A computer manufacturer improves its global supply chain management and achieves more than $100 million in annual cost savings and $200 million in reduction of assets. An Indian steel company revises its marketing strategy and realizes cumulative profit increases of more than $70 million. NASA performs a risk analysis of the heat shield of the space shuttle orbiter and obtains a 7% reduction in overall accident probability. A telecommunications company develops a simulator that increases revenue by more than $1 billion in a single year in the $8 billion inbound call center market.
What do these true success stories have in common? They all take an analytical, cross-functional, information-centered and prescriptive approach to managerial decision making and to the design and operation of business processes and systems. These terms warrant explanation.
The approach is analytical owing to its roots in the foundation disciplines of economics, information technology, mathematics, operations research, probability and statistics and systems engineering. Often, analysis involves building models that can be quantified and that lend themselves to formal or computational study. Analyses are never done for their own sake, but rather in pursuit of insight and deeper understanding.
The approach is cross-functional in that it strives for integrated, organization-wide analysis. It does not commit to any one application context or viewpoint — neither accounting nor finance nor any other traditional functional area of management — and yet it draws as appropriate on paradigms from all of these. This is particularly evident in applications to supply chain management and to business process re-engineering. Thus, the approach helps to unify the separate functional areas of management and acts as a spawning ground for new analytical methods that these areas can eventually assimilate.
The approach is information-centered because good analysis demands good information, because the focus is on the real world rather than on academic abstractions, because of the emergence of an information-based global economy and because the growing superabundance of data and information presents numerous compelling opportunities for analysis.
Relevant techniques include those for observation, data acquisition, verification, transformation, refinement (data —> information —> knowledge chain) and effective presentation. Many of these techniques are statistical, computer-based or make use of new digital technologies.
The approach is prescriptive because it aims to develop sound, defensible advice on the problems and situations it analyzes. It is descriptive only as a step toward that end. The idealis to give the best possible advice, but not at the expense of analysis paralysis. Usually it is possible to do considerably better than ordinary "what-if" analysis.
This approach has been proven time and again in applications to nearly all industries and all functional areas of management. The Decisions, Operations and Technology Management (DOTM) area adopts this approach in its teaching and research. We believe that this is the best way to cope with the major challenges of the day, which include rapidly advancing technology, the emergence of the digital economy, the data deluge, the transition to a service-oriented economy, globalization and outsourcing and other factors that tend to destabilize existing organizations and require frequent adjustment of structures and operating policies.
DOTM courses and research span four major areas of focus: strategic planning, system design, operations planning and control and technology. Strategic planning includes e-business competitive strategy, technology and capacity planning, integrated logistics, system location and strategy implementation. System design examines process design and location, capacity balancing, facility planning and the integration of computer- and communication-based technologies. Operations planning and control covers aggregate planning, forecasting, inventory management, process measurement and management, scheduling and system reliability. The technology area overlays the other three and covers decision technology, information technology and manufacturing technology. It includes technology-based competition and analysis of the effects of technology-driven impacts on products, processes, markets and organizations.