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Business Transformation in Action

Joe McKendrick

Velocity, Visibility, Reduced Variability: Homebuilder Leverages SOA and BPM

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What a tough time to be a homebuilder. That's why it was interesting to hear how one homebuilder has been able to leverage SOA and BPM to not only navigate a tough environment, but also thrive.

Ralph Warchol, VP and CIO of Clayton Homes, recently discussed these points at the recent IBM Virtual Global SOA Forum, "Work Smarter, Take Out Costs In a Tough Economy." (Full transcript of Warchol's talk available here.)

IBM is really, really bullish on SOA, and will be converging SOA experts and practitioners alike at its upcoming "IMPACT" conference, to be held May 3-8 in Las Vegas.

At this week's Webcast, Clayton's Warchol described how his team tackled service oriented processes to address a huge manual glut of paperwork that accompanied sales emanating from its 430 retail centers located around the country. The central office had 150 employees attempting to tackle the paperwork on a daily basis.

"At any given time, there are between 1,000 and 2,000 of these individual homes sales order folders being processed by the team," he explained. "A model home center sales rep calls you on behalf of their customer to inquire into the simple status of an order. What happens next? Where's the order? Where's the folder? Which department is it in?"

Warchol said the company recognized "a significant opportunity to improve what we now refer to as the three 'V's: improving the velocity of the process, increasing the visibility into the process, and lastly, reducing the variability within the process."

Warchol's team identified the various manual or redundant processes that were slowing the works, and built a "future-state model" that development would focus on and against which they could run simulations, to determine savings and ROI opportunities. The key to the new workflow was automating many tasks while enabling them to execute in parallel. "As a result of performing simulations on our prior and future-state models, using the actual employee labor costs from our sales order processing team, we were able to easily determine a dollarizer benefit. We determined that our total cycle time reduction opportunity was about 42%. Achievable through improvements to our total time required for each process step, as well as the queue time of work waiting to be executed.

Technologies leveraged for the new processes included imaging of sales order and legal documents, which was done up front, versus at the end of the process for archiving. "These images are then dropped into our WebSphere process server-based sales order workflow solution, where they are then processed from sales order initiation to close," Worchal explained. Back-end legacy systems, such as the company's AS/400, were Web-enabled.

Warchol is very adament that these processes be measured every step of the way. "It's said you cant manage what you cant measure." With monitoring capabilities, Worchal's team now has "the ability to measure process cycle time, wait time, and defect rates electronically, versus the old way through physical observation."

Interesting process observation about Clayton Homes: Most of their structures are built within climate-controlled assembly plants, then shipped out to the sites. That way, construction isn't hampered by weather conditions. Lately, the housing market has been turning around in some of the ground-zero areas affected by the mortgage crisis (such as California and Florida), so companies such as Clayton can start revving up their SOA efforts to propel new growth.

In this blog (formerly known as "SOA in Action"), Joe McKendrick examines how BPM and related business and IT approaches can promote business transformation.

Joe McKendrick

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. View more

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