UNIT 5

System Development, Organizational Change and Business Process

Reengineering
OBJECTIVES:
At the end of this chapter, the students should be able to:
 Understand the concept of redesigning the organization
 Discuss BPR and Process Improvement
 Explain system analysis
 Describe system design

INTRODUCTION:
Redesigning the organization is not a easy task nobody can change the organization in a
short period every activity take some time to improvement. Redesigning the organization with
the help of information system also take some time. In this unit you read some aspects related to
information system those play important role in the organization change according to the
environment or condition.

Systems as Planned Organizational Change

The introduction of a new information system involves much more than new hardware and
software. It also includes change in jobs, skills, management, and organization. In the
sociotechnical philosophy, one cannot install new information system, we are redesigning the
organization.
One important thing to know about building a new information system is that is process is
one kind of planned organizational change. System builders must understand how a system will
affect the organization as a whole, focusing particularly on organization conflict and change in
the locus of decision marking. Builders must also consider how the nature of work groups will
change under the new system. Systems can be technical successes but organizational failures
because of a failure in the social and political process of building the system. Analysts and
designers are responsible for ensuring that key member of the organization participate in the
design process and permitted to influence the system’s ultimate shape.

Linking Information Systems to the Business Plan

Deciding which new systems to be build an essential component of the organizational
planning process. Organization need to develop an information systems plan that supports their
overall business plan and that incorporates strategic systems into top-level planning. One specific
project have been selected within the overall context of a strategic plan for the nosiness and the
systems area, an information system plan can be developed. The plan serves as road map
indicating the direction of systems development, the rationale, the current situation, the
management strategy, the implementation plan, and the budget.

System Development and Organizational Change

New information systems can be powerful instrument of organizational change, enabling
organizational change, enabling organizations to redesign their structure, scope, power
relationship, workflows, products, and service.
The Spectrum of Organization Change
Information technology can promote various degrees of organizational change, ranging from
incremental to far-reaching form illustration show four kinds structural organization change that
are enabled by information technology: (1)Automation, (2)Rationalization, (3)Reengineering,
(4)Paradigm shifts.
Organizational Change Carries Risk and
Rewards
The most common forms of organizational
change are automation and rationalization. These
relatively slow-moving and slow-changing
strategies present modest returns but involve little
risk. Faster and more comprehensive change like
reengineering and paradigm shifts carry high
rewards but offer a substantial chance of failure.
The most common form of IT-enabled
organization change is automation. The first
applications of information technology involved
assisting employee in performing their tasks
efficiently.
Example: Calculating paychecks and payroll
registers, giving bank tellers instant access to customer deposit recodes, and developing a
nationwide network of airline reservation terminals of airline reservation agents are all examples
of early automation.

Self-Assessment
Fill in the blanks:
1. One important thing to know about building a ___________________________ is that is
process is one kind of planned organizational change.
2. _____________________________ can promote various degrees of organizational change,
ranging from incremental to far-reaching form.
3. The most common forms of organizational change are ______________ and rationalization.

Business Process
Davenport & Short (1990) define business process as “a set of logically related tasks
performed to achieve a defined business outcome.” A process is “a structured, measured set of
activities designed to produce a specified output for a particular customer or market. It implies a
strong emphasis on how work is done within an organization” (Davenport 1993). In their view
processes have two important characteristics: (i) They have customers (internal or external), (ii)
They cross organizational boundaries, i.e., they occur across or between organizational subunits.
One technique for identifying business processes in an organization is the value chain method
proposed by Porter and Millar (1985).
Processes are generally identified in terms of beginning and end points, interfaces, and
organization units involved, particularly the customer unit. High Impact processes should have
process owners.
Example:
Processes developing a new product; ordering goods from a supplier; creating a marketing
plan; processing and paying an insurance claim; etc.
Processes may be defined based on three dimensions (Davenport & Short 1990):
 Entities: Processes take place between organizational entities. They could be
Interorganizational (e.g. EDI), Interfunctional or Interpersonal (e.g. CSCW).
 Objects: Processes result in manipulation of objects. These objects could be Physical or
Informational.
 Activities: Processes could involve two types of activities: Managerial (e.g. develop a
budget) and Operational (e.g. fill a customer order).

Business Process Reengineering

Business Process Reengineering (BPR) is known by many names, such as ‘core process
redesign’, ‘new industrial engineering’ or ‘working smarter’. All of them imply the same concept
that focuses on integrating both business process redesign and deployment of information
technologies (IT) to support the reengineering work.
Business process reengineering ideas are based on the premise that every organization needs
a sense of direction. Without that direction in the form of strategic plans and business plans, the
organization has no foundation upon which to build process improvements. BPR is a method of
improving the operation and therefore the outputs of organizations. Generally the topic of BPR
involves discovering how business processes currently operate, how to redesign these processes
to eliminate the wasted or redundant effort, improve efficiency, and how to implement the
process changes in order to gain competitiveness.
The purpose of BPR is to find new ways to organize tasks, organize people and redesign
information technology so that the processes support the organization’s goals. It means analyzing
and altering the business processes of the organization as a whole. For a thorough and effective
reengineering project, organizations should first meet certain conditions before starting such a
project. Initially, the management should abandon all the rules and procedures that have been
used up to that time. In addition they should abandon other inadequate organizational and
production principles. At this point, the design of a renovated and redesigned organization
should begin.
Business process reengineering (BPR) is, in computer science and management, an approach
aiming at improvements by means of elevating efficiency and effectiveness of the business
process that exist within and across organizations. The key to BPR is for organizations to look at
their business processes from a “clean slate” perspective and determine how they can best
construct these processes to improve how they conduct business.
The key enabler for BPR is IT. IT serves as the disruptive technology that allows generalists
to do the work traditionally performed by specialists, enables everyone to make decisions (as
opposed to managers making all the decisions), and offers shared databases that allow direct
access to the same information regardless of functions
Implications of Business Process Reengineering
Undoubtedly, Michael Hammer has garnered most of the BPR press because of the radical
rhetoric with which he communicates. However, the ideas expressed by Hammer (and later
Hammer and Champy) are similar to the new business process redesign concepts of Davenport
and Short. They agree that the processes should be transformed holistically rather than by fixing
bottlenecks in small increments. Furthermore, they agree on the essential role IT should play in
business process transformation. Most importantly, their ideas point to a formulation of the
process enterprise that is different from the functional hierarchical organization with which
corporations had been aligned. In their writings, the founders of BPR have repeatedly
demonstrated the poor coordination of functional organizations and the superiority of process
organizations in coordination and in achieving performance gains. In its most radical form, the
process enterprise is one that eliminates functional structure in favor of an exclusive process
based structure. The more realistic approach for becoming a process enterprise is to have a
matrix structure of process-hierarchy and functional-hierarchy. Table below illustrates the
differences between process organizations versus functional organization.

Functional versus Process Organization

Process Improvement
In addition to increasing organizational efficiency, companies are also changing their
business processes to improve the quality in their product, service, and operations. Many are
using the concept of TQM to make quality the responsibility of all people and functions within
an organization. TQM holds that the achievement of quality control is an end itself. Everyone is
expected to contribute to the overall improvement of quality- the engineer who avoids design
error, the production worker who sports defects, the sales representative who presents the
product properly to potential customers, and even the secretary who avoids typing mistakes.

How Information System Contribute to Total Quality Management

TQM is considered to be more incremental than Business Process Reengineering (BPR)
because its effects often focus on marking a series of continuous improvement a rather than
dramatic bursts of change. Information systems can help firms achieve their quality goals by
helping them simplify products or processes, meet benchmarking standards, make improvement
based on customer demands reduce cycle time and increase the quality and precision of design
production.

Simplifying the Production Process

The fewer step in process the less time and opportunity for an error to occur.

Benchmarking
 Setting strict standard for products, services, or activities and measuring organizational
performance against those standards.

Use Customer Demands as a Guide to Improving Products and Service

Improving customer service, making customer service the number one priority, will improve
the quality of the product itself.

Reduce Cycle Time

Reducing the amount of time from the beginning of process to its end (cycle time) usually
results in fewer steps. Shorter cycle mean that errors are often caught earlier in production (or
logical or design or whatever the function), often before the process is complete, eliminating
many hidden costs.
Improve the Quality and Precision of the Design
Computer-aided design (CAD) software has made dramatic quality improvements possible
in wide range of businesses form aircraft manufacturing to production razor blades.

Increase the Precision of Production

For many products, one key way to achieve quality is make the production process more
precise and decrease the amount of variation from one part to another.

Self-Assessment
Fill in the blanks:
1. _____________ are generally identified in terms of beginning and end points, interfaces, and
organization units involved, particularly the customer unit.
2. The purpose of ________________________________ is to find new ways to organize tasks,
organize people and redesign information technology so that the processes support the
organization’s goals.
3. ____________________________ is considered to be more incremental than Business
Process Reengineering (BPR) because its effects often focus on marking a series of continuous
improvement a rather than dramatic bursts of change.

Summary and Additional Information

 Two principal methodologies for establishing the essential information requirements of
the organization as whole are enterprise analysis and success factors.
 Enterprise analysis argues that the firm’s information requirements can only be
understood by looking at the entire organization units, functions, processes, and data
elements.
 The strategic analysis, or critical factors, approach argues that an organization’s
information requirements are determined by small number of critical success factors
(CSFs) of managers.
 Business Process Reengineering (BPR) is known by many names, such as ‘core process
redesign’, ‘new industrial engineering’ or ‘working smarter’.
 With the development of information technology, system analysis too, develops more and
more vigorously and has a significant role in a life cycle of an IT application and of IT
projects in general.
  Analysis focus on systems’ requirements specification and clarification and is the stage,
when system designers have to work at two levels of definition regarding the study of
situational issues and possible solutions in terms of “what to do” and “how to do”.
 The system analyst is a key member of any systems development project.
 The system designer details the system specifications that will deliver the functions
identified during systems analysis.

Keywords
 BPR: The purpose of BPR is to find new ways to organize tasks, organize people and
redesign information technology so that the processes support the organization's goals.
 Entities: Processes take place between organizational entities. They could be
Interorganizational (e.g. EDI), Interfunctional or Interpersonal (e.g. CSCW).
 Objects: Processes result in manipulation of objects. These objects could be Physical or
Informational.
 Activities: Processes could involve two types of activities: Managerial (e.g. develop a
budget) and Operational (e.g. fill a customer order).

Review Questions
1. What are the factors behind the organizational change? Explain
2. How enterprise analysis play important role in the organizational change?
3. Illustrate the methodologies used for establishing the essential information requirements of the
organization.
4. What is your suggestion to an enterprise how they use BPR in suitable manner.
5. How total quality management help in process improvement?