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ERP & BPR
This document discusses the relationship between business process redesign, enterprise resource planning (ERP) systems, and organizational performance. It notes that while ERP systems can improve productivity through integration, they often require redesigning key business processes first to avoid failures from incompatibilities. Maintaining ERP systems after implementation and sharing knowledge about the systems can also positively impact business performance by amplifying these effects. However, organizational resistance and high costs are challenges that can be faced when aligning current processes with new ERP functionality.
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ERP & BPR
- 1. A symbiotic relationshipbetween technologies Presented by: Matthew L. Munger
- 3. Productivity ? + ? = Quality Source: (Kock, 2007)
- 4. Sources: (Wen-Sien, Shu-Ping,Hwang, & Jui-Ling, 2010) (Huq, Z., Huq, F., & Cutright, K., 2006)
- 5. » Alignment of current processes » Organizational Resistance » Incompatible » High Costs (Huq, Z., Huq, F., & Cutright, K., 2006) Additional Source: (WenHsien, T., Shu-Ping, C., Hwang, E. Y., & Jui-Ling, H., 2010)
- 6. » Elements ofBusiness Process Redesign ˃Replace synchronous with asynchronous communication ˃Reduce information duplication and overflow ˃Minimize contact points within a process » Goal ˃Improve process quality and productivity (Kock, 2007) Source: (Kock, 2007)
- 7. » Customization isdecreased » Decrease in the gap between software and processes » Integration of business processes Source: (Kock, 2007)
- 8. “Post implementation maintenanceof an ERP system has a positive effect on business performance and that knowledge management has a significant moderating effect on the relationship between ERP post implementation maintenance and business performance. This implies that if the knowledge of organizational members is effectively stored but not further shared with members, knowledge is only statically stored in the organization and cannot amplify the effects of post-implementation maintenance on the performance of the business.” (Tsai, Li, Lee, & Tung, 2011, p. 140-141)
- 9. “Although enterprise systemscan lead to major gains in productivity, by integrating information from different organization areas (e.g. sales, production, accounts receivable), they often require the key organizational processes be redesigned before they are deployed. Many examples exist in business literature of organizations that have spent millions of dollars implementing enterprise systems, only to see those implementations fail due to incompatibilities between the organizational processes and the functionality provided by the enterprise system.” (Kock, 2007)
- 10. Huq, Z., Huq,F., & Cutright, K. (2006). BPR through ERP: Avoiding change management pitfalls. Journal Of Change Management, 6(1), 67-85. Kock, N. (2007). System analysis & design fundamentals: A business process redesign approach. Thousand Oaks, CA: Sage Publications Inc. Tsai, M., Li, E. Y., Lee, K., & Tung, W. (2011). Beyond ERP implementation: The moderating effect of knowledge management on business performance. Total Quality Management & Business Excellence, 22(2), 131- 144. Wen-Hsien, T., Shu-Ping, C., Hwang, E. Y., & Jui-Ling, H. (2010). A Study of the impact of Business Process on the ERP System Effectiveness. International Journal Of Business & Management, 5(9), 26-37.
Editor's Notes
- #3 In today’s society, changes in technology and increased consumer demand have increased the complexity of organizational business processes. This complexity has forced organizations to investigate ways to better manage and analyze these processes. To determine their success, organizations measure the productivity and quality of process outcomes. Each outcome can be influenced by the tools that an organization utilizes. These tools can come in many different forms and have varying results. In fact, most of the time, solutions used can effect one outcome but not the other. So how does an organization select a more comprehensive solution that can have the desired result of increasing productivity and quality?
- #4 Before a proper solution can be discussed, it is important that the terms of productivity and quality be formally defined.The first term, productivity, can be defined as ratio between production costs and production capacity (Kock, 2007).The second term, quality, is the measurement of the level of satisfaction a customer experiences from a given business process. The term customer in this sense can be considered external or internal. For example, an internal customer could be a particular department or manager. The external customer is a person or business that receives the product or service. You may now be asking yourself, “Why are these definitions important?”. Quite simply, they are the desired outcomes so we must fully understand their meaning.
- #5 The first tool that can be utilized to obtain the desired results comes in the form of software. This tool is known as ERP or Enterprise Resource Planning software. ERP is packaged business software that is capable of sharing common enterprise data and allowing access to information in real time. The software is modularized to provide organizations customized software solutions. Some of these modules can include: Accounts Receivable, General Ledger, Work Order, Customer Resource Management, Fixed Asset Management, and Payroll (Wen-Sien, Shu-Ping, Hwang, & Jui-Ling, 2010).The number one reason companies chose to implement ERP software is to integrate business processes(Wen-Sien, Shu-Ping, Hwang, & Jui-Ling, 2010). For example, information collected by the sales department about customers can be easily accessed and manipulated by other departments. This increased accessibility to information increases productivity by decreasing the need for internal departments to duplicate work. In addition, quality is improved because information can be accessed quickly and efficiently by various departments. ERP software provides a common database for all organizational activities that results in increased data integrity, reduction in transactions, decreased management costs, and increases in customer satisfaction (Huq, Z., Huq, F., & Cutright, K., 2006). However, these objectives can only be obtained when a ERP system is properly implemented.
- #6 Some challenges that organizations face when implementing ERP systems are:Properly aligning current processes to the packaged softwareOrganizational ResistanceIncompatibilities with existing software or technologiesAnd Excessive costs (Huq, Z., Huq, F., & Cutright, K., 2006)These challenges are why a significant number of implementations fail (WenHsien, T., Shu-Ping, C., Hwang, E. Y., & Jui-Ling, H., 2010) . To combat these challenges it is important for business leaders to fully understand their organization. This can be accomplished with another tool called Business Process Redesign, also known as BPR.
- #7 According to Kock, BPR or Business Process Redesign is the change in flow of information and knowledge within an organization. This change should focus on the following:-replacing synchronous with asynchronous communication-reducing information duplication and overflow-minimizing contact points within the processThe overall goal of BPR is to improve business process quality and productivity. With this in mind, it is easy to conclude that BPR and ERP share a common goal and are more successful in a symbiotic relationship. (Kock)
- #8 ERP and BPR share this relationship because:1.) When systems and processes are consistent, there is less need for customization to match business processes thus lowering overall implementations costs 2.) When companies do not have a gap between software and processes then ERP is more likely to achieve better performance (2)3.) One of the major benefits of implementing ERP systems is to integrate business processes of a company (2). Therefore, understanding the flow of knowledge in an organization is vital to the success of ERP software packages. Also, the need for this understanding, gives an organization the opportunity to reassess and apply changes to current processes to increase productivity and quality.These ideas provide evidence that ERP software and Business Process redesign are important partners and this connection can have a positive influence on the overall goals of increasing productivity and quality. However, this relationship does not end when the implementation process is completed.
- #9 It is important to understand that the relationship between BPR and ERP does not stop after system implementation. In fact, a recent study showed that “Post implementation maintenance of an ERP system has a positive effect on business performance and that knowledge management has a significant moderating effect on the relationship between ERP post implementation maintenance and business performance. This implies that if the knowledge of organizational members is effectively stored but not further shared with members, knowledge is only statically stored in the organization and cannot amplify the effects of post-implementation maintenance on the performance of the business.” (6)Even though this study had a knowledge management focus, the conclusion provides evidence that BPR could be essential in maintaining this flow of knowledge and be a key facilitator in the success of the software, which in turn, could improve the performance of the business.
- #10 I believe the following quote from Kock best summarizes the importance of the relationship between ERP software and BPR:“Although enterprise systems can lead to major gains in productivity, by integrating information from different organization areas (e.g. sales, production, accounts receivable), they often require the key organizational processes be redesigned before they are deployed. Many examples exist in the business literature of organizations that have spent millions of dollars implementing enterprise systems, only to see those implementations fail due to incompatibilities between the organizational processes and the functionality provided by the enterprise system.”In the end, the complexity found in the modern business environment has forced businesses to examine new methods of managing and analyzing their organizational knowledge. In determining their success in this quest, organizations quantify this by measuring productivity and quality. To achieve these desired results, Business implement many different tools. Yet, the tools described in this presentation, BPR and ERP software, working in a symbiotic relationship, give an organization the best chance to achieve both desired outcomes.