ENTERPRISE RESOURCE PLANNING - ERP
CONTENT TAKEN FROM THE SLIDES OF MUHAMMAD ADIL
ERP AND BUSINESS PROCESS REDESIGN
Be aware of goals for business processes
Identify types of problems with business processes
Compare and contrast business process improvement and business process reengineering
Explain the relationship between business process reengineering and ERP
Summarize the steps in business process improvement
INTRODUCTION
Organizations optimize their business processes
Two methods for transformation of business processes:
Business process reengineering - BPR
Business process improvement - BPI
BUSINESS PROCESS
A series of activities that are linked together to convert inputs into a product or service output
Simple and complex business processes
o In terms of steps involved
Short running and long running business processes
o In terms of time
Formal and informal business processes
o In terms of rules
BUSINESS PROCESS…
Advantages of Formal processes:
Can get work accomplished faster
Improve consistency of product
Lead to accountability
CRITERIA FOR OPTIMIZED BUSINESS PROCESS
Cost efficiencies
Customer satisfaction and differentiation
Standardization
Value-added activities
Improved agility and speed
COMMON PROBLEMS WITH BUSINESS PROCESSES
Authority ambiguity
Bottlenecks
Cycle time
Data duplication
Handoffs
Intermediaries
Manual steps
Old ways
Paper records
Quality control
Rework
Role ambiguity
Segregation of duties violation
BUSINESS PROCESS REENGINEERING
fundamental, radical redesign of business processes that an organization undertakes to achieve breakthrough
performance in key measures of cost, quality, speed, and service
Act of re-thinking the way you do important things in your business
Result in significant improvements
Important because of advent of new technology
Research conducted by Hammer
o Companies don’t change their core competencies
BUSINESS PROCESS REENGINEERING…
BPR brings radical change
What is radical change?
o 60% improvement
Two ways of BPR are:
Clean Slate Reengineering
Technology Enabled Reengineering
CLEAN SLATE REENGINEERING
Process is started from scratch and completely redesigned
Fewer bounds and constraints
Free flow of ideas can result in unique process
Can result in competitive advantage
“As is” process & “to be” process
CLEAN SLATE REENGINEERING…
Business process reengineering principles
Empower workers
Centralized resources
Link parallel activities
Organize around processes
Use self-service so that employees and business partners can access information and perform routine tasks
Put the decision point where the work is performed and build controls into the process
Capture information once and at the source
CLEAN SLATE REENGINEERING…
Disadvantages
Costly
Requires time
Radical change sometimes lead to lost job
TECHNOLOGY ENABLED REENGINEERING
Technology facilitates reengineering process
Technology imposes constraints
o Constrained Reengineering
End up with old expensive processes
TECHNOLOGY ENABLED REENGINEERING…
Advantages
Provides transformation roadmap
Less risky
FACTORS FOR REENGINEERING SUCCESS
Scaling up and down
Thinking outside the box
Looking at other companies for similar solutions to similar processes
Recognizing that a process is just one aspect of success
Delivering sooner than later
Considering the competition
Remembering the employee
BUSINESS PROCESS IMPROVEMENT
Involves gradual improvement to business processes over time
Incremental and evolutionary process
General rule is if process is close to expectations it can be improved
Takes times, resources, patience and expertise
PROCESS IN NEED OF CHANGE
Three Cs should be kept in mind by company while determining process in need of change:
1) Customer
Business should be made easy for customers
2) Core
Core competency should be efficient
3) Competition
Company should have competitive processes
PROCESS IN NEED OF CHANGE…
1) Customer-Facing Process
How well company is satisfying its customer?
Performance of Current process should be compared to customer expectations
Yield customer’s view by conducting surveys
2) Core Competency Process
Input is transformed to unique product
Can be large operation with sufficient economies
Company’s bread and butter
Benchmarking is used to measure performance
o It Its key areas are financial performance, efficiency, asset utilization, reliability and service quality
PROCESS IN NEED OF CHANGE
3) Competitive Process
a. High Volume, Low Margin Processes
Considerable price pressure
High volume leads to considerable revenue
Low margin leads to efficiency need
Requires capital assets
Needs inventory storage costs
b. High Defect, High Reward Processes
c. High Skill, Time Intensive Processes
Require highly skilled workers
Company will try to simplify the process
Same people or low-paid workers will be empowered to perform the process
d. High Complexity, Specialized Resource Processes
Keep it simple, stupid
Complex requirements, complex solution and complex process
Difficulty in growth
e. Processes built around Obsolete or Changing Technology
Companies using legacy systems have obsolete business models
Companies should go for new business process models
Advantages – flexibility, scalability, standardization, user friendly interface, normalized data structure
STAKEHOLDERS FOR BUSINESS PROCESS TRANSFORMATION
Business transformation plan should be successful for following stakeholders:
1) Customers
o Customer relationship focused process help with customer satisfaction, retention and profitability.
2) Employees
o Frees up time for employees
3) Information Technology Staff
o Helps in implementation
o Has ability to contribute to project’s success by answering few questions
4) Executive Suite
o Should be willing to address issues to those who might be resistant to change
o Higher rank of sponsors, less objections from employees
5) Business Partners
6) Suppliers
o Better information to them leads to accurate and efficient operations
7) Other Interested Parties
