Business Process / Enterprise (Process Oriented) Systems
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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
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Flattening the Organizational Structure
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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
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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
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Business Process / Enterprise (Process Oriented) Systems
Business process systems are cross- functional that is, the system
boundaries are not within a single function but actually go across
boundary lines
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
Business functions Business Processes BPR
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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?
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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.)
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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)
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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
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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
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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
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Increasing operating performance Maintain Advantage Catch up
Increase flexibility, responsiveness Differentiate product and
services Manufacturing gap versus industry leader Services /
Marketing gap versus industry leader Low High Different competitive
investment strategies facing industry players as they consider
there position versus industry leaders.
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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 cant 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
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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
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Simple Rules Listen to customer Enhance those things that bring
value to the customer or eliminate those that dont Be ambitious,
focus your commitment to radical change on the process BPR
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Process Improvement and redesign Process
MagnitudeIncrementRadical Improvement 30-50%10x-100x Sought
Starting baseExisting ProcessBlank skeet Top managementRelatively
lowHigh commitment Role of ITLowHigh RiskLowHigh Improvement
Innovation/Reengineering BPR
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Magnitude of Change Source: Adapted From O'Hara, Watson and
Kavan
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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
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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
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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
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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
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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
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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
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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