Chapter 3 ERP and Business Process Redesign

BPR principles

- Have those who use the output of the process perform the process -Treat geographically dispersed resources as though they were centralized -Link Parallel activities in the workflow instead of just integrating their results. -Organize around processes, not tasks -Subsume information-processing work into the real work that produces the information -Put the decision point where the work is performed and builds controls into the process. -Capture data once and at the source

Roles for Business Process Redesign

- Leader -architect -Analyst -Coordinator -Modeler

Problems with "As is" Business Processes

-Bottlenecks -Cycle time - Data duplication -Handoffs -Inflexibility -Intermediaries -Lack of consequences -Lack of Visibility -Manuel steps -New tools but old ways -Old ways -Paper records -Quality control -Re work -Role ambiguity -Scalability -Segregation of duties violation

Optimal Business Criteria

-Cost efficiencies -Customer satisfaction differentiation -Standardization -Value-added activities -Improved agility and speed -Scalability

Process owner

A person who is responsible for the performance of a process and manages the process on a daily basis

Unclear Definitions

BPR is not equal to downsizing, corporate restructuring, or automation (although these may end up being part of it)

Minimal input

BPR works best using a mix of internal and external people. Employees know more about their own processes and culture, whereas consultants can bring fresh ideas and methodologies to the table.

Capture data once and at the source

Collect data once where it originates instead of capturing and manually re-keying.

Data Duplication

Data duplication can happen because information systems are not integrated and standard processes are not being followed

"As is" vs. "To be" processes

ERP systems require that companies be strategic about their business processes and be alert to any existing "pain points" that are hurting their competitiveness

Standardization

Each location or business unit should perform work the same way wherever possible;

Step 5: BPI Model

Embrace the new mindset and drive continuous improvement- business process management (BPM)

Architect

Has vast knowledge of end-to-end processes (Is fluent in ERP implementation methodologies or BPR techniques)

"Paving the cow paths"

In ERP implementations, paving the cow paths refers to recreating outdated, inefficient processes within the ERP system. (Paths that cows TREAD are not the most efficient way to get from point A to point B, but are the ones that follow the path of least resistance) (Customizing the ERP software to replicate broken "as is" processes that are familiar = a very expensive old processes)

BPR Principle: Have those who use the output of the process perform the process

Individuals who need the result of a process can do it themselves. Employee self-service and P cards for purchasing are examples.

BPR Principle: Subsume information-processing work into the real work that produces the information.

Instead of using people whose entire job is to process work from other departments, have systems that process the work such as matching purchase orders with goods receipts and with vendor invoices ( the "three-way match")

The business process problem of BLANK includes words such as "pass it by me" and may signal unnecessary step and excessive bureaucracy.

Intermediaries

High Skill, Time Intensive Processes

Labor intensive processes that consume highly-skilled workers are expensive

Step 3: BPI Model

Obtain information about the process from process owners and experts

Coordinator

Serves as project manager (Allocates work to resources and keeps a handle on the budget)

New Tools but old ways

Steps in software replicate the old outdated process

Taking too long

Successful major change requires forward (and sometimes rapid) momentum. If the project gets dragged out, the team loses creditability and people can get tired and lose faith in it

Step 1: Identify goals and objectives of the BPI project and assemble a team

Team includes the process owner and subject matter expert

Old ways

Technology and systems are available but not implemented, or are implemented but employees are not trained or, even worse resist using them

Digital transformation

The "process of using digital technologies to create new- or modify existing- business processes, culture, and customer experiences o meet changing business and market requirements"

Lack of Leadership

The C-suite should endorse BPR. The impact of BPR is typically so extensive that sanctioning it can only come from a high level.

"As is" process

The current process that is flawed and in need of change

BPR Principle: Treat geographically dispersed resources as though they were centralized

To get the benefits of scale and coordination while maintaining flexibility and service, use integrated systems working from one database.

True/False An advantage to clean slate reengineering is that it encourages innovation and creativity

True

Intermediaries

Words such as "Pass it by me" may signal an unnecessary step and too much bureaucracy

Subject Mater Expert

designs the technical features of the process or a leader who directs the team on deliverables and action items.

"To be" process

future design of the new business process

Shared services

helps to standardize

Processes in Need of change

-Customer-facing processes -Core competency processes -High-Volume, Low-Margin Processes -High Defect, High Reward processes -High Skill, Time Intensive Processes -High Complexity, Specialized Resource Processes -Process Built around Obsolete or changing Technology

Business Processes can be:

-Generic or unique -Supporting or core -Simple or complex -Short or long running -Formal or informal

Fatal Business Process Reengineering Mistakes

-Unclear definitions -Unrealistic expectations -Minimal input -Taking too long -Lack of leadership -Wrong scope -Lack of effective methodology -Inadequate resources

Questions for Identifying Key Stakeholders for Process Redesign

-Who needs to provide input for the project? -Who benefits from changes to the process? -Who could be negatively impacted by changes to the process? -Who needs to change how they complete their tasks when the process changes? -Who will need training to effectively use the new process? -Who needs to manage, use, or maintain the process once implemented?

What questions should be considered when compiling a stakeholder analysis?

-Who needs to provide input for the project? -Who benefits from changes to the process? -Who could be negatively impacted by changes to the process? -Who needs to change how they complete their tasks when the process changes? -Who will need training to effectively use the new process? -Who needs to manage, use, or maintain the process once implemented?

Stakeholder Analysis 2

-includes an assessment of the risks of redesign effort and take steps to mitigate them -provides a way of gauging the level of support for change and the degree of influence each individual or group will have upon the change process -Helps in developing an integrated communication strategy

Business Process Improvement Model

1. Identify goals and objectives; assemble team 2. Compile process inventory; select a process 3. Define and understand the process --> Business process reengineering 4. Analyze and measure the process 5. Improve the process --> Business process reengineering

Core Competency Processes

A company's "Bread and butter" (benchmarking can be used to compare against a standard)

Role ambiguity

A lack of clarity about the expectations, norms, and behaviors associated with a particular job can lead to process inefficiencies. Look out for words, "we do not know who does this"

Lack of effective methodology

Adopting a redesign methodology gives the project discipline, enabling a company to select the appropriate destination and find the best route to get there.

Explain the advantages and disadvantages of technology-enabled reengineering

Advantages: -the new ERP system will dictate the "to be" process (no need to develop from scratch) -Since other companies implemented the same system, the risk of whether the process designs work is minimized. Disadvantages: -That other companies implement the same ERP system because when other companies use the same best practice's is levels the playing field

Stakeholders

All the people who will be involved in the project or will be affected by its outcome are its stakeholders.

Ste 4: BPI model

Analyze and measure the process to pinpoint any problems

BPR Principle: Put the decision point where the work is performed and build controls into the process

Application controls enable the employees who perform the work to self-manage, so managers can become supportive rather than directive

The BLANK process reflects how work is currently accomplished and the BLANK process is a desired future state process

As is To be

Quality Assurance

Builds control into the process to eliminate defects in the first place (Proactive managerial tool focused on defect prevention)

High Complexity, Specialized Resource Processes

Businesses tend to embrace complexity and the market advantages that complex solutions garner; replace complex activities with simpler ones

Business Process Improvement (BPI)

Changes to existing processes that occur somewhat slowly and incrementally. (While BPR is dramatic and revolutionary, BPI is gradual and evolutionary) (The scope and intensity of a BPI project is much smaller than a BPR effort)

Quality Control

Checking another persons' work adds to cycle time. Can the work be mistake proofed to make it impossible for the error to happen in the first place?

Step 2: BPI Model

Compile PROCESS INVENTORY: that identifies key business processes in the organization, including their subprocesses and activities.

Analyst

Conducts a deep elicitation of business requirements (Handles the transition from as-is state to the to-be state) (Understands the link between ERP and business process redesign)

1. List and describe four problems that may exist in "as is" business processes

Data Duplication: data duplication can happen because information systems are not integrated and standard processes are not being followed. Intermediaries: Words such as "pass it by me" may signal an unnecessary step and too much bureaucracy Lack on consequences: Employees do not receive negative feedback or penalties for not following standards Manual Steps: Manual activities increase cycle and can create errors.

BPR Principle: Organize around processes, not tasks

Design a person's job around an objective or outcome instead of a single task. Eliminate the assembly-line approach

Modeler

Documents the processes (Governs the information received about the processes., from inception to creation to review and finally to consumption)

Lack of consequences

Employees do not receive negative feedback or penalties for not following standards

Segregation of Duties

Employees should not be in the position both to penetrate and to conceal fraud. The activities in a process that should be segregated among employees include: 1) custody of assets 2) authorization or approval of related transactions affecting those assets, and 3) recording or reporting of related transactions

True/False BPR refers to gradual, incremental changes to business processes over time.

False

Inadequate Resources

For meaningful contribution and progress, BPR team members should spend at least half of their time on the project. The company should also allot adequate monetary resources for BPR.

Using Employee self-service for travel requests and reimbursement and P cards for purchasing are examples of the BPR principle of BLANK

Have those who use output of the process perform the process

What are similarities between BPR and an ERP system implementation?

In summary, ERP systems are tools that help organizations manage their data and processes, while BPR is a management approach that aims to improve efficiency and effectiveness through the redesign of processes (Enterprise Resource Planning (ERP) systems are software that help organizations manage various business processes, such as accounting, human resources, and inventory management. These systems are designed to integrate different functions of an organization and provide a single source of truth for data.) (Business Process Reengineering (BPR) is a management approach that aims to improve the efficiency and effectiveness of an organization's processes. BPR is often implemented in conjunction with ERP systems, as it can help organizations identify areas where ERP systems can be used to automate and streamline processes.

Business process

Is a collection of linked activities employed by an organization to produce a product or service. (It is a set of procedures that, once completed, will accomplish a business objective)

Business Process Reengineering (BPR)

Is the fundamental, dramatic, radical redesign of business processes to achieve break through performance in key measures of cost, flexibility, accuracy, quality, speed, and customer satisfaction. (Companies do not change their core competencies, but instead redesign their business processes to make them more efficient and customer-centric) TWO types of BPR: Clean Slate and Technology-Enabled

Lack of visibility

Management does not have a clear picture of the end-to-end business process

Paper Records

Management should question whether the current process is adding, maintaining, or eliminating paper records. Obviously paper records are not optimal.

Rework

Management should root out the source of errors and make changes to the process to prevent errors

Manual Steps

Manual activities increase cycle time and can create errors.

What does "paving the cow paths" refer to and how does it apply to ERP system implementations?

Paving the cow paths in ERP implementations refer to recreating outdated, inefficient processes within the ERP system Paths that cow tread are not the most efficient way to get to point A to point B but are the ones that follow the path of least resistance. Customizing the ERP software to replicate broken "as is" Processes that are familiar= a very expensive old processes.

Clean Slate Reengineering

Process designers will start with a "clean sheet" of paper and redesign a process from scratch. This type of "Out of the box" thinking fosters innovation and creativity. Clean slate encourages a free flow of ideas and can result in unique processes that are much more competitive

Scalability

Processes need to be able to handle predicted future workload to support company growth.

BPR Principle: Link Parallel activities in the workflow instead of just integrating their results.

Processes run in parallel that lead to the same outcome should be connected rather than just combining results at the end.

Customer Satisfaction ad Differentiation

Processes should help a company better serve its customers and provide clear and visible differentiation.

Cost Efficiencies

Processes should streamline the employees' work

High Defect, High Reward Processes

Quality control and Quality assurance

Leader

Sanctions and oversees the business process work and aligns it with the company mission (creates and supports an environment that allows change to happen)

Unrealistic expectations

The magnitude of the performance gains should be realistic and expectations managed. Additionally, it should be understood that BPR is only applicable to the operations of the business, not strategy.

Inflexibility

The process cannot respond to changes in customer requirements or keep pace with technology.

Scalability

The process is limited to the current workload and cannot scale to handle a future workload

Stakeholder Analysis

The process redesign team should perform a stakeholder analysis to identify early on the individuals and groups who have the most influence over the project's success and those who will be impacted by it.

Wrong Scope

The scope should include the entire process, not just part of it , keeping in mind also that processes can cross organizational boundaries. In addition, not all processes are equally important or contribute equally to organizational goals. BPR should focus on strategically identified, value-added processes

Technology Enabled Reengineering (Constrained reengineering)

The technology (e.g an ERP system) provides the road map for fundamental process change. (Also known as constrained reengineering because the ERP system imposes limits and bounds on how the processes will be designed) (In the context of ERP, the system configurations will dictate how processes will work)

Cycletime

The time consumed from the beginning to the end of the process should be at the heart of business process management, as this can affect customer satisfaction, production, and service output.

Handoffs

The transfer of responsibility from one individual to another creates the opportunity for mistakes, miscommunication, and delay.

Technology -Enabled Reengineering with ERP

Understand "As Is" process Determine requirements: must haves and nice to haves Select ERP that best matches requirements Prototype configurations and customizations Configure and customize ERP system Implement "To Be" processes

Clean Slate Reengineering

Understand :As Is" process Benchmark "As Is" process Design "To Be" process Good enough? If no --> Design "To Be" process If yes --> Customized solution or ERP or other technology Implement "To Be" processes

High Volume, Low-Margin Processes

Usually a symptom of operating in an extremely competitive market with enormous price pressure.

Bottlenecks

When a number of information flows lead to a single activity, this can limit the performance and capacity of the entire system, delaying or completely stopping the process.

Quality control

is checking someone else's work (reactive tool to product quality aimed at identifying and correcting defects after the fact)

Processes Built around Obsolete or Changing Technology

legacy systems trap companies into inefficient business processes and obsolete business models

Value added activities

processes should add value to the organization

Improved agility and speed

processes should be nimble and efficient so the company can anticipate, manage, and respond to changes in the marketplace.

Customer-Facing Processes

processes should make it easy for customers to interact with a business so they will keep coming back