T-86.300 Information and Communication Technology (ICT ...€¦ · TQM and BPR - synergy Impact on quality and service Time TQM TQM BPR BPR TQM. Jari Talvinen 1.11.2004 - SoberIT

T-86.300Information and Communication Technology (ICT) Enab led Commerce

Business processes and information systems –

Jari Talvinen

Ph.D.(Econ), Docent, Helsinki School of Economics

Business Development Executive, IBM

Jari Talvinen 1.11.2004 - SoberIT

Helsinki School of Economics IBM

Agenda

❚ Business Processes & IT❚ Outsourcing❚ Change Management – key to success



What is an Information System?

❚ Hardware is a set of devices such as processor, monitor, keyboard, and printer.

❚ Software is a set of programs that enable the hardware to process data.

❚ Database is a collection of related files, tables, relations, and so on, that stores data.

❚ Network is a connecting system that permits the sharing of resources between computers.

❚ Procedures are the set of instructions about how to combine the above components.

❚ People are those individuals who work with the system or use its output.

Components of Information Systems :



Functions vs. processes



CUSTOMER

Secondary Conversion TransportationPrimary ConversionFibre

Product Flow

Demand

Information

““ The complete set of activities, resources The complete set of activities, resources and information needed to plan, source, and information needed to plan, source,

manufacture, store, sell and deliver products manufacture, store, sell and deliver products to customers.”to customers.”

What is Supply Chain Management?



Demand

Information

Product Flow

CUSTOMER


A broken process comprised of organizational “silos” A broken process comprised of organizational “silos” and information system “silos”and information system “silos”

Typical SCM - Order Fulfillment Issues



SCM conflicts within a company

❚ The production manager❙ “I want big batches in order to

reduce my set up costs

❙ The bigger the production run, the better productivity

❙ Few batches, (long runs) simplifies my planning, makes less transactions”

❚ The transport manager❙ “I want to fill up my transport

capacity.

❙ The lower frequency, the easier it is to fill, the better transport rates”

❚ The sales manager❙ “My customer will have all products with

very short notice, thus I need to have the full assortment in stock

❙ The lead times from manufacturing is so long, thus I need more safety stock

❙ My competitors can deliver everything next day”

❚ The finance manager❙ “We don’t have the cash to finance all our

stock, more must be made direct on customer request

❙ Many new products we only make once on optimistic forecasts, then I have to write them down as obsolete products”



Demand

Information

Product Flow

CUSTOMER


The result: local optimization at bestThe result: local optimization at best

Typical Order Fulfillment Issues



ProcessProcess OrganizationOrganization

InformationInformationTechnologyTechnology

People &People &CommunicationCommunication

Four Dimensions of Change



Sales & Mrktg.Sales & Mrktg.Sales & Mrktg. ServicesServicesServicesProductionProductionProduction

PresidentPresidentPresident

Supply Chain / Order FulfillmentSupply Chain / Order Fulfillment

Order Fulfillment Process Cuts Across Conventional Organization



For optimal

results all of

these must

be aligned

People & Communication

Organization

Process

Strategy

Information Technology

Order Fulfillment Solution



Demand

Information

Product Flow

CUSTOMER


•• Complete processesComplete processes•• “End“End--toto--End” Performance MeasuresEnd” Performance Measures• Clear process ownership and supporting organizationClear process ownership and supporting organization•• Share information across processes in “realShare information across processes in “real--time”time”




DemandDemand

InformationInformation

Product FlowProduct Flow

CUSTOMER


This enables the ability to optimize across the entire This enables the ability to optimize across the entire Order Fulfillment processOrder Fulfillment process




SCM opportunities within a company

❚ The production manager❙ “Due to my high flexibility in

manufacturing, I am always on line with customer demand

❙ The reduction of set up time has reduced my overall cost and increased my productivity

❙ The new small batch philosophy has forced me to solve some underlying quality problems, which I never had seen before”

❚ The transport manager❙ “Due to my flexible transport set up, I

have been able to reduce the overall capacity, which previously handled peak loads of sales companies stock build up. This has reduced total costs

❙ As I always on line with demand, I don’t have to plan any more”

❚ The sales manager❙ “My short delivery times is giving me

more sales orders❙ I can always follow the customers

variations in demands, and my responsiveness is my key selling argument

❙ I never have to scrap any articles and have rebate sales any more, this has really brought up my margin

❙ Since production radically reduced the batches, our lead times have drastically been reduced, and forecasting future demand is no issue any more”

❚ The finance manager❙ “My cash flow is always positive, and

our share holders really love our profitability”



From Functions to Process-based and Customer-driven OrganizationO

pera

tions

Ser

vice

Sal

es...

Functions arecontrollingactivities

...

Main processes are identified,functions still dominating

Ope

ratio

ns

Ser

vice

Sal

es

...

Sales process

Order-delivery process

Customer service process

Main processes areguiding activities

Ope

ratio

ns

Ser

vice

Sal

es



Business Process Reengineering

❚ Business process reengineering (BPR) refers to a situation in which an organization fundamentally and radically redesigns its business process to achieve dramatic improvement. ❙ Initially, attention was given to a complete restructuring of

organizations. ❙ Later, the concept was changed due to failures of BPR projects and

the emergence of Web-based applications.❙ Today, BPR can focus on anything from the complete restructuring of

an organization to the redesigning of individual processes. ❙ Major objective of BPR = Information Integration.



Integrated Information System



Total Quality Management and Reengineering



TQM and BPR - synergy

Impact onquality

andservice

Time

TQM

TQM

BPR

BPR

TQM



Concurrent Process Re-engineering

Processre-engineering

IS/IT design

Organisation & people

then

then

The Old Way - Business Process Re-engineering

Mobilisedprogramme

Process Re-engineering

IS/IT Design

Organisation & people

Infrastructure

Realisedgoal

Concurrent Business Process Re-engineering and Implementation



Outsourcing

❚ Many organizations may not be able to manage IT as well as firmsthat specialize in managing IT.

❚ For such organizations, the most effective strategy is outsourcing.

❙ Outsourcing is the process of obtaining services from vendors, rather than from within the organization.

❙ The decision to outsource usually considers two factors: (1) Which source is less expensive?

(2) How much control is necessary?

❚ Since the late 1980s, many organizations are outsourcing the majority of their IT functions rather than just incidental parts.

❙ In the mid-1990s, IBM, EDS, and Computer Sciences Corp. were winning approximately two-thirds of the largest outsourcing contracts.



Models of Outsourcing

• Transformation of the client enterprise • Operation of client’s value chain and/or support processes, organization,

applications and infrastructure by external service factory• Service for multiple clients• Service factory’s results are measured against business outcomes

• Management of one or more business processes by external serviceprovider (mainly support processes)

• Service for single clients• Service provider supplies service according to defined & measurable

performance metrics

• Management of department by external service provider (mainly applications and Information Technology systems)

• Service for single clients• May include transfer of IT employees and IT assets to service provider• Service providers results are measured against service level agreements

Client 1

Partner

Partner

Client

Client Partner

Client 2

Client 3

Business Transformation Outsourcing (BTO)

Business Process Outsourcing (BPO)

Strategic Outsourcing (SO)





Business Transformation - Does Company X Need Change Management?

❚ Are new skills needed? ❚ Do job profiles change?

❚ Do organisational processes change?

❚ Is everybody ready for change?

❚ Is top-management’s commitment needed?

❚ Do you have competencies for change?



Top 10 Barriers Top 10 Success Factors

Competing resources 48%

Functional boundaries 44%

Lack of change skills 43%

Middle management resistance 38%

Long IT lead times 35%

Communication 35%

Employee opposition 33%

HR (people/training) issues 33%

Initiative fatigue 32%

Unrealistic timetables 31%

% of 500companies

Ensuring top sponsorship 82%

Treating people fairly 82%

Involving employees 75%

Giving quality communications 70%

Providing sufficient training 68%

Using clear performance measures 65%

Building teams after change 62%

Focusing on culture/skill changes 62%

Rewarding success 60%

Using internal champions 60%

9 out of 10 barriers are people related

% of 500companies

3 out of 4 Change Programmes Fail to Fulfil their Promise



● Where do we want to go and what will the future loo k like?

● Why do we do this project?

● How will the new processes and systems impact the organisation?

● How will the results of the project impact the peop le in our firm?

● Culture Change● Job Description● Job Reductions● Training requirements

● Who are the key people and what are there goals and preferences?

● What shall we communicate and to whom?

Vision

Case for Change

Organisation Design

Stakeholder Mgmt

Communication

HR Management

Job Design

Training

Redeployment

Key Questions to be Answered

Documents

T-86.300 Information and Communication Technology (ICT ...€¦ · TQM and BPR - synergy Impact on quality and service Time TQM TQM BPR BPR TQM. Jari Talvinen 1.11.2004 - SoberIT