bpr & erp - chapter 5

8/6/2019 Bpr & Erp - Chapter 5

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By:-

ANKIT MAHINDROO

ASST PROFESSOR,

LMTSOM

BPR & ERP

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BPR is the fundamental rethinking and redesign of

business processes to achieve dramatic improvements incritical, contemporary measures of performance, such as

cost, quality, service and speed.

(Hammer & Champy, 1993)

WHAT IS BPR?

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WHAT IS BPR?

y Involves thorough rethinking of all :-

y business processes

yjob definitions

y

management systemsy organizational structure

y work flow and

y underlying assumptions and beliefs.

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GENERAL OBJECTIVES

y To break away from old ways of working,

y Effect radical (not incremental) redesign of processes

to achieve dramatic improvements in critical areassuch as

y cost,

y quality,

y service

y response time and

y Cycle time through the in-depth use of informationtechnology.

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KEYADVANTAGES OF BPR

Fragmented

Functional-based

Inefficient

Costly

Slow

Integrated

Process-oriented

Standardized

Customer-focused

Competency-centered

Process change

through BPR

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BPR CHARACTERISTICS

y Process innovation and re-invention

y Enterprise process change

y Performance improvement

y Increased economic growthy Higher competitive bar

y IT as central enabler

y 50 75% failure rate

y High - risk, high return venture

y Significant reduction in cycle time across processes

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SPECIFIC OBJECTIVES??

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SPECIFIC OBJECTIVES

y Standardization of business objectives

y Elimination of organizational and technical bottlenecks

y

Improvement in quality of informationy Replacement of out-of-date procedures and systems

y Integration of business processes

y Reduction in stand-alone systems and interfaces

y Covering areas previously neglected

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ANY MYTHS ABOUT BPR?

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MYTHS ABOUT BPR

y Downsizing tool

y High failure rate

y Re-engineering and transformation

y BPR and TQM

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WHAT IS A PROCESS?

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A specific ordering of work activities across time and space, with a

beginning, an end, and clearly identified inputs and outputs: a structure

for action.

(Davenport, 1993)

WHAT IS A PROCESS?

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WHAT IS A BUSINESS PROCESS?

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A group of logically related tasks that use the firm's resources to provide customer-

oriented results in support of the organization's objectives

Why Reengineer ?Why Reengineer ?Customers are DemandingCustomers are Demanding

SophisticationSophistication

Changing NeedsChanging Needs

CompetitionCompetition

Local vs. GlobalLocal vs. Global

Change TechnologyChange Technology

Change Customer PreferencesChange Customer Preferences

WHAT IS A BUSINESS PROCESS?

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ENTERPRISE REDESIGN PRINCIPLES

y Capture data once, at its source

y Information producer should also process information

y Geographically dispersed resources are treated as centralised

resourcesy Activities are linked in parallel

y Decision-making is decentralized

y Processes are integrated across entire value chain

y Development of business alliances

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BPR VS TQMIMPROVEMENT (TQM) INNOVATION (BPR)

Level of change Incremental Radical, breakthrough

Starting point Existing process Start from scratch

Frequency of change Continuous One-time

Implementation time Moderate Long

Risk Involved Moderate High

Primary Enabler Statistical Control IT

Type of change Cultural Cultural/Structural

Expected Improvement Moderate Significant

Top management Moderate Very High

Role of IT Low Very High

Focus on Process improvement Profit Maximization

Investment Low initially, high to sustain High initially, less later

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BPR AND CHANGE MANAGEMENT

y It is related to the social and cultural aspects of re-

engineering process.

y Deals with aspects such as:-

y

Committed leadershipy Employee empowerment

y Communication of strategic goals

y Process vision development

y

Project managementy Process based team formation

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BPR IMPLEMENTATION APPROACHES

y Two types of approaches:-

y Clean-slate re-engineering (everything from scratch)

y Technology-enabled re-engineering (constrained re-

engineering)

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CLEAN-SLATE RE-ENGINEERING

y Processes start to re-engineer from the beginning and not

from the middle of the process.

y Processes first re-engineered to meet organizational needs

y

Software then selected to re-engineer the processesy Not easy to do since BPR is effort-intensive

y Carrying out BPR before ERP implies investment in 2

successive projects

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ADVANTAGES

y Independent of any particular tool or ERP package.

y Design of the re-engineered processes is hidden from others.

y System not affected by change in technology since

implementation is process-driven.y Removes confusion in ERP implementation since re-

engineering is considered independent of technology

implementation.

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DISADVANTAGES

y Difficulty in designing; no prior structure available

y Design unviable or sub-optimal.

y Design might not match ERP packages available.

y Costly and time consumingy Highly efficient functional consultants required

y Overall risk also increases as design might not be tested

before

y Done by large firms only having significant time and budget.

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TECHNOLOGY-ENABLED

RE-ENGINEERING

y Involves change of processes through extensive use of IT.

y Most ERP systems are based on client-server solution model

and represents integration of BPR and IT.

y

Enterprise goals and key processes that effect the success ofthe project.

y Some key benefits when BPR is coupled with IT are:-

y Decreased inventory

yLower administrative and operating costs

y Increased revenues

y Recaptured market share

y Reduced overtime

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ADVANTAGES

y ERP package chosen gives clear directions for re-engineering

y ERP package has been tested from various parameters; hence

better re-engineered solutions and feasible design

y

Very cost-effective re-engineering as packages are very costeffective.

y Helps in timely implementation of BPR

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BPR IMPLEMENTATION METHODOLOGY

y Phase 1: Plan BPR implementation

y Phase 2: Identify opportunities for BPR in the existing

system

y Phase 3: Develop a blueprint of the existing processes

y Phase 4: Develop an improvement plan

y Phase 5: Implementation

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PHASE 1: PLAN BPR IMPLEMENTATION

y Providing access to the current state of the organization in

terms of efficiency

y Identifying the need for the change

y

Developing a vision and identifying success strategiesy Constituting a re-engineering team and giving them clearly

defined goals

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PHASE 1: PLAN BPR IMPLEMENTATION

Aspects to be evaluated in Phase 1:

y Existing processes and their data flow

y New challenges for the organization

y Manner in which existing processes are impeding thebusiness

y Cause for the organizations concern related to the market

demand and competitors

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PHASE 2: IDENTIFY OPPORTUNITIES

FOR BPR IN THE EXISTING SYSTEM

y Analysis of the core/high-level processes.

y Identification of change enablers and process performance

matrices.

y

Evaluation of existing business strategy, and establishment ofnew process performance objectives and key characteristics.

y Identification of potential barriers to implementation

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PHASE 3: DEVELOP BLUEPRINT OF

EXISTING PROCESSES

y Modelling the existing processes in terms of process and data

flow.

y Understand how technology and information are currently

used.

y Understanding the existing organizational structure.

y Comparing existing processes with new objectives.

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PHASE 4: DEVELOP AN IMPROVEMENT

PLAN

y Developing a complete model for the new processes.

y Establishing a new organization structure.

y Describing new information requirements and technology

specifications.

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PHASE 5: IMPLEMENTATION

y Developing a migration strategy to the new model.

y Accessing current skills and capabilities of the organizations

employees.

y

Mapping new tasks and skill requirements to the employees.y Reallocating the work among various people and

departments.

y Training the people at all managerial levels for the new

system.

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ROLE OF IT IN BPRIT Characteristics Advantages

Automation of processes Elimination of human labor that leads to

reduction in overhead costs.

Improving efficiency in processes

Increasing speed of execution

Store, retrieve and distribute data Distribute organization with informationaccess from different dispersed areas

Enabling data analysis

Easier communication using email, video

conferencing and telephony

Enable decision-making Ability to gather, analyse and support

interpretation of data

Control the process Helping in parallelizing jobs, controlling the

sequence of activities, and scheduling

standard procedures, etc

Process monitoring and performance

measurement

Ability to immediate report errors, and

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BPR SUCCESS VS FAILURE FACTORSFailure Factors Success Factors

Change of management system and

cultural factors

1. Communication gap

2. Organizational resistance to change

3. Lack of organizational readiness

4. Cultural Issues

5. Inefficacy

1. Establishing motivation and reward

system

2. Effective communication

3. Employee empowerment

4. Peoples involvement in BPR

implementation

5. Training and education about new

system.6. Creating effective culture for

organizational change

Management Support Factors 1. Problems related to commitment,

support and leadership

2. Problems related to championship

and sponsorship

1. Committed and strong leadership

2. Championship and sponsorship

3. Management of risk

Organizational Structure 1. Ineffective BPR teams

2. Problems related to integration

mechanism, job definition, and

responsibility allocation

1. Adequate job integration approach

2. Effective BPR teams

3. Appropriate job definitions and

responsibility allocation

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BPR SUCCESS VS FAILURE FACTORSFailure Factors Success Factors

BPR project management factors 1. Problems related to planning and

project management

2. Problems related to goals and

measures

3. Inadequate focus and objectives

4. Ineffective process design

5. Problem related to BPR resources6. Unrealistic expectations

7. Ineffective use of consultants

1. Alignment of BPR and corporate

strategies

2. Effective planning and use of project

management techniques

3. Setting performance goals and

measures

4. Adequate resources5. Effective use of consultants

6. Building BPR vision

7. Effective process redesign

IT infrastructure factors 1. Problems related to IT investment and

sourcing decisions

2. Improper IT integration

3. Inadequate IT development4. Ineffective re-engineering of legacy

systems

Adequate alignment of IT infrastructure

and BPR strategy

Building an effective IT infrastructure

Adequate IT investment and sourcingdecisions

Adequate measurement of IT

infrastructure effectiveness on BPR

Proper IT integration

Effective re-engineering of legacy systems

Effective use of IT tools

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BPR Symbols

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AnActivity

ADocument

ADecision

Data (input as outputs)

BUSINESS PROCESS FLOWCHART

SYMBOLS

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A Predefined Process

The Start of a Process

The End of a Process

Representing a Relation

Start

End


SYMBOLS

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Continuation of the process at the same page

at an equal symbol with the same number. Used

when a relation arrow crosses another relation arrow

Off-PageConnector - Process will continue on the

next page

Integration Relation -A

relation to another module isidentified and described


SYMBOLS

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Rules For Symbols

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Start

End

Generate

Purchase

Order

OK? Yes

No

Symbol used to identify the start of a business process

Activities must be described as a verb

Decisions have only two possibilities (Yes & No)

Crossing lines are not allowed

If one side of the decision has no further processes

defined this symbol has to be used

RULES FOR SYMBOLS

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Purchase

Order

Posting

of Bonus

I

A

Continuation symbol within the same number must be

present twice on the same page

Name the document

Off- PageConnector is used to continue a process at the

next page or to let the process to flow over at the previous

to the next page. If more than one is needed useA, B, C,

D

Name the data

RULES FOR SYMBOLS

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END

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bpr & erp - chapter 5

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