Business Process Reengineering INFSY 489 IST 402 Business

Business Process Reengineering INFSY 489 / IST 402

Business Process Reengineering �BPR – effort to identify the best way to do each business task supported by the system �Functional Areas? vs. Business Process?

Business Process Reengineering �Example: Forecasting �Last month’s demand to predict this month �Use monthly demand from a year ago to predict this month �Spreadsheet algorithm such as exponential smoothing over available monthly data �Seasonality indices in a spreadsheet algorithm �Rely upon managerial judgment �Ouija board

Business Process Reengineering �BPR has resulted in massive reductions in workforce (RIF) �BPR failure rates have been 50% to 70% �Employee resistance to change �Inadequate attention to employee concerns �Inadequate & inappropriate staffing �Inadequate developer & user tools �Mismatch of strategies used & goals �Lack of oversight �Failure in leadership commitment

Best Practices in ERP �Primary feature of SAP is Best Practices �A method that is judged superior to other methods �Efficient way to perform a task � 800 to 1000 best practices included in SAP R/3 �Benchmarking – compares an organization’s methods with peer groups to identify the best practices

Business Process Reengineering �Researcher Scott and Kaindle found at least 20% of functionality needed by ERP users is missing from vendor packages �BPR designed to consider human values and business purposes �ERP implementation often neglect human considerations

Business Process Reengineering �There are two main methods of business process reengineering. �Clean Slate Reengineering �Technology-Enabled Reengineering

Business Process Reengineering �Clean Slate Reengineering �Everything is designed from scratch �The software to support reengineering is selected �More expensive but more responsive to organization needs �Slower and harder to apply �Involves significant changes in the way organization does business �A way to retain competitive advantages

Business Process Reengineering �Clean Slate Reengineering Pros: �Tasks are custom made to the company and better fit the needs of the business �No constraints, anything can be designed. �Some of the underlying business components can stay the same without having to modify it to a specific software package.

Business Process Reengineering �Clean Slate Reengineering Cons: �Most expensive compared to other methods �Slower to design and harder to implement since everything is in-house with no external support. �Higher risk of failure due to slower implementation.

Business Process Reengineering �Technology-Enabled Reengineering �First select a system, then reengineer using ERP best practices �a. k. a. Constrained Reengineering, Concurrent Transformation �Faster and cheaper �Design the organizational system around abilities of vendor software �Involves the most change in organizational practice �Most complicated for training �The most dominant practice today

Business Process Reengineering �Technology-Enabled Reengineering Pros: �Cheaper then other methods due to the system and software already being available. �More support due to experience of others. �Faster to implement and design.

Business Process Reengineering �Technology-Enabled Reengineering Cons: �Involves the most business change due to having to build your company around the software package. �Possibility of more training involved for employees because there are no guarantees any of your previous business tasks will remain.

Risks of Failure in Business Process Reengineering �Average estimate of BPR project failure is 70% due to initial problems within the implementation, which include: �Internal resistance �Lack of a company sponsor �Inability to staff employees to the need of the project �Lack of attention to employees concerns �Inadequate support of software or incorrect software chosen dependant on organization

Business Processes �Network of: �Activities �Resources �Facilities �Information �Interact to achieve business function

Portion of Inventory Management Business System

Inventory Management Business System �Purchasing(activity) queries Inventory Database(facility) obtains Quantity. On. Hand(information) �If reorder needed, Purchasing generates Order(information) to Supplier(resource) �Order Placement(activity) sends copy to Receiving(activity) �Receiving puts goods into Inventory(facility) �Record sent to Inventory Database and Payment(activity)

Inventory Management Business System �Supplier sends Shipping. Invoice(information) to Payment �Shipping. Invoice compared to Order, generates Check(information and resource) �Counter Sales(activity) interacts with Customer(resource), Inventory(resource), and Inventory Database

BPR Lab �What is the process to register for a class at Penn State Harrisburg? �How could you reengineer this process?