync with the needs of the business side. “One of the big challenges was how to stay customer-service focused and get more productivity out of our colleagues so they could be freed up to help grow our business,” says Pelletier. “We started on those goals by focusing on business processes and then aligning IT projects with them.”
Pelletier formed a business process group to get people from across the enterprise talking to each other, consistent with Professor Hammer’s approach to business process reengineering. This team held cross-functional retreats and kaizen events to promote collaboration and scientific methods for improving processes and reducing inefficiencies. Pelletier quickly realized that there was an existing demand for this approach to business. “People were anxious to make things better—they just really didn’t know how, and they didn’t know how to talk to the other business units,” says Pelletier. “The business process group knew how to support the conversations that broke down these barriers, and got people within the organization to start sharing information.”
In order to be most effective, the business process team got involved early on in IT projects, says Datacard Group Vice President of Information Technology David Goihl. “It doesn’t just involve a request from the business telling us to do something, and then we go and do it. The business process team works closely with our IT team and helps us to understand the ins and outs of the processes we’re dealing with, versus just coming up with a quick-fix IT-centric solution on our own,” says Goihl. “Through this process, we ask ourselves what needs to be changed—is it the business process, the IT solution, or a combination of both?”
The newly collaborative environment represents a radical change in Datacard Group’s corporate culture. “People are at the table wanting to help improve things,” says Pelletier. “They feel they are in a partnership now, and as a result they have a lot of other great ideas—not just for their own teams but for the business overall.”
Datacard Group’s employees now collaborate regularly with the business process group on creating and improving repeatable, IT-supported business processes that increase efficiency.
One of the business processes that Pelletier and his team re-engineered was the distribution of pricing to partners. Datacard Group distributed pricing for its secure identification and card issuance products to about 250 partners quarterly by e-mailing a price book of multiple spreadsheets. Creating the book, however, involved hours of manual input by people in marketing and sales. The process of changing a price was complex and time-consuming. Partners who received the price books had to manually type them into their own systems—a process that would require a disruption of business for as many as two days.
“The process was highly complex and hugely people-dependent,” says Datacard Group Senior Vice President of Marketing Russell St. John. “It involved manual typing and checking data and affected people across the globe. It was a drain on our sales and marketing staff and was taking time away from more-valuable functions.”
To address the problem, the business process team led a series of kaizen events that examined the process from all angles and the IT around it. Pelletier says the group recruited key sales, marketing, and IT staff members to participate, including employees from international offices. In that environment, IT was challenged to break away from existing methods to create a re-engineered process.
After eight months of intense collaboration and process review, the IT team built a custom solution in Oracle E-Business Suite to automate the pricing process, creating a single version of the price book. Now, each customer gets a price book tailored to its company’s needs, in a format that can be automatically fed into its company’s systems, decreasing the quarterly downtime for price updates. The redesign led to big rewards: productivity savings of 6,000 hours annually and twice that at partners’ sites, and happier partners who save time on entering the data into their own systems.
“Our sales and marketing folks can now work on initiatives that are more value-added that require creativity and innovative thought, and they’re doing higher-level work,” says St. John. “For our partners, the change has had a dramatically positive impact—we took away the manual data entry portion for them, which made us more competitive.”
Goihl says he has gotten positive feedback about the new pricing distribution process from Datacard Group’s partners. “They have everything at their fingertips now, versus having to look through multiple pages and spreadsheets to find what they’re looking for,” says Goihl. “We took about seven steps out of our process of creating these price books.”
The process also involved the strategic, proactive help of the IT team. “The big cultural change from my IT group is around listening to the problem first, and then trying to find the solution,” says Pelletier. “They understand that their job is not only to drive IT strategy—it’s to solve business problems.”
In order to deliver its high-performance, cross-application processes, Datacard Group relies on a holistic IT environment made up largely of Oracle technology and applications. The tight integration between the applications enables the cross-departmental business processes to flow faster and more easily. The organization uses Oracle E-Business Suite, Oracle’s Agile Product Lifecycle Management applications, and Release 9.2 of Oracle’s PeopleSoft applications. “We do almost everything in the company within Oracle E-Business Suite—from purchasing and billing to manufacturing, shipping, and inventory. You name it, we’re doing it in Oracle E-Business Suite,” says Goihl.
A number of business processes run across the applications. “Oracle E-Business Suite and the PeopleSoft applications talk back and forth with the interface. What the engineering team is doing in Agile then gets transferred down to Oracle for ordering and manufacturing. So all three of those systems are very tightly integrated into one solution for the company,” says Goihl.
For example, when introducing a new product, the engineering team will put the parts and bill of materials into Agile Product Lifecycle Management applications. The information flows through a third-party data processing application and updates Oracle E-Business Suite automatically, so that the order is correctly processed and billed.
Datacard Group also deploys Oracle CRM On Demand for sales processes. Oracle CRM On Demand is integrated with Oracle E-Business Suite so that information such as sales opportunities and quotes automatically flows between the two applications. “The tight integration between the two Oracle applications saves our customer service employees significant time, because they don’t have to manually re-enter data. This also saves time and money lost on data errors,” says Goihl.
Percentage of the world’s payment cards that use Datacard solutions
By deploying Oracle Exadata in 2012 to run the three main Oracle applications and employing Oracle Platinum Services to maintain the hardware, the business process group achieved further gains in productivity. (See “Oracle Exadata Delivers Simplicity, Productivity, and Performance” sidebar.)
Datacard Group’s business process reengineering efforts have paid off. Customers are happier thanks to more efficiently run processes such as the improved price book distribution and the improvement of on-time shipment of supplies and spare parts. Employees feel more valued because their input into improving business processes is encouraged, and their productivity has increased because the time spent on manual, inefficient tasks has decreased.
The business process group has improved a number of other areas as well: easier identification and development of new products, reduced time to market of products, standardized global processes, improved cross-sell and up-sell processes, improved operational efficiencies, and increased overall organizational effectiveness. All of these changes have translated into profit—revenues have almost doubled since the company began the redesign process four years ago.
For the IT team, Datacard Group’s business process redesign means that IT is viewed as an integral part of the business and a strategic partner in working toward business goals.
“Instead of thinking of us as a necessary evil that helps them with e-mail and Microsoft Exchange problems and shying away from us, the business side is coming to us and knowing that we can help them,” says Goihl. “They’re looking at IT as a solution provider now, instead of just someone to implement a solution.”
Monica Mehta is a frequent contributor to Profit.
Oracle Exadata Delivers Simplicity, Productivity, and Performance
As part of Datacard Group’s business transformation project, in 2012, Chris Pelletier, senior vice president of strategy execution and business process at Datacard, deployed Oracle Exadata to run the tier 1 applications, including Oracle E-Business Suite, Oracle’s Agile Product Lifecycle Management and Oracle’s PeopleSoft applications, and a third-party business warehouse. The quarter-rack configuration currently processes about 800 GB of data. Pelletier chose Oracle Exadata to simplify management of the IT systems and to gain performance increases. “Our deployment of Exadata has been successful,” says Pelletier. “We went from eight pieces of hardware in our old solution to one piece of hardware. Our databases and four systems are running better and faster, with less headcount to manage them. Oracle Exadata has led to our biggest productivity gain during our business transformation.” Datacard Group utilizes Oracle Platinum Services to maintain the appliance, which frees up IT staff for projects that help grow the business. “Oracle is helping us manage our costs by doing the maintenance on the hardware for us,” says David Goihl, vice president of information technology at Datacard Group. “We no longer have to have our internal staff doing mundane tasks of system maintenance.”