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Risk Management for Business Process Reengineering: The Case of a Public

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DOI: 10.1007/978-3-030-57065-1_28

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Risk Management for Business Process
Reengineering: The Case of a Public Sector
Organization

Anastasios Tsogkas, Giannis T. Tsoulfas, and Panos Τ. Chountalas

Introduction

Business Process Reengineering (BPR) is a systematic management methodology,

in the form of a standalone change project, involving radical process redesign
(Chountalas and Lagodimos 2019). BPR implementation usually relies heavily on
Information Technology support, thus enabling the utilization of technological
capabilities for the streamlining and simplification of processes (Gunasekaran and
Nath 1997). Enterprise Resource Planning (ERP) is a set of business software appli-
cations (or ERP modules) that integrates all major business components like finance,
HR, manufacturing, supply chain, services, procurement, etc. into a single informa-
tion system. Those modules communicate with each other and share a common
database (Jacobs 2007; Rashid et al. 2002).
ERP-led BPR implementations’ main advantage is that they enable the organiza-
tion to align its operation mode with software’s functionality rather than envisioning
and redesigning core processes and then trying to support the new design on exist-
ing ICT solutions. There is always a need for software customization, but this needs
to be used sparingly, since it may signal deviations from industry standards. Many
ERP implementers find themselves in a position to re-engineer existing processes in
order to achieve alignment with the ERP program they implement. Another advan-
tage of ERP-led BPR implementations is that they do not have to deal with the

A. Tsogkas · P. Τ. Chountalas
School of Social Sciences, Hellenic Open University, Patras, Greece
G. T. Tsoulfas (*)
School of Social Sciences, Hellenic Open University, Patras, Greece
Department of Agribusiness and Supply Chain Management, Agricultural University of
Athens, Thiva, Greece
e-mail: giannis@aua.gr

© The Editor(s) (if applicable) and The Author(s), under exclusive 279
license to Springer Nature Switzerland AG 2021
D. P. Sakas et al. (eds.), Business Intelligence and Modelling,
Springer Proceedings in Business and Economics,
https://doi.org/10.1007/978-3-030-57065-1_28
280 A. Tsogkas et al.

process of negotiation and coalition-building with the employees (Huq et al. 2007)
since acquiring a new ERP system is a top management decision that inevitably
leads to fundamental changes within an organization structure, culture, decision-­
making, and management process (Sakas et al. 2019a, b, c).
Transformations are complex undertakings and many business transformations
are highly susceptible to failure (Bithas et al. 2017). To increase the chances of suc-
cess for ERP-led BPR projects, a thorough risk assessment, risk evaluation, and risk
treatment process must be established and implemented, taking into consideration
critical success and failure factors (Remenyi and Heafield 1996). Addressing this
challenge, some studies have proposed various risk management techniques and
frameworks (see for example Aloini et al. 2012; Dey et al. 2012), although much
additional work needs to be done at a more practical level (Chountalas and
Tepaskoualos 2019). Administrative science is often viewed with a strategic per-
spective, and the effort to find best practices we look for in computational models
(Nasiopoulos et  al. 2014a, b, 2015a, b, 2017) where, with the subscription of
Simulation modeling (Nasiopoulos et al. 2013, 2015b; Sakas et al. 2014), we fore-
see their evolution.
The purpose of this paper is to provide further practical guidance in this field, by
presenting a rare case of an ERP-led BPR project implementation in a public sector
organization experiencing several operational gaps, flaws, and lack of controls (i.e.
the Greek Archaeological Resources Fund, referred hereafter as ARF).
The remainder of this paper is organized as follows. The next section presents the
methodological approach of the study. After that the risk assessment/evaluation and
the risk treatment plan are discussed. Finally, the main conclusions of this study are
presented.

Research Method

This study is intended to examine the importance of critical success and failure fac-
tors for ERP-led BPR project implementation in an environment characterized by
several operational gaps, flaws, and lack of controls. The need to better understand
such a complex issue through in-depth observations in a natural setting led to the
choice of a case study analysis as the preferred research method (Meredith 1998;
Yin 2014).
For the specific purpose of this study, a single case was selected since this is
considered appropriate for exploratory investigations (Eisenhardt 1989). For this
case study analysis, ARF was chosen and this choice lies with its endeavor to imple-
ment a challenging ERP-led BPR project, despite experiencing a lack of human
resources, absence of documented work flows, obsolete ICT infrastructure, and
negative corporate culture.
ARF was founded in 1977 and its main objective is to secure, develop, collect,
and make available resources gained through managing national cultural heritage.
Risk Management for Business Process Reengineering: The Case of a Public Sect… 281

In 2018, ARF initiated the project “Re-organization and modernization of

Archaeological Resources Fund Services,” consisting of the following modules:
1 . Ticket Management System Module (TMS);
2. Access Control System Module (ACS) for visitors of archaeological sites and
museums;
3. Implementation of an ERP system that consists of all the necessary modules to
support ARF’s operations (Intensive retail module for Museum Shops,
Warehousing and distribution module, Real estate management module, produc-
tion control module, etc.);
4. Business Intelligence (BI) Module.
Such efforts that are more market and customer-oriented signal the evolution of
public sector management paradigms (Antoniadis et al. 2019).
Using multiple data collection methods allowed for data triangulation, with the
purpose of data confirmation (Jick 1979). Interviews with ARF executives were the
primary source of data, while both review of documents and records, and field
observation were used to confirm the initial findings from interviews. The data gath-
ered through all collection methods were found to be consistent, thus enhancing the
credibility of the findings (Knafl and Breitmayer 1991).
The data are presented in the following sections in accordance with ISO Standard
31000:2018 methodology, which stipulates that an organization must first conduct a
risk assessment (i.e. identify related assets or broad risk areas, risks, probability of
occurrence and impact), establish and implement a risk treatment plan in order to
mitigate risks, and finally compare the residual risk to a predefined level. All risks
in BPR/ERP implementation project in ARF were identified based on a number of
previous studies such as Remenyi and Heafield (1996), Al-Mashari and Zairi (1999),
McAdam and Donaghy (1999), Ahmad et al. (2007), Habib (2013), and Khoshlafz
and Hekmati (2016).

Risk Assessment and Evaluation

In terms of probability of risk occurrence and impact assessment, the following

predefined values are used to form a two-dimensional heat map for risk evaluation/
prioritization, as presented in Fig. 1: Probability (unlikely, likely, and very likely)
and Impact (low, medium, and high).

Fig. 1  Risk evaluation heat map

282 A. Tsogkas et al.

Risks marked as risk class 3 are considered to be low; risks marked as risk class
2 are considered to be medium; and risks marked as risk class 1 are considered to be
high. Table 1 presents the risk areas examined and the corresponding risks identified.
For every risk identified, probability of occurrence and impact severity were
assigned, after proper justification. For lack of space and to improve readability we
omit here the detailed justification for the total set of identified risks. Some indica-
tive examples are presented in Table 2.
From this analysis, an illustrative risk heat map can be drawn, as presented
in Fig. 2.

Risk Treatment Plan

For risks fitted in class 1 cells (high risks) immediate actions to mitigate risk are
required, whereas for risks fitted in class 2 cells (medium risks) actions to mitigate
risk should be planned. Finally, for risks fitted in class 3 cells (low risks) no immedi-
ate actions need to be planned. The risk treatment plan for high and medium risks is
presented in Table 3.
The revised risk heat map after the risk treatment plan is presented in Fig. 3. By
comparing Figs. 2 and 3, it is evident that the majority of risks were successfully
mitigated. However, as illustrated in Fig. 3, a number of risks are not successfully
addressed and are still categorized as high (i.e. 1.1, 2.2, 2.5, 3.1, and 5.4).

Conclusion

From the above analysis—and in accordance with other similar case studies (e.g.
Weerakkody et al. 2011)—major Critical Success Factors can be documented, such
as organizational culture, top management commitment, use of Information
Technology, organizational structure, HR and their ability to incorporate change
management. The above are fundamental factors that can contribute to successful
BPR/ERP implementation. The most important Critical Failure Factor is usually the
resistance to change due to weak or inappropriate business culture, middle manag-
ers’ fear of losing authority, and employees’ fear of losing their job. Proper com-
munication of shared vision and necessity to change by top management, combined
with education and training of all personnel, can decrease the resistance to change.
However, the lack of required skills to operate in a new environment, in conjunction
with the restrictions in hiring new personnel (as regards the Greek Public Sector)
makes the successful implementation of BPR/ERP projects in order to improve
measures such as cost, quality, service, and speed a very demanding and high-­
risk task.
Risk Management for Business Process Reengineering: The Case of a Public Sect…
Table 1  Identification of ARF’s BPR/ERP risks under broad risk areas
Broad risk area
1. Top management
2. Personnel
3. Organizational Culture
4. Organizational Structure
5. ICT Infrastructure (Hardware,
Software, Telecommunications)
6. External Consultants
7. ERP implementation contractor
283
No Risk
1.1 Top management replaced by the Minister of
Culture during project implementation
1.2 Top management unable to define the scope and
align the project with strategic objectives
1.3 Top management unable to communicate a new
vision and the necessity for change
2.1 Lack of engagement in project implementation
2.2 Lack of required competencies to support ERP /
BPR implementation and operation
2.3 Inability to understand the project’s scope
2.4 Inability to express operational requirements with
clarity
2.5 Time unavailability
3.1 Negativity
3.2 Lack of a shared vision
3.3 Risk aversion orientation
4.1 Bureaucratic structure with many layers of
hierarchy
4.2 Lack of business-oriented structure
4.3 Lack of cross-functional collaboration
4.4 Lack of job requirements and job descriptions
5.1 Inadequate main processing and storage facilities
for supporting ERP
5.2 Lack of communication lines/network connections
with point of sales
5.3 Time delays in acquiring necessary network
equipment
5.4 Lack of personnel with the required expertise to
operate and maintain ICT infrastructure
5.5 Operational disruptions due to software errors/
bugs
6.1 Inability to understand the project’s scope
6.2 Lack of competencies and knowledge required to
contribute to a BPR/ERP project
6.3 Lack of knowledge on public sector organizational
culture and climate
7.1 Contractor’s failure to complete the project due to
bankruptcy or in case of force majeure
7.2 Contractor’s failure to successfully complete the
implementation of the project due to lack of
experience
7.3 Contractor’s inability to complete the project
according to the contractual timetable
284 A. Tsogkas et al.

Table 2  Risk area analysis (indicative examples)

Risk
Risk Probability Impact severity class
1.2 Unlikely: Current ARF Chairwoman was involved High: Inability to align the 2
in BPR/ERP Projects as Project Manager in the project with ARF’s strategic
private sector and has the required experience objectives will undermine the
feasibility of implementation
2.1 Very likely: Employees may present a significant High: Resistance to change 1
change resistance since they feel that their will be overwhelming,
authority is questioned, bad practices from the undermining the feasibility of
past may be revealed, and the need for personnel implementation
with additional expertise may arise
3.3 Very likely: The Greek public sector is Medium: Changes in 1
characterized by high-risk aversion. It is very operational procedures will be
difficult to change the way business is done even difficult to implement
in the cases where the current organization is
ineffective
5.3 Likely: Telecommunication network equipment Medium: Delays in project 2
will be provided by ARF. Supply procedures in implementation
the public sector are very time-consuming
6.2 Unlikely: Both external consultants employ Medium: Consulting is a 3
highly skilled personnel with experience in similar supportive service with no
projects decisive role

Fig. 2  ARF’s ERP-led BPR risk evaluation heat map

Risk Management for Business Process Reengineering: The Case of a Public Sect… 285

Table 3  Risk Treatment Plan

New New Risk
Risk Action probability impact class
1.1 No actions can be implemented Very likely Medium 1
1.2 No actions can be implemented Unlikely High 2
1.3 Implement a communication plan Likely Medium 2
2.1 Communicating shared vision and necessity for change Likely Medium 2
through meetings between top management and
personnel
2.2 Implementation of training courses can reduce but not Likely High 1
eliminate the risk. There is still a need for acquiring new
employees with the skills required for ERP operation
2.4 Contribution of an external consultant Likely Medium 2
2.5 Contribution of an external consultant Very likely Medium 1
3.1 Training courses and meetings with top management Likely High 1
3.2 Establish and effectively communicate a shared vision Likely Medium 2
3.3 Training courses and meetings with top management Likely Medium 2
4.1 A new organizational chart is expected to be approved Likely Medium 2
4.2 Training courses, meetings, and contribution of an Likely Medium 2
external consultant
4.3 A new organizational chart is expected to be approved Likely Medium 2
4.4 A new organizational chart is expected to be approved Likely Medium 2
5.1 No actions can be implemented Unlikely High 2
5.2 Collaboration with the Ministry of Culture (Information Unlikely High 2
Technology Division)
5.3 Top management commitment to apply actions reducing Unlikely Medium 3
all unnecessary delays
5.4 Acquiring new employees with necessary expertise Very Likely High 1
through the Government’s employee mobility program
5.5 An extended period of pilot operation Unlikely Medium 3
7.1 No actions can be implemented Unlikely High 2
7.2 No actions can be implemented Unlikely High 2
286 A. Tsogkas et al.

Fig. 3  Revised ARF’s ERP-led BPR risk evaluation heat map

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