Selecting Large Systems

1. Selecting Large Systems

2. Make or buy decision Decision Criteria Pressure to “Make/Own” Pressure to “Buy”

3. Flattening the Organizational Structure

4. Streamlining the Business Cycle • Operating Cycle • The activities through which an organization designs, produces, markets, delivers, and supports its product and services • Management Cycle • The activities through which an organization manages the design, produces, markets, delivers, and supports its product and services Operational Process Management Process

5. BPR • Business Process Redesign • The fundamental rethinking and radically redesign of business processes to achieve dramaticimprovement in critical, contemporary measures of performance such as cost, quality, service and speed. • The implementation of deliberate and fundamental change in business processes to achieve breakthrough improvements in performance. • Enabled by IT

6. BPR • Business Process Redesign • Also known as Reengineering or Process Innovation is offered as an enabler of organizational transformation. • Organization embrace a BPR approach when they believe that a radical improvement can be achieved by marring business process, organization structure, and IT change. • Examples: • Taco have embraced BPR to enable the redefinition of their business

7. BPR • BPR Objectives: • To dramatically reduce cost • Reduce time • To dramatically improve customer services or to improve employee quality of life • To reinvent the basic rules of the business e.g. • the airline industry • taco bell from Mexican food to fast food to feeding people anywhere, anyhow. • Customer satisfaction • Organizational learning

8. BPR • Change: • To transform an organization, a deep change must occur in the key behavior levels of the organization: • jobs, skills, structure, shared values, measurement systems and information technology. • Role of IT • BPR is commonly facilitated by IT e.g. • Organizational efficiency • Effectiveness • Transformation

9. BPR • Efficiency • Applications in the efficiency category allow users to work faster and often at measurable lower cost • Mere automation of manual tasks, resulting in efficiency gains (least deep) • Effectiveness • Applications in the effectiveness category allow users to work better and often to produce higher quality work. • Requires changes not only in technology, but in skills, job roles, and work flow (deeper).

10. BPR • Transformation • Applications in the the transformation category change the basic ways that people and departments work and may even change the very nature of the business enterprise itself. • A major change in the organization, including structure, culture, and compensation schemes (deepest).

11. BPR • Process • A process is set of logically related tasks performed to achieve a defined business outcome • A collection of activities that, taken together, create value for customer e.g. new product for customer. This tasks are inter-related tasks

12. BPR • How can Companies Identify their Business Processes. Examples • Manufacturing: As the procurement-to-shipment process • Product development as the concept-to-prototype process • Sales as the prospect-to-order process • Order fulfillment as the the order-to-payment process • Service as the inquiry-to-resolution process Business Processes Business functions

13. BPR • How can Companies Identify their Business Processes. • Dysfunction: Which process are in the deepest trouble • Important: Which process have the greatest impact on customer • Flexibility: which process are the most susceptible to redesign.

14. BPR • Embarking on Re-engineering • Persuade people to embrace or at least not to fight -the prospect of major change by developing the clearest message on: 1: A “case for action”- Here is where we are as a company and this is why we can’t stay here • show your balance sheet • show competitors balance sheet 2: A “vision statement” - This is what we as a company need to become

15. BPR • Simple Rules • Start with a clean sheet of paper. • With my current experience what can I do today • If I were to re-create this company today, given what I know and current technology, what would it look like. • How will I be focusing, organizing and managing the company? • Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and process-oriented?

16. BPR • Simple Rules • Listen to customer • Enhance those things that bring value to the customer or eliminate those that don’t • Be ambitious, focus your commitment to radical change on the process

17. BPR Improvement Innovation/Reengineering • Process Improvement and redesign Process Magnitude Increment Radical Improvement 30-50% 10x-100x Sought Starting base Existing Process Blank skeet Top management Relatively low High commitment Role of IT Low High Risk Low High

18. Anatomy of a Traditional (Non-Integrated) Architecture Interface Interface Interface Interface Order Entry Inventory Mgmt. Billing A/R Finance

19. The Value Chain Support activities Primary activities Inbound logistics Materials receiving, storing, and distribution to manufacturing premises Operations Transforming inputs into finished products. Outbound logistics Storing and distributing products Marketing and Sales Promotions and sales force Service Service to maintain or enhance product value Corporate infrastructure Support of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Human resources management Recruiting, hiring, training, and development Technology Development Improving product and manufacturing process Procurement Purchasing input

20. Value Chain Integration

21. ANATOMY OF: AN ENTERPRISE SYSTEM Managers & Stakeholders Int Ext Ext Int Sales & delivery App. Reporting App . Financial App S u p p l i e r s C u s t o m e r s Back office admin. & workers Sales force & customer service reps. Central database Mfg. App Service App. HRM App Inventory & supply App

23. RATIONALE FOR ERP SYSTEMS • One of the key reasons why managers have sought to proceed with difficult ERP projects is: • to end the fragmentation of current systems, • to allow a process of standardization, • to give more visibility on data across the entire corporation, • to obtain competitive advantage (Sammon & Adam, 2000). • A seamless integration is essential to provide visibility and consistency across the enterprise.

24. Picking the right System • Focus on both implicit and explicit key business processes • Identify a short list of vendors that can support the key processes • Don’t start with RFP until you have identified the key processes

25. Picking the right System • Vendor reputation • System Operating requirements • Functionalities • Price • Geographical coverage

26. Picking the right System • Weighted approach

27. Picking the right System • Rule of Thumb • 75-80% fit between business requirements and system functionality • Key business process is key requirement • Analyze organizational change management ability

28. Picking the right System • Summary • Identify key business process • Impact of the key business on organization performance • Identify a short list of vendors (Use a consultant carefully) • Ask how the selected vendors can support your key business processes • Vendor demonstration of system supporting key processes. Involve the users in this process • Check vendor references • Include clauses that protect the key processes and the others

29. Recommendation for Multinational Companies • Focus on a short list of vendors that can provide global operation and support. • Consider best of breed • Ability to integrate with local location specific system requirements

30. Recommendation for Midrange Enterprises • Consider local vendor with in-depth local knowledge of customer’s business • Price

31. Recommendation for Small Enterprises • Consider implementation tactical rather than strategic • Good functional depth, domain expertise and local capabilities (e.g. service and support) • Consider best of breed as well • Vendor long term viability • Price