Business Process / Enterprise (Process Oriented) Systems

Information, Organizations, Processes and Control

Hierarchical organizations of past years Today

Process-oriented, Learning, Team-based, and Fastcycle 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

Information, Organizations, Processes and Control

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.

Creating the Information Age Organization

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

Business Process / Enterprise (Process Oriented) Systems

Business process systems are crossfunctional
that is, the system boundaries are not within a single function 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

BPR
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

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 Logistics

IS SYSTEM Procurement

Production / Operations
Finance / Accounting Human Resources Sales / Marketing

Material Resources Planning

Accounts Payable Payroll 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.

BPR
How can Companies Identify their Business Processes. Examples
Manufacturing: As the procurement-toshipment process
Product development as the concept-toprototype process Sales as the prospect-to-order process

Order fulfillment as the the order-topayment process

Service as the inquiry-to-resolution process

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

BPR- How can Companies Identify their Business Processes

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

High

Manufacturing gap versus industry leader

Increasing operating performance

Catch up

Maintain Advantage

Increase flexibility, responsiveness Differentiate product and services

Low
Low Services / Marketing gap versus industry leader High

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

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

BPR
Process Improvement and redesign Process
Magnitude
Improvement Sought Starting base Top management commitment Role of IT Improvement Increment 30-50% Innovation/Reengineering Radical 10x-100x

Existing Process Relatively low

Blank skeet High

Low

High

Risk

Low

High

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 ReDesign (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 Regeneration

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 Regeneration

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 ReDesign (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