IT and Changing Business Processes

1. IT and Changing Business Processes • Define: ERP, ERPII, Enterprise Information System (EIS), business process, TQM, BPR • Discuss the advantage of a business process perspective to a silo perspective • Distinguish the basic characteristics of TQM and BPR • Indicate when an enterprise system should not drive BPR • Discuss the characteristics, benefits, disadvantages and application of EIS • Discuss the risks of radical design

2. IS IT an Enabler or an Inhibiter?

3. Business Process Perspective • Business process includes • A beginning and an end • Inputs and outputs • A set of tasks to transform inputs to outputs • A set of metrics for measuring effectiveness • Crosses functions • Offers a “bigger picture” than silo perspective

4. Comparing Silo & Business Process Perspectives

5. Comparing Silo & Business Process Perspectives

6. FUNCTIONAL Focus on specialization Good for recruiting and training specialists Good for coordination within specialization Efficient Less duplication of effort DIVISIONAL Focus on purpose Good training for generalists Good for coordination within self-contained unit More adaptive Advantages: Traditional Departmentation Approaches

7. Total Quality Management (TQM) • Process by which managers make changes continually (and often incrementally) to improve business processes over time • Management philosophy where quality metrics drive performance evaluation of people, processes, and decision • Improve business activities with the goal of zero defects

8. Total Quality Management • Choose business process to improve • Choose a metric by which to measure the business process • Enable personnel involved with the process to find ways to improve it according to the metric

9. Business Process Redesign (BRR) • Radical redesign of organizational business processes to attain more aggressive improvement goals. • Reengineering - Fundamental rethinking and radical redesign of a business process to achieve dramatic improvements in performance (Hammer, 1990) • Starting over

10. Key aspects of BPR • Need for radical change to existing processes • Cross-functional business perspective • Challenging old assumptions • Networked (cross-functional) organization • Empowerment of employees • Measurement of success via metrics tied to business goals

11. BPR Radical improvements Change existing processes TQM Incremental improvements Tweak existing processes BPR vs. TQM

12. Definitions • Enterprise Information System (EIS) - distributed system that covers the entire organization • ERP – A type of EIS; a large highly complex software program that integrates many business functions under a single application • Legacy system - older or mature IS (often 20-30 years old)

13. ERP Characteristics • Integrated modules such as manufacturing, accounting, HR and sales • Commercial packages – require long-term relationship with vendor • Best practices • Some assembly required • Evolving – moving toward web-based systems

14. ERP • Most widely used – SAP’s R/3 (Others – PeopleSoft, Baan, Oracle) • All modules can easily communicate with one another • Tool for centralized operations & decision making • Growing need to integrate ERP applications within companies and across trading partners • middleware for 24/7 B2B applications (ERP databases and B2B applications) • Average TCO of $15 million

15. ERP Advantages and Disadvantages • Advantages • Integration • Fits with company’s desire to centralize • Efficient use of company’s databases • Disadvantages • $$$$$$ • Need for company to redesign itself to fit ERP • Risk

16. When an EIS should drive BPR • Organization is new and does not yet have processes • Organization does not rely on its operational business processes as a source of competitive advantage • Current systems are in crisis and time, knowledge or resources are too short to make correct • ERP features fit organization • ERP has top management support