ENTERPRISE RESOURCE PLANNING - ERP

CONTENT TAKEN FROM THE SLIDES OF MUHAMMAD ADIL

ERP AND BUSINESS PROCESS REDESIGN

 Be aware of goals for business processes

 Identify types of problems with business processes
 Compare and contrast business process improvement and business process reengineering
 Explain the relationship between business process reengineering and ERP
 Summarize the steps in business process improvement
INTRODUCTION

 Organizations optimize their business processes

 Two methods for transformation of business processes:
 Business process reengineering - BPR
 Business process improvement - BPI
BUSINESS PROCESS

 A series of activities that are linked together to convert inputs into a product or service output
 Simple and complex business processes
o In terms of steps involved
 Short running and long running business processes
o In terms of time
 Formal and informal business processes
o In terms of rules
BUSINESS PROCESS…

 Advantages of Formal processes:

 Can get work accomplished faster
 Improve consistency of product
 Lead to accountability
CRITERIA FOR OPTIMIZED BUSINESS PROCESS

 Cost efficiencies
 Customer satisfaction and differentiation
 Standardization
 Value-added activities
 Improved agility and speed
COMMON PROBLEMS WITH BUSINESS PROCESSES

 Authority ambiguity
 Bottlenecks
 Cycle time
 Data duplication
 Handoffs
 Intermediaries
 Manual steps
 Old ways
 Paper records
 Quality control
 Rework
 Role ambiguity
 Segregation of duties violation
BUSINESS PROCESS REENGINEERING

 fundamental, radical redesign of business processes that an organization undertakes to achieve breakthrough
performance in key measures of cost, quality, speed, and service
 Act of re-thinking the way you do important things in your business
 Result in significant improvements
 Important because of advent of new technology
 Research conducted by Hammer
o Companies don’t change their core competencies
BUSINESS PROCESS REENGINEERING…

 BPR brings radical change

 What is radical change?
o 60% improvement
 Two ways of BPR are:
 Clean Slate Reengineering
 Technology Enabled Reengineering
CLEAN SLATE REENGINEERING

 Process is started from scratch and completely redesigned

 Fewer bounds and constraints
 Free flow of ideas can result in unique process
 Can result in competitive advantage
 “As is” process & “to be” process
CLEAN SLATE REENGINEERING…

 Business process reengineering principles

 Empower workers
 Centralized resources
 Link parallel activities
 Organize around processes
 Use self-service so that employees and business partners can access information and perform routine tasks
 Put the decision point where the work is performed and build controls into the process
 Capture information once and at the source
CLEAN SLATE REENGINEERING…

 Disadvantages
 Costly
 Requires time
 Radical change sometimes lead to lost job
TECHNOLOGY ENABLED REENGINEERING

 Technology facilitates reengineering process

 Technology imposes constraints
o Constrained Reengineering
 End up with old expensive processes
TECHNOLOGY ENABLED REENGINEERING…

 Advantages
 Provides transformation roadmap
 Less risky
FACTORS FOR REENGINEERING SUCCESS

 Scaling up and down

 Thinking outside the box
 Looking at other companies for similar solutions to similar processes
 Recognizing that a process is just one aspect of success
 Delivering sooner than later
 Considering the competition
 Remembering the employee
BUSINESS PROCESS IMPROVEMENT

 Involves gradual improvement to business processes over time

 Incremental and evolutionary process
 General rule is if process is close to expectations it can be improved
 Takes times, resources, patience and expertise
PROCESS IN NEED OF CHANGE

 Three Cs should be kept in mind by company while determining process in need of change:
1) Customer
Business should be made easy for customers
2) Core
Core competency should be efficient
3) Competition
Company should have competitive processes
PROCESS IN NEED OF CHANGE…

1) Customer-Facing Process
 How well company is satisfying its customer?
 Performance of Current process should be compared to customer expectations
 Yield customer’s view by conducting surveys

2) Core Competency Process

 Input is transformed to unique product
 Can be large operation with sufficient economies
 Company’s bread and butter
 Benchmarking is used to measure performance
o It Its key areas are financial performance, efficiency, asset utilization, reliability and service quality
PROCESS IN NEED OF CHANGE

3) Competitive Process
a. High Volume, Low Margin Processes
 Considerable price pressure
 High volume leads to considerable revenue
 Low margin leads to efficiency need
 Requires capital assets
 Needs inventory storage costs
b. High Defect, High Reward Processes
c. High Skill, Time Intensive Processes
 Require highly skilled workers
 Company will try to simplify the process
 Same people or low-paid workers will be empowered to perform the process
d. High Complexity, Specialized Resource Processes
 Keep it simple, stupid
 Complex requirements, complex solution and complex process
 Difficulty in growth
e. Processes built around Obsolete or Changing Technology
 Companies using legacy systems have obsolete business models
 Companies should go for new business process models
 Advantages – flexibility, scalability, standardization, user friendly interface, normalized data structure
STAKEHOLDERS FOR BUSINESS PROCESS TRANSFORMATION

 Business transformation plan should be successful for following stakeholders:

1) Customers
o Customer relationship focused process help with customer satisfaction, retention and profitability.
2) Employees
o Frees up time for employees
3) Information Technology Staff
o Helps in implementation
o Has ability to contribute to project’s success by answering few questions
4) Executive Suite
o Should be willing to address issues to those who might be resistant to change
o Higher rank of sponsors, less objections from employees
5) Business Partners

6) Suppliers
o Better information to them leads to accurate and efficient operations

7) Other Interested Parties