The Role of Business Architecture in Mergers and Acquisitions

Deb Boykin, Director BPM March 21, 2012

Company Profile

• Pfizer is headquartered in New York City

• Diversified global health care portfolio includes; Human and Animal Biologic

Small Molecule Medicines and Vaccines

Nutritional and Consumer Products

At Pfizer, we apply science and global resources to improve health and well being at every stage of life

Agenda

• Introduction

• Establishing Process Governance

• Business Endorsement of the Global Model

• Global Model Enhancement to optimize the new organization

• Adoption and Implementation of the Global Model

“Mergers and acquisitions (M&As) are a major challenge for CIOs and IT, where conventional leadership and management techniques can often fall short. With M&As on the rise, and IT's integration role more critical than ever, it pays for CIOs to build their M&A integration capabilities using proven techniques.”

Gartner

Background

• 2009

• Pfizer Acquires Wyeth Pharmaceuticals

• SAP selected as Pfizer’s ERP tool of choice

• 2010

• Process Governance established

• Global Model Baseline endorsed

• 2011

• Successful Deployment of first Global Model Implementation

What is the ERP Global Model?

Documented business/program processes (ex: standard sales order, Process Governance)

System functionality, master data elements and global positions

Training courses Global test scripts Reports, custom and standard Global interfaces to approved

applications Performance Metrics

The Business Architecture Model consist of standard Business Processes supported by ERP functionality

Global Model Lifecycle

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Establish Governance

Endorse Global Model

Enhance Global Model

Implement and Adopt Global Model

Understand the current Global Model

Assess Process Synergies to implement best practice

Deploy Global Model

Mobilize Governance Team

Deliverable: Global Model Endorsement

Deliverable: Approved Global Model Enhancements

Deliverable: Health Check Reports, Operational KPIs, Business Value Realization

Deliverable: Engaged team responsible for the alignment of Strategy, Business Process and System Functionality

Establishing Process Governance

Establish Governance

Endorse Global Model

Enhance Global Model

Implement and Adopt Global Model

Process Owners

Invoice to Pay

Invoice to Cash

Tax and Treasury

T&E

R2R (2x)

Risk and Compliance

Finance

Commercial

Commercial

Logistics

Global External Supply

Global Packaging

Supply Planning

Engineering

Manufacturing

Lab Processes

Global Pack. Services Quality

Compliance Processes

Quality and Compliance

Regulatory –Artwork and Labeling

R&D

Finance Commercial Manufacturing Quality and Compliance R&D

Indirect Procurement

Indirect Procurement

Executive Sponsors

Process Drivers

Manufacturing

Business Process Governance

• What is business process governance?

Business Process Governance is a partnership between IT and the Business

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Business Process Governance

• Why is it important to Pfizer? • To enable business ownership of Pfizer business processes

Process driver is the single point of contact for in-scope business process decision-making globally

• To achieve control and balance of global business process standardization Objective: 85% standardization, 15% specific legal, regulatory or customer

required customization

• To ensure decisions are made in the best interest of Pfizer globally Best practice sharing across Pfizer through a network of expert process users

and SMEs

Business Process Governance provides corporations with the capability to optimize processes, systems and roles to align their strategic direction

Business Endorsement of the Global Model

Establish Governance

Endorse Global Model

Enhance Global Model

Implement and Adopt Global Model

Global Model Endorsement signifies understanding of the current Global Model and agreement on the process changes which are delivered based on approved enhancements.

Global Model Endorsement

Executive Sponsors and Process Owners Endorse Global Model Maps at the Summary Level

Process Component

Each process component is governed by a single Process Driver

Executive Sponsors and Process Owners endorse at the Summary Level (“What” Map)

The first level of detail is the “What” model which depicts the Process component lifecycle

Process Drivers Endorse at the Detail Level (“How” Map)

The second level of detail is a “HOW” process model that depicts the process steps and how they are executed in the business

• Face to Face Meetings co-led by Process Driver and Solution Owner

• “ I have reviewed the GME summarization document and endorse that the attached list of Global Model Enhancements are necessary to be added to the Global Model.”

Executive Sponsor, Process Owner, Process Driver Endorsement Document

Written endorsement drives ownership

ERP Global Model Endorsement

I endorse the ERP Global Model Baseline maps which are relevant to the Process Components listed below:

Process Component Name Endorsed 1 Agenda Topic: Demand Planning

• Establish Demand Requirements (P1.1) 2 Agenda Topic: Supply Planning and Replenishment

• Balance Demand and Supply (P1.3) • Plan Source (External - P2.4) • Plan Distribution (DRP) (P4.1 - P4.4)

Business Process Owner Endorsement: This endorsement reflects the baseline maps effective on the date of my signature below. _________________________________________ Name _________________________________________ Title _________________________________________ Signature _________________________________________ Date

Global Model Enhancement to optimize the new organization.

Establish Governance

Endorse Global Model

Enhance Global Model

Implement and Adopt Global Model

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Global Model Enhancement is... ... leveraging the existing global model

The existing global model is deployed and has proven its value Enhancements are those required to address critical business requirements

... focused on global requirements for the good of the company As opposed to what is good for a particular location Efficiencies for the global network may not necessarily translate to what is best for an

individual location

... expected that the global model will meet 85% of the requirements Additional local, regulatory, statutory, and tax requirements anticipated during

deployment

Choose the best practices from each company to optimize process value across the new organization

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Global Model Enhancement is not...

... Business Process Reengineering Existing business processes will be leveraged We are not starting from a blank sheet of paper

... an open forum for new business requirements The immediate focus is on deploying the solution to Pfizer entities New requests for functionality will be incorporated via the business process

governance Once the solution is implemented, new functionality will be incorporated through

continuous improvement and "business as usual" Enhancement Requests

Stay focused on current practices to deliver quickly

Analysis of Existing Models

•Scenario 1: Use Company A’s Process •Scenario 2: Use Company B’s Process •Scenario 3: Hybrid A + B Process

People Process Performance Systems

- Assess Strengths and Weaknesses - Determine Cost, Revenue, Risk

- Assess Strengths and Weaknesses - Determine Cost, Revenue, Risk

- Assess Strengths and Weaknesses - Determine Cost, Revenue, Risk

Leverage the strength of both companies to deliver the full potential of the merger/acquisition

Implementation and Adoption

Establish Governance

Endorse Global Model

Enhance Global Model

Implement and Adopt Global Model

Deploy the Global Model to New Sites.

Sustain the Global Model at Existing Sites.

Improve the Global Model across the Enterprise.

System deployment and Process Understanding

Business Adoption and Process Monitoring

Continuous Improvement and Process Optimization.

Driving Process Standardization Global Visibility

Improvement against Scorecard Metrics

Business Value Realization

The Needs Approach The Results

M&A has 3 components. It begins with the initial Deployment, but Sustaining and Improving are on-going architecture initiatives that must be managed through change control.

Business Adoption and Process Monitoring

Business Architecture provides the framework necessary to perform Process Monitoring activities that allow Process Focused Communities to monitor Solution performance as intended.

Identify Health Check Metrics and protocol for auditing and issue escalation process for CoP.

Establish Process Focused Communities with standard approach to process monitoring

Identify the key Health Check Metrics for monitoring ERP Go Lives based on deployed processes

Ensure operational reporting aligns to Business Value Realization

Design and Monitor the ER Management Process for Deployments.

Summary

• Establish clear expectations for comparing organizations and processes

• Determine opportunities for realizing synergies in regards to roles, systems, activities, etc

• Ensure that the best processes are leveraged in the new organization

• Determine the effort required to standardize processes across the new organization.

Business Architecture is vital for companies wanting to build their M&A integration capabilities

Business Architecture’s Role in M&A

Questions?