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Session 2 & 3Session 2 & 3

ERP vs BPRERP vs BPR

Introduction to BPR

Why and what is BPR?

Checklist & areas to redesign

Relationship with ERP

Impact on ERP

Risks in BPR

BPR Options – Clean Slate & Technology Enabled

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Strategic Enterprise? Extended Enterprise ? BR or BPR ? ERP ? Where do all these fit in & how do they mesh together ?

Sounds like a Million $

Question!!!!

Sounds like a Million $

Question!!!!

Yes, in fact these are frequently echoed questions in the Indian Corporate circles nowadays.

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Why this question?Why this question?

The new school of thought proposes a shift from efficient to effective, passive to active, tactical to strategic and automation to optimization.

Competency management, which hinges around knowledge, skill & most importantly, attitude, is also a key area.

A radical rethinking on the way the business is run would bring the best out of the Organization.

The need of the hour seems to be the fundamental re-structuring & transformation of enterprise

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What is BPR?What is BPR?

Business Process Re-engineering (BPR) is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service & speed.

Dr. Michael Hammer is one of the world’s leading business thinkers. Reengineering the Corporation, which he wrote with James Champy, was the first book to look at how successful companies could use technology to revamp the way they did business, rather than automating old processes.

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Analysis and radical redesign of business processes using objective, quantitative methods and tools and management systems to accomplish change or performance improvement.

Also called as :

Re-Engineering, Process Reengineering, Process Quality Management, BPR, Process Innovation, Process Improvement, and Business Process Engineering.

Business re-engineering improves all three areas essential to business effectiveness - Business plans, Business Process & Business Information.

Other DefinitionsOther Definitions

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Is BPR a streamlining process or re-inventing process??

There exists a fundamental difference between streamlining a business process and re-inventing it

Streamlining is an exercise, which result in making incremental changes to the current process to increase performance parameters like quality, etc.

In the case of re-inventing a process, the existing one is scrapped and a new one is created from scratch with a fresh look. Concepts & ideas from within and outside the industry should be welcomed.

Ideally, Organizations should look at a continuum from streamlining to re-inventing.

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Checklist for BPRChecklist for BPRDoes the company have a system in place that can correlate and map low-level system events to high-level business views to detect and diagnose business performance problems at the functional level?What are our major business processes?Do the company's collaborative systems archive projects and processes so they can be reused as best practices?How do these processes interface with customer and supplier processes?What are our strategic, value-adding processes?Which processes should we reengineer within three months, six months, one year, and subsequently?What organizations and jobs are involved in the processes? What pieces of work are done by each job?What policies apply to the performance of the processes? In which piece of work does each policy apply?What technology is used in the processes? In which piece of the work is the technology used?How do we identify processes that are conducive to redesign?

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Areas to RedesignAreas to Redesign

(a) High customer requirement, but low performance (customers complain);(b) Some things just take too long; (c) High cost of poor quality (errors, rework, mistakes, scrap); (d) The company throws people at the problem, but things don't get better; (e) High internal frustration factor and low morale; (f) Process spans several functions and there is finger pointing and blaming; (g) Process is not being measured, high variability in output or results;(h) Excessive information exchange, data redundancy, and re-keying of data; (i) Inventory, buffers, and other assets sitting idle; (j) High ratio of checking and control to value adding; (k) Complexity, exceptions, and special cases; (l) No one is responsible for the process.

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BPR vs ERPBPR vs ERP

Project Management

Change Management

Strategic Planning

Continuous Process Management

Technology Management

•Fragmented•Functional-based•Inefficient•Costly•Slow

•Integrated•Process-oriented•Standardized•Customer-focused•Competency-centered

Process change through ERP

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Process Change ManagementProcess Change Management

• Change Management– Commitment, people, communication, interactions

• Project Management– Team formation, progress measurement

• Strategic Management– Process redesign, measurement, continuous improvement

• Continuous Process Management– Performance gap analysis, change justification

• Technology Management– Software selection, technical analysis & design, installation

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Impact on ERPImpact on ERP

• If poor BPR is conducted, or if vendor system adopted without consideration of organizational requirements:– Will discard processes in which organization

has developed competitive advantage– Even when BPR beneficial, there will be a

transition period where employee performance degrades while learning new system

– Failure of leadership commitment

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Risks in BPRRisks in BPR

• Advocates report failure rates of 50% to 70%

• Sutcliffe [1999] reviewed difficulties– Employee resistance to change– Inadequate attention to employee concerns– Inappropriate staffing– Inadequate tools– Mismatch of strategies & goals

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How Reengineering Should WorkHow Reengineering Should Work

• Texas Instruments, 1990s– Long cycle times, declining sales– Applied BPR cross-disciplinary teams

• To control all aspects of product development

– First pilot teams failed• Sabotaged by existing organization

– TI Reorganized around teams• Cut launching time by one-half• more profit• 4 times the ROI

– Minimizing the errors of oversightedness

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Best Practices in ERPBest Practices in ERP

• The most efficient way to perform a task

• SAP devotes considerable research to best practices– 800 to 1000 best practices reported in their R/3

system

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BenchmarkingBenchmarking

• Compare an organization’s methods with peer groups– Identify what practices lead to superior

performance– Usually part of BPR

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Implementation ProblemsImplementation Problems

• Scott & Kaindle [2000]: at least 20% of needed ERP functionality missing from vendor practices

• Many reports of missed deadlines, excessive costs, employee frustration in ERP implementation

• Taylor [1998]: need more participative design in implementing ERP– If adopt vendor system in total, can assure timely

implementation within budget– Also disregard organizational needs– Training a key part of ERP implementation

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BPR OptionsBPR Options

• Clean Slate– Reengineer everything from scratch

• Technology Enabled

(constrained reengineering; concurrent transformation)– First select system (vendor)– Second reengineer

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Comparison: Clean Slate vs. Technology EnabledComparison: Clean Slate vs. Technology Enabled

Clean Slate advantages Technology Enabled advantages

Not constrained by tool Focus on ERP best practices

Not limited by best practices database

Tools help structure reengineering

Retain competitive advantages Tools focus reengineering

Not subject to vendor changes Process bounded, thus easier

May be only way to implement advanced technology

Know design is feasible

May have unique features where best practices inappropriate

Greater likelihood that cost, time objectives met

Software available

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Finally do you need BPR?Finally do you need BPR?

• O’Leary [2000] survey of SAP R/3 users– Technology enabled strategy dominated– Prior to ERP implementation, 16% thought

BPR needed prior to SAP implementation• 33% thought BPR unnecessaary

– After ERP implementation, 35% thought BPR needed prior to SAP implementation

• 10% thought BPR unnecessary

• So BPR seems to be a useful exercise