EX1
EXECUTIVE SUMMARY
Backgrounds and Purpose
Organizations are frequently assessed based on their financial performance over a given duration, whether it be one quarter or one year. However, one could easily make the case that evaluating performance on financial figures alone is an exceptionally naïve assessment method. Often, it is the processes behind the figures that are more important to assess, and ultimately can provide a more accurate depiction of organizational performance over any given duration especially in the future. Because of this, it is important for any organization to understand, in detail, the various aspects of business process management. Electronic Arts is no different. Thus, in order to appraise the performance of such a company, it would be important to identify various business processes within the organization (support and primary alike), and compare their current process practices against effective business process management (PM) practices.
Scope and Methods
The scope of this research is to be confined to Electronic Arts performance across various process types, such that the processes can be compared against effective process management techniques. In order to acquire the materials necessary to validate the scope, the research will require various online materials across numerous sources.
Findings
History has demonstrated that Electronic Arts has made significant progress since it was founded in 1982; however, like all companies, it has faced a number of problems throughout the company’s development. Regarding support processes, EA had struggled to objectify a valid compensation process. Regarding primary processes, EA’s logistics strategy were not always successful in producing the desired result. From a bridged process perspective, the product development process has been fairly effective in utilizing the concepts of process management, integrating the perspectives of many stakeholders throughout the design, implementation, management, and continuous improvement processes.
Recommendations / Conclusion
Based on the findings, one could conclude that Electronic Arts has been effective in adapting to problematic situations as they arise, always utilizing continuous improvement in order to develop solutions to these problems. While it has not always been an easy progression, progress has been made, and continues to do so. Because of this, it becomes apparent that EA does utilize business process management in some fashion, and could benefit from expanding their utilization of effective process management concepts in various other areas of their organization.
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Electronic Arts (EA) Overview/Introduction
Electronic Arts was founded in 1982 by Trip Hawkins after he resigned from Apple Computer. The company was based on the concept of publishing and distributing the work of outside developers, promoting the programmers and designers almost as much as the games they produced (Waugh, 2006). Today, EA is the largest gaming publisher in the world, owninga number of studios in the gaming industry of various sizes, including well-known studios such as Maxis, Pogo.com, Ubisoft, Mythic Entertainment, and BioWare. Much of its success can be attributed to its ability to immediately react to problems that arise within its various processes, most publicly noted, processes related to HR practices, acquisitions, and consumer interaction.
General Process Management Concerns
While the idea of Business Process Management (BPM) always do this to establish the meaning of an acronym is an exceptionally large concept, a general definition of its principles is that BPM provides an understanding for removing barriers to process improvement, giving organizations an opportunity for differentiation by focusing on the performance of the processes, not just the execution. For the majority of organizations, there are three primary types of processes: support, primary, and bridging. These processes are often evaluated by identifying the current state of the processes, how the processes are designed, how the processes are implemented, how the processes are managed and controlled, and how continuous improvement factors into the process (including how they relate to their stakeholders).
Support Processes
Support processes assist in assisting various areas of the organization that require management. These processes include research and development, finance, human resources, procurement, and even SWOT planning. Regarding Electronic Arts, one of the most publicly criticized processes of the past was the ineffective and potentially harmful human resources management practices of which EA was engaged.
HR Practices and Lawsuits
In 2004, Electronic Arts was hit with a class action lawsuit regarding the treatment and compensation of a significant number of employees. Erin Hoffman, a fiancée of an EA programmer, created an online screen name, known only at the time as “EA_spouse”, created numerous blogs regarding the ridiculous human resource work schedule and compensation processes at EA. She stated, “The current mandatory hours are 9am to 10pm--seven days a week--with the occasional Saturday evening off for good behavior (at 6:30pm).” The most important part, however, is that the large majority of these employees did not receive any overtime, since EA had classified them as being “exempt”. (Feldman, 2004)
The settlement resulted in a $14.9 million dollar fund that was organized to be claimed as compensation for employees that had worked for EA between 2001 and 2006. EA had also announced that any unclaimed portion will be donated to the Ronald McDonald House Charities and establish scholarships for minority females interested in the programming field (Jenkins, 2006). This lawsuit not only had an impact on how EA or the gaming industry approached the process of determining employee compensation, but the software development industry as a whole.
It is easy to determine the failures of EA’s employee compensation process. There was a complete lack of stakeholder satisfaction, for both the employees and stockholders (considering the lawsuit). There was no process owner that managed the process, nor participation from the benefactors of the process, as the design simply stated that as an employee, one is paid on salary and, thus, exempt from overtime.
But more importantly, EA continued to demonstrate their ability to quickly adapt to the situation and improve the process. The lawsuit obligated the need to utilize process management practices. The new system design and implementation required the input of HR specialists as well as the employees of the company (who in this case function as the consumer in the process). Two years after the lawsuit, even Hoffman stated, “I think EA is tremendously reformed, having made some real strong efforts to get the right people into their human resources department,” and that, “I've been hearing from people who have gotten overtime pay there and I think that makes a great deal of difference. In fact, I've actually recommended to a few people I know to apply for jobs there,” (Hyman, 2008). This displays the existence of process improvement at EA.
Primary Processes
Primary Processes are vital to the basic operations of a company. These processes include logistics, operations, marketing, sales, and service. In this discussion, it will be important to focus on logistics, which consists of managing both supply side and customer side relationships, and service, which includes the communication lines. It is important to note that the service section of the primary process may overlap with bridging process of product development, due to the various cultures of the individual studios owned by EA, and thus, will be reviewed in the Bridging Process section.
Mergers and Acquisitions
For Electronic Arts, business is rooted in the publishing and distribution of video games. This means that mergers and acquisitions are key to the company’s development and progression. However, the original management of this process was not always well accepted, nor did it always benefit the company.
When EA first acquired Origin Systems in 1992, a popular development studio at the time, it in turn received the rights to the Ultima Series. Problems began to arise from the beginning. EA was exceptionally controlling and aggressive, creating a non-functional nice ties to PM relationship and demonstrating a lack of communication flow (key aspects to process management). EA rushed the production of Ultima VIII and XI, resulting in poor development, disgruntled employees, and unsatisfied customers (Rausch, 2004).
In 2004, EA shut down its Origin Systems development Studio, similarly to what it did to Westwood Studios, offering relocation opportunities to the staff (Zealot, 2004 ). The multiple shut downs of acquired studios had demonstrated EA’s failure to manage their acquisition process effectively, and they were financially obligated to make adjustments.
However, an excellent factor for determining effective process management is consistent historical demonstration for improvement. EA has modified their acquisition strategy and process overtime into something that is much more conducive to successful business operations. John Carmack, CEO of id Software, recently decided to be acquired by EA in 2008, stating, “I'll admit that, if you asked me years ago, I still had thoughts that EA was the Evil Empire, the company that crushes the small studios...I'd have been surprised, if you told me a year ago that we'd end up with EA as a publisher.” However, he continued on to say, “when we went out and talked to people, especially EA Partners people like Valve, we got almost uniformly positive responses from them,” which presents an overall perspective change in stakeholder value. He described the acquisition as conforming to the traditional idea of publishing arrangements, but instead like a menu of various services. Each company that is now a part of EA chooses the various services they require in order to perform more effectively, and are allowed to run their own studio accordingly. (Burnes, 2008)
This demonstrates strong process management skills. Originally, the acquisition process consisted of buying a studio, and then forcing a culture on to it. This improvement of this process has many contributing factors to its success. Unlike the previously designed system, the new system took into consideration the suppliers (the studios) and the consumers, both in the design and implementation phases. It required the contributions and feedback from both sides in order to create the correct process. The new process design also took human nature into consideration, understanding that each studio and their consumers are unique and have their own individual cultures. And, obviously, EA’s flexibility allows for a system that is conducive to continuous improvement.
Bridging Process: Service and Product Development – Consumer Interaction
As stated previously, Electronic Arts now allows the various studios to manage their own operations regarding product development and service for the games that are produced. Thus, in order to provide a real insight as to how some of these processes perform, it will be important to identify a particular branch.
Mythic Entertainment,also referred to now as EA Mythic, has developed a very unique consumer feedback process that involves a combination of the engineers, programmers, community coordinators, and customers. The program developed that encompasses the process as a whole is referred to as the Team Lead Program. This program reaches out to various customers that are considered “experts” in various aspects of the game, offering them various benefits (including free accounts and software), in exchange for their time in collecting community feedback, organizing it, and writing various reports concerning the field of specialization. This process includes direct communication between the game developers and these select members from the community, along with the program coordinator, that manages the process. From a service standpoint, it allows the community to be more actively involved in the process and changes that affect the game they are playing, instilling end-user involvement. From a product development standpoint, it allows discussions and feedback to be more detailed and focused, as oppose to trying to trudge through feedback from an endless number of consumers.
Just as important, however, is the continuous improvement of this program. Based on communication and design propositions of both the company and the current Team Leads, the program continuously undergoes changes as seen fit. One example is the reporting process. Initially, the reporting process was a combination of consistent discussion between the developers and the team leads, along with one large annual report every year. However, while the discussions are still a very common aspect of the program, the large annual reporting has evolved into a more organized approach, such that there is a monthly area of focus for the TLs to report on. Overall, this is a perfect example as to how process management was very successful, such that many stakeholders were brought together in order to assist in the design, implementation, managing, and continuous improvement of the process.
Assessment
Overall, Electronic Arts has demonstrated to be fairly effective at process management. It is clear to see that EA, like all companies that continue to grow and develop, have had their fair share of problems with developing the correct process for the correct product in the past.However, with well-executed process management, EA has been able to capitalize on simple, cost effective policy modifications through the collaboration of their various stockholders. By doing this, they have consistently utilized the concept of continuous improvement in order to redesign, implement, and manage their processes.
Works Cited
Burnes, A. (2008, July 15). John Carmack: EA No Longer The Evil Empire. Retrieved February 20, 2009, from IGN: VE3D:
Feldman, C. (2004, November 11). Employees readying class-action lawsuit against EA. Retrieved February 20, 2009, from Game Spot:
Hyman, P. (2008, May 13). 'EA_Spouse' Hoffman: Quality Of Life Still Issue, Despite EA Improvement . Retrieved February 20, 2009, from Gamasutra:
Jenkins, D. (2006, April 26). Programmers Win EA Overtime Settlement, EA_Spouse Revealed. Retrieved February 20, 2009, from Gamasutra:
Rausch, A. (2004, May 7). From Origin to Destination . Retrieved February 20, 2009, from Game Spy:
Waugh, E.-J. R. (2006, 25 August). A Short History of Electronic Arts. Retrieved February 20, 2009, from Business Week:
Zealot, F. (2004 , February 25). EA to Shut Down Origin Systems. Retrieved February 20, 2009, from Game Pro: