CAVS Publication Abstract

The Role of Goldratt Thinking Process in Enterprise System Impementations

Walden, C. (2001). The Role of Goldratt Thinking Process in Enterprise System Impementations. CAVS Extension Technical Report.

Abstract

Companies by the droves are implementing enterprise systems (ES). It is not atypical for the largest capital investment in the history of a company to be its ES. The issue of how to derive maximum business value from ES implementations has received considerable attention in the literature, both in academic journals and popular business publications. This paper begins by reviewing the works of two experts, Thomas Davenport and Eliyahu Goldratt. Davenport’s approach to the ES implementation problem as described in Mission Critical: Realizing the Promise of Enterprise Systems is contrasted to Goldratt’s approach as described in Necessary But Not Sufficient. The review highlights areas of agreement, but also draws attention to points of conflict. Both Goldratt and Davenport essentially agree with the premise that ES implementations should be driven based primarily on business and not technical needs. Also both agree that core business processes need to be changed in order to gain the greatest possible benefits. However, they reach these agreements based on very different premises. Davenport places more emphasis on using ES as a primary driver, while Goldratt places more emphasis on leveraging the logical re-evaluation of a company’s business rules. Goldratt’s position is that we must first find and eliminate policies that impede system performance and only then begin to think about ESs. In contrast Davenport views ESs as the stimulus to make major changes to the business. Both see ESs as a necessary condition to system improvement, but Goldratt tends to view these systems as a “necessary evil.” Davenport appears to advocate a fundamental conflict between breadth (i.e., complexity) of ES implementation and the degree of business value obtained. While Goldratt argues that the degree of business value is not so much related to breadth or complexity of the ES, but to whether or not the ES system allows the system constraints, of which there are only a relative few, to be elevated or removed. Next a brief outline of Goldratt’s Thinking Process (TP) is provided. This introduces several new tools that appear to be useful in defining the requirements for improved business processes so that ES implementations are fully leveraged. A case study is provided which presents a tangible example of how the evaporating cloud, one of the tools from Goldratt’s TP, can be used to develop breakthrough solutions which may then be used to define simpler and more powerful business processes.