Session 2 & 3


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Session 2 & 3

  1. 1. Session 2 & 3 ERP vs BPR <ul><li>Introduction to BPR </li></ul><ul><li>Why and what is BPR? </li></ul><ul><li>Checklist & areas to redesign </li></ul><ul><li>Relationship with ERP </li></ul><ul><li>Impact on ERP </li></ul><ul><li>Risks in BPR </li></ul><ul><li>BPR Options – Clean Slate & Technology Enabled </li></ul>
  2. 2. <ul><li>Strategic Enterprise? Extended Enterprise ? BR or BPR ? ERP ? Where do all these fit in & how do they mesh together ? </li></ul>Sounds like a Million $ Question!!!! Yes, in fact these are frequently echoed questions in the Indian Corporate circles nowadays.
  3. 3. Why this question? <ul><li>The new school of thought proposes a shift from efficient to effective, passive to active, tactical to strategic and automation to optimization . </li></ul><ul><li>Competency management, which hinges around knowledge, skill & most importantly, attitude, is also a key area. </li></ul><ul><li>A radical rethinking on the way the business is run would bring the best out of the Organization. </li></ul><ul><li>The need of the hour seems to be the fundamental re-structuring & transformation of enterprise </li></ul>
  4. 4. What is BPR? <ul><li>Business Process Re-engineering (BPR) is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service & speed. </li></ul>Dr. Michael Hammer is one of the world’s leading business thinkers. Reengineering the Corporation , which he wrote with James Champy, was the first book to look at how successful companies could use technology to revamp the way they did business, rather than automating old processes.
  5. 5. <ul><li>Analysis and radical redesign of business processes using objective, quantitative methods and tools and management systems to accomplish change or performance improvement. </li></ul><ul><li>Also called as : </li></ul><ul><li>Re-Engineering, Process Reengineering, Process Quality Management, BPR, Process Innovation, Process Improvement, and Business Process Engineering. </li></ul><ul><li>Business re-engineering improves all three areas essential to business effectiveness - Business plans, Business Process & Business Information. </li></ul>Other Definitions
  6. 6. Is BPR a streamlining process or re-inventing process?? <ul><li>There exists a fundamental difference between streamlining a business process and re-inventing it </li></ul><ul><li>Streamlining is an exercise, which result in making incremental changes to the current process to increase performance parameters like quality, etc. </li></ul><ul><li>In the case of re-inventing a process, the existing one is scrapped and a new one is created from scratch with a fresh look. Concepts & ideas from within and outside the industry should be welcomed. </li></ul><ul><li>Ideally, Organizations should look at a continuum from streamlining to re-inventing. </li></ul>
  7. 7. Checklist for BPR <ul><li>Does the company have a system in place that can correlate and map low-level system events to high-level business views to detect and diagnose business performance problems at the functional level? </li></ul><ul><li>What are our major business processes? </li></ul><ul><li>Do the company's collaborative systems archive projects and processes so they can be reused as best practices? </li></ul><ul><li>How do these processes interface with customer and supplier processes? </li></ul><ul><li>What are our strategic, value-adding processes? </li></ul><ul><li>Which processes should we reengineer within three months, six months, one year, and subsequently? </li></ul><ul><li>What organizations and jobs are involved in the processes? What pieces of work are done by each job? </li></ul><ul><li>What policies apply to the performance of the processes? In which piece of work does each policy apply? </li></ul><ul><li>What technology is used in the processes? In which piece of the work is the technology used? </li></ul><ul><li>How do we identify processes that are conducive to redesign? </li></ul>
  8. 8. Areas to Redesign <ul><li>(a) High customer requirement, but low performance (customers complain); </li></ul><ul><li>(b) Some things just take too long; </li></ul><ul><li>(c) High cost of poor quality (errors, rework, mistakes, scrap); </li></ul><ul><li>(d) The company throws people at the problem, but things don't get better; </li></ul><ul><li>(e) High internal frustration factor and low morale; </li></ul><ul><li>(f) Process spans several functions and there is finger pointing and blaming; </li></ul><ul><li>(g) Process is not being measured, high variability in output or results; </li></ul><ul><li>(h) Excessive information exchange, data redundancy, and re-keying of data; </li></ul><ul><li>(i) Inventory, buffers, and other assets sitting idle; </li></ul><ul><li>(j) High ratio of checking and control to value adding; </li></ul><ul><li>(k) Complexity, exceptions, and special cases; </li></ul><ul><li>(l) No one is responsible for the process. </li></ul>
  9. 9. BPR vs ERP Project Management Change Management Strategic Planning Continuous Process Management Technology Management <ul><li>Fragmented </li></ul><ul><li>Functional-based </li></ul><ul><li>Inefficient </li></ul><ul><li>Costly </li></ul><ul><li>Slow </li></ul><ul><li>Integrated </li></ul><ul><li>Process-oriented </li></ul><ul><li>Standardized </li></ul><ul><li>Customer-focused </li></ul><ul><li>Competency-centered </li></ul>Process change through ERP
  10. 10. Process Change Management <ul><li>Change Management </li></ul><ul><ul><li>Commitment, people, communication, interactions </li></ul></ul><ul><li>Project Management </li></ul><ul><ul><li>Team formation, progress measurement </li></ul></ul><ul><li>Strategic Management </li></ul><ul><ul><li>Process redesign, measurement, continuous improvement </li></ul></ul><ul><li>Continuous Process Management </li></ul><ul><ul><li>Performance gap analysis, change justification </li></ul></ul><ul><li>Technology Management </li></ul><ul><ul><li>Software selection, technical analysis & design, installation </li></ul></ul>
  11. 11. Impact on ERP <ul><li>If poor BPR is conducted, or if vendor system adopted without consideration of organizational requirements: </li></ul><ul><ul><li>Will discard processes in which organization has developed competitive advantage </li></ul></ul><ul><ul><li>Even when BPR beneficial, there will be a transition period where employee performance degrades while learning new system </li></ul></ul><ul><ul><li>Failure of leadership commitment </li></ul></ul>
  12. 12. Risks in BPR <ul><li>Advocates report failure rates of 50% to 70% </li></ul><ul><li>Sutcliffe [1999] reviewed difficulties </li></ul><ul><ul><li>Employee resistance to change </li></ul></ul><ul><ul><li>Inadequate attention to employee concerns </li></ul></ul><ul><ul><li>Inappropriate staffing </li></ul></ul><ul><ul><li>Inadequate tools </li></ul></ul><ul><ul><li>Mismatch of strategies & goals </li></ul></ul>
  13. 13. How Reengineering Should Work <ul><li>Texas Instruments, 1990s </li></ul><ul><ul><li>Long cycle times, declining sales </li></ul></ul><ul><ul><li>Applied BPR cross-disciplinary teams </li></ul></ul><ul><ul><ul><li>To control all aspects of product development </li></ul></ul></ul><ul><ul><li>First pilot teams failed </li></ul></ul><ul><ul><ul><li>Sabotaged by existing organization </li></ul></ul></ul><ul><ul><li>TI Reorganized around teams </li></ul></ul><ul><ul><ul><li>Cut launching time by one-half </li></ul></ul></ul><ul><ul><ul><li>more profit </li></ul></ul></ul><ul><ul><ul><li>4 times the ROI </li></ul></ul></ul><ul><ul><li>Minimizing the errors of oversightedness </li></ul></ul>
  14. 14. Best Practices in ERP <ul><li>The most efficient way to perform a task </li></ul><ul><li>SAP devotes considerable research to best practices </li></ul><ul><ul><li>800 to 1000 best practices reported in their R/3 system </li></ul></ul>
  15. 15. Benchmarking <ul><li>Compare an organization’s methods with peer groups </li></ul><ul><ul><li>Identify what practices lead to superior performance </li></ul></ul><ul><ul><li>Usually part of BPR </li></ul></ul>
  16. 16. Implementation Problems <ul><li>Scott & Kaindle [2000]: at least 20% of needed ERP functionality missing from vendor practices </li></ul><ul><li>Many reports of missed deadlines, excessive costs, employee frustration in ERP implementation </li></ul><ul><li>Taylor [1998]: need more participative design in implementing ERP </li></ul><ul><ul><li>If adopt vendor system in total, can assure timely implementation within budget </li></ul></ul><ul><ul><li>Also disregard organizational needs </li></ul></ul><ul><ul><li>Training a key part of ERP implementation </li></ul></ul>
  17. 17. BPR Options <ul><li>Clean Slate </li></ul><ul><ul><li>Reengineer everything from scratch </li></ul></ul><ul><li>Technology Enabled </li></ul><ul><li>(constrained reengineering; concurrent transformation) </li></ul><ul><ul><li>First select system (vendor) </li></ul></ul><ul><ul><li>Second reengineer </li></ul></ul>
  18. 18. Comparison: Clean Slate vs. Technology Enabled Software available Greater likelihood that cost, time objectives met May have unique features where best practices inappropriate Know design is feasible May be only way to implement advanced technology Process bounded, thus easier Not subject to vendor changes Tools focus reengineering Retain competitive advantages Tools help structure reengineering Not limited by best practices database Focus on ERP best practices Not constrained by tool Technology Enabled advantages Clean Slate advantages
  19. 19. Finally do you need BPR? <ul><li>O’Leary [2000] survey of SAP R/3 users </li></ul><ul><ul><li>Technology enabled strategy dominated </li></ul></ul><ul><ul><li>Prior to ERP implementation, 16% thought BPR needed prior to SAP implementation </li></ul></ul><ul><ul><ul><li>33% thought BPR unnecessaary </li></ul></ul></ul><ul><ul><li>After ERP implementation, 35% thought BPR needed prior to SAP implementation </li></ul></ul><ul><ul><ul><li>10% thought BPR unnecessary </li></ul></ul></ul><ul><li>So BPR seems to be a useful exercise </li></ul>