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Modeling Change Management and Risk Management in a

Financial Organization Due to Information System Adoption

Subhas C Misra, Riya Rana and Ritika Verma

Indian Institute of Technology (IIT), Kanpur, India

Vinod Kumar and Uma Kumar

Carleton University, Ottawa, Canada

Abstract
Purpose: Organizations, being the competitive kind, aspire to rationalize, innovate and streamline their
processes. Business Process Reengineering (BPR) is an attempt to adapt and readjust themselves to the
changing conditions and requirements of the people. Irrespective of the reengineering program or the modeling
technique, BPR focuses on organizational and process changes. Change Management involves taking care of
organizational changes which may, at times be difficult to accomplish. Most attempts made in modeling change
management address the nature of changes without addressing the reason for the changes made and how they
will affect the organization’s conditions. This paper also attempts to address the risk involved in implementing
Enterprise resource planning (ERP) in an organization undergoing change. This technique explores the various
vulnerabilities and opportunities of risk associated with re-engineering.
Design/methodology/approach: An actor dependency technique has been used to analyze and model early
phase requirements of change management and then addressing consequent risks involved in an organization.
This model explains insights, intents and rationales behind the entities and behaviors.
Originality: i* modeling technique has been used not only for demonstrating changes but also for
reengineering the entire proceedings and maneuvering of tasks. Certain plans and solutions have been suggested
in the end for problems that already existed at that time, and the ones, which may occur after applying changes.
This is done by means of risk management, which addresses probable risks of the future.
Findings: A case study has been used to demonstrate this approach.
Keywords: Modeling, Change Management, Risk management.
Paper type: Conceptual paper.

1. Introduction

Business Process Reengineering (BPR) is a method to improve business performance by

introducing certain set of activities and redesigning the existing business processes (Misra,
2006). In today’s competitive scenario, organizations are comprehensively dynamic and they
aspire to rationalize, improve and adapt to changing situations (Kueng and Kaulek, 1997) as part
of BPR attempts. Subsequently, many organizations involve themselves in intensive process
redesign tasks. It specially assists if the organization is in the growing phase and intends to go
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global with branches in foreign countries. Different process models are utilized during the phases
of analysis, design and at last implementation (Georgakopoulos et al., 1995; Kueng et al., 1996;
Mylopoulos et al., 1999; Ould, 1995; Gans et al., 2003). The main element of BPR is change
management. Changes occur in the implementation phase after they are studied and analyzed
thoroughly. Changes usually occur in structure, technology or programs and may be sometimes
challenging to accept and carry out especially if the people are resistant to changes (Misra,
2006).
In some recent studies, primarily in the non-software industries, critical factors and effective
strategies for success in business were depicted (Martin and Cheung, 2002). Functional
requirements were mostly addressed in the past. Opportunities and Vulnerabilities were not taken
so much into account. But in today’s competition, it has become necessary to integrate changes
and associated risks explicitly in the modeling of system processes (Misra, 2006).

The scope of this paper covers both change and risk management. Changes always have a certain
risk factor attached to it. They may or may not work similarly for all organizations. Type of
employees and their inter dependencies are important factors in determining results. Through this
paper, dependencies have been modeled in early phase processes. These dependencies change in
reengineered process. In this paper, certain changes are proposed, and analyzed, however there
may be various other possibilities and scenarios. The main aim is to present a tool for depicting
and examining change management in similar BPR Projects.

In addition to it, our paper is method-oriented and focuses on one scenario at a time. Unless all
other scenarios are laid out and analyzed simultaneously, the cost efficiency cannot be accurately
estimated. In typical BPR Projects, such tasks take place at the level of project Management,
when all the changes are minutely studied and modeled, and several other alternatives are taken
care of. Cost-benefit analysis is then done by the Project Manager for all possible scenarios
(Misra, 2006). In this paper, a particular methodology is adopted and certain reengineering
principles are applied to model changes and subsequent risks involved, in a case study before and
after reengineering.

2. i* modelling
i* modelling is a language used for modelling early stages of case studies to grasp properly, the
main issues involved in the problem domain. According to Yu, Eric, 2009, “i* modelling
language is used to model ‘as-is’ and ‘to-be’ situations. The name i* refers to the idea of
distributed intentionality which underlines the framework”. It involves heterogeneous actors with
several goals, tasks and inter-dependencies. It incorporates the features and characteristics of
both the actor and its goals. i* modelling answers questions like what do the actors want and who
all would they depend on to have their goals fulfilled. It analyzes as to why processes are
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performed in their existing pattern. It also presents a blueprint of the problem domain and
highlights the basic outline of the necessary dependencies, organizational tasks and processes.

For modelling of Change Management, two types of i* representations are used: Strategic
dependency model (SD) and Strategic Rational model (SR). SD model illustrates dependencies
between actors, whereas the SR diagram internally models each actor to rationalize and justify
their dependencies. Alternatively, it can be said that SD diagram depicts dependencies at a
greater level of generalization and abstraction compared to SR, because SR concentrates on the
subjective working of the actor and upholds its dependencies.
Actors can be categorized as “depender”, “dependee”, or “dependum” in accordance with their
dependencies. The “Depender” relies on the “Dependee” to obtain a “Dependum”. The essential
and basic components of SD diagram are (Mylopoulos et al., 1999; Molani et al., 2003; Sutclifre
and Minocha, 1999):
 Goal dependency models an actor depending on another for some tangible condition. The
dependee has the freedom of choice for the method of attaining goal.
 Task dependency models an actor depending on another for performing an activity. This
scenario usually represents an implicit depender’s goal which is directly related to task
completion.
 Resource dependency models a dependent actor relying on another for making an entity
available. Obtaining this resource is usually straightforward.
 Soft goal dependency models an actor depending on another to make a fuzzy condition
come true. Here fuzzy implies something which is unclear and not accurately specified.
In such a case, a dependee collaborates, but a depender gets the final say in achieving the
soft goal.

When we look at SR diagrams, they focus inside the actor. They are efficient in depicting
both external and internal information. External elements remain similar to the ones shown in
SD diagrams while internal information is detailed. This internal information is illustrated by
similar goals, tasks, and resources but they are organized rank-wise in a “means-end” or
“task-decomposition” relationship. These tasks may have their influences on each other or
external tasks. They can be further subdivided into sub goals and subtasks to increase
understanding. Their individual contributions to other actors or the same actor may be
positive or negative.

3. The study of Change Management & Risk Management at AFC

In this paper, an actor dependency modeling technique has been used to model change
management problems in the current loan repayment process of a finance company (AB Finance
Company: AFC), which is going through modifications in its organizational systems, and
processes. The company modeled here is hypothetical and not related to any existing
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organization. This case study has been inspired from chapter-2, “Re-engineering and Enterprise
Resource Planning Systems”, of the book “Enterprise Resource Planning” by Mary Sumner,
2005. Section 3.1 introduces background of the business.

3.1 Background of the business

The AB Finance Company (AFC) was founded in 1921 in a small mid-western town. In its
formative years, AFC lent money to farmers and executives. Being new and willing to take risks,
it charged slightly higher interest rates unlike the commercial banks. Its initial policy was to loan
individuals, thereby assisting them in making purchases such as automobiles, appliances, home
improvements etc. It aspired to turn transnational and expand beyond its home base. Later it
expanded to around 145 branches across the country. They came up with a new growth plan to
setup 400 AFC branches within the next 3 years across the continent and 1000 branches within
the next 6 years across the globe. The probable locations were growing suburbs and developing
countries. Eventually, it also began to provide working capital to manufacturers and building
contractors. Such widespread expansion plans required an improved information system for
proper maneuvering of transactions for loans, payments and settlements.

3.2 Current Loan Repayment Process at AFC

The current loan repayment process at AFC has been described as follows:
 The debtor needs to first acquire a loan from AFC. After that, he can repay it in three
different ways:
o Physically bring their payments into the branch in the money order/ cash/ cheque/
demand draft form
o Mail their payments using postal services to the branch
On receiving the payments, the branch employees match their loan ID. If required
the customer card file is checked additionally for this purpose. On acceptance of
the payment the Outstanding Loans File is updated by taking out the voucher
copy corresponding to the particular payment. The voucher copy is stamped
“paid” on by the personnel and then is filed in the Paid Vouchers file in sequence
by Loan ID and due date.
o Customers can pay home office physically or through mail
Home Office Payment Processing Department proceeds to verify the payment by
checking the contained voucher. If it’s absent, the payment processing clerk uses
the printout of the central Outstanding Loans File to search the loan ID
corresponding with the precise amount. Then, the branch personnel are mailed an
Accepting Payment report (APR), notifying them of the payment made. They use
the APRs from the Home office and their own internal records to match and
update their own local Outstanding Loans File. The details are also updated in the
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Outstanding Loans File in the Home Office. A batch payment processing run
updates all accounts centrally, every day.
Payments made in this way are sent directly to the Home Office Bank.
 The Payment Processing Department then produces a payment report for the Accounting
Department. A branch-by-branch payment report is also made for each Branch Manager.
To model the actor dependency technique mentioned before, we need to define the actors in this
case study. Following actors were recognized for the current loan processing system:
External actors. Debtors
Internal actors. Branch office, Home office

The Home office of AFC is divided into many departments. But only some of them are of
interest to us. These are: Office bank, Accounting Department, and Payment Processing
Department. Figure 1 shows these departments using i* modeling.

Figure 1. Illustration of different departments in the Home office

3.3 Strategic Dependency model for the current loan repayment process method 1

Now let us analyze the SD Diagram for the first method of current loan repayment process.  The
actors involved are “Debtor”, “Branch Office”, and “Home Office”. Since, the Home office,
which is the centre of all activities, would want the debtor to repay his/her loan, it becomes the
depender of the main task Payment. This makes the debtor as the dependee.  In Method 1, the
debtor directly repays his loan to the branch office by means of cash, cheque, or money order.
This implies that the branch office would depend on the debtor for this task. For repayment
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process to begin the debtor has to first provide the resource Loan ID to the branch office. The
branch personnel would then verify the loan ID by checking internal records. If voucher copy is
present then the work becomes easier as it can be directly matched with the existing data, and
stamped “paid” later.

Figure 2. SD diagram for the current loan repayment process method 1

Debtor would depend on the branch office for soft goals of Quick and Errorless Updation. If
there is an error or delay in updation then the customer might receive an unnecessary reminder
by the Delinquency Analysis System. Lastly, Home Office depends on the Branch Office for the
resource APR for Updation. The Home office is informed about each payments by means of an
APR (Accepting Payment report), which is filed out for each payments of the day and mailed to
the Home office. This enables the Home office to update its own Central Loan Outstanding File.

3.4 Strategic Dependency model for the current loan repayment process method 2

If we analyze the second loan repayment process method, we realize that it is almost similar to
repayment method 1, with the only distinction being that the resource payment is being sent
through Mail. Thus the dependencies would remain same in the second SD diagram. There are
certain risks involved in this case. Postal delay may lead to late repayment and the debtors
profile coming into the notice of the Delinquency Analysis System. Even after repaying, the
debtor would still receive reminders. Also when payments are made through mail, there is lesser
probability that the debtor would attach voucher copy with it. Missing voucher copy would
elaborate the process and may lead to errors in updation.
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Figure 3. SD diagram for the current loan repayment process method 2

3.5 Strategic Rationale Model for the current loan repayment process methods 1& 2

The SR Diagram for the first and the second method of current loan repayment process is self-
explanatory. The goals and the tasks involved reflect the whole repayment process itself. The
actors whose internal functioning we will be looking into are Debtor, Branch office, and Home
office. The main goal of the debtor is Loan Repayment. This can be done in two ways- Pay
physically or Pay through Mail to the branch office. Hence these tasks are connected to the main
goal by means-end relationship. These tasks can be further decomposed into softgoal of Timely
Payment and a task of Attaching Voucher. Presence of the debtor’s voucher copy prevents a lot
of clerical work and reduces chances of error in updation.
Now, let us look into the proceedings of the Branch Office. Its main goal would be to Process
Loan Repayment. It involves tasks of updating Local Outstanding Loans file, stamping ‘paid’ on
the voucher copy and filing it in the ‘paid voucher file’. Updation is made possible by Verifying
Loan ID by pulling out voucher copy or checking the customer card file. Verification by voucher
copy depends on whether the Debtor has attached voucher copy or not.
The Updation needs to be quick and errorless as depicted in earlier diagrams too. Timely
Payment by the Debtor helps in the softgoal of Quick Updation by the Branch.  Errorless
Updation helps in the main goal of the debtor, i.e. Loan updation.
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Figure 4. SR Diagram for the current loan repayment process methods 1& 2

The main goal of the Home office is to supervise the whole payment process. His task at hand
would be to Update its own Central Outstanding Loans File. Updation depends on the Debtor for
payment and on the Branch office for sending an APR.

3.6 Strategic Dependency model for the current loan repayment process method 3

In method 3, the customer pays directly to the Home office. The dependencies which were
earlier between the debtor and the branch office would now lie between the debtor and the home
office. This time the debtor would depend on the home office for quick and errorless updation of
repayment status, while the home office would depend on the debtor for Payment through
cash/mail, Loan ID and the voucher copy. The branch office would depend on the home office
for timely notification of repayment status through APR so that the profile does not go to the
delinquency analysis system.
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Figure 5. SD diagram for the current loan repayment process method 3

Payments made in such a way are batched and directly sent to the home office bank. A payment
report is made by the payment processing department for the accounting department and a
branch by branch payment report is made for each branch manager.

3.7 Strategic Rationale model for the current loan repayment process method 3

Now, let us look into the internal tasks and goals of the actors, in the third method of loan
repayment. The goals and tasks of the Debtor would remain the same as in the first and the
second method with the only distinction being that payment is being made directly to the home
office.
As we have seen earlier, Home office itself has three parts- Central payment Processing
Department, the Home Office Bank, and the Accounting Department. The main goal of the
Central payment processing department is to Verify and Accept Payment for which it depends on
the Debtor to actually make the payment and trigger the whole process. Its main goal can be
completed only after Updating Central Outstanding Loans File and Synchronization of several
other tasks. Updation can be done only after checking the Enclosed Voucher (if Present) and
matching Loan ID in file.
The ‘help’, ‘make’ and ‘some+’ relationships are quite straightforward in this diagram. Tasks
like sending an APR to the branch, Producing Branch by Branch Payment Report and Producing
payment Report for the Accounting Department has to be synchronized at the end for the process
to be completed at the central payment processing department level.
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Figure 6. SR diagram for the current loan repayment process method 3

The main goal of the Home office bank is to Store Repaid Money which is being batched and
sent to it by the Payment Processing department. The Accounting Department takes care of the
Error Rectification. This can be done by Accepting Payment report (APR) sent by the Central
Payment Processing department and then Calculating and keeping tracks of the payments made.
The role of the Branch office starts after receiving an APR for updation from the Home Office.
Its main goal is to Update Account Information by Updating Local Outstanding Loans File after
checking its internal records. Receiving Branch by branch payment report assists in errorless
updation. The debtor depends on both the home office and the branch office for the updation
process to be complete.

3.8 Strategic Rationale model for Delinquency Analysis System

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Every week, the delinquency analysis system is carried out. Its main goal is to Isolate Delinquent
Loans. This can be achieved by the task determining overdue payments; hence the means end
relationship between them. Overdue payments are determined by checking Central Outstanding
Loans File at the Home office. The main task is then decomposed into another task which is,
Generating Aged Trial Balance Report .This report indicates the number of days the payment
has been overdue, i.e. 15, 30, 45 or 60 days.  As soon as a payment is overdue by 15 days, a first
polite computer generated reminder is sent. For 30 days overdue profiles, second lesser polite
reminder is sent. As the number of days increase another two reminders are sent with increasing
degree of persistence. Thus, determining the number of days overdue helps in the task of sending
reminders to delinquent profiles. This task is made possible by determining overdue payments in
the first place itself. Another actor involved in this diagram is the Collections Department. Its
role emerges when the payments become more than 60 days overdue. Its main goal is to collect
repayments which are more than 60 days overdue. Thus it depends on the delinquency analysis
system for this information. Such delinquent profiles are moved to this department and the
collection agents follow up from there.

Figure 7. SR diagram for Delinquency Analysis System

3.9 Strategic Dependency model for the Settlements accounting system

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In a scenario where the debtor wants to pay his/her loan before the official due date, he/she can
request the bank for a settlement figure. This amount would settle the outstanding balance on the
loan. In case of urgency, the branch manager can call the Home office. The information system
Department on receiving the request prepares the settlement balance along with the settlement
run. This is processed nightly and next morning the settlement balance is delivered to the Branch
Manager.

Figure 8. SD diagram for Settlements accounting system

Figure 8 shows the SD diagram for the settlements accounting system with 4 actors: debtor,
Branch manager, Home office and Information system dept. as a part of the Home office.
The debtor depends on the Branch manager to achieve his main goal- address request on time
provide him with the resource settlement figure. Since he wants to pay before the due date this
dependency is of extreme importance. The Branch manager is required to phone the Home office
only if the request is urgent, hence the debtor needs to specify urgency of his request. It is this
urgency which starts the whole chain of events.
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The Branch manager depends on the Home office to provide him with the resource settlement
figure. For this, the Branch manager needs to convey the debtor’s request and details, shown by a
dependency link. The Information Systems department depends on the Home office to convey
request so that they can prepare the settlement run. Looking at this chain of events, we can note
that ultimately, the debtor depends on the Information System dept. to calculate the settlement
figure correctly.

4. Problems in the current loan repayment process at AFC

The current loan repayment process consists of various bottlenecks, which invariably leads to
postponing other processes. It is mechanized, slow and its sequential nature creates delays due to
minor errors. Most importantly, their current process does not allow them to expand to other
countries due to lack of a proper database management system and an efficient and secure data
sharing process. By analyzing the current process, this paper intends to evaluate the problems,
assess the actors and their intentions, suggest improvements by reengineering and address how
the new solutions would address these problems.
As mentioned before, to accommodate expansion plans, the current system will need to be
streamlined, modified, and enhanced. The problems are presented along with suggested
solutions:
 Half the time, the customer forgets to mail the voucher booklet to the Home office. It
might also get misplaced in delivery. This makes it problematic to trace payments as they
don’t possess the local customer card file containing the name and loan ID. Such
payments have to be traced by looking at a printout of the Outstanding Loans File. These
unknown payments may also create an APR to the incorrect branch, leading to increased
clerical work and error adjustments.
Plan:
Introduce an integrated database so that there is common access to a relational database
by all branches and Home office. The notion of an integrated database is to share
common data among organizational units which is maintained in central databases
(Sumner, Mary, 2005). Its elements and their relationships can be predefined. The database
allows many users to edit and update it, thus improving data consistency, independence
and integrity. It is a major factor in reducing reiteration of tasks. For its security, an
administrator’s role is defined who will provide security measures for authorized access.
Also, it would be easier for the administrator to monitor all the processes in branches
across the globe. If the voucher is missing, then by typing name or address in the
integrated database, a debtor’s details can be accessed quite easily by the branch or home
personnel.  There is no need for printing and checking against the Outstanding Loans
File. This diminishes the redundancy of processing a loan due to missing voucher.
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Since an integrated database is accessible to all, no APR or branch by branch payment

report is required now, thus reducing chances of error. As an added measure, small
penalty can be charged for not bringing or mailing the voucher.

 In some cases, the customers do not make their payments until 10 days after the target
date. In addition, due to other deferrals, when they do pay, it may not be posted in the
Outstanding Loans File on time, leading to customers getting a reminder from the
delinquency analysis system. The personnel has to contact the Home Office and track
down the payment to its sources when the customer objects. Hence, the customer service
gets extremely busy in addressing late and missing payments instead of working on other
issues.
Plan:
Using an Integrated Database would save time in entering data and processing it since it’s
a server based software. This reduces the chances of delays. Thus details of the payment
are posted and updated on the database on time.
Another solution is to introduce a Web Portal to play the role of Delinquency Analysis
system. Debtors can register for an account on the company’s online web portal. The web
portal will also display the customer’s payment status- when and where it has been
accepted, verified and approved of. Now, the company personnel doesn’t have to call the
Home office for tracing the payment, since they can directly check the online portal or
integrated database for the debtor’s payment status. Process becomes faster and less
complicated. Clerical work is reduced.
Integrated database has now replaced the Outstanding Loans file and details will be
updated automatically through web portal for the debtor to see.
As an added measure the web portal can create gentle reminders before the due date
occurs.
 In approximately 70% of the 145 branches, a clerk was busy full time doing redundant
clerical work, like maintaining local branch loan files, pulling local files, entering
payment details, and producing APRs. In the other 30%, such tasks took lesser time,
about 2-5 hours a day only.
Plan:
Using an integrated database will remove the excessive clerical work. There is no need to
pull voucher copies (optional), print files or make APRs. Home office and Branches
submit and check info simultaneously.  Duplicity of tasks is removed. The concept of
local and central branch files has been removed as the integrated database replaces its
usability.

 Due to the processes described above, keeping the Outstanding Loans File up-to-date was
not possible. Therefore, it became difficult to isolate the delinquent loans until it was too
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late, resulting in 2.5% of the loans not being paid back. According to their data the
highest uncollectable amount for a year was $ 4795000.
Plan:
Potential delinquents should be recognized during the initial approval process. This can
be done by keeping information about the delinquent like age, occupation, income,
family size, location, mobility, and a host of other criteria. A delinquency profile will aid
in identifying “High potential for delinquency” accounts.  This profile can be maintained
by Operations Research Personnel on an ongoing basis.
The Integrated database allows itself to be updated regularly and quickly due to its
improved user interface. Being a server based software it can easily isolate delinquent
loans. Efficiency is improved due to the usage of information technology in speeding up
the processes. Using this information, it will get easier for Collections Department to
keep track of the delinquent defaulters.
 Owing to error and adjustment tasks, the present month’s account books remain
unbalanced until twelfth of the next month. This disturbs AFC’s planning for cash flow
and makes them borrow more money than is actually required, that too at greater interest
rates.
Plan:
As a part of reengineering principles, parallel activities should be linked throughout the
process (instead of being linked only at the end), saving time and effort. Rather than
balancing the books at the end of the month, it can be started in the middle of the current
month. Specially, payments which have been finalized and have no more outstanding
loan money left for repayment should be processed as soon as they are made.
To tackle complicated planning, create a process owner having authority over all the
processes. According to reengineering principles, new roles and authorial positions
should take the place of traditional structures. Since number of branches is increasing,
new roles of regional managers can be created to supervise proceedings. Branches can be
divided into 4 zones: North, West, South, and East with a particular Branch manager
acting as a regional manager. His work would be to oversee and ensure error
rectifications occur promptly.
The debtor can also assist in error rectification. It is in his interest to ensure that his
payment is received and not misplaced. The web portal would regularly display status of
the loan repayment for the debtor. Debtor will be also notified through SMS or emails,
whenever his info is updated in the integrated database.

All these preemptive measures should allow AFC to smoothly plan their case flow needs.
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5. Reengineered loan repayment process at AFC

The debtor wants to repay his loan, for which he has three ways now: 1) through mail 2)
physically 3) using web portal. He can pay either at the branch office or Home office as
described earlier.

5.1 Strategic Dependency model for the Reengineered loan repayment process with actor
Branch

Figure 9 shows the new loan repayment process that is modeled using an SD diagram. Let us
analyze this SD diagram by looking at the new changes and comparing it with the earlier SD
diagram. The whole loan repayment process can only start when the debtor makes his payment.
Therefore his paying back starts the whole chain of processes. Hence there is a strong
dependency between him and the branch office. The branch office depends on him to make his
payment, shown through a task dependency.

Figure 9. SD diagram for the Reengineered loan repayment process with the actor Branch

To process this loan, identity details like Voucher, name or loan ID are required. Branch office is
a depender on debtor to provide this resource. Earlier, failure to bring a voucher increased
clerical work as the personnel would then have to print out__ and check against it. But now the
personnel can directly verify the repayment by typing the name/loan id in the integrated
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database. The database would then show further details for processing the payment. Hence
voucher is now optional.
The debtor depends on the branch office to update his repayment status and details without any
errors. If any errors occur, it would cause additional clerical work in verifying and cross-
checking sources. This in turn would cause unnecessary discomfort for both the debtor and the
branch.
The debtor also depends on the branch to make the updation quick since he would like to avoid
delays as much as possible. Both these dependencies are shown through a fuzzy goal because of
the subjective nature they possess. Errorless and quick can be considered vague and unclear as
they hold different meanings for everyone. For example, some people might want their process
to finish in ten minutes while others may be comfortable with waiting up to an hour.
The earlier dependency which existed between the Home and branch office vanishes now since
there is no need for sending APRs or other information. The Home office can directly check any
details it wants to by using the integrated database. The process has now become simpler.

5.2 Strategic Dependency model for the Reengineered loan repayment process with actor
Home office

Figure 10. SD diagram for the Reengineered loan repayment process with actor Home office

Figure 10 shows the SD diagram for new loan repayment process to the Home office. Payment
can be made in two ways: through mail or physically in person. The dependencies exist the same
as before. Now instead of branch, the home office will depend on the debtor to make the
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payment and provide his details like Loan id/name/voucher. Voucher is again optional for the
customer. The debtor depends on the home office to fulfill his fuzzy goal of updating his details
in an errorless and quick manner.
Now, the Home office doesn’t need to send APRs or payment reports to any branch since all
updations are made in the integrated database. A branch can use this database and check for all
the payments made to its name on any working day. This reduces the load on the Home office
and reduces chances of sending an APR to the wrong branch.

5.3 Strategic Rationale model for the reengineered loan repayment process for Branch
and Home office

Figure 11 shows the SR diagram of the new loan repayment process. The branch is replaceable
with the Home office since both have similar diagrams. Both have been depicted by one diagram
for the sake of avoiding repetition.

Figure 11. SR diagram for the reengineered loan repayment process for Branch and Home office

The debtor’s main goal is loan repayment. He can achieve this by paying physically or through
mail, shown via a means end relationship. This task is then decomposed into another subtask-
bring voucher copy and softgoal- timely payment. The branch’s main goal is to process the loan
repayment for which it depends on the debtor to make available the resource- payment. This
main goal is achieved my two means: updating integrated database and stamping paid on the
voucher. The task Update integrated database is decomposed into two subtasks and a softgoal.
On the customer’s part, bringing the voucher copy makes the task of verifying loan id by
checking enclosed voucher copy. The voucher copy is optional and if missing, verification can be
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done by typing the name/loan id in the integrated database. Timely payment by the debtor helps
the branch in achieving the softgoal quick updation of the database. Errorless and immediate
updation by the branch helps the customer in achieving his main goal of loan repayment.

5.4 Strategic Dependency model for the Reengineered loan repayment process using
Web Portal

Figure 12 shows the SD diagram for the on-line loan repayment process. There are some
interesting changes worth noting in this diagram. The web portal is a new actor which now
accepts payment and facilitates this process. It will now update the integrated database,
compared to Home/branch personnel in the previous payment method. The customer will make
his payment through online banking or his credit card. The credit card company will then verify
this payment, approve it and then transfer the money to the Home office bank. The new web
portal will notify the debtors when the credit card company doesn’t verify their charges. In this
case, the web portal updates its status for the debtor to see. For each stage of approval or denial,
the web portal shows it on the web portal to notify the debtor about the proceedings.

Figure 12. SD diagram for the Reengineered loan repayment process using Web Portal

On the other hand, the Home office bank or departments have no interaction with the debtor
here. They just receive the payment from the credit card company instead of getting it directly
from the debtors. The home office bank or departments has nothing to do with the payment
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process here. However, the home office payment processing department does depend on the web
portal to accomplish the task of updating the integrated database. Also the Home office bank
depends on the credit card company to transfer the money on time.

5.5 Strategic Rationale model for the Reengineered loan repayment using the Web
Portal

Now we will show the new loan repayment process using a web portal. Figure 13 shows internal
goals and activities of the actors, now refined due to re-engineering.
The customer’s main goal of loan repayment is decomposed into two subtasks. The customer
first does the task login through online portal. Having a good credit line makes updation for the
branch errorless and quick. It indicates having sufficient balance and is necessary so that his
payment doesn’t get cancelled. Timely payment can be considered as a significant means to
achieve loan repayment. It is soft because it is subjective in nature. Not paying the loan on time
makes the repayment process slow and tedious. Therefore timely payment helps in quick and
errorless updation.

Figure 13. SR diagram for the Reengineered loan repayment using the Web Portal

It can be seen that the web portal plays an important role here: to be a quick, easy and customer
friendly service. All its goals and tasks are aligned to make the loan repayment process smooth
and quicker than before. Process loan repayment is its main goal which can be achieved by a
single means update integrated database- which is then decomposed into various subtasks and
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softgoals. The web portal first needs to accept payment and then verify & approve it. Without
these tasks updating integrated database is not possible. For verifying the payment the web portal
depends on the credit card company to ensure correct payment. Through a means end
relationship we can depict further subtasks and softgoal: verify charges, transfer money and
errorless transfer and verification. The office bank, a part of the home office, depends on the CC
Company to transfer money correctly on time. After payment has been verified, the web portal
can update status to the customer. This helps in being a customer friendly service. In case the
payment is not approves the web portal shows payment cancellation as its status. The debtor
depends on this resource to stay notified of his payment status. The payment processing
department, a part of the home office, depends on the web portal to now update the integrated
database for its own usage.

6. Risk Management

Due to the competitive economy, companies desire to revolutionize their business processes for
better efficiency. This requires some level of innovation and adaption on their part.  Thus,
business process reengineering initiatives involve at least some amount of risk taking.
After depicting change management, we now move on to exploring the risks associated with the
case study by the same methodology i.e., depicting intentional dependencies between actors.
Since the old processes have been re-engineered, it would be reasonable to address the risks
associated with them.
According to Hubbard, Douglas, 2009, “Risk can be defined as the product of the result and
probability of a hazardous event or occurrence. Risk management is the identification, valuation,
and ordering of risks followed by coordinated application of resources to minimize, monitor, and
control the probability and/or impact of unfortunate events or to maximize the realization of
opportunities.”
The concept of risk management allows managers to acquire knowledge, remove bad decisions-
mainly from experiences or analyzing all the possibilities.

Based on the scope of this paper, three risks have been modelled and addressed along with their
remedies:
 Credit Card System failure
 Database failure
 Customer fraud
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6.1 Risk Management for Credit Card System Failure

In Figure 14, the risks for Credit Card System Failing have been addressed. These risks are being
resolved by the Web Portal itself who plays the role of “Handling CC System Failures”, where
CC stands for Credit Card.

Figure 14. SR diagram depicting Risk management for credit card system failure

The interdependent goals and tasks between positions would remain the same as in SD and SR
diagrams for improved repayment process. Even the internal components like goals, tasks and
soft goals would remain the same as in earlier SR Diagrams. Introduction of Web portal allowed
the debtors to repay their loans online. This was introduced as method 4 of repayment. Certain
questions arise as to who should address the problems related to CC System Failures? Since
the web portal automates the process of repayment, and reduces clerical work, it also holds the
responsibility of handling risks.
The given diagram shows that the Credit Card Company System position covers the
function/activity of “Credit Card System Failing”. Its main task would be Process Disruption.
Disruption can occur in 3 ways. Firstly, the credit card company may approve charges
incorrectly (it may either disapprove the correct amount or approve the incorrect amount to be
repaid). Secondly, there might be site traffic delay (this may occur when a lot of people are
trying to access the site). In such a case, charges would be eventually approved, but with a lot of
delay, leading to customer inconvenience. Thirdly, the website may crash and completely stop
working. In such a scenario, charges would be disapproved and the debtor would not be able to
use this method of repayment anymore. These risks are directly affecting the goals and tasks of
the web portal and indirectly affecting the goals and tasks of the debtor. Web Portals task of
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Verify and approve charge depends on the Credit Card Company for Errorless Charge Approval.
This task is interfered by the risks involved in credit card failing. Incorrect Charge Approval
breaks the goal of Errorless Charge Approval. Similarly, Site Traffic Delay breaks the goal of
Verifying Charges on Time which is important for web portal to provide Quick and easy service
to the debtors. Website Crash breaks the goal of Smooth Intra-Bank Transactions. This would
disable the web portal from accepting repayments from other banks.
The main goal of Web Portal, in case of risks, would be to systematically Manage CC failures.
This could be efficiently done by allowing an Alternate Online Payment Option. This reduces
and even eliminates the effects of Credit Card System Failing’s tasks. It affects the tasks of
Incorrect Charge Approval, Site Traffic Delay and Website Crash with the severity of Break.

6.2 Risk Management for Database failure

Figure 15. SR diagram depicting risk management for Database failure

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Suppose the risk of database failing occurs. The whole loan repayment process highly depends
on the integrated database for its functioning. How can such a situation be managed? To handle
such a risk, web portal will have to perform some counter and preventive actions. Hence, we
assign web portal the role of handling database failure. Side by side, the integrated database will
handle the role of failing.
In this figure, risk management for database failure has been depicted. This diagram shows all
events with high probabilities of occurring and measures which might prove most effective in
handling them. Relevant goals and tasks have been shown. It should be noted that the elements
of Web portal’s SR diagram have been retained here.
Some questions behind this diagram are:
Why is web portal assigned the role of handling database failure? The web portal is a part of our
re-engineered solution to make the loan repayment process smooth and quick. Using technology
at its base, it can be made to perform tasks and roles as per its efficiency. The web portal is hence
required to handle technical failures and perform preventive measures.
Why would the integrated database fail? The integrated database might be subjected to certain
external forces which might hamper its processes. All the failures are actual risky possibilities
and by addressing them we intend to improve the quality and strength of the integrated database.
The integrated database covers the role of integrated database failing. It has a singular main goal:
failing. This can be decomposed into 5 ways. These tasks are shown along with the severity of
their effects on the web portal’s goals and tasks:
·         Database hacked (by an external virus, person)
- hurts the web portal’s main goal process loan repayment
·         Accounting error (error in calculating the loan outstanding figure by an
employee/personnel; leads to more complications in the repayment process and extra clerical
work)
- hurts web portal’s main goal of process loan repayment
·         Access denial (if the integrated database refuses to open for editing or viewing)
- breaks the web portal’s task of updating integrated database
·         Database crash (all the information stored on the database is lost or the database gets
suddenly inaccessible to all while editing or viewing)
- breaks the web portal’s softgoal of being a quick & easy service
·         Data entry error (wrong entry in the integrated database rendering its information useless)
- breaks the web portal’s softgoal of updating information in an errorless and quick manner
On the other hand the web portal covering the role of handling database failure. Its main goal is
systematically manage integrated database failure. To achieve this goal, it has three means: use
backup database, prompt customer to recheck errors before confirming payment (check if all
figures match the payment required), use first-class firewall.
To diminish or eradicate consequences of integrated database failing’s tasks, web portal handling
database failure would execute the task of using backup database- which would break the effect
of access denial, hurt database hacked and database crash. The task of prompting customers for
rechecking errors before payment would reduce the effect of accounting error and break data
 P a g e | 25

entry error. This implies that if any data entry errors show up, the customer (on checking his
status on the web portal) can always contact customer service and report it for rectification. The
task of using first-class firewall, backed by a technical team hurts the effect of a hacked database.

6.3 Risk management for Debtor fraud

Now, a new model will analyze the situation where the debtor performs an external fraud. This
means that he might try to repay his loan unethically or hack the site, change details, thus not
repaying at all.
This situation will be modeled by a SR diagram. Figure 16 will contain the elements of web
portal’s previous diagram. Two new roles of online debtor performing a fraud and web portal
managing a fraud have been added.
The online debtor covering the role of performing a fraud has a main goal: do an external fraud.
It has been termed external since it involves an external actor- the debtor. His main goals can be
achieved via three means: impersonating another user (stealing someone else’s credit card and
using it), fill wrong details intentionally (using another customer’s login-theft of information),
hack the company site.
By analyzing these deceitful tasks we can see that they break the web portal’s external softgoal
of accepting an errorless and credible payment. Hence web portal needs to perform preventing
actions to tackle this risk.
The web portal’s main goal of dealing with fraud is achieved by three means: use first class
firewall software, prompt debtor to change password regularly, double check repayment made.
The last task is decomposed into 3 tasks: confirming payment through security question,
verifying payment through email, send high security key through SMS for rechecking.
Now let’s analyze the effect of the preventive measures on the fraudulent activities. Hack the
site’s effect is broken by using first class software. It will also hurt filling wrong details
intentionally (if any user leaves his account open for a long time, web portal will logout
immediately to prevent someone else from using the account). This is not shown by a break link
because a fraudulent debtor might guess someone else’s login details without hacking.
Prompting debtor to change his password regularly breaks the effect of impersonating another
user. A fraudulent debtor might not be able to guess someone e’s password if changed regularly.
Finally, verifying by SMS, email, and security questions breaks the effect of impersonating
another user. Even though a stolen credit card might be used for an unauthorized transaction, its
effect will be cancelled if confirmation is asked from the original user on his phone
number/email.
These tasks are hence effective enough to avoid risk effects.
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Figure 16. SR diagram depicting Risk Management for debtor fraud

Another type of risk which is worth mentioning is internal fraud, i.e. fraud performed by an
employee. Such type of fraud might be committed by different type of activities like unreported
transactions, unauthorized transactions, theft, forgery, bribes, insider training and so on (Eagle,
Linda, 2007). Some preventive measures to manage this risk would include employee training,
close management supervision, division of duties, employee background checks among others.
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7. Conclusions

We have drawn a framework for evaluating and modeling change management in organization.
We used the actor dependency concept to picture the purposeful relationships among strategic
actors. This technique is described and illustrated by studying a case and applying change and
risk management to it. This technique explains the prospects and alterations associated with BPR
and can evidently integrate the change related issues in the course of system analysis.
This paper also attempts to address the risk involved in implementing ERP in an organization
undergoing change. This technique explores the various vulnerabilities and opportunities of risk
associated with re-engineering. The drawn framework is global in the sense that the re-
engineered processes and associated risks are not limited to any one country or industry, hence
widely implementable.
ERP provides us with a prospect of re-designing business processes. Not only that, business
processes can be streamlined and business rules enhanced by adopting re-engineering (Sumner,
Mary, 2005). Re-designing processes provides the base for new opportunities, such as eBusiness,
as discussed in this paper via the introduction of a web portal. Re-engineering with ERP enables
organizations to be more receptive and alert to changing markets and to shifts in competitors’
strategies.
It should be noted that the i* framework is used as a modeling tool to solve our problem,
allowing us to model the early-stage requirements and dependencies. However, this technique
cannot be used as a replacement for implementing changes since its objective doesn’t consist of
precision. Our technique should be considered complementary to conventional modeling
techniques like UML.

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