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BPR before ERP A worthwhile investment?

Organizations decide on Implementing an ERP solution basically to derive business


value. A pre-packaged ERP solution is largely believed to bring with it best practices across
industries. Organizations hope to improve bottom lines by achieving higher productivities as a
result of implementing the best practices available with the ERP. It is to be noted that with
such lofty expectations and intentions, when ERPs are implemented, a whopping 90%
implementations are either over budget or are deemed complete failures.
Over the years critical analysis of causes behind ERP failures have given rise to another
school of thought. BPR or Business Process Re-engineering was then considered the best bet
to insulate organizations against ERP failures. Getting a BPR done before ERP implementation
offers several advantages especially for organizations implementing IT systems for the first
time. Typically in such organizations, processes work in silos and the concept of internal
customer is almost non-existent. People working in their independent process areas are least
aware of their role in the whole chain of processes. In such scenarios directly implementing
ERP solutions can give rise to severe change management issues and acceptance of the new
solution is almost Nil. Business Process Reengineering on the other hand provides
opportunities to simplify processes, standardize them and remove non value added activities.
Active participation of key stakeholders throughout the BPR exercise results in people taking
ownership for their processes and extend cooperation to their internal customers. The Reengineered processes are relatively easy to automate and ERP implementation has a much
better chance of success.
On the flip side, the BPR exercise requires commitment of resources and is quite time
consuming. A thorough BPR process can take as much as 4 months to a year to complete
depending on the complexity of the organization structure. In view of this, some of the
organizations then decide to directly go in for ERP implementations. Any standard ERP
package like Oracle, SAP, Microsoft offers standard best practices which may be configured for
the specific business. The effort and resources required to implement ERP is equivalent to
getting a BPR process done. A full-fledged ERP implementation may take up as much as 5
months to a year. Organizations tend to believe that in doing a BPR they would just be
duplicating the effort and hence instead choose to go in directly for ERP implementation. This
strategy works fairly well with organizations already having basic IT systems in place. One of
the strongest arguments against going in for pre-packaged standard best practices is that
organizations sometimes lose out on their competitive advantage. It is possible that some of
the processes though not efficient enough have been the basis of a competitive advantage.
Another factor to consider is that, the ERP packages are configurable and thousands of
configuration items are required to be set for a complete implementation. If the business
processes are not clearly defined, there is a strong chance of error in configuration of such
setups. These errors lie dormant for longer periods and once they are obvious the damage to
the solution and data is already done.
Conclusion : BPR before ERP or directly ERP is a decision to be taken based on the
Organization structure, their people and the process maturity available. There is no right or
wrong approach. Industries already having implemented IT systems, have by going through
the implementation process, reached a base level of maturity and hence can well afford to go
in for ERP implementations directly. But even for such organizations, the success of the ERP
implementation would depend mostly on how they handle change management and mainly
on how the implementation project is governed. Organizations operating with highly complex
business processes with a large geographical spread and with minimal process maturity would
be better served if a BPR is undertaken as a distinct exercise thus increasing the chances of a
successful ERP implementation subsequently.