Towards Developing a Model-based Decision Support Method for Enterprise Restructuring

1. Towards Developing a Model-based Decision Support Method for Enterprise Restructuring Alexey Sergeev (aisergeev@yahoo.com) Eduard Babkin (eababkin@hse.ru) National Research University – Higher School of Economics Dept. of Information Systems and Technologies, Bol. Pecherskaya 25, 603155 Nizhny Novgorod, Russia

2. Restructuring • Enterprise structure simplification: • Spin-off of department • Closing department • Closing department & contract with 3rd-party to fulfill functions • Enterprise structure complication: • Merging with 3rd-party • Opening new department

3. Real-life case – car service company • 22 people • Functions: • Car repair • Regular car maintenance • Colour matching / colouration • Selling car lubricants • Challenges: • Lack of experienced workforce • Strong competition • … • Task: • a reusable method of decision support for defining best solution for enterprise restructuring

4. Tools • DEMO • Easy for modelling • Easy for understanding • Universality • Transaction Cost Theory • Quantitative cost estimation • Applicable for DEMO transactions cost estimation

5. DEMO notation enhancements Actor-Function Role Table *Function role – as per job contract **Actor role – as per DEMO

6. DEMO notation enhancements Transaction Cost Table *List of transaction costs can be found in literature and discussed with subject matter experts

7. DEMO notation enhancements Restructuring Cost Table *List of transaction costs can be found in literature and discussed with subject matter experts

8. DEMO notation enhancements Enhanced ATD

9. Decision support method • Company representatives propose ways of enterprise development • Meeting with company representatives to discuss and prioritize proposed ways. • DEMO model of current enterprise structure created (Actor Transaction Diagram is enough) • DEMO models for all proposed ways of development created

10. Decision support method • Cost estimation & applying extensions for DEMO models • Presenting results to enterprise representatives & finalizing cost estimation • Comparison of initial DEMO model and models for each restructuring option & choosing options for implementation • DEMO models for all proposed ways of development created

11. Guarantee of the correctness • Costs are estimated by 2 groups of experts separately, consensus for contradictions • Using statistics data for the area of business operation of the enterprise • Using imitating modellingtechniques

12. Notes for modeller • Additional transaction after restructuring – “keeping enterprise operation in accordance to DEMO model” • Additional risks and transaction costs when moving transaction to the border / out of enterprise

13. Real-life case – car service company • 9 ways of enterprise restructuring initially proposed • 4 options chosen for modelling • Models created • Costs estimated • Meeting with company representative held, results presented, final cost estimation agreed • One option for restructuring started to be implemented in the end of April • One more option to be implemented starting June

14. Conclusions • Method provides easy algorithm and tools for identifying best ways for enterprise restructuring with quantitative costs estimation • DEMO models are easy to understand by enterprise representative • Costs can be successfully estimated by consulting with enterprise subject matter experts • Method was applied for a real-life case of a small company

15. Future research • Application of the method for another (larger) enterprise • Development of the software tool to automate modelling and cost estimation tasks