Business Process / Enterprise (Process Oriented) Systems

Information, Organizations, Processes and Control

Hierarchical organizations of past years Today

Process-oriented, Learning, Team-based, and Fast-cycle organizational models

Flat, flexible, focused on core competence

Inside, empowered, interfunctional teams of knowledge workers are reengineering and continually improving core business processes.

Think globally and act locally

Flattening the Organizational Structure

To accomplish the organizations of the year 2000 and beyond firms must change the way they are organized, and employees at all levels must become information literate - not just computer literate.

Information, Organizations, Processes and Control

Transforming an Organization Requires more than just Changing the Structure. True change occurs deep within the organization as

individuals and work teams redefine the way they work and the values that guide decision making and action.

Managers need to rethink the nature of control and authority

Smashing together the features of the hierarchy with features of an entrepreneurial firm will not work.

Work must change and people must change

New knowledge and skills are needed

Creating the Information Age Organization

Business Process / Enterprise (Process Oriented) Systems

Business process systems are cross-functional that is, the system boundaries are not

within a singlefunction but actually go across boundary lines

BPR

Business Process Redesign The fundamental rethinking and radically redesign

of business processes to achieve dramatic improvement in critical, contemporary measures of performance such as cost, quality, service and speed.

The implementation of deliberate and fundamental change in business processes to achieve breakthrough improvements in performance.

Enabled by IT

Business Process Redesign Also known as Reengineering or Process

Innovation is offered as an enabler of organizational transformation.

Organization embrace a BPR approach when they believe that a radical improvement can be achieved by marring business process, organization structure, and IT change.

BPR

Hammer and Champy It is an all-or-nothing proposition that produces

dramatically impressive results. Most companies have no choice but to muster the courage to do it. For many, reengineering is the only hope for breaking away from the ineffective, antiquated ways of conducting business that will otherwise destroy them.

BPR

BPR Objectives: To dramatically reduce cost Reduce time To dramatically improve customer services or

to improve employee quality of life To reinvent the basic rules of the business e.g.

the airline industry taco bell from Mexican food to fast food to

feeding people anywhere, anyhow. Customer satisfaction Organizational learning

BPR

Change: To transform an organization, a deep change must

occur in the key behavior levels of the organization: jobs, skills, structure, shared values, measurement

systems and information technology.

Role of IT BPR is commonly facilitated by IT e.g.

Organizational efficiency Effectiveness Transformation

BPR

Efficiency Applications in the efficiency category allow users to

work faster and often at measurable lower cost Mere automation of manual tasks, resulting in

efficiency gains (least deep)

Effectiveness Applications in the effectiveness category allow

users to work better and often to produce higher quality work. Requires changes not only in technology, but

in skills, job roles, and work flow (deeper).

BPR

Transformation Applications in the the transformation category

change the basic ways that people and departments work and may even change the very nature of the business enterprise itself. A major change in the organization, including

structure, culture, and compensation schemes (deepest).

BPR

Process A process is set of logically related tasks

performed to achieve a defined business outcome

A collection of activities that, taken together, create value for customer e.g. new product for customer. This tasks are inter-related tasks

BPR

Business Function --

Business Function --A group of similar resources that perform similar activities or tasks.  

This is also called a task-oriented approach where the emphasis is placed on perfecting the execution of individual tasks.

Functional IS Systems -- also known as "silo" systems supported one business function

 BUSINESS FUNCTION    IS SYSTEM

   Logistics     Procurement

   Production / Operations     Material Resources Planning

   Finance / Accounting     Accounts Payable

   Human Resources    Payroll

   Sales / Marketing    Sales Order Management

When information from one IS system was needed by another business function, then periodically information would pass from one IS system to the other.

How can Companies Identify their Business Processes. Examples Manufacturing: As the procurement-to-

shipment process

Product development as the concept-to-prototype process

Sales as the prospect-to-order process

Order fulfillment as the the order-to-payment process

Service as the inquiry-to-resolution process

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BPR

Advantage of a business process

The inherent advantage of a business process is that its performance can easily be measured against the attainment of the goal. 

Looking at the business function systems --  how is performance measured?

Business process IT Systems organized around business processes:

Enterprise Resource Planning (ERP) or Business Engineering (BE) or ENTERPRISE SYSTEMS (ES)

Packaged, application software (modules) designed to address common business processes (across industries and business functions)

Evolved, in part, from MRP (Materials Resource Planning) concepts,  thus the 'rp' in erp and mrp

Typically, vendors assume some customization and integration will be required -- but customization will NOT be to the core 

Vendors also assume system infrastructure exists (including: RDB, client, servers, browsers, network, etc.)

Common Features: On-line system with no traditional batch

interfaces One database for all data Clear definition of every data items Efficient support of back-office transaction

processing; weaker in decision support and analytical support but improving

Templates for processes of best practices Client/server computing, network

infrastructure, RDB, GUI, Web Enablement Proprietary language and tools (e.g. ABAP/4 for

SAP R/3)

Advantages: Tight integration among all modules Single view of the business -- 

    same db, consistent reporting and analysis Process orientation: streamline processes Rich functionality : templates & reference model Flexibility: current and new environment Scalability: small group vs. enterprise Expandability: modular vs. total systems Interoperability with 3rd party solutions Rapid implementation: "vanilla" version

Challenges:

High cost with low payoff is the norm when vanilla version not implemented

Difficult to change /test all aspects that are affected simultaneously

Difficult to design a new process that's an improvement (particularly when the organization's structure is an issue)

Difficult to find/build software for new process.

Difficult to change all aspects simultaneously

Learning Curve Realities 

Idiosyncratic support needs are the norm

How can Companies Identify their Business Processes.

Dysfunction: Which process are in the deepest trouble

Important: Which process have the greatest impact on customer

Flexibility: which process are the most susceptible to redesign.

BPR- How can Companies Identify their Business Processes

BPR- How can Companies Identify their Business Processes

Increasing operatingperformance

Maintain Advantage

Catch up

Increase flexibility, responsivenessDifferentiate product and services

Manufacturing gapversus industry leader

Services / Marketing gap versus industry leaderLow

Low

High

High

Different competitive investment strategies facing industry players as they consider there position versus industry leaders.

Embarking on Re-engineering Persuade people to embrace or at least not to

fight -the prospect of major change by developing the clearest message on:

1: A “case for action”- Here is where we are as a company and this is why we can’t stay here show your balance sheet show competitors balance sheet

2: A “vision statement” - This is what we as a company need to become

BPR

Simple Rules Start with a clean sheet of paper.

With my current experience what can I do today

If I were to re-create this company today, given what I know and current technology, what would it look like.

How will I be focusing, organizing and managing the company?

Transition from a vertical functional departments to one that is horizontal, CUSTOMER focused and process-oriented?

BPR

Simple Rules Listen to customer

Enhance those things that bring value to the customer or eliminate those that don’t

Be ambitious, focus your commitment to radical change on the process

BPR

Process Improvement and redesign Process

Magnitude Increment Radical

Improvement 30-50% 10x-100xSought

Starting base Existing Process Blank skeet

Top management Relatively low Highcommitment

Role of IT Low High

Risk Low High

Improvement Innovation/Reengineering

BPR

Magnitude of Change 

Source: Adapted From O'Hara, Watson and Kavan

The Seven Phases of Process Re-generation

1. Strategy Linkage  kicks off project  secure management commitment  discover process opportunities  identify IT enabling opportunities  align with  corporate strategy and select BPR project

2. Change Planning inform stakeholders and organize re-generation team prepare project schedule and set performance goals

3. Process Pathology document existing process uncover process pathologies

The Seven Phases of Process Re-generation

4. Social Re-Design -- 5.  Technical Re-Design  (reiterative until satisfied) explore alternative designs design new process design HR architecture (x-func/multi-discipline) select IT platform prototype holistic process

The Seven Phases of Process Re-generation

6. Process Re-Generation implement HR changes  develop & deploy IT support  -- tug of war game --

 forces towards catastrophe and towards the ideal re-organizing:

teams jobs training

top management communication and persuasion critical here

7. Continuous Improvement measure performance link to quality improvement

The Seven Phases of Process Re-generation

1. Strategy Linkage a. kicks off project b. secure management

commitment c. discover process

opportunities d. identify IT enabling

opportunities e. align with  corporate

strategy     select BPR project

2. Change Planning a. inform stakeholders 

    organize re-generation team

b. prepare project schedule     set performance goals

A. Imperative    "Prove the need" Positive ("this change" is a

big chance to grab it all) Negative (without "this

change" we will die)

B. Leaders     Instigate and Sustain the change    "Walk the talk" and "Block escape" brave fearless communicative 

The Seven Phases of Process Re-generation

3. Process Pathology a. document existing

process b. uncover process

pathologies

C. Levers    the tools-- changed processes, people, technology, environment    "Power the transition" and "Demonstrate new reality"

rewards/punishments peer pressure forced

environmental/technological changes -- "no going back"

stakeholder feedback

The Seven Phases of Process Re-generation

4. Social Re-Design -- 5.  Technical Re-Design  (reiterative until satisfied) a. explore alternative

designs b. design new process c. design HR architecture

(x-func/multi-discipline) d. select IT platform e. prototype holistic

process

D. Affected Agents    all those affected by the change    "Segment them" --  "Strategy and

communication tactics for      each"

customers suppliers strategic partners stockholders community neighbors

6. Process Re-Generation a. implement HR changes  b. develop & deploy IT

support  -- a tug- of- war game on forces aimed towards catastrophe and the ideal

c. re-organizing: teams jobs training

d. top management communication     top management persuasion     ( critical here)

7. Continuous Improvement a. measure performance b. link to quality improvement

E.  Buoys     Stabilizers ( life preservers)      for affected agents     Exploit camaraderie consistency core competencies cultural values strategic relationships