Business Process Reengineering and Information Technology

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The Need for BPR

Customers Competition Change Techniques lag behind technology Fragmented piecemeal systems Integration
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Characteristics of Business Process Reengineering

Several jobs are combined into one Employees make decisions Steps in business process: natural order Process may have multiple versions Work is performed where it makes the most sense
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Characteristics of Business Process Reengineering

Controls, checks, other non value-added work is minimized Reconciliation is minimized - minimize external contact points Hybrid centralized / decentralized operation is used A single point of contact is provided for the customer
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IT
Information available at many places Expert systems, allowing generalists to perform specialist tasks Telecommunication networks, allowing organizations to be centralized and decentralized at the same time Decision-support tools, allowing decision-making to be a part of everybody's job Wireless data communication and portable computers, allowing field personnel to work office independent Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found High performance computing, allowing on-the-fly planning and revisioning

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Implementation Issues
Expensive Eliminating jobs

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When to Use BPR?

Failure rate as high as 75-85% Improperly aligned BPR and IT Expensive Organizational resistance

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What is an ERP System definitions

Simplistic Definition ERP - Enterprise Resource Planning Detailed Definition a business strategy and set of industry-domainspecific applications that build customer and shareholder communities value network system by enabling and optimising enterprise and interenterprise collaborative operational and financial processes(Source: Gartners Research Note SPA-12-0420)
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Simplistic
Integration of all the information flowing through a company financial and accounting, human resource information, supply chain information, and customer information.

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ERP
ERP systems typically include the following characteristics: An integrated system that operates in real time (or next to real time), without relying on periodic updates. A common database, which supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department.

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Finance/Accounting
General ledger, payables, cash management, fixed assets, receivables, budgeting, consolidation

Human resources
payroll, training, benefits, 401K, recruiting, diversity management

Manufacturing
Engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects, manufacturing flow, activity based costing, Product lifecycle management

Supply chain management

Order to cash, inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing, commissions

Project management
Costing, billing, time and expense, performance units, activity management

Customer relationship management

Sales and marketing, commissions, service, customer contact, call center support

Data services
Various "selfservice" interfaces for customers, suppliers and/or employees

Access control
Management of user privileges for various processes
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Components
Database Management portal/dashboard Business intelligence system Customizable reporting External access via technology such as web services Search Document management Messaging/chat/wiki Workflow management

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Key Points
Modularity Process preparation Configuration Customization Extensions Data Migration
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Disadvantages Customization is problematic. Reengineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities ERP can cost more than less integrated and/or less comprehensive solutions. High switching costs increase vendor negotiating power vis a vis support, maintenance and upgrade expenses. Overcoming resistance to sharing sensitive information between departments can divert management attention. Integration of truly independent businesses can create unnecessary dependencies. Extensive training requirements take resources from daily operations.
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