SELECT, IMPLEMENT & USE TODAY’S ADVANCED BUSINESS SYSTEMS

1. MODERN ERP SELECT, IMPLEMENT & USE TODAY’S ADVANCED BUSINESS SYSTEMS Second Edition Chapter 3: ERP and Business Process Reengineering

2. Business Process Reengineering • Concept coined by Michael Hammer Reengineering the Corporation… • Business Process Reengineering is the fundamental, radical, redesign in business processes to achieve dramatic improvements in key measures of performance such as cost, quality, speed, and service • The focus of BPR is not on how a process is done, but WHY it is done

3. Benefits vs. Challenges of BPR • Risks • Benefits • Cost Reductions • Improved Customer Satisfaction • Improved Agility • Increased Profitability and Reputation • Resistance from employees • Cost • Job losses • Tradition and culture • Time requirements • Lack of management support • Risks to managers • Retraining

4. Types of Reengineering • Clean Slate Reengineering • Process design starts with a clean slate • Also referred to as “starting from scratch” • Theoretically, no limits • Technology-Enabled Reengineering • A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering • The technology drives the reengineering

5. Clean Slate Reengineering Disadvantages: • Costly • Excess time and resources (makes it difficult for smaller companies in an industry to afford) Advantages: • Not constrained by a particular tool • Not constrained to a limited set of processes • Evolution is not limited by a particular technology • Can result in unique processes (which gives a competitive advantage) • Encourages a free flow of ideas

6. Technology-Enabled Reengineering Advantages: • ERP provides the tool and structure to facilitate change • Roadmaps lead to less time • ERP bounds the design which eliminates difficult decisions • Design is feasible and we know it works (it’s been proven) • Less risk • Designs likely can be implemented in a timely manner because they are focused on specific processes • Fewer overhead costs Disadvantage • Constrained by a technology, evolution limited by that technology, limited by certain best practices in that technology • Not unique – no competitive value perhaps (which incidentally is why orgs may customize); other companies have access to the design

7. Business Process Reengineering Principles • Have those who use the output of the process, perform the process • Empower workers • Treat geographically dispersed resources as though they were centralized • Link parallel activities instead of integrating their results • Organize around processes, not tasks or functional areas • Self service • Put the decision point where the work is performed and build controls into the process • Capture information once and at the source

8. Targets for Reengineering • Process as Part of a Core Competency • A core competency is a company’s process that transforms generic inputs into uniquely developed products or services that provide it with a competitive advantage • Key Performance Indicators - allow the company to compare its performance to industry best practices • High Volume, Low Margin Activities • High Defect, High Reward Activities • Quality Controls– reduce error rate, but can be costly • High Skill, Time Intensive Activities • High Complexity, Specialized Resource Activities • “KISS” or “keep it simple stupid” • Process Built around Obsolete or Changing Technology

9. Lessons Learned through BPR • Low cost labor • Scalability – both up and down • Think outside the functional box – using BPR techniques to connect silos • Look at other companies for similar solutions to similar processes • Recognize that a process is just one aspect of success • Deliver sooner rather than later – setting and meeting more short-term goals

10. Reengineering Challenges • Resistance from employees • Cost • Job losses • Tradition and culture • Time requirements • Lack of management support • Risks to managers • Retraining

11. Constituents for Reengineering • Customers • Employees • Information Technology Staff • Business Partners • Upstream Supply Chain • Auditors • Regulators • Interested Parties