In this external element of the WITORG Guide, we will reflect on the various systems used to support the organizational systems. They include hardware, software and methodologies used daily in any organization.
The systems world is broad and often interconnected. We will talk about some concepts such as: ICT, ERP, CRM, PLM, PDM, lean manufacturing, lean thinking, VSM, Toyota system, MTM, big data, industry 4.0, automation pyramid, BI, SQL databases, NoSQL databases…
In the WITORG Guide, ‘C. Systems’ is one of the external elements. Systems have been, and continue to be, elements developed to support an organizational system. They are tools selected and acquired by the organizations at a specific moment, which will be used for a large number of tasks, routines and functions within the organizational system both internally and in connection with the environment where they interact. Once acquired in an organization, as they are parameterized and implemented, they are a core part of the organizational system’s design.
The decisions made in the internal elements of the guide 100, 200, 300, 400, 500 and 600, will be very important in the parameterization and implementation of the systems, hence it is an external element of the guide. Each organization, once there is an external system incorporated, will make it its own and unique when mixing and parameterizing it with decisions taken in the named internal elements.
Methodologies, hardware and software are not an end in themselves. They are tools used within an organizational system to achieve goals, targets and continue to survive. And in survival it will surely be necessary to evolve these systems, or even to change them and, to a certain extent, to start over.
Malfunction of a system within an organizational system
It is common to see how a system that works acceptably in an organization Z, does not do so in another organization X, even if both organizations operate in the same sector, create similar products or services, are in the same region, have similar size and apparently the same organizational system needs. Sometimes, the most curious thing is the feeling within organization X, where the system apparently does not work, that the fault of the system’s malfunction is the system itself.
ERPs are a clear example of this type of situation. The implementation of lean manufacturing methodologies, including 5S, VSM, Kanban and SMED, can be another clear example. Surely the reader will remember more.
When an organization decides to incorporate a new system into the organizational system, there may be several reasons for it, some are:
- To replace an already implemented system that is not functioning at an acceptable level.
- Technological or methodological obsolescence of the current system.
- A customer’s requirement.
- The need to work with customers, suppliers, public administration, etc.
- Apparent competitive advantages regarding the system currently operating.
- A strategic decision.
In today’s world, practically every day some new concept/system appears within the systems. They promise spectacular results and it is normal to be alert to see if any of the new management concepts, methodologies and tools could provide some kind of organizational improvement. However, it is also common to find implanted systems in organizations, which are far from reaching their maximum development potential and which cause some disappointment at having created high expectations.
What are the reasons for not having developed to its maximum potential or being close to it? Some are:
- Lack of knowledge about the system itself. In other words, lack of training.
- Being reluctant to develop it due to the feeling of little potential for improvement.
- Departmental organization where the system is used by several departments that work in a Taylorist way without too much connection or transparency between them.
- Lack of interdepartmental or cross-functional leadership among functions.
- Cost associated with further developing the system.
- Sensation within the organization of non-availability of time to continue developing the system.
- Lack of clarity in the internal elements of the WITORG Guide 100, 200, 300, 400, 500 and 600.
Speaking of systems in general, and without going into a specific case, it can be difficult to find generic reasons why a system has not developed to its maximum potential, or a high percentage of it. However, if we focus on more specific cases, it may be easier. Some classic examples:
- Tools used within lean manufacturing, such as SMED, 5S or design of a VSM, are usually systems, methodologies or even philosophies whose implementations are difficult and reach a small degree of development with respect to their potential. Many times, after a huge effort in its first implementation, these systems are neglected and deteriorate.
- In the case of ERPs, the generic reasons presented in this section for which a system does not develop until reaching a high percentage of the maximum development become more evident.
- Systems for the management of all employees’ ideas for continuous improvement. They are launched with great impetus and the system quickly decays.
- Any other the reader wants to add.
Systems are an external element of the WITORG Guide. This is because their incorporation into an organizational system requires prior work. Without an analysis and if you are not aware of the reality of an organizational system in terms of the internal elements of the WITORG Guide, the probability of success in the implementation of a system decreases.
In the reality of organizations there are real failures in system implementations, which could be avoided by reflecting on internal elements and being aware of reality.
Systems and process management
At present, it can be difficult to differentiate between a ‘system’ and a ‘management process’. For example, in an ERP several management processes or subprocesses can coexist, represented as management processes in the management process map of a specific organization.
Some questions about this:
- Who parameterizes an ERP where several management processes coexist and the same parameter can affect more than one management process?
- Can different organizational functions parameterize a system without considering the rest of the functions?
- Can the parameters of a management process or organizational function influence in a positive or negative way the performance of another management process or departmental function?
We will try to differentiate between the management process and the system, even knowing that many routines of the management process are executed within a system.
It is described in internal element ‘300. Process management’, differentiating processes and subprocesses as much as possible. Both encompass a series of activities related to management, generally interconnected, for the achievement of an objective or goal. As a management process you can include activities, for example:
- Process management ‘order-delivery-collection’. All management activities, for example in serial manufacturing, including since a customer places an order, it is manufactured, delivered and charged.
- Process management ‘launch of new products’. All management activities included from product design, development and tuning, marketing, supply, etc. to offer it to the market.
As a management sub-process, functions, maintenance, quality, logistics, expeditions, etc. can be included, which support a main process management.
Systems include software, hardware and methodologies, which support management processes and management subprocesses.
Once systems are incorporated into management processes or subprocesses, the organizational system operates and develops its routines, operations, etc. From that point, the systems will work with the essence of the organization, in terms of introducing in it its elements, such as information on product, process, purchases, costs, sales, people, customers, suppliers, administration, calculations for various functions, various analyses, etc.
In reality, some organizations feel dissatisfied with their systems, blaming them for organizational malfunction. WITORG, however, believes that the design of the management processes is the necessary basis, and previous step, for a later choice of one or other system. This is seen when comparing two Z and X organizations (same sector, similar product and even organizational needs) with the same system and different approach to process management. In an organization Z, the management of a management process is carried out efficiently, using the same systems as a second organization X. Meanwhile, in organization X, a sense of chaos is perceived in its management despite using the same system than Z. For both organizations X and Z, it could be mentioned that, to the same system and different management processes, the performance can be very different.
It must also be assessed what new systems offered in the market could cause a management process to be rethought to a certain extent, since it can be significantly improved.
As a summary of this point, we cite the importance of a good design of management processes for a later incorporation of systems or tools that support them. Always not forgetting that a new system could provide functionalities to evolve a management process or even redesign it in an important way. Therefore, defining what goes first, if the design of a management process or the knowledge of a system, is something to study in each case and according to the starting situation.
Systems and databases (SQL and non-SQL, blockchain…)
We will reflect in this section on the importance of databases within organizational systems, therefore on the systems incorporated into an organizational system. Having information has always been related to power or to the advantage of anticipating others in decision making. And the databases store data that can be converted into information, which will be used in decision-making and for self-learning.
To operate with databases it is necessary to use different programming tools to create systems. Although we will discuss only about databases, the need for knowledge of programming environments will always be present.
Then, chronologically and through six points, we will describe a series of key milestones in the history of information storage.
I. Paper files
Until four or five decades ago, the most common way for information storage was on paper. We can include in this section engineering drawings, suppliers’ contracts, customers’ contracts, offers, budgets, specifications files, records and a long list of all types of information..
II. First SQL databases and for files 2D and 3D
Although the first relational databases began to be developed more than four decades ago, it was around 1980 when SQL databases began to be used in ERP systems in a massive and centralized way within organizations. The storage in 2D and 3D began to generalize also in those years, although only within organizations.
The high cost of these storage systems was only possible for medium and large organizations at the beginning. In a few years, and thanks to technological progress, they became more widely available.
III. Personal computers, Lotus 123, Excel, Access
In the 1990s, the use of personal computers became widespread and, in addition to having centralized storage systems, personal computers began to be used. Lotus 123 spreadsheet became popular, subsequently Excel went on to lead the market.
IV. Internet, big data, non-relational databases:
From the creation and development of the Internet, or www (World Wide Web) over the decade of 1990, NoSQL databases began to develop, with information storage capacities far superior to SQL. The possibility of storing an immense amount of internet data or the possibility of storing the data generated internally in an organization as part of the industry 4.0 concept represents an opportunity to generate useful information to make organizations evolve. Self-training through the analysis of this information is also a key point for an organization’s development.
Therefore, the organizational systems will evolve with the aim of understanding complete management processes. Hence the importance of knowing database structures and how they collect the information flows that make up a management process.
Currently, access to the technologies in this section is available to most organizations. The possibilities of interconnecting between different entities and working collaboratively are extensive and constantly evolving. Mastering these technologies can help the evolution of organizations’ organizational systems.
V. Blockchain. Distributed registry technologies
The blockchain concept, within the ICT, began to be known due to the cryptocurrency, bitcoin. The distributed storage system is constituted by a network of nodes (computers or other systems), where the same information is stored. The verification of the certainty of the information is carried out in a consensual manner by different independent entities. Once the information has been verified, it is stored in each of the nodes. It cannot be modified from its storage.
With this concept, information is no longer centralized, therefore transparency is guaranteed. Bitcoin is a recent reality, born in 2009. The blockchain concept and the associated ICTs will bring the development of many tools within the system for many different uses. And not only as a concept of information storage, but also as an organizational concept. In chapter ‘Organizational systems and their evolution’, the blockchain concept will be treated in its organizational aspect.
VI. The evolution of communications through the internet
Another of the basic aspects of systems is the speed of communication through networks. In the last twenty years ago, the communication speed of 36 K second has passed to 300 Megabytes/second. When you read this book, maybe that speed has been exceeded.
These speeds and the systems that support them have the following possibilities from the ‘cloud’ concept:
- SAS: Software As a Service. These are complex or simple information systems (ERP, 3D design, blogs…) that integrate a variety of operations. It is paid for system use. These systems are an essential part of the organizational systems that support the process management. The advantages are cost savings per hour of use and software supported by a third expert party in theory and who gives a better service.
- IAS: Infrastructure As a Service. The necessary equipment is subcontracted (servers, components, networks…) to accommodate all or part of the systems (ERP, 3D design, spreadsheets, word processors, databases, various software…) of an organization. The advantages are the cost savings of having a third party managing an infrastructure in which there is a specialist and it can manage several software licenses in a centralized way instead of having to install them on personal computers.
- PaaS: Platform as a Service. It is a combination of SAS and IAS. They are services in the cloud where the infrastructure (servers, components, networks, etc.) and the different software (ERP, 3D design, spreadsheets, text processors, databases, various software…) are used according to the SAS and IAS concepts. PaaS services are hosted in the cloud and users can access them simply through their web browser.
Reflections on organizational systems, systems and points I, II, III, IV, V and VI
Many of the systems are supported by databases. In this sense, some reflections or ideas are presented below, always prudently, as this is a complex world:
- A system is not an end in itself, except, to a certain extent, cases in which an organization develops a system to be sold. A system is a set of methodologies, software or hardware that facilitate the management of management processes to achieve goals or objectives, within a more or less formal organizational system.
- Many of the systems use databases, and here is the first big question: if to achieve an organization’s objectives or goals we use systems, including their databases, what is the organizations’ managers knowledge (specially speaking about all the small and medium) of the structures of these databases on which their management processes operate?
- If it is necessary, to some extent, to have databases and programming notions to design management processes, can a manager collaborate in the design of a management process without knowing what a database is?
- In general, in ‘lifelong’ organizations (large, medium and small), except for the technological ones created two or three decades ago, the majority of directors, managers and qualified technicians, the database they have slightly learned to handle is Excel or a similar software.
- For example, when a company has an ERP, and despite this, people use Excel massively because ‘the system’ does not give them what they need, behind this reality lies a poor design of management processes, little knowledge of databases and, usually, a functional or departmental organizational model.
In general, directors and managers in traditional organizations (non-technological), were born before 1975 and, in a high percentage, share common characteristics:
- They have developed their careers mainly in departmental organizations, when management of processes or process management was beginning to be conceptualized.
- They use Excel, Word, Power Point and in a minimum percentage, Access.
- Knowledge of corporate relational databases is minimal except for a small percentage.
- Big data, what is this and what is it used for?
Despite these characteristics shared by most directors and managers, many organizations survive and even meet or exceed their objectives and goals. Therefore, to continue surviving, in many cases, a traditional conception of organizational system has been enough. However, we will state sectors where there have been major changes:
- Entertainment industry, music, cinema: Netflix, YouTube, iTunes, Spotify…
- Retailing: Amazon…
- Advertising: Google, Facebook, influencers…
- Travel agencies, accommodations.
- Passenger transportation.
- Freight transport.
- Fashion: Inditex…
What will be the next big change in the business model? Who and in what way will it affect? These cases proof that new business models, based on redesigns of management processes and supported by new technologies, where SQL and NoSQL databases are differentiating elements, are the key factors that have made part of the traditional industry to be restructured in a way unthinkable not so long ago. Therefore, the two fundamental elements in the changes of business models have been:
- The domain of the technological world and understanding of technologies, with databases as a key element.
- The vision of an organization as a whole, evolving it from a Taylorist and departmental conception, to the organizational understanding based on process management.
Lean concept and systems
Today, the lean concept is usually present when talking about management systems or organizational systems. This concept includes others such as lean thinking, lean manufacturing, muda, Kaizen, monozukuri, monozukuri gemba, 5S, VSM, JIT, 6-sigma, SMED, takt-time and many others. Lean is also described with adjectives as slender, simple, simple, agile, light, adjusted, efficient, effective, intelligent, etc. in relation to methodologies and management systems.
All these concepts and adjectives attributed to the word lean make it a management philosophy. This philosophy is applicable to countless cases in different sectors and cases.
The lean concept originates in Japan after the Second World War, although the term is coined long after the birth of the concept. It seeks to rationalize production systems, mainly automotive (Toyota system), working two points:
- The elimination of ‘muda’, that is, everything that does not add value to the product. The term muda encompasses any waste from human activities and productive processes that consume resources and do not generate value.
- A form of management of the logistics chain where it is sought a subordination of the entire production chain to the client and its rhythm. From here, terms and methodologies such as Kanban, JIT and VSM.
From now on we will call the sum of these two points: ‘removeMUDA & VSM’.
The lean concept is generated in specific circumstances:
- The country is in a post-war situation after the Second World War.
- The need to rebuild the country.
- Industrial world.
- Very hierarchical society, as well as its organizations.
- People who enter an organization for life.
- Sense of belonging to an organization and its work environment.
- Organizations’ commitment so that increases in productivity do not lead to layoffs.
- Others related to the idiosyncrasy of Japanese society, transferable to their organizations.
In its origin, and with the concept ‘removeMUDA & VSM’, concepts, methodologies, tools and systems are developed, with the aim of improving the implementation of lean.
In this historical development of lean elements, the need to order and connect them arises. From here the concept of ‘lean house’ appears. If an Internet search of ‘lean house’ is carried out, an infinite number of results will appear.
All these representations appear, on the one hand, from the need to want to understand everything that encompasses lean. On the other hand, we also try to create an order to know which elements are basic and therefore the first to be implemented and which others are developable after having implemented the basic ones. However, many of these elements of the lean house are implanted in organizations where the basic concept of removeMUDA & VSM is not so present.
The following questions arise:
- What elements make up lean in reality?
- What does it mean to be a lean organization?
- Does using tools called lean mean being a lean organization?
- Could it be assessed with some measures which organization is the leanest or which organization has a leaner implantation?
- Can a departmental organization be lean?
- Within the concept of removeMUDA & VSM, the part of subordinating a logistic/productive system to the rhythm of the client has been called VSM. Is it possible to work VSM as a whole (WITORG definition in ‘300. Process management’) in a departmental organization.
- How many years has taken organizations recognized as lean to evolve their organizational system until reaching a satisfactory level in it?
Next, a WITORG version of lean house:
As it can be seen, it is a representation of lean elements, as well as some organizational and management phases until it can be considered lean. However, in this type of lean houses it is complex to represent other elements that are which will make it possible for that lean house to be operative. These elements are proposed in the WITORG Guide as 100, 300 and 600.
This section aims to show the complexity of moving from considering a lean concept represented in a lean house to a real and satisfactory lean implementation within an organization. The lean concept has derived in many elements intermingled and treated in a conceptual way. The lean concept is within the systems, therefore it is an external element. At any given time, an organization will want lean elements for its organizational system. When these concepts are implemented, they will be reflected as internal elements of the guide, mainly in points 200, 300, 400, 500 and 600.
To conclude, we leave some notes about the concept and the lean universe:
- The original concept pursued the explained above, such as removeMUDA & VSM.
- The lean originated in Japan, in a post-war situation and in the car industry.
- The lean concept has evolved and has been adapted for other sectors, both industrial and others.
- The organizations considered lean referents have been developing and evolving for years, if not decades, their organizational systems.
- Inside the lean houses there are elements that existed before the origin of the lean, or that are used both in the lean world and in organizations without a clear lean focus. Therefore, sometimes the lean concept can be confused with tools or practices that in principle should not be assigned to the concept, although they do help to develop it.
- The lean concept must be defined and implemented in each particular organization, although we can use tools or methodologies that are available in the market.
- The VSM part of removeMUDA & VSM requires a clear focus on the section ‘300. Process management’. And, therefore, work for management processes or systems instead of for heads or departments.
- How to structure the teams of people, how they work and the organizational design is something hardly explained in a lean house. Each organization has a specific casuistry up to a certain point and requires its own solution that will have to evolve to continue working on the removeMUDA & VSM concept.
The new dimension of organizational systems
As conclusions of what has been explained in this chapter we can point out:
- In many organizations, there is a malfunctioning of the systems due to poor design of the process management.
- Understanding an organization in a departmental manner hinders the knowledge of systems.
- In several sectors there is a poor knowledge of the databases, without this knowledge it is difficult to understand the systems and obtain benefits from their use.
- Knowledge or understanding of new systems can offer organizations ideas to redesign their process management.
- Some sectors have evolved dramatically in recent years. New organizations, using systems, have been able to rethink traditional business models through management processes supported by systems or new technologies. These new organizations, in some cases, have even managed to be the new leaders of their markets, removing protagonism or expelling those that existed until recently.
The evolution of systems constantly brings new options to rethink business models and management processes. The systems, in constant evolution, contribute new possibilities to the organizations and involve a new dimension of the organizational systems:
- People require knowledge about the system as a subject or topic, common to all specialties. Increasingly, any profession integrates a technological base for its performance. Not having the knowledge implies not being able to exercise a profession, as it evolves on a technological support that is an important part of it.
- The interconnection between people and their activities can be carried out on systems. Systems provide transparency. ‘Transparency’ is not something authentic and genuine, something cool, it is a way of showing information and activities clearly, where it is more complicated to hide information or activities used in a partisan way within the same organizational system.
- The possibilities of interconnection provide facilities for the management or business processes to be transparent. Knowing a process management shared by several people who exercise different functions within it creates cohesive teams of people, where the detection of inefficiencies of operation or opportunities for improvement is easier. If from detection the teams of people are able to evolve a management process, the road to continuous improvement and survival is easier.
- The systems allow a self-learning capacity on what is done. Big data, SQL and NoSQL databases, industry 4.0, more powerful and faster networks, imply a new concept of self-learning.
- The relationships between people within an organization (with its organizational system), based on the constant evolution of the systems, imply an evolution from Taylorist ways to more holacratic ways.