Chapter 8: Weaknesses in Equifax security systems were evident well before the big The Clemens Food Group

ty systems were evident well before the big The Clemens Food Group raises and processes about five million hogs per rollout ended up taking several years and resulted in heavy
Case Study: Is the Equifax Hack the Worst Ever – and Why? hack. A hacker was able to access credit-report data between April 2013 year, managing procurement, production, and logistics services from birth customization.
8-13 Identify and describe the security and control weaknesses and January 2014. The company discovered that it mistakenly exposed to finished food products. Clemens has 3,350 employees. Organization: Clemens Food selected itelligence Group implementation
discussed in this case. consumer data as a result of a “technical error” that occurred during a For a company in the perishable goods industry such as Clemens Food to consultants to help with its master data and other migration issues.
On September 7, 2017 Equifax reported that from mid-May through July 2015 software change. Breaches in 2016 and 2017 compromised be profitable, it must have a firm grasp on the timeliness and accuracy of itelligence Group is a global SAP Platinum Partner with over 25 years of
2017 hackers gained access to some of its systems and potentially the information on consumers’ W-2 forms that were stored by Equifax units. orders and very precise information about the status of its products and experience. It offers a full range of services from implementation
personal information of about 143 million U.S. consumers, including Additionally, Equifax disclosed in February 2017 that a “technical issue” warehouse activities throughout its network of farms and production consulting to managed services for its clients. Clemens identified
Social Security numbers and driver’s license numbers. Credit card compromised credit information of some consumers who used identity- facilities. Accuracy in determining yields, costs, and prices in a wildly itelligence as a partner with deep SAP food-specific knowledge and
numbers for 209,000 consumers and personal information used in disputes theft protection services from LifeLock. fluctuating market can make a difference of millions of dollars. experience, including fresh and processed meat. itelligence Group had a
for 182,000 people were also compromised. 8-15 Discuss the impact of the Equifax hack? 9-14 What problem was the company facing. What management, proprietary Hog Procurement solution available for Clemens that helped
Equifax reported the breach to law enforcement and also hired a Hackers gained access to Equifax systems containing customer names, organization, and technology factors contributed to these problems? deliver an on-time and on-budget project with minimal disruption to the
cybersecurity firm to investigate. The size of the breach, importance, and Social Security numbers, birth dates, and addresses. These four pieces of Management: Clemens Food’s legacy systems were no longer able to business. itelligence Group had experience guiding other meat-processing
quantity of personal information compromised by this breach are data are generally required for individuals to apply for various types of keep up with production and support future growth. Management realized companies through similar largescale implementations. The company
considered unprecedented. consumer credit, including credit cards and personal loans. Criminals who the company needed a new platform to provide better visibility into wanted intelligence to act as business process experts to help Clemens
The Equifax breach was especially damaging because of the amount of have access to such data could use it to obtain approval for credit using production, more efficient planning, and tighter control of available-to- Food re-examine the way it did things. Clemens Food followed
sensitive personal and financial data stored by Equifax that was stolen, other people’s names. Credit specialist and former Equifax manager John promise processes. itelligence’s suggestions about modifications, budget management, the
and the role such data play in securing consumers’ bank accounts, medical Ulzheimer calls this is a “nightmare scenario” because all four critical Being in the perishables industry made it imperative for Clemens Food to overall testing cycle, and the philosophy of implementation.
histories, and access to financing. In one swoop the hackers gained access pieces of information for identity theft are in one place. have master data in place when the new system went live to avoid Technology: By the time Clemens Food migrated to SAP S/4HANA, its
to several essential pieces of personal information that could help Stolen personal data will be available to hackers on the Dark Web for disruptions to production or shipping capabilities. legacy ERP system was linked to more than 70 applications. One
attackers commit fraud. years to come. Governments involved in state-sponsored cyberwarfare are Organization: Clemens Food also wanted real-time information about especially valuable piece of project guidance from itelligence was to
Analyses earlier in 2017 performed by four companies that rank the able to use the data to populate databases of detailed personal and medical plant profitability, including daily profitability margins on an order-by- encourage project members to see the implementation as being led by the
security status of companies based on publicly available information information that can be used for blackmail or future attacks. order basis. business rather than just an IT project. Clemens Foods started out with the
showed that Equifax was behind on basic maintenance of web sites that 8-16 How can future data breaches like this one be prevented? Sales forecasting in the meat-processing industry has unique challenges project being IT-led, but after five months assigned internal leaders of the
could have been involved in transmitting sensitive consumer information. Explain your answer. because of the many variables from dealing with perishable products, raw business to be the project leads. That switch forced the project team to be
Cyberrisk analysis firm Cyence rated the danger of a data breach at There will be hacks—and afterward, there will be more. Companies need material by-products, and seasonality considerations. Every Thursday, more objective through all the different testing phases. After each testing
Equifax during the next 12 months at 50 percent. It also found the to be even more diligent about incorporating security into every aspect of Clemens Food ran a sales report on its old legacy system that showed the cycle, they had objective scoring from the dedicated team leads who
company performed poorly when compared with other financial-services their IT infrastructure and systems development activities. To prevent data previous week’s sales. Information about actual profitability was delayed. viewed the project as a business process improvement. That helped the
companies. The other analyses gave Equifax a higher overall ranking, but breaches such as Equifax’s, organizations need many layers of security Now, the company can measure profitability on an invoice-by-invoice project team move closer to a finished product, rather than waiting until
the company fared poorly in overall web-services security, application controls. They need to assume that prevention methods are going to fail. basis, and it knows the profitability of each order right away. Prices going live to find out it missed the mark. Including the business as equal
security, and software patching. As data breaches rise in significance and frequency, the government is change daily in the perishable food business, so the importance of having partners when updates were instituted helped ensure that customizations
A security analysis by Fair Isaac Corporation (FICO), a data analytics proposing new legislation that would require firms to report data breaches real-time information about profitability can’t be overstated. were avoided.
company focusing on credit scoring services, found that by July 14 within specific time frames and set standards for data security. Technology: Clemens Food created a five-year plan to modernize its IT ___________________________________________________________
public-facing web sites run by Equifax had expired certificates, errors in There are other measures every organization, public and private can and infrastructure with an integrated platform for systems to optimize its Chapter 10:
the chain of certificates, or other web-security issues. should take to secure their systems and information. Section 8.4, What are supply network and improve scheduling, optimization, and margin Case Study: A Nasty Ending for Nasty Gal
8-14 What management, organization, and technology factors the most important tools and technologies for safeguarding information visibility in its multi-business operations. The plan gained steam in 2014 10-15 How did social media support Nasty Gal’s business model? To
contributed to these problems? resources, of this chapter provides a list: when Clemens Food announced it would develop a third pork processing what extent was Nasty Gal a “social” business?
Management: Competitors privately observed that Equifax did not - Use appropriate identity management and authentication procedures and plant comprising 550,000 square feet in Coldwater Township, Michigan. Nasty Gal’s styling was edgy and fresh—a little bit rock and roll, a little
upgrade its technological capabilities to keep pace with its aggressive processes. The addition of this facility could significantly increase volume and bit disco, modern, but never hyper-trendy. Eight years after its founding,
growth. Equifax appeared to be more focused on growing data it could - Use adequate firewalls, intrusion detection systems, and antivirus double revenue if it was backed by a more modern IT platform. Clemens Nasty Gal had sold more than $100 million in new and vintage clothing
commercialize. software. Food’s existing ERP system needed to be replaced by one that could and accessories, employed more than 350 people, had more than a million
The findings of the outside security analyses appear to conflict with - Secure wireless networks. handle increased volume and multi-plant complexities. fans on Facebook and Instagram, and was a global brand. It looked like a
public declarations by Equifax executives that cybersecurity was a top - Use adequate encryption and public key infrastructures—this alone 9-15 Was SAP S/4HANA a good solution for Clemens Food Group? genuine e-commerce success story.
priority. Senior executives had previously said cybersecurity was one of would have saved Sony a lot of grief and money. Explain your answer. Sophia Amoruso, who launched Nasty Gal, was a heavy user of social
the fastest-growing areas of expense for the company. Equifax executives - Control Network Traffic with Deep Packet Inspection technology. Yes, the SAP S/4HANA was an excellent solution for the food group. tools to promote her business. When she first started out, she used
touted Equifax’s focus on security in an investor presentation that took Many security experts believe that U.S. cybersecurity is not well- SAP S/4HANA is a business suite that is based on the SAP HANA in- MySpace, where she attracted a cult following of more than 60,000 fans.
place weeks after the company had discovered the attack. organized. The FBI and Department of Homeland Security released a memory computing platform. It features enterprise resource planning The company gained traction on social media with Nasty Gal’s aesthetic
Organization: Equifax bought companies with databases housing “cyber alert” memo describing lessons learned from other hacks. The software meant to cover all day-to-day processes of an enterprise and also that could be both high and low, edgy and glossy.
information about consumers’ employment histories, savings, and salaries, memo lists generally recommended security practices for companies to integrates portions of SAP Business Suite products for customer Amoruso took customer feedback very seriously and believed customers
and expanded internationally. The company bought and sold pieces of adopt, including encrypting data, activating a personal firewall at agency relationship management, supplier relationship management, and supply were at the center of everything Nasty Gal did. When she sold on eBay,
data that enabled lenders, landlords, and insurance companies to make workstations, monitoring users’ online habits, and blocking potentially chain management. SAP S/4HANA is available in on-premises, cloud, she learned to respond to every customer comment to help her understand
decisions about granting credit, hiring job seekers, and renting an malicious sites. and hybrid computing platforms. precisely who was buying her goods and what they wanted. Amoruso said
apartment. ___________________________________________________________ The company now has a single “source of truth,” and data are integrated, that the content Nasty Gal customers created was always a huge part of
The data breach exposed Equifax to legal and financial challenges, Chapter 9: whereas in the past it had to deal with similar data spread over multiple the Nasty Gal brand. It was very important to see how customers wore
although the regulatory environment is likely to become more lenient Case Study: Clemens Food Group Delivers with New Enterprise systems. With a single source of truth and the ability to put information at Nasty Gal’s pieces and the types of photographs they took. They were
under the current presidential administration. It already is too lenient. Applications people’s fingertips, Clemens Foods can create dashboards and focus on inspiring.
Credit reporting bureaus such as Equifax are very lightly regulated. Given 9-13 Why would supply chain management be so important for making reporting far simpler than it’s ever been. Social media is built on sharing, and Nasty Gal gave its followers
the scale of the data compromised, the punishment for breaches is close to Clemens Food Group? 9-16 What management, organization, and technology issues had to compelling images, words, and content to share and talk about each day. It
nonexistent. Clemons Food is a vertically coordinated company that includes be addressed to implement SAP S/4HANA at Clemens Food Group? could be a crazy vintage piece, a quote, or a behind-the-scenes photo. At
Technology: The hack involved a known vulnerability in Apache Struts, antibiotic-free hog farming, food production, logistical services, and Management: Clemens Food chose to implement SAP S/4HANA most companies, the person manning the Twitter and Facebook accounts
a type of open-source software Equifax and other companies use to build transportation. Using a responsive pork production system, the company Finance, along with functionality for materials management and is far removed from senior management. Amoruso did not always author
web sites. This software vulnerability was publicly identified in March focuses on supplying the highest-quality products to its partners as well as production planning in a sweeping “big-bang” approach across the every Nasty Gal tweet, but she still read every comment. If the customers
2017, and a patch to fix it was released at that time. That means Equifax advanced solutions that simplify partners’ operations. enterprise. The new system needed to be operational in time for the were unhappy about something, she wanted to hear about it right away. At
had the information to eliminate this vulnerability two months before the opening of the Coldwater plant. Clemens Food had used a phased other businesses, it might take months for customer feedback to filter up
breach occurred. It did nothing. approach for its previous ERP implementation 15 years earlier. That prior to the CEO. When Nasty Gal first joined Snapchat, Amoruso herself
tested the water with a few Snaps, and Nasty Gal followers responded in Case Study Questions 3. Give an example of a business decision in this case study that was useful for staging more effective meetings, but Meyers feels the company
force. 1. Assess the management, organization, and technology issues for facilitated by using social media to interact with customers. would derive more benefit from using AI technology to help it make
10-16 What management, organization, and technology problems using social media to engage with customers. Mack Trucks’ digital marketing team knows if a person in its database better and faster decisions.
were responsible for Nasty Gal’s failure as a business? Management: Companies can use social media to help build interest in clicked on a Facebook post to view an Anthem-related video or looked for Many enterprise applications of immersive technology are still in the
Management: In June 2008, Amoruso moved Nasty Gal Vintage off eBay their brands as long as customers feel connected and at ease with the other information on the company’s web site. Compelling personalized piloting and troubleshooting phases. Today’s virtual reality technology
and onto its own destination web site, www. nastygal.com. In 2012, Nasty promotions. Personalizing the company can be a huge success. Using content helps engage prospects and move them further along the sales also lacks strong security and management features appropriate for
Gal began selling clothes under its own brand label and also invested $18 Facebook to show what friends purchased by using the “Like” button can process until they ask to talk to a Mack dealer. At that point, the prospect deployment in the enterprise, where VR applications might need to be
million in a 527,000-square-foot national distribution center in Kentucky draw customers into the company’s site. Mack Trucks’ senior is considered a qualified lead. The Social Cloud software program alerts linked to the organization’s databases and major corporate systems.
to handle its own shipping and logistics. Venture capitalists Index management has been very pleased with the results and detail and team members when the Mack Anthem is mentioned on various social According to research analyst Ian Hughes, for most workplace
Ventures provided at least $40 million in funding. Nasty Gal opened a precision of digital marketing information. Vice President of Marketing sites, and they can respond where appropriate. applications, shutting people off from other people and the real world to
brick-and-mortar store in Los Angeles in 2014 and another in Santa can see what happens with every dollar Mack spends. 4. Should all companies use social media technology for customer engage in a virtual experience does not fit well with the way people
Monica in 2015. Organization: Some companies use a dedicated team of Twitter service and marketing? Why or why not? What kinds of companies behave. Rather than a fully simulated work environment, for most tasks,
Nasty Gal experienced tremendous growth in its early years, being named responders to answer user questions and respond to complaints. The are best suited to use these platforms? Hughes recommends blending real and virtual worlds. It’s better for
INC Magazine’s fastest growing retailer in 2012 and earning number one company can then mine the data through text mining and convert the data Before a company jumps into using Facebook and Twitter, it needs to technology to be extending the real world rather than replacing it.
ranking in Internet Retailer’s Top 500 Guide in 2016. By 2011, annual to useful information about the company’s products. The company can make sure the “back room” mechanics are in place to process customer 3.Do you think Facebook’s virtual reality strategy will be successful?
sales hit $24 million and then nearly $100 million in 2012. However, sales also use the information to gauge the success of promotions, which service requests. If the company’s employees are not available for the Explain your answer.
started dropping, $85 million in 2014 and then $77 million in 2015. products are hot and which are duds, and the impact of advertising unanticipated response volume, the plan could backfire. Facebook wants to use virtual reality to create a new type of shared social
Organization: With growing direct-to-consumer demand and higher campaigns. However, companies must be careful not to just rush in and Social media can provide a platform for widespread negative backlash to experience. Facebook envisions a virtual world with an imaginary social
inventory replenishment requirements driven by new store openings, create Facebook pages and Twitter accounts. They must engage in companies or retailers. Starbucks coffee experienced a huge angry space where avatars that look like real people “hang out” with other
Nasty Gal invested in a new warehouse management system. Nasty Gal’s meaningful “conversations” with customers and collect feedback and response from customers for a social issue promotion it began on Twitter avatars representing friends and family. CEO Mark Zuckerberg believes
rapid expansion was fueled by heavy spending in advertising and input. They must slowly build relationships over time with customers. and Facebook. virtual reality provides a new and powerful way for his company to grow
marketing. This is a strategy used by many startups, but it only pays off in Technology: Mack Truck’s marketing team uses traditional channels for Companies who interface directly with consumers are probably more and expects one billion people to use this medium.
the long run if one-time buyers become loyal shoppers. Otherwise, too broad awareness and relies on social marketing to focus on segmentation suited to using Facebook and Twitter promotions. However, all companies The beta version of Spaces, Facebook’s virtual reality app for the Oculus
much money is spent on online marketing like banner ads and paying for and metrics. who create social media avenues with customers must realize that it’s not Rift, was launched in April 2018. Spaces is intended as a virtual hangout
influencers. 2. What are the advantages and disadvantages of using social media a mirror image of offline, traditional contacts. Relationships must be where you can interact with up to four friends, each represented by self-
Technology: The warehouse management system investment was for advertising, brand building, market research, and customer created and nurtured over time. created digital avatars. Inside Spaces you can also video chat with friends
designed to increase warehouse productivity and shorten order cycle times service? ___________________________________________________________ via Facebook Messenger, do a Facebook Live broadcast, or take “selfies”
so that Nasty Gal’s supply chain could better service its mushrooming Advantages: Chapter 11: in VR to share with Facebook friends.
sales. The company selected HighJump’s Warehouse Management System - Advertising: Twitter has developed new offerings for advertisers like Interactive Session: Technology: The Reality of Virtual Reality In Oculus Rooms for the Oculus Go, people can spend time together in a
(WMS) with the goal of increasing visibility and overall productivity Promoted Tweets and Promoted Trends. These features give advertisers Case Study Questions virtual world, chatting, watching a movie, or playing cards. Oculus Go
while keeping fill rates above 99 percent. the ability to have their tweets displayed more prominently when Twitter 1.If your company wanted to implement a virtual reality application, has a virtual reality TV viewing app called Oculus TV where users can
HighJump’s implementation team customized the WMS software to users search for certain keywords. what management, organization, and technology factors should it “sit” in a 3-D environment with a massive screen and watch a video with
optimize the business processes that worked best for an e-commerce - Brand building: Mack Truck launched a comprehensive social media consider? a friend.
retailer that ships most of its items straight to the customer, with a small campaign directing Facebook, Twitter, YouTube, and LinkedIn followers Management: A major drawback of virtual reality is how it isolates
subset going to retail stores. The WMS software was also configured to to photos, videos, text summaries, and other content describing every people from others and from real-world surroundings because they are Case Study: Can Cars Drive Themselves – And Should They?
support processes that would scale with future growth. aspect of its new product line. The campaign was credited with attracting immersed in a virtual world encased in a headset. There is a gap between 11-13 What are the management, organizational, and technology
10-17 Could Nasty Gal have avoided bankruptcy? Explain your more than 40,000 new social followers to the Mack brand. the hype and the reality of what VR can actually do for business. challenges posed by self-driving car technology?
answer. - Market research: Prompted by customer social media comments about Management needs to ensure that the company will receive concrete
Nasty Gal wasted money on things that didn’t warrant large expenditures. meats other than roast beef, fast-food sandwich restaurant chain Arby’s returns on investment. Virtual reality shouldn’t be viewed as the next Management: Autonomous vehicle technology has reached a point
The company quintupled the size of its headquarters by moving into a launched a “Meat Mountain” campaign poster showing various meats platform everyone’s going to use, because it’s unclear that will be the where no automaker can ignore it. Every major auto maker is racing to
50,300-square-foot location in downtown Los Angeles in 2013—far more other than roast beef. Arby’s customers mistakenly thought the poster case, according to Forrester Research analyst J. P. Gownder. develop and perfect autonomous vehicles, believing that the market for
space than the company needed, according to industry experts. The displayed a new sandwich and, through social media, indicated they were Organization: A business needs to be able to demonstrate that VR will them could one day reach trillions of dollars.
company also opened a 500,000-square-foot fulfillment center in anxious to try it. Arby’s then responded with a new $10 Meat Mountain solve a very specific business problem, and must determine exactly how Organizational: There’s still plenty that needs to be improved before
Kentucky to handle its own distribution and logistics as well as two brick- sandwich. VR technology can improve its operations, engage customers for highly self-driving vehicles could safely take to the road. Autonomous vehicles
and-mortar stores in Los Angeles and Santa Monica. Even in the hyper- Disadvantages: configurable goods, or deliver new consumer experiences. are not yet able to operate safely in all weather conditions. Heavy rain or
trendy fashion business, companies have to closely monitor production, - Twitter accounts have been hacked with negative results. Many Technology: In many virtual reality systems, the user dons special snow can confuse current car radar and lidar systems-autonomous
distribution, and expenses for operations to move products at a scale big companies simply flood social media channels with sales and marketing clothing, headgear, and equipment, depending on the application. The vehicles can’t operate on their own in such weather conditions. These
enough to make a profit. Nasty Gal’s mostly young staff focused too pitches, touting themselves, and they don’t engage in conversations with clothing contains sensors that record the user’s movements and vehicles also have trouble when tree branches hang too low or bridges and
much on the creative side of the business. customers where they could collect customer feedback and input. immediately transmit that information back to the computer. For instance, roads have faint lane markings. On some roads, self-driving vehicles will
While it was growing, Nasty Gal built its management team, hiring - Social media campaigns can be tricky to orchestrate, and the results are to walk through a virtual reality simulation of a house, you would need have to make guidance decisions without the benefit of white lines or
sizzling junior talent from retail outlets such as Urban Outfitters. But their not always predictable. Although previous Trump tweets calling out garb that monitors the movement of your feet, hands, and head. You also clear demarcations at the edge of the road, including Botts’ Dots (small
traditional retail backgrounds clashed with the startup mentality. As Nasty brands such as Lockheed Martin had hurt stock share prices, when social would need goggles containing video screens and sometimes audio plastic markers that define lanes). Botts’ Dots are not believed to be
Gal expanded, Amoruso’s own fame also grew, and she was sidetracked followers of Donald Trump called for boycotting Nordstrom for dropping attachments and feeling gloves so that you can be immersed in the effective lane-marking for autonomous vehicles.
by other projects. Employees complained about Amoruso’s management Ivanka Trump’s clothing line from its stores, Nordstrom’s stock price computer feedback. Technology: A car that is supposed to take over driving from a human
style and lack of focus. rose, and the company outperformed many of its retail industry rivals in 2.Should all businesses use virtual reality? Why or why not? What requires a very powerful computer system that must process and analyze
Amoruso resigned as chief executive in 2015 but remained on Nasty Gal’s the months that followed. Nordstrom customers remained loyal to the kinds of organizations will benefit most from this technology? large amounts of data generated by myriad sensors, cameras, and other
board of directors until the company filed for Chapter 11 bankruptcy in brand. The most popular virtual reality applications are currently in retail and devices to control and adjust steering, accelerating, and braking in
November 2016. Between 2015 and 2016, Nasty Gal raised an additional - In September 2016, San Antonio–based Miracle Mattress provoked manufacturing, where an immersive experience can help customers response to real-time conditions. Key technologies include: sensors,
$24 million in equity and debt financing from venture-focused Stamos angry social media backlash when it posted a Facebook video advertising visualize products or teach factory workers how to use complex cameras, lidars, GPS, radar, computer, machine learning, deep learning,
Capital Partners LP and Hercules Technology Growth Capital Inc. Even a “Twin Towers Sale.” The video encouraged customers to “remember equipment. computer vision technology and maps.
though the funding helped Nasty Gal stay afloat, the company still had 9/11” and “get any size mattress for a twin price.” Miracle Mattress Not all organizations will benefit from VR. Greg Meyers, CIO at 11-14 Are self-driving cars good business investments? Explain your
trouble paying for new inventory, rent, and other operating expenses. removed the video from its Facebook timeline, and owner Mike Bonanno Motorola Solutions, a data communications and telecommunications answer.
posted an apology letter. equipment provider, doesn’t see any obvious applications where virtual Self-driving car companies are notorious for overhyping their progress.
Interactive Session: Management: “Socializing” with Customers reality can help drive growth for his company. Virtual reality may be Should we believe them? At this point, the outlook for them is clouded.
A self-driving car is essentially a collection of networked computers and How can autonomous vehicles communicate with humans and other Management: There was some resistance to process mining among some Predix. Predix is not limited to industrial applications. It could be used for
sensors linked wirelessly to the outside world, and it is no more secure machines to let them know what they want to do? Researchers are long-term Siemens managers who thought they already knew how to analyzing data in healthcare systems, for example. GE now has a Health
than other networked systems. Keeping systems safe from intruders who investigating whether electronic signs and car-to-car communication handle processes efficiently. Lars Reinkemeyer, head of Siemens global Cloud running on Predix. Data security is embedded at all platform
want to crash or weaponize cars may prove to be the greatest challenge systems would solve this problem. There’s also what’s called the “trolley process mining services, was able to promote analytics adoption by application layers, and this is essential for companies linking their
confronting autonomous vehicles in the future. problem”: In a situation where a crash is unavoidable, how does a robot identifying individuals who were receptive to process mining and operations to the Internet.
Self-driving cars require new ecosystems to support them, much as car decide whom or what to hit? Should it hit the car coming up on its left enlisting them to promote the new technology. Since Siemens AG GE currently uses Predix to monitor and maintain its own industrial
today’s cars are dependent on garages, gasoline stations, and highway or a tree on the side of the road? implemented process mining, it has been able to identify slowdowns in products, such as wind turbines, jet engines, and hydroelectric turbine
systems. New roads, highways, and automotive supply chains will have to A computer-driven car that can handle any situation as well as a human parts procurement, late product deliveries, and billing inefficiencies that systems. Predix is able to provide GE corporate customers’ machine
be rebuilt for self-driving cars. The big auto makers that build millions of under all conditions is decades away at best. were costing the company millions of dollars. operators and maintenance engineers with real-time information to
cars a year rely on complex, precise interaction among hundreds of Organization: Before implementing the Celonis software, Siemens had schedule maintenance checks, improve machine efficiency, and reduce
companies, including automotive component suppliers and the services to Chapter 12 to manage its business processes manually. Individual supervisors were downtime. Helping customers collect and use this operational data
keep cars running. They need dealers to sell the cars, gas pumps or Interactive Session: Technology: Siemens Makes Business Processes responsible for specific processes. When things did not go as planned, proactively would lower costs in GE service agreements. When GE agrees
charging stations to fuel them, body shops to fix them, and parking lots to More Visible such as when a machine broke down or a parts shipment arrived late, there to provide service for a customer’s machine, it often comes with a
store them. Case Study Questions was no easy way to determine exactly how these occurrences impacted performance guarantee. Proactive identification of potential issues that
Manufacturers of autonomous vehicles need to rethink interactions and 1.Identify the problem in this case study. What management, overall operations. also takes the cost out of shop visits helps the customer and helps GE.
processes built up over a century. The highway infrastructure will need to organization, and technology factors contributed to the problem? Technology: If a process model doesn’t already exist, the software will In early 2013, GE began to use Predix to analyze data across its fleet of
change over time to support autonomous vehicles. Waymo has partnered Aside from wanting to continually improve its business processes, try to create one automatically, sometimes using artificial intelligence machines. By identifying what made one machine more efficient or
with Avis to take care of its fleet of driverless minivans in Arizona, and Siemens needed to find a way to stop managing its business processes techniques such as machine learning. If a process model is available, the downtime-prone than another, GE could more tightly manage its
it’s working with a startup called Trov to insure their passengers. GM is manually. Billing inefficiencies were costing the company millions of process mining software will compare it to the event log to identify operations. For example, by using high performance analytics, GE learned
retooling one of its plants to produce Chevrolet Bolts without steering dollars. The company couldn’t take advantage of supplier discounts discrepancies and their possible causes. For process modeling, Siemens that some of its jet aircraft engines were beginning to require more
wheels or pedals. because it was unable to pay quickly enough. uses a Celonis tool called Pi Conformance and Machine Learning. The frequent unscheduled maintenance. A single engine’s operating data will
11-15 What ethical and social issues are raised by self-driving car Management: Management was seeking better ways of making the software predicts which customer orders are likely to arrive late using only tell you there’s a problem with that engine. But by collecting massive
technology? business more efficient and turned to business process mining technology. algorithms that continuously learn from Siemens’ performance. amounts of data and analyzing the data across its entire fleet of machines,
In March 2018, a self-driving Uber Volvo XC90 operating in autonomous Organization: Siemens has thousands of business processes, some of GE was able to cluster engine data by operating environment. The
mode struck and killed a woman in Tempe, Arizona. Since the crash, which are very complex. the company established a unit called Process Case Study: Is Predix GE’s Future company found that the hot and harsh environments in the Middle East
Arizona has suspended autonomous vehicle testing in the state, and Uber DAsh (which stands for Data Analytics, smart handling) to actively 12-13 How is GE changing its business strategy and business model? and China caused engines to clog, heat up, and lose efficiency, so they
is not renewing its permit to test self-driving cars in California. The support global process optimization in all Siemens divisions. It started What is the role of information technology in GE’s business? required more maintenance. GE found that engines had far fewer of these
company has also stopped testing autonomous cars in Pittsburgh and collecting and analyzing ERP data to identify bottlenecks in its The company is transitioning to a much more technology-centric business problems if they were washed more frequently. Fleet analytics helped GE
Toronto and it’s unclear when it will be revived. production, delivery, and payment processes using Celonis Process strategy and business model. GE is selling off its division that makes increase engine lifetime and reduce engine maintenance.
Even before the accident, Uber’s self-driving cars were having trouble Mining analysis and visualization software for this purpose. refrigerators and microwave ovens along with most of GE Capital 12-16 To what extent is GE becoming a software company? Explain
driving through construction zones and next to tall vehicles like big truck Technology: Process mining software analyzes data in enterprise financial services to focus on electric power generators, jet engines, your answer.
rigs. Uber’s drivers had to intervene far more frequently than drivers in application event logs to determine how business processes are actually locomotives, and oil-refining gear and software to connect these devices
other autonomous car projects. The Uber accident raised questions about working in order to identify bottlenecks and other areas of inefficiency so to the cloud. GE is putting its money on the technology that controls and GE wanted to go beyond helping its customers manage the performance
whether autonomous vehicles were even ready to be tested on public that they can be improved. The technology can analyze millions of monitors industrial machines as well as software-powered, cloud-based of their GE machines to managing the data on all of the machines in their
roads and how regulators should deal with this. transaction records and spot deviations from normal workflows. A push of services for analyzing and deriving value from the data. GE hopes this entire operations, even those of other manufacturers. Many customers use
While proponents of self-driving cars like Tesla’s Elon Musk envision a a button produces a snapshot of an entire business process. Process DAsh strategy will turn it into a major software company. GE equipment alongside equipment from competitors. The customer cares
self-driving world where almost all traffic accidents would be eliminated, used the Celonis software to take all the individual data in a large number 12-14 On what business functions and level of decision making is GE about running the whole plant, not just GE turbines, for example, and 80
and the elderly and disabled could travel freely, most Americans think of information systems and use them to construct logical models of focusing? percent of the equipment in these facilities is not from GE. If, for
otherwise. A Pew Research Center survey found that most people did not existing business processes and automatically visualize them. The GE is using sensor-generated data from industrial machines to help example, an oil and gas customer has a problem with a turbo compressor,
want to ride in self-driving cars and were unsure if they would make roads software documents actual processes in real time, as the sequence of customers monitor equipment performance, prevent breakdowns, and a heat exchanger upstream from that compressor may be the source of the
more dangerous or safer. Eighty-seven percent wanted a person always events is taking place. assess the machines’ overall health. This new technology is opening new problem, so analyzing data from the turbo compressor will only tell part
behind the wheel, ready to take over if something went wrong. 2.Describe the capabilities of process mining software. Was this an opportunities for GE customers while also helping to transform GE from a of the story. Customers therefore want GE to analyze non-GE equipment
Some pundits predict that in the next few decades, driverless technology effective solution? Explain your answer. traditional manufacturer to a modern digital business. GE has committed and help them keep their entire plant running. GE is in discussions with
will add $7 trillion to the global economy and save hundreds of thousands When process mining software is used to analyze the transaction logs of $1 billion to installing sensors on gas turbines, jet engines, and other some customers about managing sensor data from all of the machine
of lives. At the same time, it could devastate the auto industry along with an ERP or CRM system, data visualization capabilities in the software can machines; connecting them to the cloud; and analyzing the resulting data assets in their operation.
gas stations, taxi drivers, and truckers. People might stop buying cars show users what processes are running at any given time. An organization to identify ways to improve machine productivity and reliability. In other In November 2017, Jeff Flannery, who succeeded Immelt as GE’s CEO,
because services like Uber using self-driving cars would be cheaper. might use process mining software to find the cause of unexpected delays words, GE is betting its future on software and the Internet of Things announced that spending on GE Digital and Predix would be cut by more
This could cause mass unemployment of taxi drivers and large reductions in invoice processing by examining the logs of the accounts payable (IoT). than 25 percent, or $400 million. Digital initiatives are still critical to the
in auto sales. It would also cut down the need for many parking garages module in its ERP system. Users can see at a glance where inefficiencies 12-15 Describe three kinds of decisions that can be supported using company nevertheless, and Flannery wants Predix to generate $1 billion
and parking spaces, freeing up valuable real estate for other purposes. occur through bottlenecks, unnecessary detours, and manual interventions, Predix. What is the value to the firm of each of those decisions? in annual revenue. However, Flannery wanted this accomplished via a
More people might decide to live further from their workplaces because or where compliance issues might arise. Some process mining software, Explain. “more focused” strategy. In July 2018, the company announced it was
autonomous vehicles linked to traffic systems would make traffic flow including Celonis, enables users to drill down to view the individual The foundation for all of GE’s Industrial Internet (IoT) applications is seeking a buyer for key parts of its digital unit.
more smoothly and free riders to work, nap, or watch video while documents associated with a process. Predix, a software platform launched in 2015 to collect data from These events demonstrate that GE greatly underestimated the challenges
commuting. 3.How did process mining change decision making at Siemens? industrial sensors and analyze the information in the cloud. Predix can run of creating all the software needed for analyzing Internet of Things (IoT)
Some people will prosper. Most will probably benefit, but many will be Siemens started using Celonis analysis and visualization tools to learn on any cloud infrastructure. The platform has open standards and data to improve business processes across a wide range of industries. GE’s
left behind. Driverless technology is estimated to change one in every how quickly it pays its suppliers. Some suppliers offer discounts for early protocols that allow customers to more easily and quickly connect their technical expertise lies in designing and manufacturing machines like
nine U.S. jobs, although it will also create new jobs. Another payment. Siemens was often unable to take advantage of these discounts machines to the Industrial Internet. The platform can accommodate the power jet engines, plant turbines, and medical imaging equipment and in
consideration is that the tremendous investment in autonomous vehicles, because it was unable to pay quickly enough. The company used process size and scale of industrial data for every customer at current levels of creating the specialized software to control machines in factory
estimated to be around $32 billion annually, might be better spent on mining to analyze data from its ERP, accounting, and payment approval use, but it also has been designed to scale up as demand grows. Predix can operations. It was too much of a stretch for GE Digital to move quickly
improving public transportation systems like trains and subways. Does systems to understand why this was happening. Siemens also used process offer apps developed by other companies as well as GE, is available for into cloud-based software to handle all kinds of sensor and machine data
America need more cars in sprawling urban areas where highways are mining to study inefficiencies in the way it takes orders from and is paid on-premises or cloud-based deployment, and can be extended by and big data analytics for the entire Industrial Internet. GE also faced
already jammed? by its customers (order-to-cash processes). customers with their own data sources, algorithms, and code. Customers difficulties adapting its own legacy applications to Predix. GE had many
11-16 Will cars really be able to drive themselves without human 4. What management, organization, and technology issues need to be may develop their own custom applications for the Predix platform. GE is algorithms for monitoring its machines, but they were written in different
operators? Should they? addressed when implementing process mining systems? also building a developer community to create apps that can be hosted on coding languages and resided on other systems in GE businesses. This
made converting the software to run on Predix time consuming and
expensive. Predix has been pared back to be primarily a set of software
tools to help write applications, as opposed to connecting to layers of code
to automate data analysis. GE Digital now focuses on selling products for
specific industrial applications tailored to GE’s existing industrial
customers rather than an all-purpose operating system and platform for
the wider industrial world.