Bpr & Erp - Chapter 5
Transcript of Bpr & Erp - Chapter 5
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By:-
ANKIT MAHINDROO
ASST PROFESSOR,
LMTSOM
BPR & ERP
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BPR is the fundamental rethinking and redesign of
business processes to achieve dramatic improvements incritical, contemporary measures of performance, such as
cost, quality, service and speed.
(Hammer & Champy, 1993)
WHAT IS BPR?
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WHAT IS BPR?
y Involves thorough rethinking of all :-
y business processes
yjob definitions
y
management systemsy organizational structure
y work flow and
y underlying assumptions and beliefs.
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GENERAL OBJECTIVES
y To break away from old ways of working,
y Effect radical (not incremental) redesign of processes
to achieve dramatic improvements in critical areassuch as
y cost,
y quality,
y service
y response time and
y Cycle time through the in-depth use of informationtechnology.
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KEYADVANTAGES OF BPR
Fragmented
Functional-based
Inefficient
Costly
Slow
Integrated
Process-oriented
Standardized
Customer-focused
Competency-centered
Process change
through BPR
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BPR CHARACTERISTICS
y Process innovation and re-invention
y Enterprise process change
y Performance improvement
y Increased economic growthy Higher competitive bar
y IT as central enabler
y 50 75% failure rate
y High - risk, high return venture
y Significant reduction in cycle time across processes
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SPECIFIC OBJECTIVES??
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SPECIFIC OBJECTIVES
y Standardization of business objectives
y Elimination of organizational and technical bottlenecks
y
Improvement in quality of informationy Replacement of out-of-date procedures and systems
y Integration of business processes
y Reduction in stand-alone systems and interfaces
y Covering areas previously neglected
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ANY MYTHS ABOUT BPR?
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MYTHS ABOUT BPR
y Downsizing tool
y High failure rate
y Re-engineering and transformation
y BPR and TQM
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WHAT IS A PROCESS?
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A specific ordering of work activities across time and space, with a
beginning, an end, and clearly identified inputs and outputs: a structure
for action.
(Davenport, 1993)
WHAT IS A PROCESS?
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WHAT IS A BUSINESS PROCESS?
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A group of logically related tasks that use the firm's resources to provide customer-
oriented results in support of the organization's objectives
Why Reengineer ?Why Reengineer ?Customers are DemandingCustomers are Demanding
SophisticationSophistication
Changing NeedsChanging Needs
CompetitionCompetition
Local vs. GlobalLocal vs. Global
Change TechnologyChange Technology
Change Customer PreferencesChange Customer Preferences
WHAT IS A BUSINESS PROCESS?
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ENTERPRISE REDESIGN PRINCIPLES
y Capture data once, at its source
y Information producer should also process information
y Geographically dispersed resources are treated as centralised
resourcesy Activities are linked in parallel
y Decision-making is decentralized
y Processes are integrated across entire value chain
y Development of business alliances
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BPR VS TQMIMPROVEMENT (TQM) INNOVATION (BPR)
Level of change Incremental Radical, breakthrough
Starting point Existing process Start from scratch
Frequency of change Continuous One-time
Implementation time Moderate Long
Risk Involved Moderate High
Primary Enabler Statistical Control IT
Type of change Cultural Cultural/Structural
Expected Improvement Moderate Significant
Top management Moderate Very High
Role of IT Low Very High
Focus on Process improvement Profit Maximization
Investment Low initially, high to sustain High initially, less later
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BPR AND CHANGE MANAGEMENT
y It is related to the social and cultural aspects of re-
engineering process.
y Deals with aspects such as:-
y
Committed leadershipy Employee empowerment
y Communication of strategic goals
y Process vision development
y
Project managementy Process based team formation
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BPR IMPLEMENTATION APPROACHES
y Two types of approaches:-
y Clean-slate re-engineering (everything from scratch)
y Technology-enabled re-engineering (constrained re-
engineering)
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CLEAN-SLATE RE-ENGINEERING
y Processes start to re-engineer from the beginning and not
from the middle of the process.
y Processes first re-engineered to meet organizational needs
y
Software then selected to re-engineer the processesy Not easy to do since BPR is effort-intensive
y Carrying out BPR before ERP implies investment in 2
successive projects
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ADVANTAGES
y Independent of any particular tool or ERP package.
y Design of the re-engineered processes is hidden from others.
y System not affected by change in technology since
implementation is process-driven.y Removes confusion in ERP implementation since re-
engineering is considered independent of technology
implementation.
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DISADVANTAGES
y Difficulty in designing; no prior structure available
y Design unviable or sub-optimal.
y Design might not match ERP packages available.
y Costly and time consumingy Highly efficient functional consultants required
y Overall risk also increases as design might not be tested
before
y Done by large firms only having significant time and budget.
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TECHNOLOGY-ENABLED
RE-ENGINEERING
y Involves change of processes through extensive use of IT.
y Most ERP systems are based on client-server solution model
and represents integration of BPR and IT.
y
Enterprise goals and key processes that effect the success ofthe project.
y Some key benefits when BPR is coupled with IT are:-
y Decreased inventory
yLower administrative and operating costs
y Increased revenues
y Recaptured market share
y Reduced overtime
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ADVANTAGES
y ERP package chosen gives clear directions for re-engineering
y ERP package has been tested from various parameters; hence
better re-engineered solutions and feasible design
y
Very cost-effective re-engineering as packages are very costeffective.
y Helps in timely implementation of BPR
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BPR IMPLEMENTATION METHODOLOGY
y Phase 1: Plan BPR implementation
y Phase 2: Identify opportunities for BPR in the existing
system
y Phase 3: Develop a blueprint of the existing processes
y Phase 4: Develop an improvement plan
y Phase 5: Implementation
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PHASE 1: PLAN BPR IMPLEMENTATION
y Providing access to the current state of the organization in
terms of efficiency
y Identifying the need for the change
y
Developing a vision and identifying success strategiesy Constituting a re-engineering team and giving them clearly
defined goals
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PHASE 1: PLAN BPR IMPLEMENTATION
Aspects to be evaluated in Phase 1:
y Existing processes and their data flow
y New challenges for the organization
y Manner in which existing processes are impeding thebusiness
y Cause for the organizations concern related to the market
demand and competitors
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PHASE 2: IDENTIFY OPPORTUNITIES
FOR BPR IN THE EXISTING SYSTEM
y Analysis of the core/high-level processes.
y Identification of change enablers and process performance
matrices.
y
Evaluation of existing business strategy, and establishment ofnew process performance objectives and key characteristics.
y Identification of potential barriers to implementation
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PHASE 3: DEVELOP BLUEPRINT OF
EXISTING PROCESSES
y Modelling the existing processes in terms of process and data
flow.
y Understand how technology and information are currently
used.
y Understanding the existing organizational structure.
y Comparing existing processes with new objectives.
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PHASE 4: DEVELOP AN IMPROVEMENT
PLAN
y Developing a complete model for the new processes.
y Establishing a new organization structure.
y Describing new information requirements and technology
specifications.
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PHASE 5: IMPLEMENTATION
y Developing a migration strategy to the new model.
y Accessing current skills and capabilities of the organizations
employees.
y
Mapping new tasks and skill requirements to the employees.y Reallocating the work among various people and
departments.
y Training the people at all managerial levels for the new
system.
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ROLE OF IT IN BPRIT Characteristics Advantages
Automation of processes Elimination of human labor that leads to
reduction in overhead costs.
Improving efficiency in processes
Increasing speed of execution
Store, retrieve and distribute data Distribute organization with informationaccess from different dispersed areas
Enabling data analysis
Easier communication using email, video
conferencing and telephony
Enable decision-making Ability to gather, analyse and support
interpretation of data
Control the process Helping in parallelizing jobs, controlling the
sequence of activities, and scheduling
standard procedures, etc
Process monitoring and performance
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BPR SUCCESS VS FAILURE FACTORSFailure Factors Success Factors
Change of management system and
cultural factors
1. Communication gap
2. Organizational resistance to change
3. Lack of organizational readiness
4. Cultural Issues
5. Inefficacy
1. Establishing motivation and reward
system
2. Effective communication
3. Employee empowerment
4. Peoples involvement in BPR
implementation
5. Training and education about new
system.6. Creating effective culture for
organizational change
Management Support Factors 1. Problems related to commitment,
support and leadership
2. Problems related to championship
and sponsorship
1. Committed and strong leadership
2. Championship and sponsorship
3. Management of risk
Organizational Structure 1. Ineffective BPR teams
2. Problems related to integration
mechanism, job definition, and
responsibility allocation
1. Adequate job integration approach
2. Effective BPR teams
3. Appropriate job definitions and
responsibility allocation
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BPR SUCCESS VS FAILURE FACTORSFailure Factors Success Factors
BPR project management factors 1. Problems related to planning and
project management
2. Problems related to goals and
measures
3. Inadequate focus and objectives
4. Ineffective process design
5. Problem related to BPR resources6. Unrealistic expectations
7. Ineffective use of consultants
1. Alignment of BPR and corporate
strategies
2. Effective planning and use of project
management techniques
3. Setting performance goals and
measures
4. Adequate resources5. Effective use of consultants
6. Building BPR vision
7. Effective process redesign
IT infrastructure factors 1. Problems related to IT investment and
sourcing decisions
2. Improper IT integration
3. Inadequate IT development4. Ineffective re-engineering of legacy
systems
Adequate alignment of IT infrastructure
and BPR strategy
Building an effective IT infrastructure
Adequate IT investment and sourcingdecisions
Adequate measurement of IT
infrastructure effectiveness on BPR
Proper IT integration
Effective re-engineering of legacy systems
Effective use of IT tools
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BPR Symbols
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AnActivity
ADocument
ADecision
Data (input as outputs)
BUSINESS PROCESS FLOWCHART
SYMBOLS
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A Predefined Process
The Start of a Process
The End of a Process
Representing a Relation
Start
End
BUSINESS PROCESS FLOWCHART
SYMBOLS
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Continuation of the process at the same page
at an equal symbol with the same number. Used
when a relation arrow crosses another relation arrow
Off-PageConnector - Process will continue on the
next page
Integration Relation -A
relation to another module isidentified and described
BUSINESS PROCESS FLOWCHART
SYMBOLS
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Rules For Symbols
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Start
End
Generate
Purchase
Order
OK? Yes
No
Symbol used to identify the start of a business process
Activities must be described as a verb
Decisions have only two possibilities (Yes & No)
Crossing lines are not allowed
If one side of the decision has no further processes
defined this symbol has to be used
RULES FOR SYMBOLS
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Purchase
Order
Posting
of Bonus
I
A
Continuation symbol within the same number must be
present twice on the same page
Name the document
Off- PageConnector is used to continue a process at the
next page or to let the process to flow over at the previous
to the next page. If more than one is needed useA, B, C,
D
Name the data
RULES FOR SYMBOLS
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END
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