Enterprise Resource Planning Reengineering and Enterprise Resource Planning

Enterprise Resource Planning, : Re-engineering and Enterprise Resource Planning Systems 2 -1

Business Process Reengineering (BPR) involves the radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality. In Business Process Reengineering, companies start with a blank sheet of paper and rethink existing processes to deliver more value to the customer. 2 -2

Objectives • Recognize factors associated with the evolution of ERP systems – BPR – Client-server networking – Integrated databases • Examine role of process modeling in redesigning business models 2 -3

Re-engineering • Fundamental rethinking and radical redesign of business processes Goal is to achieve major improvements in performance Efficient redesign of value chain • • – Primary activities • – Secondary activities • • Inbound logistics, operations, outbound logistics, marketing and sales, service Organizational activities, human resources, technology, purchasing Motivations – Deregulation, consolidation, customer sophistication, increased competition 2 -4

Business Process Re-engineering (BPR) • • • Technology used to mechanize work Create new business rules Remove outdated rules Improve responsiveness Reduce costs 2 -5

Business Process Re-engineering (BPR), continued • Decentralize decision making – Become responsive to customer’s needs – Flatten organization • • Facilitated by information technology Redesign of jobs – New levels of judgment – New types of leaders • Adaptable © Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 2 -6

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Process Modeling • Business process – • Data store – • Data transferred between processes or from a process to data store Organizational unit – • Data needed by business process Data flow – • Business activities Units where processes take place Event – Includes triggers and outcomes 2 -8

Basis for Best Practices Supported by ERP Modules • Re-engineered process models – Improved process change depictions • Data integration – Among multiple processes • Structural changes – Streamline business functions – Maximized productivity © Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 2 -9

Reliable Finance Company • • • Expansion required redesign of existing system Needs enhanced information system Increase number of branches exponentially Achieve a competitive advantage Analysis of loan application system – – Reduce approval from 10 -13 days to 2 -3 days Improve access to databases for approval decisions 2 -10

Failure in Re-engineering – Apply “clean slate” approach • • Continuous training for new roles Measure performance Jobs must be redesigned Use rewards as incentives to change 2 -11

Case: Re-engineering the Payment Process System at RFC Current payment processing system – Customers: • Make payments at branch – • Mail payments to branch – – – • Manually processed Batched for deposit in afternoon Home Office mailed an Advice of Payment Received Payment made to Home Office – – Cash, check, money order Manually processed Batched for deposit in afternoon Branch mailed an Advice of Payment Received Each night, batch payment processing runs to update accounts © Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 2 -12

Case: Re-engineering the Payment Process System at RFC, continued • • Weekly delinquency analysis run Payment reminders sent out at 15, 30, 45, and 60 days – Computer generated • Settlement figures processed upon request – Urgent requests take overnight • Major expansion planned 2 -13

Summary • • BPR allows the organization to rethink and radically redesign their business processes Process modeling of business activities change organizational management structures ERP systems are facilitated by IT Processes are standardized and teamwork enhanced © Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 2 -14